For years, it has been speculated by critics that Herbalife could have a layer of fraud to it that transcends the pyramid scheme allegations of late. However, in a new research report prepared by 10/10 Research, and released today, a new layer of allegations of previously unreported – and so far unsubstantiated – criminal impropriety has emerged.
In the report, the researcher outlet makes several grave accusations involving not only money laundering at Herbalife, but also of being a participant in the Latin American drug trade, and suggests that one particular agency that may want to take a closer look at Herbalife's dealings.
As it notes, "the company’s success in countries like Mexico and Colombia and the immense amount of undocumented cash that trades hands at the over 40,000 nutrition clubs between the two countries could make for a perfect environment for wrongdoing involving cash."
In theory, Herbalife makes for a great vehicle for money laundering. Signing up as a distributor is easy and requires little documentation. It’s probably very easy to set up fake accounts under a main distributor, giving the cash a chain of individuals to work its way up and through, while the top distributor uses “cash purchases” of product below him to collect recruiting rewards. 10/10 Research’s internal estimates lead us to believe that between 40% and 60% of cash invested by top distributors can then come back to them. The fact that Herbalife recognizes revenue in local currencies and pays out to distributors using U.S. dollars could make the company an obvious target for those wanting to take local currencies acquired through questionable means and turn them into fresh U.S. legal tender.
We suspect this small, yet weighty, collection of evidence is only the tip of the iceberg. We believe these revelations about one of Herbalife’s top distributors and a Board Member should lead media and investigative journalists to introduce a line of questioning regarding potential money laundering at the company that we think the DEA will be very interested in.
Below is the introduction from the report:
The Rabbit Hole Goes Deeper Than Most Think
We bet you didn’t know that one of Herbalife’s top distributors and top earners; a Colombian national named Socrates Valencia that the company almost never mentions or talks about publicly, was arrested in connection with the seizure of $40 to $50 million of cocaine by federal officials in the 1980’s. Mr. Valencia and a gentleman named Mr. Tomas Troncoso were sharing a taxi. In the trunk of the taxi was their suitcases, which combined contained “25 kilos of cocaine”. Mr. Troncoso was later found to have another 36 kilos of cocaine in his Edgewater apartment. At the time, it was reported as “the largest amount of cocaine ever confiscated in New Jersey”.
What if we also told you Socrates’ brother and fellow Herbalife distributor, Arquimedes Valencia, registered a domestic business corporation in 1994 with someone who “collected drug money for the Cali cartel,” according to the New York Times. When this individual was stopped on the Spain Brook Parkway by authorities in the 1990’s, he “told the police that money and records” found on his person were “part of his work as an independent distributor of Herbalife International health-care products”?
What if we told you that as recent as 2012, individuals in Brazil were charged with laundering money through ‘weight loss clubs’ and what if we told you that just last year, a current member of Herbalife’s Board of Directors was revealed to be a named defendant in a money laundering complaint in Brazil? Today, in our first public research note ever, 10/10 Research wants to blow open an angle to potential fraud at Herbalife that has yet to be investigated by short sellers or the media. We think the DEA needs to investigate Herbalife immediately based on the evidence we will put forth today; if they aren’t already investigating the company.
The full report is below:
via http://ift.tt/2enUcSo Tyler Durden