Sunday, September 29, 2013

You really think Herbalife Sold That Much Stuff in Mexico? Maybe Not...

Turns out there's a new wrinkle to the "explosive growth" Herbalife enjoyed in Mexico and further south... According to indictment of one of the drug kingpins... Herbalife Account is used to launder money for the drug cartel!

Really really makes you wonder if that "60% sales by Latino distributors" is for real sales or not, doesn't it?

Drug cartels use WHATEVER means they can to launder their profits, even if they take a big loss on it. Back in Colombia, Grupo DMG's huge pyramid scheme (by David Murcia) was long believed to have been one front for a lot of the drug money laundering in Colombia, and he was indicted both in US and Colombia for such, not really much for his huge defrauding of the people of Colombia.

Thus, it is NOT much of a stretch to imagine the cartels now pushing their money through MLM in order to launder it. And Herbalife, having a big presence in Latino world, is naturally a huge target.

While this does not indicate in any way that it's Herbalife's fault, it certainly calls into question how realistic is its business model, if they are (or not) aware that they were used to launder drug money, , how much MORE money was pumped through Herbalife that we don't know about, and how much of their business is a sham (through no fault of their own).

It further calls into question the entire hands-off model of MLM... how does a company know if anything's sold... or just dumped to rack up "fake sales" for the commission? And perhaps, how the company does not really WANT to know?

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  1. "ow does a company know if anything's sold... or just dumped to rack up "fake sales" for the commission?"

    THere is the modus operandi which even the NYT refused to mention!

  2. Why didn't Ackman figure this out??

    1. Because technically speaking, Herbalife is NOT at fault for being used as a method of money laundering.