Schneiderman remains mum about Herbalife as investors, activists mount pressure for relief

Is Attorney General Schneiderman's investigation of Herbalife independent of lobbyists' influence ?

By LOUIS FLORES

The office of State Attorney General Eric Schneiderman (D-New York) refused to comment today in response to an open letter published last week on the investor Web site Seeking Alpha about the pending investigation into the business practices of the health supplements company, Herbalife Ltd.

State Attorney General Eric Schneiderman (D-New York) faces conflicts of interest even as his office is investigating Herbalife Ltd.  Source :  Eric Schneiderman Campaign Video/YouTube Screen Shot

State Attorney General Eric Schneiderman (D-New York) faces conflicts of interest even as his office is investigating Herbalife Ltd.  Source :  Eric Schneiderman Campaign Video/YouTube Screen Shot

The open letter, written by the consultant and author Rogier van Vlissingen, raised many questions about regulatory, criminal, labor, and tax violations involving the sale of Herbalife's products. 

"There are potentially numerous violations happening in large number, with 3,000 Nutrition Clubs in NY State, including potentially some or all of the following: indications of overt attempts to subvert tax regulations, restaurant and other public health regulations, signage requirements, employer-employee regulations, and other regulatory oversight, all happening in plain sight, on your watch," wrote Mr. van Vlissingen.  The open letter has attracted over 230 comments.

When contacted by Progress Queens, a representative of Attorney General Schneiderman's office refused to comment.  

Some government reform activists are privately concerned that Attorney General Schneiderman’s investigation of Herbalife will end the way all, other major corporate wrong-doing investigations always ends : with no action taken to shut down a criminal corporate enterprise.

Attorney General Schneiderman's reported investigation of Herbalife is taking place as other prosecutorial or regulatory offices are investigating the company for questionable business practices, including allegations that Herbalife operates as a pyramid scheme.  To push back against the investigations, Herbalife has retained a national law firm, public relations firms, and other consulting firms to lobby prosecutors and regulators.  One of the consulting firms retained by Herbalife is SKD Knickerbocker, the consulting firm that employs Attorney General Schneiderman's ex-wife, Jennifer Cunningham, who remains a close adviser to Attorney General Schneiderman.  Herbalife claims that Ms. Cunningham does not work on the Herbalife account at SKD Knickerbocker.  However, government reform advocates question how Ms. Cunningham's firm could represent a company that is accused of operating as a pyramid scheme when she herself is advising the state's top law enforcement official.  

A message left with SKD Knickerbocker seeking comment was not returned.

As reported by Progress Queens, the national law firm employed by Herbalife, Dickstein Shapiro, has been a campaign contributor to both Gov. Andrew Cuomo (D-NY) and Attorney General Schneiderman.  Moreover, Herbalife has contributed to a lobbying vehicle, the Democratic Attorneys General Association, that has, in the past, donated money to Attorney General Schneiderman's campaign committee.

Some government reform activists are privately concerned that Attorney General Schneiderman's investigation of Herbalife will end the way all, other major corporate wrong-doing investigations always ends :  with no action taken to shut down a criminal corporate enterprise.  Notwithstanding pending regulatory and prosecutorial investigations, which activists claim are moving too slow, if at all, perhaps the greatest pressure facing Herbalife is a $1 billion short bet placed on its equity shares by the controversial investment management firm, Pershing Square Capital Management.  

Some investor watchdogs assert that all multi-level marketing companies exploit employees and consumers.  However, the Federal Trade Commission, or the FTC, does not share this legal opinion, meaning, multi-level marketing companies are allowed to wreak years', sometimes decades', worth of damage, before consumer advocates, private plaintiffs' lawyers, or regulators intervene.  In the case of Herbalife, one former state prosecutor, Bruce Craig, has called on the FTC to take a definitive stance on multi-level marketing companies.  

Until the regulatory authorities, such as the FTC, or prosecutors, such as Attorney General Schneiderman take action, activists are helping people, who have been exploited or victimized by multi-level marketing companies.  

Some social service organizations have made efforts to warn the Latino community in Queens about Herbalife’s business practices.  Make the Road New York, a local Latino advocacy group, has produced a documentary-style video in Spanish to warn Latinos in Queens about problems had by some people with past associations with Herbalife.  The video has been viewed over 11,000 times on YouTube.  Latino advocacy groups have accused Herbalife of deliberately recruiting and exploiting Latinos, especially undocumented Latinos, to work in its sales force.  

The consultant and author, Mr. van Vlissingen, is organizing a meeting Thursday up in The Bronx to help people, who have been exploited or victimized by multi-level marketing companies, file claims for damages.  If you believe that you have been exploited or victimized by a multi-level marketing company, you are invited to Thursday night's meeting, which will take place at the Kips Bay Boys & Girls Club, 1930 Randall Avenue, Bronx, New York 10473.  The nearest subway stop is the 6 station at Parkchester.  

 

The meeting Thursday night isn't limited to any one particular multi-level marketing company.  According to Mr. van Vlissingen's open letter published on Seeking Alpha, "Herbalife is in the Hispanic community, and Amway, ACN, Ambit are raging in the Bangladeshi community, TelexFree affected the African community in a big way and so on."