WASHINGTON, April 23 Herbalife, a weight
loss and nutrition company being investigated for allegations
of running a pyramid scheme, disciplined hundreds of
distributors last year for making unsubstantiated medical claims
about its products, ABC News reported on Wednesday.
The network said the company disclosed the internal figures
after an ABC News investigation found what it called "numerous
examples of distributors boasting to potential customers that
the company's products helped treat maladies ranging from
diabetes to heart disease."
In one case, an ABC reporter posing as a customer
caught a Staten Island, New York, distributor on a hidden camera
saying a woman overcame a brain tumor after using Herbalife
products, the network said.
Asked by ABC in a televised report if Herbalife cured brain
tumors, Herbalife President Des Walsh said: "Absolutely not.
Frankly, I am appalled to hear you say this because what is
happening there is a complete and absolute violation of our
Asked if such incidents happened often, Walsh replied: "I do
not believe so," adding: "These instances ... are absolute
aberrations. ... This is not the Herbalife I know."
ABC said that since the interview, Herbalife had told the
network it disciplined almost 600 distributors last year for
making such claims and stripped 12 of their distributorships.
The network quoted Herbalife training materials as saying:
"Nutrition club members may share their experiences from using
the products, but the products are not intended to diagnose,
treat, prevent or cure any disease or medical condition, and
under no circumstances should there be any statements,
advertising or implications to the contrary."
The company did not immediately respond to a Reuters request
Several civil rights groups have charged that Herbalife is a
pyramid scheme, which is a company that makes more money from
signing up recruits than from selling products or services to
The company denies the allegations. High-profile investors
such as Carl Icahn, George Soros and Daniel Loeb have supported
Herbalife in the past by taking stakes.
The Federal Trade Commission, the FBI, New York State
Attorney General Eric Schneiderman and Illinois Attorney General
Lisa Madigan have all begun investigations into Herbalife.
Hedge fund manager William Ackman was the first to call
Herbalife a fraud. He placed a $1 billion bet against the
company in 2012.
(Reporting by Peter Cooney; Editing by Jan Paschal)