* Investor says Icahn aided pyramid scheme amid Ackman feud
* Banks accused of failing to withdraw Herbalife financing
By Jonathan Stempel
March 13 A short seller in Herbalife Ltd's
stock has sued officials at three major U.S. banks as
well as activist investor Carl Icahn, saying they are helping
perpetuate a fraudulent pyramid scheme at the nutritional
Daniel Ravicher, a New York lawyer, on Wednesday filed
papers in Manhattan federal court seeking to force officers and
directors at Bank of America Corp, JPMorgan Chase & Co
and Wells Fargo & Co to pull back $1.2 billion
of financing for Herbalife.
In a separate lawsuit, he said Icahn has aided the alleged
fraud by amassing a stake of nearly 16 percent in the company as
part of a feud with hedge fund manager William Ackman. Ravicher
is seeking to force Icahn to pay damages and divest his stake.
"He has a revenge motive, not an investment motive,"
Ravicher said in a phone interview, referring to Icahn.
More than 50 defendants were named in the lawsuits targeting
Bank of America, JPMorgan and Wells Fargo, including respective
chief executives Brian Moynihan, Jamie Dimon and John Stumpf.
Ravicher said the bank defendants have breached their
fiduciary duties to him, a shareholder, by failing to urge the
withdrawal of the Herbalife financing. He said this exposes the
banks to substantial risks of criminal and civil liability.
Like Ackman, Ravicher has a short position in Herbalife,
meaning he has bet that the company's share price will fall.
The lawyer said he has lost more than $75,000 on his short
position, which began around the time Ackman announced he was
shorting the stock in December.
Ackman has bet roughly $1 billion against Herbalife, arguing
that its business model is nothing more than a "well-managed
Icahn has supported Herbalife, calling it a good company
with good management.
Herbalife, which has corporate offices in Los Angeles, said
on Feb. 28 that it planned to add two directors chosen by Icahn,
creating an 11-person board, and said Icahn may boost his stake
to 25 percent.
Bank of America spokesman Bill Halldin, JPMorgan spokeswoman
Tasha Pelio and Wells Fargo spokesman Ancel Martinez declined to
comment on the lawsuits. An Icahn spokeswoman had no immediate
comment. Herbalife, which is not a defendant in either lawsuit,
also declined to comment.
Ravicher, 38, said he lives in Fort Lauderdale but practices
law in Manhattan.
He is also executive director of the Public Patent
Foundation, and co-counsel with the American Civil Liberties
Union in a lawsuit now before the U.S. Supreme Court over
whether Myriad Genetics Inc may patent two genes linked
to hereditary breast and ovarian cancer.
Ravicher said he is not pursuing the Herbalife cases as a
class action, but said investors with similar grievances are
free to contact him.
The cases are Ravicher v. Moynihan et al, U.S. District
Court, Southern District of New York, No. 13-01665; and Ravicher
v. Icahn in the same court, No. 13-01666.