By Christine Richard and Aaron Greenspan

Executive Summary

Herbalife Nutrition Ltd., a Multi-Level Marketing (MLM) nutritional supplement company, has a long and highly publicized history of being accused of operating as a pyramid scheme. Less well known is the extent to which its global reach has overlapped with money laundering and narcotrafficking channels.

Based on numerous interviews, Freedom of Information Act (FOIA) requests, legal document searches, and internal Herbalife materials, this report presents a history of Herbalife’s intersection with money laundering and the illicit drug trade, both directly and indirectly through its distributors. For decades, rather than address its entanglement with money laundering in ways that would dissuade further criminal involvement, Herbalife has structured its business in such a way that it remains vulnerable. Examples include:

Allowing its products to be moved through the so-called “gray market,” where products in one country are illicitly transported across borders to another

Relying on poorly disclosed or undisclosed third parties to operate the Herbalife business in high-risk countries including Russia, Colombia, Panama and Mexico, creating blind spots throughout the company’s vast operational footprint

Allowing high-ranking distributors at the top of the pyramid to make decisions at Strategy and Planning Committee meetings that dictate the company’s global expansion plans, vendors, and policies, even though members have questionable histories and, in at least one case, a narcotics trafficking conviction

Building a complex business structure that permits the company and distributors to move money across international borders with little to no regulatory oversight

Herbalife’s business has been linked to at least two notorious drug cartels, as well as the global bank HSBC, known for terrorist and narcotics financing. The company’s extensive track record of compliance failures, in direct violation of multiple federal Anti-Money Laundering (AML) statutes, leaves open the door to those who would use Herbalife to move illicit goods and funds around the world.

Herbalife has carefully cultivated a public image as a purveyor of nutritional supplements that are designed to help its customers lose weight and stay fit. Thus far it has been successful in convincing the marketplace that it is a legitimate business, albeit one with a few deficiencies like any large company. Considerable evidence supports a different and darker view.

References on PlainSite