Pershing Square New In-Depth Study Released On Herbalife Ltd. (HLF) Practices – ValueWalk Premium

Pershing Square New In-Depth Study Released On Herbalife Ltd. (HLF) Practices

Pershing Square Capital Management, L.P. announces the release of a series of background papers on key wrongdoers in Herbalife Ltd. (NYSE: HLF)’s unlawful pyramid scheme, starting with Shawn Dahl


     Pershing Square New In-Depth Study Released On Herbalife Ltd. (HLF) Practices

New York, NY – February 3, 2014.   Pershing Square Capital Management, L.P. released today an in-depth study on the deceptive practices and recruitment systems used by Shawn Dahl of White Rock, Vancouver, Canada, who started in 1999 with Herbalife Ltd. (NYSE: HLF), a member of its Chairman’s Club until June 2013, and one of Herbalife’s top distributors in recent years.


This is the first in a series of papers to be released by Pershing Square.  Other wrongdoers who will be profiled include:

–          Doran Andry, a 22-year Herbalife Ltd. (NYSE:HLF) veteran, member of the Chairman’s Club, and top distributor in recent years;

–          Leslie Stanford, a 33-year Herbalife veteran, member of the Founder’s Circle, and former member of the Board of Directors;

–          John Tartol, a 32-year Herbalife Ltd. (NYSE:HLF) veteran, a member of the Chairman’s Club, and current member of the Board of Directors;

–          And other senior distributors.


Herbalife knows about these deceptive practices, relies upon them, profits from them, and rewards the perpetrators with millions of dollars of remuneration, including discretionary bonuses.


As an unlawful pyramid scheme, Herbalife fosters, promotes, honors, and financially rewards pyramid schemes operated by its top distributors.  Because there is little genuine retail demand for Herbalife’s overpriced commodity products, the company depends for its revenues on the endless recruitment of new distributors.


As an example of Herbalife’s wrongful practices, Dahl operates a lead generation business which recruited large numbers into Herbalife’s pyramid scheme with false promises of easy money and financial freedom.  He took over his lead generation business, Online Business System (OBS), from his mother-in-law, Deborah Stoltz, and her sister, Marilyn Thom, who were convicted in Canadian Federal Court in Vancouver, British Columbia, of operating an unlawful Herbalife pyramid scheme in Canada in 2004.


Pershing Square has evidence that Stoltz and Thom remained active with Herbalife. They were featured as President’s Team members and at company events as recently as December 13th.

Herbalife distanced itself from Dahl in 2013 after Pershing Square’s December 2012 presentation, which shined light on Herbalife and OBS. Herbalife had for more than 13 years facilitated, celebrated, and promoted Dahl’s business.

A summary outlining Dahl’s deceptive practices is attached.  The material, with extensive links to exhibits and videos documenting the allegations, will also be available on

About Pershing Square Capital Management, L.P.

Pershing Square Capital Management, L.P., based in New York City, is a SEC-registered investment advisor to private investment funds.  Pershing Square manages funds that are in the business of trading — buying and selling — securities and other financial instruments.  Funds managed by Pershing Square have established short and other bearish economic positions against securities of Herbalife Ltd.  Pershing Square may change its views about, or its investment positions in,Herbalife at any time, for any reason or no reason.  Pershing Square may buy, sell, cover or otherwise change the form or substance of its Herbalife investment.  Pershing Square disclaims any obligation to notify the market of any such changes.  Please see the full Disclaimer appearing on website



Jennifer Burner

(212) 260-8813

[email protected]


Carolyn Sargent

(212) 843-8030

[email protected]




Summary of Report on Shawn Dahl

Dates of Herbalife Distributorship:  approx. 1999 – 2013

Status in Herbalife:  Chairman’s Club (former)

Business Methods:  Lead Generation, Training Videos, Recruiting Materials

All statements in this summary report are made pursuant to Pershing Square’s disclaimer, available at

  • ·         For over a decade, Shawn Dahl was one of Herbalife’s most successful distributors and was celebrated and promoted by Herbalife as a paragon of success.  He became a member of the Chairman’s Club, a status that only 50 of 3.5 million people have attained.
  • ·         Dahl achieved success by running a lead-generation business called Online Business Systems, which he took over from his mother-in-law Deborah Stoltz and her sister Marilyn Thom in 2004, when they were convicted of operating a scheme of pyramid selling for Herbalife and failing to make required disclosures, in violation of the Canadian Competition Act.  In the months before their conviction as they were negotiating with Canadian authorities, Stoltz and Thom handed the keys to their unlawful business to Dahl, who continued it under the name Online Business Systems (OBS).
  • ·         OBS has recruited huge numbers of new distributors into the Herbalife scheme with false promises of easy money and financial freedom.  We estimate the amount of inventory purchased by OBS’ failed distributors and their other losses to be in the hundreds of millions of dollars.The vast majority of OBS members fail quickly. According to Dahl’s own documents, even among the OBS members who made the investment (often up to $3,000) to qualify as a Supervisor in the Herbalife marketing plan, the turnover rate is 86% per year.
  • ·         Dahl provides various training materials and other business tools that plainly tell members of OBS to focus their efforts on recruiting new distributors into the Herbalife scheme rather than selling Herbalife products to genuine retail customers outside the distribution network.  He has said: “If you want lifestyle income, you recruit.”
  • ·         With full knowledge of OBS’s deceptive practices, Herbalife facilitated OBS’s business and promoted and celebrated Dahl, as well as Stoltz and Thom even after their conviction for running an Herbalife pyramid scheme.  Herbalife CEO Michael Johnson and Herbalife President Des Walsh participated in an OBS conference call, telling people that this was a “powerful business opportunity” that was “changing people’s lives.”  Herbalife featured Dahl’s claims of success in Herbalife’s own its publications and at Herbalife events.
  • ·         While Herbalife has attempted to distance itself from Dahl recently, the company cannot escape liability for participating in Dahl’s deceptive and destructive conduct for a decade.

Comments (13)

  • Mario Landro February 3, 2014 at 12:45 pm
  • herbs4mike .

    They might fine Herbalife, but they won’t shut it down like Ackman wants. The fact is Herbalife is not a pyramid scheme By the definition of the law. What a distributor does is not the company. Furthermore, If people failed with $3,000 of product, why didn’t they send the product back to Herbalife. Herbalife has a 100% money back program for a year. If they failed quickly, why didn’t they send the product back and get the refund. I know if I can get my $3000 back, and it’s not working for me, I KNOW I’m going to get my $3,000 back! And please don’t say they left the products in the garage for over 1 year before they realized they could get their money back. Ackman says hundreds of millions, However, I doubt people failed at any greater rate then any other Herbalife distributor. And if they could send it back, they did, or they opted to use the products, which is smart of them.

    February 3, 2014 at 12:01 pm
    • tex2

      How do you know they aren’t a pyramid scheme? Do you even know what that means? LOL

      February 3, 2014 at 11:37 pm
      • herbs4mike .

        Why are you laughing, youngster? By the way you talk, I’m sure I’m old enough to be your Dad. You never know I might be!! Yes, I do know what constitutes a pyramid scheme and I know Herbalife is not one. Now go back to your playstation….

        February 7, 2014 at 10:08 am
        • tex2

          I’m laughing because you’re full of crap. How old are you? If you answer, I’ll let you know how old you were when I was born. I wouldn’t doubt you’re the father of lots of sons and daughters you never met, that’s part of what makes you a perfect Herbalife distributor, no morals or ethics. LOL

          You STILL haven’t answered the main question – what is the definition of a pyramid scheme?

          February 7, 2014 at 11:36 am
  • Mario Landro

    well this baby is going to collapse nicely.. if only Madoff sold shakes!

    February 3, 2014 at 12:08 pm
  • Rene E Porcile

    Nothing NEW about Shawn Dalh story. HLF canceled his
    distributorship a year ago and at the time Greenberg was saying HLF will
    lose members, etc – but was wrong again. The lead generation business
    was used by less than 1% of distributors worldwide. This practice is in
    use today by many MLM’s, but NOT HLF. Ackman is wrong, but can’t admit it. Ichan, Stiritz, Soros, Banks, Hedge Funds… all give a vote of confidence to HLF for good reason!

    February 3, 2014 at 3:20 pm
    • tex2

      How do you know it’s less than 1%, and there aren’t other ways for the upline to rip off the downline?

      February 3, 2014 at 11:36 pm
  • Rene E Porcile

    Mario, I’m assuming you are a leader? So most likely you can do better, right? Go for it, make it happen. Let us know what you are doing to make the lives of millions of people better, OK?

    February 3, 2014 at 5:20 pm
    • tex2

      Rene, I KNOW you are a scam artist. LOL

      February 3, 2014 at 11:38 pm
  • Judy Brown

    Great article by Robert Fitzpatrick last year on Seeking Alpha, putting the HLF/Ackman story in a historical perspective. Back when Ponzi was running his scheme, lots of people defended it as legitimate. From the article:

    “It should be noted that Ponzi’s business never generated significant consumer complaints. Critical questions and accusations, rather, came from muckraking journalists who took legal and professional risks to question the scheme. Critics were often viciously attacked by Ponzi’s investors as elitists, big business manipulators, anti-business socialists, or small minded individuals who resented or envied Ponzi’s success. The tide changed only when an authoritative voice weighed in against Ponzi. That highly respected figure was Clarence W. Barron, the de facto founder of the Dow Jones news service and the publisher of the Wall Street Journal and Barron’s Magazine.”

    February 3, 2014 at 9:56 pm
  • tex2

    What a crock, this is just like Amway, except Amway is even bigger. Google “stop the amway tool scam wordpress”

    February 3, 2014 at 11:34 pm
  • herbs4mike .

    Anybody who wants to see Mark Hughes on video like the one above. Don’t watch that. It has been cut so many ties nothing makes sense. Just go to Youtube and see the real thing, uncut. So nothing can be taken out of context. This video is cut so many time it’s totally useless, and reeks of attempted manipulation

    February 7, 2014 at 10:18 am


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