Friday, April 25, 2008

Barry Minkow Finds Herbalife President Falsified Credentials

According to a Wall Street Journal article by Keith J. Winstein published today, Gregory Probert, the president and chief operating officer of Herbalife Ltd. (NYSE: HLF) does not have a Masters of Business Administration degree from California State University as claimed in at least nineteen SEC filings by the company. My good friend, former fraudster turned fraud fighter, Barry Minkow, co-founder of the Fraud Discovery Institute hired a private investigator to examine and verify the biographies of Herbalife executives.

According to the Wall Street Journal:

In response, Mr. Probert, 51 years old, said he nearly completed an M.B.A. at Cal State, but "the truth is that my vanity prevailed and I did not take action" to correct Herbalife's biography of him "even though I was aware it was not accurate."
"I suppose that some of us who have been blessed with a certain degree of good fortune are tempted to see the paths we took in romantic versus strictly factual ways," Mr. Probert wrote in an email. "I was wrong for succumbing to my vanity and apologize for doing so."

Barry Minkow has publicly acknowledged that he is shorting Herbalife and has provided law enforcement with online access to his trading account. The Fraud Discovery Insititute has exposed over twenty frauds totaling in excess of a billion dollars.

Herbalife told the Wall Street Journal that the company would correct its disclosures and remove any mention of Mr. Probert's falsely claimed M.B.A.

Gregory Probert's lie about obtaining a Masters of Business Administration degree from California State University violates Herbalife's Corporate Code of Ethics and Business Conduct. See the quote below:

Under various laws, the Company is required to maintain books and records accounting for the Company's transactions. It is mandatory that these books and records be accurate and that they include all pertinent information on a timely and understandable basis. In addition, reports and documents that the Company files with or submits to the Securities and Exchange Commission (SEC), as well as other public communications, must contain full, fair, accurate, timely and understandable disclosure.
Dishonest reporting, or failure to disclose material terms of a transaction on a timely basis, is strictly prohibited. An individual cannot knowingly report information that is inaccurate or organize it in a way intended to mislead or misinform those who receive it.
Employees must not make false or misleading statements in external financial reports, SEC filings or submissions, environmental monitoring reports, other documents submitted to or maintained for government agencies, or other public communications. Dishonest reporting can lead to civil or criminal liability, including significant monetary fines for the Company and possible jail sentences and/or fines for you.

Message to Gregory Probert: You should immediately resign and hire a good securities law attorney. How long did you really think you could continue with your charade knowing that the Fraud Discovery Institute was carefully examining Herbalife's SEC dislosures? If you don't resign, Herbalife Chairman and CEO Michael O. Johnson should fire you. You can read the SEC's Code of Ethics requirements under the Sarbanes-Oxley Act here. There is a saying, "It takes one to know one."

In a previous blog post, I detailed the Fraud Discovery Institute's "Top Ten Red Flags for Fraud at Herbalife."

Disclosure: In the past, I have provided funds to the Fraud Discovery Institute to cover costs of investigations. At the time of this blog post, I am not short or long Herbalife.

Written by:

Sam E. Antar (former Crazy Eddie CFO and a convicted felon)

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