OK - we have reviewed the definitions.
Herbalife is under investigation by Federal authorities as being a possible Pyramid/Ponzi scheme. As we discussed, a pyramid scheme is a form of fraud in which participants are promised payments or services primarily for enrolling people into the scheme, rather than supplying any real investment or sale of products or services. A Ponzi scheme is a form of fraud where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator.
Both a pyramid scheme and a Ponzi scheme rely on getting new members or players into the scheme. Without new members, the scheme will collapse because no real products or services are being sold for profit.
Herbalife is accused of possibly being such a scheme because it relies on multi-level marketing to sell its products. It should be stated at this point that Herbalife is far from being the only company that uses multi-level marketing; many other companies use this type of sales practice. However, Herbalife's actions and complaints against the company have attracted attention and now it appears that an actual investigation is underway.
Herbalife is under investigation by Federal authorities as being a possible Pyramid/Ponzi scheme. As we discussed, a pyramid scheme is a form of fraud in which participants are promised payments or services primarily for enrolling people into the scheme, rather than supplying any real investment or sale of products or services. A Ponzi scheme is a form of fraud where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator.
Both a pyramid scheme and a Ponzi scheme rely on getting new members or players into the scheme. Without new members, the scheme will collapse because no real products or services are being sold for profit.
Herbalife is accused of possibly being such a scheme because it relies on multi-level marketing to sell its products. It should be stated at this point that Herbalife is far from being the only company that uses multi-level marketing; many other companies use this type of sales practice. However, Herbalife's actions and complaints against the company have attracted attention and now it appears that an actual investigation is underway.
NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR
IS IT INTENDED TO BE LEGAL ADVICE. IF
THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.
NOTE: ANY INDIVIDUAL WHO HAS NOT PLED GUILTY TO A CRIME OR
WHO HAS NOT BEEN FOUND GUILTY BY A JUDGE OR JURY IS INNOCENT UNTIL PROVEN GUILTY
AS PER THE LAWS OF THE UNITED STATES OF AMERICA.
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tausk
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