In theory, it should be easy for the Government or any investigative authority to demonstrate that Herbalife is a pyramid or Ponzi scheme once they have access to all necessary financial records. The records would have to show that:
A pyramid scheme is an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public.
or
A Ponzi scheme is a fraudulent investment operation 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.
If the financials show one or the other, then it would seem that the Government would have an open and shut case. Will this happen, however?
Remember, as we discussed, if Herbalife is determined to be a pyramid or Ponzi scheme, this could threaten the entire framework of Multi-Level Marketing schemes. I am not saying that if Herbalife is declared to be such a scheme then it must follow that ALL MLM's fall into this category, but it does draw suspicion to the entire framework of MLM's. Certainly it would make an investor or worker think twice before investing in such a scheme.
A pyramid scheme is an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public.
or
A Ponzi scheme is a fraudulent investment operation 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.
If the financials show one or the other, then it would seem that the Government would have an open and shut case. Will this happen, however?
Remember, as we discussed, if Herbalife is determined to be a pyramid or Ponzi scheme, this could threaten the entire framework of Multi-Level Marketing schemes. I am not saying that if Herbalife is declared to be such a scheme then it must follow that ALL MLM's fall into this category, but it does draw suspicion to the entire framework of MLM's. Certainly it would make an investor or worker think twice before investing in such a scheme.
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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