Fraud Discovery Institute Retracts Herbalife Accusations

[Judge Roy Bean]

Is this a trend for Minkow or is he getting litigation-shy?

http://www.marketwatch.com/news/story/f ... &dist=hppr

[wserra]

Hopefully, he's just getting litigation-shy. Because there is another alternative, JRB - Minkow is turning into another Ed Magedson of Rip-Off Report. That would be bad. But, if Michael Webster is right that he was paid more than attorney fees and expenses in the USANA settlement, then it's starting to look suspiciously like Magedson's "Corporate Advocacy Program".

Note the complete absence on Minkow's site of any mention of Herbalife (and, of course, USANA). However, there is a version of the events on Herbalife's site. This version is clearly negotiated language, such as

Upon further investigation by FDI founder Barry Minkow, the Fraud Discovery Institute became convinced that Herbalife employs systematic internal controls, including the use of outside, independent laboratory testing, which ensures their products are manufactured safely and in compliance with California law. It is evident to the Fraud Discovery Institute that Herbalife produces products that are safe, and that the company strives for continuous improvement in product quality.

Remember Emily Litella? "Never mind."

Sorry, but this looks bad for Minkow. I, for one, have serious renewed doubts about his credibility.

[michaelwebsterlaw]

My first concern about Minkow's model is that greenmail inevitably ends with some blessing of the fraud artist, making the accusations less plausible in the minds of many.

My second concern about Minkow's model is that does little to assist the victims of these frauds.

Perhaps this concern is overblown, as it does not appear that the majority of mlm victims lose more than 10k?

However, given that Minkow is in California which has at least 3 consumer protection laws, unfair pratices, seller assisted marketing plan, franchise law, I hope that the he modifies his scheme to be first off the bat with a lawsuit, similar in plan to the Calif AG's suit on YTB.

[Demosthenes]

Minkow makes money from shorting the stocks of the companies he trashes.

http://www.bloggingstocks.com/2007/03/1 ... to-usna-l/

[michaelwebsterlaw]

Nothing wrong, in my opinion with short selling.

If Minkow loses credibility, the short selling won't work.

Mark Cuban has set up a website to do the same thing as Minkow.

Good luck to all short sellers trying to bring light into the world.

[wserra]

Nothing wrong, in my opinion with short selling.

Nothing wrong in anybody's opinion with short selling.

If Minkow loses credibility, the short selling won't work.

There are plenty of instances in which people who should have no credibility in fact influence markets. I'm not saying that Minkow has no credibility.

Mark Cuban has set up a website to do the same thing as Minkow.

I assume that you mean Sharesleuth. I have the same problem with Sharesleuth that I have with Minkow - they profit by manipulating the market. Whether that manipulation reaches the level of a 10b-5 violation (I assume Canada has the equivalent) even if the released information is true is, I think, still problematic. There is law here that even open-market transactions can violate 10b-5 if done with the intent to manipulate. I have no doubt at all that, if the information the shorter releases is false, the result is an unlawful manipulation. There's even a term for it - a "poop and scoop", the inverse of a "pump and dump".

So even if their info is true, I think Sharesleuth and Minkow are uncomfortably close to the line. And, as Minkow saw, if sued they have unclean hands. At least Sharesleuth doesn't purge the bad stuff from the site. Doesn't Minkow having done that lead to the inference that he took his profits and ran?

Good luck to all short sellers trying to bring light into the world.

And they may need it.

[michaelwebsterlaw]

wserra writes: "I have no doubt at all that, if the information the shorter releases is false, the result is an unlawful manipulation. There's even a term for it - a "poop and scoop", the inverse of a "pump and dump"."

I do have problems with Barry's business model, but not because his information is wrong. My problem is that by shorting and then releasing the SEC investigation report, he is actually harming any potential investigation.

Barry has rushed into this business model without much thinking about the overall response and effect on those he is trying to help - which is consistent with his overall character.

In one way, he has clearly rattled the MLM community and shown the house of cards for what it is.

Be better to join up with the state AG's or some of them at this point instead of trying to get the SEC off their butts.

Sleuthshare, on the other hand, seems a silly whack job with no overall purpose.