Activist hedge fund manager Bill Ackman continued his relentless attack on Herbalife, releasing a report that accuses millionaire Herbalife distributor John Tartol of misleading others into selling the company's nutrition products.
Ackman's company, Pershing Square Capital Management, said in the report released on its website Thursday that Tartol has made millions of dollars by misleading people into believing they can get rich as independent Herbalife distributors.
"What took us that many years to do — 25, 30-plus years — you can all do in the next six, seven, eight years," Tartol said at a 2011 Herbalife convention in Las Vegas, according to Ackman's report. "This is why everybody here is fired up. Because we know it."
Tartol, a member of Herbalife's board since 2005, said Ackman's allegations are unfounded.
"As an Herbalife independent distributor for nearly 33 years, I am very proud of the success I've achieved and helped many, many others achieve," he said in a statement released by Herbalife.
"Together we offer healthy nutrition and an opportunity to earn supplemental income. And yes, for the small percentage of Herbalife distributors who choose to work hard and build a business, there is an opportunity for significant financial success," he said.
Tartol, a Malibu resident, is the highest-profile Herbalife distributor to be attacked by Ackman.
The vast majority of people who join Herbalife's network of distributors end up losing money, while fewer than 1% make a six-figure income, the Pershing Square report said.
The Los Angeles company sells nutrition and health products through independent salespeople in more than 80 countries. Its products are not available in stores.
In December 2012, Ackman accused Herbalife of operating a pyramid scheme and announced he had bet more than $1 billion on Wall Street that the value of the company's stock would fall.
The stock nose-dived on the news, but recovered last year, gaining more than 100% when regulators failed to act. Ackman trimmed his short position, a Wall Street play that pays when a stock's price falls.
Nevertheless, Ackman has increased his pressure on the company in recent weeks, releasing detailed attacks on successful Herbalife distributors.
Herbalife has defended its business model, saying the vast majority of people who sign up as distributors do so to get discounts on nutrition products they personally consume, not to get rich.
Company spokeswoman Barb Henderson said Ackman's latest attack is meritless.
"Having failed last year to make a return on his reckless $1-billion bet by attacking our business model, Ackman is now launching desperate attacks on individuals," she said.
Herbalife shares rose 76 cents Thursday, or 1%, to $66.94.