US authorities have opened a criminal probe into the nutrition and weight loss company Herbalife Ltd, according to media reports today.
The New York Times reported that sources said the case has been under investigation for several months. The daily added that officials it contacted say it is possible that authorities will opt not to take action against Herbalife.
The Times wrote that the investigation focuses on Herbalife's direct-selling business model.
Herbalife distributes its diet shakes, supplements and other products through a network of sales representatives, which some, including billionaire hedge fund manager William Ackman, say is really a pyramid scheme -- an allegation which the company has staunchly denied.
Shares in the Los Angeles based company have fallen sharply in recent months amid the allegations.
The Federal Trade Commission says it has launched a civil inquiry into Herbalife, and the company has revealed that it also is being investigated by the Securities and Exchange Commission.
But the company issued a statement yesterday, responding to "media reports and rumors in the marketplace," saying it was unaware of any criminal investigation.
"We have no knowledge of any ongoing investigation by the DOJ (Department of Justice) or the FBI, and we have not received any formal nor informal request for information from either agency," the Herbalife statement said.
