Business

Ackman naming names in new attack on Herbalife

Bill Ackman continues to name names.

The hedge-fund activist called out a second high-level Herbalife distributor on Thursday for alleged actions he claims create the company’s pyramid scheme.

The distributor, Doran Andry, a 22-year Herbalife distributor and member of the Chairman’s Club, “victimized thousands of recruits,” Ackman’s hedge fund, Pershing Square, claimed in a statement.

Ackman, who for most of the 14 months since he took his $1.16 billion short on Herbalife has concentrated on the company’s actions, has recently turned his attention to distributors of the company’s nutritional shakes.

Pershing Square, in the statement, also claimed Herbalife has not enforced its own rules against its distributors. Such inactions amount to “willful blindness,” the hedge fund maintained.

Ackman’s fund also cited several Federal Trade Commission cases to argue that Herbalife can be held liable for such alleged misdeeds done on its behalf.

Herbalife vehemently denies it is a pyramid scheme.

Andry, who Ackman claims was the No. 1 Herbalife distributor in recent years, runs a so-called lead-generation business named Financial Success System (FSS).

Andry created FSS after a similar business was sued for fraud in 2002, along with Herbalife and Andry, Pershing Square said. The case was settled for $6 million, according to the statement.

Lead generation is the practice of collecting names of those interested in a “business opportunity” like Herbalife and selling those contact details to junior distributors as possible recruits. Andry sold the leads for up to $130 a pop, Pershing Square alleges.

Lead generation has been the source of hundreds of complaints to the FTC, according to records obtained from the regulator through the Freedom of Information Act.

Many of the leads were worthless, former distributors told The Post.

However, a recent report from a Barclays equity analyst attempts to throw cold water on Ackman’s focus on lead generation.

“[Herbalife] has not gotten any complaints from distributors about purchasing leads, and we think it likely it would provide compensation if there were complaints,” the report said.

In a statement, Herbalife said the company “prohibited lead purchases entirely [beginning] last summer. This method has been misunderstood outside of Herbalife and addressing it in this way eliminated the misperceptions.”

Pershing Square said it believes senior distributors are continuing to engage in the practice of lead generation.

Ackman’s profile on Andry is the second in a series. On Feb. 3, the hedgie profiled Shawn Dahl, another high-level distributor. Andry could not be reached for comment.