Pershing Square Capital Management released its 18th video on Thursday warning investors about the alleged evils of Herbalife (HLF - Get Report) . Pershing Square CEO Bill Ackman has been shorting Herbalife since December of 2012, CNBC's Scott Wapner reported on "Fast Money Halftime Report" today.
The newest video shows a Herbalife President's team member, Style Bell, speaking at a webinar recruiting members, Wapner said.
"You guys are going to make a ridiculous amount of income. You can't even imagine. When I tell you what you think you're going to get, it's going to be times 10," Bell said on the Webinar.
This contradicts the statements released by Pershing Square that suggest Herbalife is not a lucrative business opportunity. Less than 1% of the company's distributors earn more than minimum wage from the company and 90% of new distributors drop out in their first year, Wapner said on CNBC.
In Herbalife's 2016 10-K report, the company said it is nearing a resolution with the FTC regarding a regulatory investigation. The company also said it has been reforming its practices over the last year. In May, Herbalife announced it is in advanced discussions with the FTC regarding a potential settlement of the investigation for $200 million, Ackman told CNBC.
During these processes thousands of Herbalife distributors would attempt to recruit people through webinars but with false, misleading statements about the potential of Herbalife's business opportunities, Ackman said.
"We featured 18 [videos] over the last 18 business days and you can expect another one tomorrow and Monday and Tuesday and Wednesday. We have thousands of hours of footage of these distributors bilking other people out of their hard earned money," he said.
The problem with Herbalife is the incentives of its marketing plan. The only way to make money is to recruit people to invest thousands of dollars in the company. There is no way for HerbaLife to stop the abuse unless it changes its marketing plan, Ackman explained.
"Incentives drive human behavior and if you don't change the incentives the behavior isn't going to change," he said.
The only way it gets resolved is if Herbalife stops incentives to recruit. HerbaLife cannot accept those changes from the government because no one is buying the company's product which would lead them to go bankrupt, Ackman added.