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Herbalife launches website to counter pyramid scheme claims

The Herbalife logo is seen on a building housing some of their offices in downtown Los Angeles, California April 28, 2013. REUTERS/Lucy Nich
The Herbalife logo is seen on a building housing some of their offices in downtown Los Angeles, California April 28, 2013. REUTERS/Lucy Nich

BOSTON (Reuters) - Weight loss and nutrition company Herbalife launched a website on Tuesday that details its business practices and counters claims made by billionaire investor William Ackman that it is running an illegal pyramid scheme.

The website represents the latest salvo in a high-stakes battle between Ackman and investor Carl Icahn, who has taken a major stake in Herbalife and will soon control five seats on its 13-member board of directors.

Ackman, who runs the $12 billion hedge fund Pershing Square Capital, announced a $1 billion short bet against Herbalife in 2012 and since then has been lobbying lawmakers and regulators to investigate it. He claims Herbalife misleads recruits about how much money they can make buying its products in bulk and selling them, which Herbalife denies.

The Federal Trade Commission confirmed it opened a probe this month, but declined to give any details.

Herbalife's site, iamherbalife.com, describes Ackman's claims as misleading and features a link to dozens of testimonials from users touting the company's products and how healthy they are after taking them.

It adds that there is no guarantee of success as a distributor, contrasting with some of its promotional videos showing distributors riding snowmobiles and horses, talking about their lavish lifestyles and how others can copy them.

Herbalife writes on the site that it is a "legitimate multi-level marketing company" focused on selling its shakes and powders to people who want to consume them. It also makes clear that Ackman will make money if Herbalife's share price falls and could lose money if it climbs.

The share price has fallen 32 percent since January but has risen 41.78 percent over the last 52 weeks.

The site appears to be a direct response to Ackman's own site, factsaboutherbalife.com, launched in 2012, which details Ackman's claims against the company.

Herbalife said it is confident that it is in compliance with all applicable laws and regulations. It also said it will not comment further about the FTC probe until there are material developments.

(Reporting by Svea Herbst-Bayliss; Editing by Richard Valdmanis and Dan Grebler)

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