Herbalife board member a target in long-running Brazilian fraud case
By Svea Herbst-Bayliss, Jeffrey Dastin and Marcelo Teixeira
NEW YORK/SAO PAULO (Reuters) - A director of U.S. nutrition company Herbalife is among 12 people charged in a years-old Brazilian embezzlement case that has never been mentioned in Herbalife public disclosures, according to court documents and company filings.
Herbalife has become one of America's most closely-watched companies after billionaire investors William Ackman and Carl Icahn squared off with enormous bets on its future, with Ackman betting on its demise and Icahn on its success.
Prosecutors in Brazil charged current Herbalife board member Pedro Cardoso with money laundering in 2008 for allegedly participating in an embezzlement scheme a decade earlier that siphoned 26.7 million Brazilian reais ($10.4 million) from the state government in Espirito Santo.
The 8th Criminal Court of Vitoria ordered bailiffs to serve him with a subpoena in 2010, but they did not locate him and the case remains open, according to court filings and a court source.
According to the U.S. Securities and Exchange Commission's rules on disclosure, companies must report legal proceedings that are material to evaluating the integrity of a director. Herbalife has not made the information about Cardoso's case public, according to proxy statements it has filed since 2009 when Cardoso joined the company's board.
Cardoso said in a statement dated this week emailed to Reuters by an Herbalife official that the lawsuit was a private matter dating back to 1998 which had no bearing on his work for the company, and that he was unaware he was being sought in the case.
"I have received no official notification of any kind with regards to this matter," he said.
Herbalife declined requests for additional comment. The SEC declined to comment. Continued...