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Herbalife to Pay $15 Million to End ‘Pyramid Scheme’ Suit

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Herbalife Ltd. agreed to pay $15 million to settle a lawsuit by a former California distributor of its nutrition products who alleged the company’s business model is a “pyramid scheme” that didn’t allow him to make a profit.

The U.S. Federal Trade Commission is probing the Los Angeles-based maker of weight-loss shakes and nutritional supplements following accusations by billionaire hedge-fund manager Bill Ackman that the company misleads distributors, misrepresents sales figures and sells a commodity product at inflated prices. The Federal Bureau of Investigation also opened an investigation and several states are looking into complaints.