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In 2019, two Herbalife executives located in China were charged.

The SEC also filed a lawsuit against one of the executives who led Herbalife China for more than ten years.

The Foreign Corrupt Practices Act offenses by Herbalife were the subject of both criminal accusations and a civil lawsuit.

Jerry Li, also known as Yanliang Li, has been the managing director of Herbalife China since 2007. Head of External Affairs at Herbalife, Hongwei Wang, also known as Mary Yang, was his collaborator.

Herbalife’s misdeeds in China were originally highlighted by BehindMLM in 2019. The business avoided prosecution by paying a $122 million fine, as the DOJ chose to postpone its case.

Here is a synopsis from the DOJ if you aren’t acquainted with the case;

Herbalife Nutrition Ltd. (Herbalife), a publicly listed global nutrition firm with headquarters in the United States, has consented to pay more than $122 million in fines to end an investigation by the authorities regarding potential FCP Act breaches (FCPA).

The resolution results from a Herbalife plot to bribe Chinese government officials, falsifying books and records, and give them illicit payments and advantages to gain, keep, and expand Herbalife’s business in China.

I was unaware at the time that the SEC had separately accused Li and Wang and sued them.

On October 22, 2019, Li and Wang’s indictment was submitted under secret.

On November 14th, the indictment was released from the seal. The docket for the criminal cases has not received any further significant revisions.

Li and Wang live in China and are nationals of that country. They are still wanted by US police, as far as I know.

I was the subject of a civil lawsuit brought by the SEC on November 14, 2019.

Li oversaw a bribery conspiracy in China from 2006 to 2016, paying off local, provincial, and national government representatives to gain direct selling permits and stop government inquiries into the operations of (Herbalife’s) China Subsidiary.

Li oversaw a plan while serving as the Director of Sales for the China Subsidiary of (Herbalife) in 2006 and 2007 and as its Managing Director from December 2007 to 2016.

I give money, gifts, trips, dinners, and entertainment to bribe authorities;

(ii) create false expenditure reports to cover such payments;

To hide the bribes, (iii) Herbalife circumvented internal accounting systems.

Li bought permits and stopped government inquiries by paying off Chinese government officials.

Late in 2006, (Herbalife’s) China Subsidiary applied for its first direct selling license in China with the Chinese government.

(Herbalife’s) China Subsidiary paid bribes to employees of the China Ministry of Commerce, which is in charge of issuing direct selling licenses in China, as well as to regional offices of the China State Administration for Industry and Commerce to expedite application clearance (another government agency that participated in the licensing process).

These payments were paid under the direction of Li and (Wang).

For instance, in a telephone call that was recorded on January 10, 2007, Li asked Wang if the China Subsidiary of (Herbalife) had “taken care” of Official 1 at the Ministry of Commerce.

We have sent the money to [Official 1], haven’t we? I then inquired. And (Wang) said, “Of course, we have,” in response. The money “works great on him,” said Li.

I also ordered the payment of bribes to Chinese government officials to halt inquiries into (Herbalife’s) China Subsidiary by the Chinese government and to avoid or lessen penalties imposed on (Herbalife’s) China Subsidiary.

For instance, Li and (Wang) discussed similar payments to officials in the Jilin Province in a recorded phone call on March 15, 2007.

Li revealed to Wang that he had bribed Jilin officials 35,000 yuan (about $4,500) “to establish the relationship… Spending money upfront is preferable to spending money down the road, I was thinking.

After all, this is only a modest amount, and the total would be considerably more if we were punished.

Li and (Wang) discussed payments made by China Employee 2 to authorities in Zhejiang province to halt multiple government investigations against China Subsidiary in a call that was taped on December 5, 2007.

Li informed Wang that Li had instructed China Employee 2 to address any urgent matters.

Li persisted in bribing government representatives after (Herbalife’s) China Subsidiary received its initial direct selling license from the Chinese government.

Li, for instance, spoke with a representative of the State Administration for Industry and Commerce in the Shaanxi Province (“Official 2”) during a telephone call that was recorded on September 8, 2009.

I was informed by Official 2 that China Subsidiary could be required to pay a fee since there could be “some problems” in Beijing.

I was informed by Official 2 that although he did not “want to speak too much with you over the phone,” he was interested in working as a “consultant” for China Subsidiary and that the money he would earn from this position would go toward his “son’s house purchase fund.”

Li praised Official 2 for his assistance in completing the licensing procedure for the China Subsidiary in Shaanxi Province when he also informed him of its near completion.

I was informed by Official 2 that he would travel to Beijing to meet with the leadership because “it is a connection for life, not only to handle this situation.”

I also paid off officials at state-run media organizations in China to avoid bad coverage of the China subsidiary of (Herbalife).

For instance, a state-owned media outlet (“Media Outlet 1”) defamed the China subsidiary of (Herbalife) in a story that appeared in January 2013.

In a telephone call that was recorded on April 22, 2013, Wang informed Li that she had met with Media Outlet 1’s president (referred to as “Media Official 1”) and requested that he take down the unfavorable article.

I was informed by (Wang) that he had already consumed the recommended amounts of food, liquids, and other items. He must decide.

It’s time for him to start working, right?, Li retorted.

“If you destroy us, where could you obtain money,” Wang reported Media Official 1 as saying to Li. Media Official 1 chuckled and agreed to take down the unfavorable stories.

Li commended Wang, saying, “You did a terrific job!”

A different state-owned media outlet (“Media Outlet 2”) wrote several critical stories regarding China Subsidiary in 2013.

In a call with Li that was recorded on August 28, 2013, China Employee 3 said that the Chief Editor of Media Outlet 2 had met with him and “had agreed that they would stop after publishing two stories and we would start to explore a partnership.”

When the Chief Editor of Media Outlet 2 ordered him out, China Employee 3 allegedly “placed our ‘goodwill’ on the desk,” according to Li. He pretended not to notice. This shouldn’t cause any issues.

Li advised China Employee 3 to first request that Media Outlet 2 run favorable pieces before discussing “partnership.”

The first bribes to Chinese officials were documented on Herbalife’s records as “red envelope” payments. Accounting statements were revised to “conceal the payments” when Wang informed Li of this.

Herbalife, on the other hand, contends that its Chinese subsidiary misled them.

I gave the Internal Affairs Department (IA) of Herbalife false assurances that the excessively high EA expenditures were acceptable and required to operate a business in China.

Li misled IA by acknowledging the compliance issues raised in the reports, such as the use of phony receipts, and promising to punish and educate staff members to better adherence to China Subsidiary’s regulations.

Li is further accused of lying to the SEC;

Li denied knowledge of any payments made to Chinese government officials on behalf of (Herbalife’s) China Subsidiary in testimony before the Commission staff on October 20–21, 2016, in front of the (Herbalife) officer in charge of its FCPA compliance (as well as other Herbalife representatives).

On December 24, 2020, the SEC was able to serve Li in China using the Hague Convention.

Li didn’t reply to the SEC’s lawsuit, so the watchdog decided to seek default judgment in September 2021.

The SEC obtained a default judgment against Li on June 27.

Li is not allowed to commit any further offenses after the court granted an injunction. Additionally, he was mandated to pay a $550,092 civil fine.

Li and Wang were fired from Herbalife around the time they were charged in 2019.

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