OpTree

Herbalife, Ltd has just announced that Gregory Probert, the COO who embellished his resume, has resigned from the company.

We reported last week about Probert’s embellishments that came to light during an independent investigation into the executives of the company. Probert admitted that he did indeed embellish his resume when he stated that he had completed an MBA program at UCLA.

“Greg made substantial contributions to Herbalife,” Chief Executive Officer Michael Johnson said in the statement. “The circumstances surrounding his resignation are disappointing.”

Probert has served as COO of Herbalife since 2003. The former Disney Exec had a great run at Herbalife and helped the company prosper in the last few years. No replacement has been named, but the company reported that other employees are now taking over his duties until a new COO is announced.

Probert and Herbalife join a not so distinguished list of companies that have had issues with top executives falsifying their resumes. In recent years RadioShack Corp and Intercontinental Hotels Group have both had issues with fake resumes. In the age of the internet, it is so easy to find information on anyone. I cant imagine how anyone, especially someone with such a high profile position thinks they can get away with lying on their resume. Probert had a very successful career at Herbalife and was well respected in the industry for the job he had done, along with Michael Johnson of rebuilding the company. It is sad to see his reputation tarnished by such a stupid mistake especially given that it was unearthed by such an unethical person.

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Just a few months ago, it seemed like Herbalife was the wall street darling. With shares soaring and profits rising, Herbalife, it seemed, had come back from near death. Well, it didn’t’ last long.

Problems began at the beginning of April when the company was red flagged by the Fraud Discovery Institute which cited several violations against the company and suggested that its auditor resign (you can see a copy of the report here). Barry Minkow, who runs the Fraud Discovery Institute, hired a private investigator to look into the biographies of all of the top level executives at Herbalife. What they found was that Herbalife President and COO, Gregory Probert lied about the completion of his MBA degree. Probert has had to admit that he did NOT complete requirement for his MBA as he stated in his biography.

Minkow is no stranger to fraud to himself. He served a sentence for fraud stemming from some corrupt activity at his former company, ZZZZ Best Co. He was also openly called a fraud and profiled on 60 Minutes last summer. Minkow has been a critic of Herbalife for some time now and it seems is determined to do his best to bring the company down (maybe because his own attempts at success have failed so miserably). Minkow is currently shorting the shares to finance his Herbalife Investigation both in the U.S and in China. Minkow has also been on a YouTube rampage shooting videos of Herbalife “Victims.” Minkow is hoping that by shorting the stock, the price will decline. Upon news of the exaggerated bio, stocks did fall almost $4.00 (almost 9%) but our guess is he doesn’t have the financial capacity to short sell a company which averages over a millions shares a day traded .

Officials from Herbalife say that they will hold their own internal investigation into the matter and take appropriate action. Many analysts anticipate the Probert will be reprimanded but not fired. While Probert did exaggerate his bio, his contribution to the company during his tenure has been invaluable and the company has done quite well during his time as president. It seems that Minkow, who has used his own money to fund investigations into the company, has some personal vendetta against the company. Herbalife is under some pressure now to restore its credibility. Aside from the Minkow investigation, authorities in China and in several European Countries are looking into fraudulent activity within the company. It will be interesting to see how the stock continues to do amidst all of the scrutiny.

While we don’t condone what Probert did, it’s hard to applaud Minkow for his actions given his shady past and the fact that he has lost investors a lot of money compared to Probert who has delivered for his shareholders.

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