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Enforcement Action Dataset

 

Initiation Date:    11/14/2019  Information

Prosecuting Agency:    U.S. Securities and Exchange Commission

Type of Action:    SEC Federal Court Proceeding

Docket or Case Number:    19-cv-10562

Court:    S.D. New York

Name of Prosecuting Attorneys:   

  • Marc P. Berger, SEC New York Regional Office
  • Sanjay Wadhwa, SEC Headquarters
  • Gerald A. Gross, SEC New York Regional Office
  • Jack Kaufman, SEC New York Regional Office
  • Liora Sukhatme, SEC New York Regional Office
  • Christopher Mele, SEC New York Regional Office
  • Sonali Singh, SEC Headquarters
  • Tracy L. Price, SEC Headquarters
  • Charles E. Cain, SEC Headquarters

US Assisting Agencies:   

  • U.S. Department of Justice
  • Federal Bureau of Investigation

Foreign Enforcement Action/Investigation:    Unknown

Foreign Assistance:    Unknown

Origin of the Proceeding:    Unknown

Whistleblower:    Unknown

Case Status:    Resolved


Summary  Information

Herbalife Nutrition Ltd. was a California-based multi-level marketing corporation that sold health care, personal care, and other products in more than 90 countries around the world, including China. While multi-level marketing is legal in the United States, it is prohibited under Chinese law, which allows only "direct selling," i.e. selling a company's products through independent sales representatives. Herbalife operated in China through a group of wholly-owned subsidiaries, collectively known as the China Subsidiary. The China Subsidiary acted as a division of Herbalife rather than a separate and independent entity.

Jerry Li, who was identified as Yanliang Li in the parallel DOJ action, was a Chinese citizen who was the Director of Sales and later the Managing Director of the China Subsidiary.

According to the documents in this case, from 2006 to 2016, Li orchestrated a scheme in China to bribe local, provincial, and national government officials in order to obtain direct selling licenses and curtail government investigations of his company's business practices. It is further alleged that Li directed that the bribes be made through payments of cash, gifts, travel, meals and entertainment, and that Li falsified company expense reports to conceal the bribes.

On November 14, 2019, the SEC filed a three count complaint in the Southern District of New York against Li alleging violations of the anti-bribery, books and records, and internal controls provisions of the FCPA.

On September 27, 2021, the SEC moved for a default judgment against Li. On June 27, 2022, the court granted the SEC's motion, permanently enjoining Li from violation the FCPA and ordering him to pay a civil fine of $550,092.

In a related proceeding, on November 14, 2019, the DOJ announced that it had filed a three count indictment in the Southern District of New York against Li and China subsidiary employee Hongwei Yang alleging (1) conspiracy to violate the anti-bribery and internal controls provisions of the FCPA, (2) perjury, and (3) destruction of records in a federal investigation.

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