Herbalife investigated by DOJ, FBI

April 12, 2014 12:00:00 AM PDT
The Department of Justice and the FBI are investigating Los Angeles nutritional products company Herbalife, which critics claim is an illegal pyramid scheme.

News of the probe caused stock in the company to tumble almost 14 percent on Friday.

The company has denied running a pyramid scheme. Herbalife products are not sold in stores. The company relies on a team of more than 3 million independent salespeople -- called distributors -- to sell products. Distributors are paid by commissions from sales and bonuses for recruiting new distributors.

In December, a hedge fund manager reported the vast majority of the company's distributors lose money, while a few at the top make millions from recruiting efforts.