Today's Wall Street Journal reports that (subscription required) Herbalife (NYSE: HLF) president and COO Gregory Probert never received the MBA listed in his biography that appears in reports the company has filed with the Securities & Exchange Commission.

The resumé embellishment was uncovered by Barry Minkow, a former fraudster turned fraud investigator.

In an e-mail to the Journal, Probert wrote that he almost completed an MBA at Cal State, but that "the truth is that my vanity prevailed and I did not take action" to correct Herbalife's biography "even though I was aware it was not accurate ... I suppose that some of us who have been blessed with a certain degree of good fortune are tempted to see the paths we took in romantic versus strictly factual ways. I was wrong for succumbing to my vanity and apologize for doing so."

What? He apologizes for not correcting Herbalife's biography of him? It's not like Herbalife made it up. He should be apologizing for "taking action" to lie to his employer and investors. Lying about credentials is not an error of omission. It's a deliberate error of commission, and from the email to the Journal, he doesn't appear to be taking full responsibility for that.

At 10 p.m. last night, Herbalife put out a press release announcing that "Officials at California State University, Los Angeles confirmed that Probert was enrolled in the graduate school MBA program for 12 quarters in the 1980s. The company is reviewing the matter and, upon completion of this internal investigation, will take any appropriate action."

Minkow, who is short Herbalife's stock, has accused the company of perpetrating a large fraud. This latest find would seem to raise grave questions about the integrity of at least one of the company's senior executives.

Ex-con turned fraud fighter Barry Minkow has released a press release raising questions about Herbalife (NYSE: HLF). Calling the company a "financial crime in progress," he wrote about the "Top Ten Red Flags of Fraud at Herbalife."

Herbalife describes itself as "a global network marketing company that sells weight-management, nutrition, and personal care products intended to support a healthy lifestyle," but Minkow believes the company is a fraud.

Minkow writes about a large amount of insider selling combined with aggressive debt-financed share repurchases and indications that the company's business model is not sustainable. Minkow argues that the company has saturated many of its existing markets and that the stringent multi-level marketing laws in China will make expansion there difficult. In the report, he writes that "Herbalife's expansion has reached more than 80 percent of the world's population as the entire continent of Africa, for the most part, is not in the market for weight loss products," but the reality is that Africa is actually facing an extremely serious obesity epidemic. Whether Herbalife's premium-priced products are a viable solution there is a separate question.

Shares of Usana Health Sciences (NASDAQ: USNA) are down 25% after the company reported lower than expected first quarter sales, and forecast a drop of 20% in full-year earnings.

In the press release announcing the results, Usana blamed "disappointing results from new promotional and incentive activities, economic uncertainties in the U.S., as well as the lingering effects relating to negative misinformation about the company that appeared in the mass media during 2007."

The "negative misinformation" referred to consisted of a series of reports produced by ex-con turned fraud investigator Barry Minkow, who alleged that the company was operating an illegal pyramid scheme. While the SEC ended its investigation of the company without taking any action, the company's lawsuit against Minkow has not gone so well.

A court tossed out 4 of the company's 5 claims against Minkow, with Judge Tena Campbell saying that the company failed to demonstrate that Minkow's claims were false, writing that their arguments of defamation revolved around "hypertechnical statements representing differing interpretation of data."

Minkow told the Salt Lake Tribune that "The message from this case is if you have accurate information and you don't break the law and you can corroborate your findings, you don't have to fear retribution from the company."

So here's my question for Usana: If Minkow's claims were "negative misinformation," why can't you rebut the substance of his report?

In an email, Minkow told me that he believes that "the credit crisis prevented people from dumping overpriced vitamins or failing business opportunities on their credit card and the same will occur with Herbalife (NYSE: HLF)."

In addition to numerous misrepresentations about its own company, the management at Usana Health Sciences (NASDAQ: USNA) has also taken to slandering its chief critic, con-man turned gumshoe Barry Minkow. Now Minkow is fighting back.

In a letter to Usana President David Wentz and CFO Gil Fuller also posted on his Fraud Discovery Institute's website, Minkow writes:

I have struggled over the last several weeks to remain silent in response to the multiple slanderous accusations made by your company in both your SEC filings and public statements. You and your paid supporters have made one false accusation after another, including your
company's statement in the recent Forbes article:
"We believe everything he [Barry Minkow] says to be false," Usana spokesman Joseph
Poulos told Forbes.com. "He's a liar; he's a criminal -- he can't be trusted."
Now Mr. Poulos said this on the record to a national magazine knowing it not to be true because even he believes that everything I have said is not a lie or he would have prevented (just to give one example but be assured these examples could be readily multiplied) Mr. Waitley from resigning from the board of directors as our reporting of the non existence of his Masters degree from the Naval Academy was dead on (again just to provide one example).

Of course, anyone following the Usana story knows that Mr. Poulos is, at best, completely out of touch with reality. I recently did a post comparing him to Baghdad Bob. Minkow also shows the first real evidence of accounting fraud at the Salt Lake City multilevel marketing company. Read the letter to see that.

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