On July 11, 2022, the US Securities and Exchange Commission announced that on June 27, 2022, the US District Court for the Southern District of New York had entered a default judgment against Yanliang (“Jerry”) Li (the former managing director of the Chinese subsidiary of Herbalife Nutrition Ltd., a Los Angeles-based company that makes and sells direct-to-consumer personal health and nutrition items). In an Opinion and Order also filed on June 27, 2022, the court held that the SEC had adequately alleged that Li -- who failed to appear to defend against the SEC’s allegations -- had violated the anti-bribery and accounting provisions of the US Foreign Corrupt Practices Act , and that the SEC had substantiated its request for injunctive relief and damages. As a result, the court enjoined Li from further violations of the FCPA and ordered him to pay a civil penalty of $550,092.
The judgment is the result of a complaint the SEC filed against Li on November 14, 2019. According to the complaint, Li oversaw a bribery scheme in China from 2006 to 2016 in which Herbalife provided local, provincial, and national Chinese government officials with money, gifts, entertainment, and travel in exchange for the officials' (i) providing direct sales licenses to Herbalife and (ii) foregoing investigations of the company. As alleged, Li also falsified Herbalife’s books and records to hide these improper payments.
In October 2019, the US Department of Justice (DOJ) charged Li with conspiring to violate the FCPA (along with other offenses). Li has not been arrested and remains at large. In August 2020, Herbalife agreed to pay $123 million to the SEC and DOJ to resolve allegations that Herbalife’s Chinese subsidiaries had violated the FCPA’s books and records and internal controls provisions.