On April 25, the stock of Herbalife Ltd., which sells weight-loss and energy products through multi-level marketing, plunged by 9 percent to $40.08. On that day, San Diego fraud sleuth Barry Minkow had revealed that Herbalife’s president, Gregory Probert, did not have the MBA degree he claimed to have. Minkow, who had been betting Herbalife stock would go down, made $50,000 on the stock’s plunge.

It was legitimate: Minkow had publicly revealed he was betting on the stock’s dive, “and the FBI and SEC had access directly to the trading account in advance,” he says, referring to the Federal Bureau of Investigation and the Securities and Exchange Commission, federal agencies to which he regularly gives scam information dug up by his Fraud Discovery Institute.

On May 1, Probert resigned from Herbalife under pressure. That day, the stock dropped only 1.85 percent.

Herbalife’s address is Los Angeles. But the company is officially based in the tax-and-secrecy haven of the Cayman Islands. Astutely, Minkow is suspicious of multi-level marketing companies, because they are basically pyramid schemes, he says. He is also suspicious of offshore pirate coves. In February of last year, he exposed Salt Lake City–based Usana Health Sciences, another multi-level marketer of weight-loss and energy products. The founder of that company holds 52.4 percent of the shares, and almost all of them are tucked away in the hush-hush tax haven of the Isle of Man.

When Minkow went on the attack, Usana’s stock was selling for $61.19. Now it is a bit above $20. Minkow made $60,000 on that one, but the proceeds didn’t cover the cost of the Usana investigation, which unearthed two San Diegans at the top of the company with phony bios. They resigned. Usana has sued Minkow and his institute; the case is still in court, but Minkow seems to have the upper hand, even though the case is being tried in Utah.

As a result of Minkow’s charges, the Securities and Exchange Commission probed Usana, eventually dropping the matter. The agency began investigating Herbalife last year, and that probe is still pending.

Herbalife’s business is seemingly booming. But the company makes its money recruiting salespeople; actual product sales are not as important, says Minkow. He says the same of Usana. That’s what makes both of them endless chain schemes, he says.

“The biggest risk facing Herbalife is the high level of regulatory scrutiny to which it is subjected, particularly in foreign markets where its multi-level marketing approach is not widely accepted,” says Morningstar, the stock-rating firm. “We give the firm an F for stewardship,” partly because of the Cayman Islands incorporation.

Minkow, who is quoted in newspapers such as the Wall Street Journal and appears on TV shows such as 60 Minutes, is both world-famous and world-infamous. In 1987 he was sentenced to 25 years in the slammer for perpetrating a fraud in which he inflated sales by 90 percent. He has written books on the experience. While in prison, he got religion and was sprung in 7 years. He is now senior pastor for Community Bible Church in Mira Mesa. He splits his time between saving souls and chasing crooks. But “sadly, no trade [bet on a stock receding] has ever come close to covering the cost of any investigation,” so the church has not reaped any of the profits.