Herbalife, which sells weight management and skincare products, is being denounced as a pyramid scheme by Bill Ackman, a hedge fund manager. Ackman charges Herbalife’s goal is not to sell products but duping people into selling business opportunities to their friends who, in turn, sell it to their friends.

Ackman is the founder and CEO of Pershing Square Capital Management and an active philanthropist. In December 2012, Ackman publicly declared Herbalife a pyramid scheme and was set to selling short the stock, believing that it’s actually worth nothing. According to The New York Times, Ackman also believes Herbalife’s actual retail sales are much lower than reported. He said, “I don’t think very many retail sales are actually happening at all.”

According to Ackman, Herbalife “is the best-managed pyramid scheme in the history of the world,” reports NYT. Herbalife’s products are not sold directly through Herbalife; rather independent salespeople, or distributors, are tasked with selling the weight management, diet and skincare products. The distributors receive commissions for their sales, notes NYT, but Ackman says the real incentive for the distributors lies not in selling the actual products but selling the chance to becoming a distributor.

Each distributor is tasked with selling the chance to become a Herbalife distributor to friends, and once those friends are signed up, they must sell becoming a Herbalife distributor to their friends. It’s an endless cycle, according to Ackman.

Herbalife has steadfastly denied Ackman’s claims and Barbara Henderson, a Herbalife spokeswoman, responded in an email to NYT saying, “Had our executives been there, they would have been able to tear Mr. Ackman’s premises and interpretation of our business model apart. His misstatements and mistakes are too numerous to address immediately.”

Ackman is not alone in his concerns about Herbalife, which reports close to $4 billion in sales. Earlier in 2012, David Einhorn, hedge fund manager and president of Greenlight Capital, asked several questions about Herbalife’s marketing setup, and what is the incentive for signing up, during a conference call that caused Herbalife’s stock to drop 20 percent in one day, reports Business Insider. Those questions by Einhorn cost Herbalife $2 billion.

On CNNMoney, Ackman was willing to bet $1 billion that Herbalife’s stock was worthless and that the company was, in fact, a pyramid scheme. Herbalife has close to 3.2 million distributors, notes CNNMoney, and if the company was determined to be a pyramid scheme, could be forced to cease operations by the Federal Trade Commission.

As CNNMoney outlines Herbalife’s marketing system, distributors buy Herbalife products at a discount and sell them to others for profit but will also sign up others to become distributors, which allows them to collect a portion of the newly signed distributor’s sales.

Ackman says Herbalife’s products are not actually that desirable to consumers at the suggested retail price and told CNN: “What they really sell and what their distributors make money from is by selling a business opportunity, and the business opportunity is to sell the business opportunity to your friends, who in turn sell it to their friends.”

Ackman pledges that any profits he makes from short-selling Herbalife will be donated to charity.

Not all investors are convinced that Herbalife is a pyramid scheme and stock prices have increased following drops caused by Einhorn’s and Ackman’s concerns. Some hedge fund managers believe the FTC will not investigate Herbalife and the FTC will not comment on any investigations until they are ready to declare legal action. Herbalife says it will refute Ackman’s claims during an investors meeting on Thursday.