Ackman to take Herbalife war to China

In an interview with CNNMoney last year, Bill Ackman said Herbalife is an "inherently fraudulent company."

Bill Ackman has said he will go "to the end of the earth" to bring down Herbalife. Tomorrow, he will take the fight to China.

The hedge fund billionaire plans to unveil new evidence Tuesday that he says shows Herbalife (HLF), which sells nutritional supplements through a network of independent distributors, is operating in violation of Chinese law.

Pershing Square Capital Management, Ackman's $11 billion hedge fund, will release a report showing that Herbalife's business in China is run "as a pyramid scheme," according to a press release issued last week.

Related: Herbalife flexes its muscles in China

Ackman first called Herbalife a pyramid scheme more than a year ago when he disclosed a $1 billion bet the company's stock price will fall. So far, the trade has not worked out. Herbalife shares are up nearly 60% over the past 12 months, leading to significant paper losses for Pershing.

But the decision to open a new front against Herbalife in China suggests that Ackman has no intention of backing down. He told Bloomberg TV in November that he was prepared to "go to the end of the earth" to win his bet.

Ackman argues that Herbalife makes its money by selling products to distributors, who in turn sell to other local sales people, rather than actual end users. He has accused Herbalife of targeting Latinos in the U.S. as an attempt to exploit immigrant communities.

For its part, Herbalife says its business practices are no different than other "multi-level" marketing companies, such as Avon (AVP) and NuSkin (NUS). The company has dismissed Ackman's claims as unfounded and motivated by profit.

But Ackman has used aggressive tactics to draw attention to what he says is "an inherently fraudulent company."

According to a report Monday in the New York Times, he has funded letter-writing campaigns and grass-roots groups to rally support for his cause. He has also lobbied members of Congress, including Senator Ed Markey, a Democrat from Massachusetts, who called on regulators to investigate Herbalife in January after receiving complaints from constituents.

Herbalife noted Ackman's lobbying in a statement Monday.

"Another day, another baseless attack from Bill Ackman," a spokeswoman for the company said. "Having failed to make his case on Wall Street, he took his fight to Washington, DC and the states. Now that those efforts to buy his way to an investigation have been exposed, he is going to China. We are confident in the strength of our consumption based business model in China."

Related: Bill Ackman scales back bearish Herbalife bet

But when it comes to buying influence in Washington, Herbalife appears to be outspending Ackman.

The company, which had $4.8 billion in sales last year, spent nearly $2 million on federal lobbying in 2013, according to filings cited by Reuters. By contrast, Pershing spent $264,000 on lobbyists last year, the report states.

Meanwhile, another big-name hedge fund manager has taken up the other side of Ackman's bet.

Carl Icahn bought a 13% stake in Herbalife in Feb. 2013, not long after Ackman launched his attack. The two traded insults in a memorable exchange on live TV last year.