Ackman, who has been battling the California-based nutrition company for 19 months and has a $1 billion bet it will eventually go bust, told 500 people in a New York auditorium - and thousands watching the webcast - that Herbalife is a criminal enterprise that targets minorities, counts nonexistent

customers, and breaks labor laws.

Ackman's $14.7 billion hedge fund Pershing Square Capital Management unveiled its $1 billion short bet against Herbalife in December 2012, calling the company a pyramid scheme where members earn more money from recruiting than by actually selling products to end users.

Herbalife has rejected the claims.

In his three-hour presentation, Ackman said officials are moving too slowly against Herbalife. The Securities and Exchange Commission, the Federal Trade Commission, and the FBI are among those probing the company's business practices.

With this presentation, which he billed as the most important in his career, he shifted his appeal to investors, saying that by laying out all of the evidence against Herbalife he was giving them a reason to start selling.

Ackman said he hopes to cause the company to collapse and called for it to be shut down.

Herbalife Chief Financial Officer John DeSimone on Tuesday said Ackman's claims were fabricated. He added that Herbalife had commissioned a study that vindicated the company.

Herbalife shares rose 25 percent to $67.77, far exceeding losses on Monday after Ackman told CNBC he would deal a "death blow" to the company. Trading volume in Herbalife was the heaviest since February 2013.

OVER-PROMISED, UNDER-DELIVERED

"Unfortunately, Bill over-promised and under-delivered on this presentation," said Vijay Marolia, a fund manager at Regal Point Capital Management. Several other hedge fund managers said that they were recent buyers of the stock, and were not convinced to sell by Ackman's presentation.

While there have been some bright moments for Ackman's Herbalife bet, overall it has not fared well. Since the end of 2012, Herbalife shares have roughly doubled and Ackman's billionaire rivals, including Carl Icahn and George Soros, have purchased Herbalife shares.

Herbalife's move higher on the stock market on Tuesday likely triggered a chain reaction as short-sellers covered their losing bets, according to traders.

“All those people who were short yesterday scrambled to cover and then it became a mad rush,” said Chris Wang, portfolio manager at SYW Capital Management LLC in New York, who does not have a position in the stock.

"FREE LABOR"

Ackman's presentation on Tuesday focused largely on so-called nutrition clubs that serve Herbalife's drinks - aloe, tea and shakes. Ackman said Herbalife uses the clubs as recruiting centers where people, often Latinos, have to work as unpaid trainees before being allowed to try to rise to distributor posts.

Ackman said his firm spent $50 million on investigating this business and that his researchers had audio, video and other data after having visited 240 of these clubs.

"They are not selling weight loss in these clubs, they are selling business opportunities," Ackman said. "This is all free labor, totally illegal," he said.

He said that Herbalife booked people who showed up at the nutrition clubs as customers even if they didn't pay for Herbalife products. "I think there is an armory of weaponry in the smoking gun department," Ackman said.

Hours into the presentation, Ackman's voice cracked and he appeared to be choking back tears when he recounted how his great grandfather came to America to pursue a dream. He said Herbalife Chief Executive Michael Johnson was a "predator" who tarnished that dream.

Herbalife countered when its CFO DeSimone said in an interview on Fox Business News that Ackman's claims were "completely false" and said that Ackman was operating out of self-interest.

"There is certainly an economic incentive there," he said, referring to Ackman's $1 billion bet against the company.

DeSimone added that Herbalife had commissioned a former FTC economist to analyze its business, and that the results of that study showed the company was breaking no laws.

(Writing and additional reporting by Richard Valdmanis and David Gaffen; Editing by Nick Zieminski and Phil Berlowitz)

By Svea Herbst-Bayliss and Ryan Vlastelica