Oct 18 Latino civil rights activists on Friday
appealed to California's attorney general to probe the marketing
practices of Herbalife as the nutrition and supplements
company hosted a sales event for thousands of Latino
Dozens of protesters with signs saying "Stop Exploiting Us"
stood outside the Los Angeles convention center to urge Kamala
Harris, the state's attorney general, and Bob Lee, the Santa
Cruz District Attorney, to investigate what they call predatory
business practices and review how the $6.7 billion company
"We are asking Attorney General Harris to help us protect
vulnerable, low income Latinos and other minorities from these
schemes that have cost people their life savings," said Angelica
Salas, Executive Director, Coalition for Humane Immigrant Rights
of Los Angeles.
They were meeting nearby the city's convention center where
Herbalife was hosting 12,000 Latino distributors at its
Extravaganza Latina sales event.
Some prominent Wall Street investors as well as certain
civil rights groups have accused Herbalife, which relies on
thousands of independent distributors to sell its products, of
being a pyramid scheme, something the company denies.
Pyramid schemes, where operators typically try to make money
by recruiting new members who pay fees rather than relying only
on the sale of goods, are illegal in California. The Attorney
General's office has a section on its Web site alerting people
to how they differ from legal multi-level-marketing schemes.
Harris' office did not return a call seeking comment.
Herbalife spokeswoman Barbara Henderson did not return phone
calls or emails seeking comment.
The company often woos potential distributors with stories
of big paychecks that lead to luxury cars and super-sized
mansions and a carefree lifestyle. In reality more than
two-thirds of the distributors made no money at all last year,
said Brent Wilkes, national executive director of the League of
United Latin American Citizens.
"If Herbalife's executives refuse to implement the necessary
reforms, at the very least they should stop targeting the
family-oriented and trusting Latino community with their
deceptive business practices," he said.
Outside the convention center where Herbalife hosted its
event the atmosphere became testy when some distributors spat at
some of the community activists and when Herbalife CEO Michael
Johnson arrived, several eye witnesses said.
"Johnson approached us and was very confrontational," said
Randy Fox, a regional director for LULAC, adding "he told us
'You don't know the facts. We don't want to hear your lies. This
is all lies. You should be ashamed of this." Herbalife spokesman
James Golden declined to comment on the matter.
For the company, the sales event in Los Angeles caps a busy
week when a federal judge denied Herbalife's motion to drop
charges brought by a former distributor who accused it of
running an alleged pyramid scheme.
The ruling marked a victory for the plaintiff, Dana Bostick,
as it was the first court case brought against the company since
it captured the public attention of Wall Street where prominent
billionaire investors are battling over its future.
Hedge fund manager William Ackman has called the company a
pyramid scheme and predicted its stock price will eventually
fall to zero. So far he has lost hundreds of millions of dollars
on the bet. Billionaire Carl Icahn has bet that the company's
share price will climb. Shares closed the week at $65.25,
leaving them up 98 percent for the year to date.