| BOSTON, March 9
BOSTON, March 9 Hedge fund manager William
Ackman, who is betting $1.16 billion that Herbalife is a fraud,
spent $264,000 last year on lobbyists to press his case against
the company, according to government documents filed in recent
That amount is dwarfed by the nearly $2 million Herbalife
spent in 2013 on federal lobbying as the nutrition and
weight loss company fought the billionaire investor's claims it
runs a pyramid scheme. In an illegal pyramid scheme members earn
more for recruiting new members into the scheme than for selling
the products outside the network.
Ackman's $12 billion Pershing Square Capital Management
hired three lobbyists in 2013, marking the first time ever that
the New York-based hedge fund has spent money on Washington
lobbyists, data from the United States Senate Disclosure Act
In October Ibarra Strategy Group began working for Pershing
Square and earned $30,000 for the year, the filingshows.
The group, founded by Mickey Ibarra, a former Director of
Intergovernmental Affairs under President Bill Clinton,
specializes in Latino outreach.
Ackman has accused Herbalife of unfairly targeting
minorities. Civil rights group League of United Latin American
Citizens, which has asked California's Attorney General to probe
Herbalife, echoed the fund manager's accusations. Herbalife said
last month that it does not target members of minorities or low
The battle for the future of Herbalife is heating up this
year with each side trying to press its case with Washington
lawmakers as well as regulators, who may ultimately control the
In the last days, the Securities and Exchange Commission and
the Federal Trade Commission refused to tell U.S. Senator Edward
Markey, who asked them to probe the company, what they were
doing on Herbalife. But each offered plenty of examples of
having shut down illegal businesses before.
SEC chair Mary Jo White, who last year touted the benefits
of shareholder activism, said the SEC's Enforcement Division has
previously probed whether statements made about a business are
"materially false or misleading, including statements regarding
the compensation levels."
Ackman has said that 88 percent of Herbalife distributors
earn nothing. That stands in stark contrast to some Herbalife
distributors' testimonials where they tout lavish lifestyles as
an incentive for others to sign up. Herbalife has said
distributors results' depend on time, energy and dedication.
Ackman has forecast that Herbalife's share price will
plummet to zero amid regulators' scrutiny but so far the fund
manager is in the red on the bet, as Herbalife shares have
climbed 61 percent in the last year. Since January, the shares
have lost ground however, falling 17 percent.
Pershing Square also paid $84,000 to Moffett Group, run by
former U.S. Representative Toby Moffett, who promises to bring
clients' messages to the highest levels in Washington.
The bulk of its lobbying budget, $150,000, went to Wexler &
Walker Public Policy Associates, which describes itself as a
full service government affairs firm.
During the same year, Herbalife spent at total $1.89 million
on lobbying, according to public data from the Center for
Herbalife paid $250,000 to government relations firm Downey
McGrath, which counted Boeing, Microsoft and Time Warner among
its past clients.
IBC earned $30,000 from Herbalife last year while $140,000
went to Ogilvy, $160,000 was paid to Podesta Group and $40,000
went to Glover Park Group.
Herbalife also spent $1.27 million on lobbying on its own
Separately the company made a $10,000 donation last year to
Democratic Attorneys General Association, according to the
Center for Responsive Politics. Pershing Square did not donate
to this group. California's Attorney General, Kamala Harris, the
person the Latin civil rights group LULAC last year asked to
probe Herbalife is a Democrat.