pershing square capital - robin hood in reverse
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Pershing Square Capital Management, L.P.
Robin Hood in Reverse
November 22, 2013
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Disclaimer
Pershing Square Capital Management, L.P. (“Pershing Square”) is an investment adviser to funds that are in the business of bu ying and selling securities and other
financial instruments. Pershing Square currently maintains a substantial short position in the common stock of Herbalife Ltd. (“Herbalife”).
Pershing Square will profit i f the trading price of Herbalife common stock declines and will lose money if the trading price of common stock of Herbalife increases.
Pershing Square may change its views about or its investment positions in Herbalife at any time, for any reason or no reason. Pershing Square may buy, sell, cover or
otherwise change the form or substance of any of its investments related to Herbalife at any time for any reason or no reason. Pershing Square disclaims any
obligation to notify the market or any other party of any such changes.
The information and opinions expressed in this presentation (the “Presentation”) are based on publicly available information about Herbalife and other companies.
Pershing Square recognizes that there may be non-public information in the possession of Herbalife or others that could lead Herbalife or others to disagree with
Pershing Square’s analyses, conclusions and opinions.
The Presentation includes forward-looking statements, estimates, projections and opinions prepared with respect to, among other things, certain legal and regulatoryissues Herbalife faces and the potential impact of those issues on its future business, financial condition and results of op erations, as well as, more generally,
Herbalife’s anticipated operating performance, access to capital markets, market conditions, assets and liabilities. Such statements, estimates, projections and
opinions may prove to be substantially inaccurate and are inherently subject to significant risks and uncertainties beyond Pershing Square’s control.
Although Pershing Square believes the statements it makes in the Presentation are accurate in all material respects and do not omit to state material facts necessary
to make those statements not misleading, Pershing Square makes no representation or warranty, express or implied, as to the accuracy or completeness of those
statements or any other written or oral communication it makes with respect to Herbalife and any other companies mentioned, and Pershing Square expressly
disclaims any liability relating to those statements or such communications (or any inaccuracies or omissions therein). Thus, shareholders and others should
conduct their own independent investigation and analysis of those statements and communications and of Herbalife and other companies to which those statements
or communications may be relevant.
The statements Pershing Square makes in the Presentation are not investment advice or a recommendation or solicitation to buy or sell any securities. Except where
otherwise indicated, the Presentation speaks as of the date hereof, and Pershing Square undertakes no obligation to correct, update or revise those statements or to
otherwise provide any additional materials. Pershing Square also undertakes no commitment to take or refrain from taking any action with respect to Herbalife or any
other company.
As used herein, except to the extent the context, otherwise requires, Pershing Square includes its affiliates and funds it ma nages or advises and their respective
partners, directors, officers and employees.
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SEC Recent Actions on Pyramid Schemes
In January 2013, the SEC’s enforcement unit opened an
investigation into Herbalife(1)
On October 17, 2013, the SEC announced charges and seized the
assets of a worldwide pyramid scheme operating under businessnames “CKB” and “CKB168”(2)
The SEC has a long history of prosecuting pyramid schemes,including the landmark 1973 action against Koscot , and hasprosecuted two pyramid schemes in the last 18 months(3)
2
(1) Source: Ben Protess & Michael J. De La Merced, S.E.C. Opens Investigation Into Herbalife, NEW YORK TIMES, January 9, 2013 (http://dealbook.nytimes.com/2013/01/09/s-e-c-opens-investigation-into-herbalife/?_r=0)
(2) Source: SEC Press Release (Oct. 17, 2013) (http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539880547(3) SEC v. Koscot Interplanetary , Civ. A. No. 17134 (N.D. Ga. 1973); SEC Press Release (Oct. 2013) (available at https://www.sec.gov/News/PressRelease/Detail/Press
Release/1370539880547); SEC Press Release (Aug. 2012) (available at https://www.sec.gov/News/PressRelease/Detail/PressRelease/1365171483920
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On October 17th, 2013, the SEC issued an
Investor Alert warning investors to bewareof “pyramid schemes posing as multi-level
marketing programs”
3
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The SEC Investor Alert Identified Seven Hallmarks
of a Pyramid Scheme
Source: SEC Press Release and Investor Alert (Oct 17, 2013), available at https://www.sec.gov/investor/alerts/ia_pyramid.htm
Investor Alert: Beware of Pyramid SchemesPosing as Multi-Level Marketing Programs
The SEC's Office of Investor Education and Advocacy is issuing this Investor Alert to warnindividual investors about pyramid schemes, a type of investment scam that fraudsters often pitch
as a legitimate business opportunity in the form of multi-level marketing programs.
4
Have you ever been tempted by an advertisement or offer to make "easy money" or "onlineincome" out of your own home? Multi-level marketing ("MLM") programs are promoted throughInternet advertising, company websites, social media, presentations, group meetings, conferencecalls, and brochures. In an MLM program, you typically get paid for products or services that youand the distributors in your "downline" ( i.e., participants you recruit and their recruits) sell to others.However, some MLM programs are actually pyramid schemes -- a type of fraud in whichparticipants profit almost exclusively through recruiting other people to participate in the program.
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Hallmark #1: Emphasis on Recruiting
5
“Emphasis on recrui t ing. If a program primari ly focuses on recrui t ing
oth ers to join the program for a fee, it is l ikely a py ramid scheme. Be
skept ical if you wi l l receive more com pensat ion fo r recrui t ing others
than for prod uct sales .”
- SEC Investo r Alert, Octob er 17, 2013
Source: SEC Press Release and Investor Alert (Oct. 17, 2013) (available at https://www.sec.gov/investor/alerts/ia_pyramid.htm)
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It’s All About Recruiting
6
Source: Herbalife’s 2011 Extravaganza, Las Vegas, NY (October 26-29, 2011) (available at http://www.youtube.com/watch?v=cVbd8bw4MlQ)
VIDEO
Susan Peterson – Founder’s Circle Member, Herbalife’s 2011 Extravaganza
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It’s All About Recruiting
7
Source: Herbalife’s 2011 Extravaganza, Las Vegas, NY (October 26-29, 2011) (available at http://www.youtube.com/watch?v=cVbd8bw4MlQ)
“If you want to m ove the check, you need to f ind other
people that want to make money and represent the
Herbal i fe products and Herbal i fe opportunity.”
Susan Peterson – Founder’s Circle Member, Herbalife’s 2011 Extravaganza:
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“Promises of hig h returns in a short t ime period. Be leery of pi tches forexponent ia l returns and ‘get r ich quick’ cla ims . High returns and fast
cash in an MLM program may suggest that comm issions are being paid
out o f money from new recrui ts rather than revenue generated b y
product sales .”
- SEC Inv esto r Alert, Oct ob er 17, 2013
Hallmark #2: Promises of High Returns in a Short
Time Period
8
Source: SEC Press Release and Investor Alert (Oct. 17, 2013) (available at https://www.sec.gov/investor/alerts/ia_pyramid.htm)
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Senior Herbalife Distributors Lead Recruits to Believe They
Can Make Hundreds of Thousands in Short Order
Source: Doran Andry, Financial Success Systems Fi rst Package video
VIDEO
Doran Andry – Chairman’s Club Member
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Current and Former Board Members Tell Recruits That
Herbalife is an Opportunity to Make Money Quickly
10
Source: Promotional video for online recruiting business Success Connection (available at http://www.youtube.com/watch?feature=player_embedded&v=kKq8IhJ_dMI)
VIDEO
Leslie Stanford: Former Herbalife Board Member and Current Founder’s Circle Member
John Tartol: Herbalife Board Member and Chairman’s Club Member
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Hallmark #3: Easy Money or Passive Income
“Easy money or passive incom e. Be wary if you are offered
com pensat ion in exchange for l i t tle wo rk such as making payments,
recrui t ing others, and p lacing advert isements .”
- SEC Invest or A lert, October 17, 2013
11
Source: SEC Press Release and Investor Alert (Oct. 17, 2013) (available at https://www.sec.gov/investor/alerts/ia_pyramid.htm); Financial Success Systems ‘Herbalife Success University’ Presentation(Module 1)
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Senior Herbalife Distributors Tell Recruits They
Can Earn Millions in Passive Income
12
VIDEO
Doran Andry, Again – Chairman’s Club Member
Source: Doran Andry, Financial Success Systems Fi rst Package video
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Hallmark #4: Buy-in Required
Herbalife requires a “buy-in” via an Herbalife Member Pack for $57.75 or $89.55 to receivea discount and the option to run the business. To advance quickly and receivecommissions, distributors must also spend ~$3,000 - $4,000 purchasing inventory to qualifyas a Supervisor, in order to be eligible to earn recruiting rewards.
13
“Buy -in required. The goal of an MLM pro gram is to sel l produ cts. Be
careful i f you are requ ired to pay a buy-in to part icip ate in the prog ram,
even if th e buy -in is a nom inal one-t ime or recurrin g fee (e.g., $10 or
$10/month ).”
- SEC Inv esto r Alert, Octob er 17, 2013
Source: SEC Press Release and Investor Alert (Oct. 17, 2013) (available at https://www.sec.gov/investor/alerts/ia_pyramid.htm)
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Hallmark #5: Complex Commission Structure
“Complex commission structure. Be con cerned unless comm issions are
based on prod ucts o r services that you or you r recrui ts sel l to people
outs ide the program. If you do not un derstand how yo u w i l l be
com pensated, be caut ious .”
- SEC Inv esto r Alert, Octob er 17, 2013
126 Pages of Text and Forms
More than 150 Rules
More than 60,000 words 11+ Levels of Distributors
Five Different Forms ofCompensation
14
Minimal Marketing Advice
Largely Unintelligible
Frequently Revised &Supplemented
Herbalife Sales and Marketing Plan
Source: SEC Press Release and Investor Alert (Oct. 17, 2013) (available at https://www.sec.gov/investor/alerts/ia_pyramid.htm); Herbalife Sales & Marketing Plan; see li nk athttp://factsaboutherbalife.com/wp-content/uploads/2012/12/Marketing-Plan-and-Business-Rules-2012.pdf
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“No genuine products or service. MLM prog rams invo lve sel l ing agenuine produ ct or service to people wh o are not in th e program.
Exercise caut ion i f there is no u nder ly ing prod uct or s ervice being sold
to o thers, or i f w hat is being sold is speculat ive or appears
inappropr iately pr iced .” (emphasis added)
- SEC Inv esto r Alert, Octob er 17, 2013
Hallmark #6: No Genuine Products or Service…Sold to
People Who Are Not in the Program / Inappropriately Priced
In Herbalife’s case:
No empirical evidence of retail sales outside the program
Commodity products with highly inflated suggested retail prices
15
Source: SEC Press Release and Investor Alert (Oct. 17, 2013) (available at https://www.sec.gov/investor/alerts/ia_pyramid.htm); see materials collected and analyzed in Pershing Square Presentation,Who Wants to be a Millionaire? (December 20, 2012)
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Hallmark #6 (Cont’d): “Inappropriately Priced” Products
Retail Price Per Multivitamin Tablet (1)
16
$0.06
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.26 = 4x Centrum
(1) HLF Source: Herbalife U.S. Product Price List (11-2013). Centrum source: Walmart.com (11-2013)).
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Hallmark #7: No Demonstrated Revenue from Retail
Sales
“No demonstrated revenue from retail sales. Ask to see documents,such as f inancial statements audi ted b y a cert i f ied pub l ic accountant
(CPA), showin g that the MLM company generates revenue from sel l ing
i ts produ cts or s ervices to people outside the program .”
- SEC Inv esto r Alert, Octob er 17, 2013
17
Let’s see how Herbalife has answered this question
Source: SEC Press Release and Investor Alert (Oct. 17, 2013) (available at https://www.sec.gov/investor/alerts/ia_pyramid.htm)
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Retail Sales: The Big Question
“So we don’t have an exact
percentage David, because wedon’t have visibility to that level
of detail. . . . So, well, again,going back to our 70% rule, webelieve that it’s that 70% or
potentially in excess of that.”
-Herbalife President Des Walsh
18
David Einhorn:“What is the percentage that is actually sold to
consumers that are not distributors?”
Source: Herbalife Q1 2012 earnings call
VIDEO
Herbalife Q1 2012 Earnings Conference Call – May 1st, 2012
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The Day After Einhorn Asked His Question, Herbalife
Issued an 8K Changing Walsh’s Answer
19Source: Herbalife Report on Form 8-K, filed May 2, 2012
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The Day After Einhorn Asked His Question, Herbalife
Issued an 8K Changing Walsh’s Answer
20Source: Herbalife report on form 8-K, filed May 2, 2012, at 2
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0.0
50.0
100.0
150.0
200.0
$40
$45
$50
$55
$60
$65
$70
$75
Apr 30 May 1 May 2 May 3
V o l u m e ( m m S h a r e s )
P r i c e
Volume Price
The Market Did Not Like This Answer
21
$70.32
$46.20
34% decline
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The FTC, SEC, the Court s, and even Herbali fe itself have all
recent ly reaff i rmed the cr i t ical role of retai l sales to cus tom ers
outs ide the dist r ibut ion netwo rk in dist inguish ing a legi t imate MLM
from a pyramid scheme
22
Why Did the Market React So Negatively
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The FTC Reaffirms the Critical Role of Retail Sales
Multilevel Marketing
“Not all multilevel marketing plans are legitimate. If the money you makeis based on your sales to the public, it may be a legitimate multilevelmarketing plan. If the money you make is based on the number ofpeople you recruit and your sales to them, it’s not. It’s a pyramidscheme. Pyramid schemes are illegal, and the vast majority ofparticipants lose money.”
- FTC Website, Bureau of Consumer Protection – Business Center
23Source: http://www.business.ftc.gov/documents/inv08-bottom-line-about-multi-level-marketing-plans
FTC Facts for Consumers: Bottom Line About Multilevel Marketing Plans
and Pyramid Schemes (November 2012)
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Source: Complaint in FTC v. Fortune Hi-Tech Marketing, Inc., No. 13CV578 Dkt #4 (N.D. Ill. January 24, 2013) (emphasis added). 24
Fortune Hi-Tech Marketing Complaint
On January 24, 2013, Fortune Hi-Tech Marketing was shut down by the FTC
and State Attorneys General from Kentucky, Illinois and North Carolina onthe ground that it was a pyramid scheme. In its complaint, the governmentnoted the lack of retail sales outside the distributor network
The FTC Reaffirms the Critical Role of Retail Sales
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A Federal Judge Reaffirms the Critical Role of
Retail Sales
Source: Bostick v. Herbalife International of American, No 2:13-cv-02488-BRO-RZ, Dkt #40, at 9 (C.D. California October 11, 2013)
“Although [Herbalife] contend[s] that distributors should be classified asultimate users, Omnitrition points out that “[i]f Koscot is to have any teeth, [asale for a distributor’s personal use] cannot satisfy the requirement that salesbe to ‘ultimate users’ of a product.” Id. at 783. Therefore, downline
distributors are not ultimate users for purposes of the second elementof the Kosco t test.” (bold emphasis added)
25
Order Denying Herbalife’s Motion to Dismiss pg. 9)
In the class-action, Bostic k v. Herbal i fe, Herbalife argued that distributors
should be classified as ultimate users. On October 11, 2013, FederalDistrict Court Judge O’Connell denied Herbalife’s motion to dismiss and
stated that distributors are not ultimate users.
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“. . . Regulations applicable to network marketing organizations
generally are directed at preventing fraudulent or deceptive schemes,often referred to as “pyramid” or “chain sales” schemes, by ensuring
that product sales ultimately are made to consumers and thatadvancement within an organization is based on sales of theorganization’s products rather than investments in the organization or
other non-retail sales-related criteria.”
Even Herbalife Admits That Retail Sales Are Crucial
26
Herbalife 2012 10K – Risk Factors
Source: Herbalife 2012 Report on form 10-K, filed February 19, 2013, at 30
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Herbalife Requires Distributors to Keep Detailed
Retail Sales Records
Source: Herbalife Sales & Marketing Plan at 71
Required Information:- Name- Address- Telephone no.- Products sold- Sales price
28
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Herbalife’s Retail Order Form
29Source: Herbalife Sales & Marketing Plan at 42
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30
What does management have tosay about this critical issue?
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CEO Michael Johnson Interview on CNBC – December 19, 2012
Source: http://video.cnbc.com/gallery/?video=3000136542ar
VIDEO
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CEO Michael Johnson Answers The Same Question…
32
December 19, 2012:
CNBC: “What % of your sales areoutside that distribution network?”
Johnson: “90%”
CNBC: “So the vast majority?”
Johnson: “Absolutely”
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33
CEO Michael Johnson Interview on CNBC – January 10, 2013
Source: http://video.cnbc.com/gallery/?video=3000140236
VIDEO
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…But That Answer Was Actually a “Misstatement”
34
If 90% of distributors are buying for themselves, clearly these are notretail sales to customers outside the program
January 10th, 2013 (22 Days Later), Michael Johnson Says:
“It was a misstatement. 90% of ourdistributors - ok - who are buying ourproduct - let me just try to clarify this - buy
it for one reason, and they buy it for self-consumption, and that was amisstatement on that day, I was kind ofhyped up that day, wasn’t I?”
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35
Unwilling to provide actual retail sales
data, Herbalife says that people are
just confused
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36
CEO Michael Johnson Interview on CNBC – December 19, 2012
Source: http://video.cnbc.com/gallery/?video-3000136542
VIDEO
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“[A] part of the distributors is described ascustomers . . . Obviously, this is not serious.” -Commercial Court in Belgium
Source: Test-AanKoop v. Herbalife International Belgium [Comm. Ct Brussels], November 23, 2011, AR 2004/7787, No. JC-DC / 27 [Jee] (Belg.), sli p op. at 12.
Courts Have Rejected Herbalife’s Claim that its
Distributors are Retail Customers
37
On November 23, 2011, the Belgian Commercial Court found Herbalife to be
a pyramid scheme, rejecting Herbalife’s claim that distributors are simplymisnamed
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39
What excuses does Herbalife give fornot collecting retail sales data?
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In June 2009 Herbalife Said It Doesn’t Collect
Retail Sales Data Because of Price-Fixing Concerns
Collecting proof of actual retail sales is not illegal and does notcreate anti-trust risk
Source: Transcript of hearing on Motions for Summary Judgment in Herbalife v. Ford, No. 07 civ. 2529, Dkt #300 at 13 (C.D. Cal., June 1, 2009) 40
Herbalife’s Attorney in Summary Judgment Argument – June 1, 2009
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Herbalife Has a New Excuse
Source: http://video.cnbc.com/gallery/?video-3000140234
VIDEO
President Des Walsh interview on CNBC – January 10, 2013
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Herbalife Claims Privacy Concerns Prevent
Collecting Retail Sales Data
42
How is Herbalife responding to the SEC October 2013 Investor Alert?
Source: SEC Press Release and Investor Alert (Oct. 17, 2013) (available at https://www.sec.gov/investor/alerts/ia_pyramid.htm)
SEC Investor Alert Hallmark:
“ No demon strated revenue from retai l sales. Ask to see documents,
such as f inancial statements audi ted b y a cert i f ied p ubl ic accountant
(CPA), show ing that the MLM company generates revenue from sel l ing
i ts produ cts or s ervices to people outside the program .”
- SEC Invest or A lert, October 17, 2013
Herbalife responds to this simple question with misstatements and
misdirection
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To collect two years of Retail Order Forms from all of Herbalife’s
distributors
To hire an independent big four accounting firm to verify and validatethe retail sales data
To submit the results of the data and analysis directly to the various
regulators (which would protect the privacy of Distributors)
Herbalife need only:
(1) Direct Distributors to cooperate and
(2) Inform them that their records will be submitted to the government,which means the records must be authentic and truthful*
Pershing Square Offers to Pay the Cost:
*Source: 18 U.S.C. §1001. Statements or entries generally
(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and
willfully - (1) falsi fies, conceals, or covers up by any trick, scheme, or device a material fact; (2) makes any materially fals e, fictitious, or fraudulent statement or representation; or (3) makes or uses
any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined under this title, imprisoned not more than 5 years or, if the
offense involves international or domestic terrorism (as defined in section 2331), imprisoned not more than 8 years, or both. If the matter relates to an offense under chapter 109A, 109B, 110, or
117, or section 1591, then the term of imprisonment imposed under this section shall be not more than 8 years.
43
Herbalife Exhibits All Seven SEC Hallmarks of a
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Herbalife Exhibits All Seven SEC Hallmarks of a
Pyramid Scheme
44
Emphasis On Recruiting
Promises Of High Returns In A Short Time Period
Easy Money Or Passive Income
Buy-In Required
Complex Commission Structure
No Genuine Product or Service…Sold to People Who
Are Not in the Program / Inappropriately Priced
No Demonstrated Revenue from Retail Sales
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Herbalife says nutrition clubs are
proof of retail sales
Let’s take a look at what’s really
going on…
45
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The Reality of New York City Nutrition Clubs
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Source: CNNMoney interview aired on January 11, 2013, available at http://money.cnn.com/2013/01/11/smallbusiness/herbalife-network/
VIDEO
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Nutrition Club Rules Make Retail Sales Not Viable
No external displays of the Herbalife’s name or logo
Must cover windows
No “Open / Closed” sign
No advertising or promotionNot allowed to attract customers or walk-ins
Must serve a shake, aloe water and tea to every “Member”
Only complimentary offerings of products
Can charge membership fees to cover operating costs; product costs may notbe recovered
Customers not allowed to carry out food unless in a small, unmarkedcontainer
47Source: Herbalife Sales & Marketing Plan at 74, 101 - 115
According to Herbalife’s rules, “Nutrition Clubs are social gatherings…not retail
stores or outlets, nor are they restaurants or carry-out establishments”
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48
Herbalife Claims its Competition Is Fast Food
Herbalife says its competition is McDonald’s and KFC
“You’re not going to like my answer on competition because
strategically we view the competition as fast food… It is the steal a
meal a day from fast food. It is no t to go after oth er supplement
companies. It’s to go after McDonald’s, to go after KFC.”
-John DeSimone, CFO, September 7th, 2011
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A Map of Queens, New York
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McDonald’s Are Evenly & Rationally Distributed
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But Why Are Nutrition Clubs Clustered In Two
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But Why Are Nutrition Clubs Clustered In Two
Sections of Queens?
51
Interestingly Grameen America’s Two Offices in
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Interestingly, Grameen America’s Two Offices in
Queens are in the Heart of the Clusters
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Who are the victims?
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Herbalife Targets Vulnerable, Low-Income Minorities
“[M]any Latino leaders [are] increasingly concerned with Herbalife's
predatory business practices and how the company targets the Latino
community in a methodical and calculated manner…
“The scale of the scheme is breath-taking. There are 550,000Herbalife distributors in the United States. Somewhere between 60 to 83
percent of them are Latino. 300,000 to 400,000 Latino distributors will quit
this year alone only to be replaced by another 300,000 to 400,000 new Latino
distributors. If left unchecked, Herbalife could recruit, defraud and dispose of
as many as 4 million Latino distributors over the next 10 years.”
Source: http://www.huffingtonpost.com/brent-a-wilkes/herbalife-a-pyramid-scheme_b_4220426.html
Numerous Voices Are Calling for an Investigation of
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55
Numerous Voices Are Calling for an Investigation of
Herbalife
Rep. Linda Sanchez (CA-38)Rep. Loretta Sanchez (CA-46)
Rep. Michelle Lujan Grisham (NM-1)
Neil M. O'Leary, Mayor of Waterbury, CT
State Senator Adriano Espaillat, NY SD-31
Ofelia Hernandez, Huntington Park, CA Councilor
Chris Garcia, Cudahy, CA Vice MayorJorge Morales, South Gate, CA Councilor
Aide Castro, Lynwood, CA Councilor
Denise Robles, Commerce City, CA Councilor
Julissa Ferreras, NYC Councilor District 21
Melissa Mark-Viverito, NYC Councilor, District 8
Tito Jackson, Boston City Councilor, District 7 55
Herbalife Asks Distributors to Write to Their Local
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Herbalife Asks Distributors to Write to Their Local
Member of Congress in Support of Herbalife
“I find the targeting of Distributors by ethnicity offensive on many levels and thesuggestion that Herbalife takes advantageof any Distributor to be simply false. AtHerbalife, we strive to change people’s
lives by providing the best nutritionalproducts and the best business opportunityto ALL”
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57
Herbalife Targets Ethnic Affinity Groups
From Herbalife’s 2010 Investor Presentation
Source: Herbalife 2010 investor day presentation
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58 ________________________________________________
Source: Herbalife flyer.
Herbalife Targets African Americans
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59Source: Herbalife Today (magazine published by Herbalife)
Herbalife Targets Latinos
Based on Herbalife’s Own Reported Data What
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Based on Herbalife s Own Reported Data, What
are a Distributor’s Chances of Success?
88% of all distributors receive no commissions from Herbalife
Even among “Sales Leaders” (who are pressured to invest~$3,000 - $4,000 purchasing inventory in order to be eligibleto earn recruiting rewards), half received no commissionsand 95% averaged commissions of only $8 per week beforeexpenses
The top 1% of distributors received 87% of all commissions
According to Herbalife’s most recent U.S. Statement of Average
Gross Compensation, the real facts are:
Source: Herbalife Statement of Average Gross Compensation of U.S. Distributors; Pershing Square Presentation, Who Wants to be a Millionaire
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61
Ana Maria Archila
Co-Executive Director, Make the
Road New York
Make the Road New York’s mission is to build the power of Latino
and working class communities to achieve dignity and justicethrough organizing, policy innovation, transformative education,and survival services.
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Make The Road Video