Herbalife Targeting Immigrants with its Pyramid Scheme !

Chamba SanchezBy Chamba SanchezMay 3, 2017

I was researching for new documentaries a week ago and came across this one, Betting on Zero,  aA documentary about Herbalife. I watched it. I knew that this company was being scrutinized for its business model, but I didn’t know they were preying on Latino immigrants. In light of how this company is aggressively targeting humble immigrants, I was somewhat puzzled that Herbalife’s business and how its strategies have been under the radar of many major Spanish speaking news organization.  This documentary profiles a group of immigrants in Chicago who have been victimized by Herbalife’s ruthless marketing strategies.  These immigrants were easily deceived and lied to by recruiting their family members and close friends. Newspapers reported that 60% of the money that Herbalife makes come from Latinos in the US.

I was shocked witnessing how Herbalife with such an unethical business model has risen and done well.  They have persisted even when it has been exposed many times by major newspapers as to how they have defrauded people.  Any rational being who looks at this company from any angle will conclude that this company truly is fraudulent.

Any federal regulatory agency that monitors these companies would say that if a business entity and those who participate in the organization make money primarily from recruiting people instead of selling goods or services to consumers, this business organization is deemed to be operating a “pyramid scheme.”  Now, how did they get away with this?  Herbalife is annually audited by powerhouse Pricewaterhouse-Cooper one of the most credible and prestigious accounting firms in the world. These accounting firms make sure that everything in these companies is real, legal and ethical so investors and consumers can be protected.

Herbalife has very strong PR and Law departments. This company also hires celebrities and well-known people in political circles. They have hired a soccer player, David Beckham and the big-time soccer player Ronaldo who plays in Europe. They also recruit politicians with a lot of credibilities to promote their products. Former Secretary of State under President Bill Clinton, Madeline Albright, and our very own former Mayor Antonio Villaraigosa to mention some.  These two have consulted or are currently consulting for Herbalife and see no problem with Herbalife defrauding people.

Former Mayor Villaraigosa comes up in this documentary.  He seems indifferent that this company is causing so much pain in our community. He consults for the company, and the company uses him to appease those in our community who question this company’s legitimacy.  Any immigrant knows who this man is, and these poor immigrants feel more comfortable dealing with this company when they see this man working for Herbalife.  It is not hard to see that the man is selling out.  It was disgusting seeing him in this film making the case as to how good it is for our community that this company sells its products to us.

The former mayor argues in this film that our community has an obesity problem and that Herbalife has the solutions for said problem. We might have this obesity problem but what Herbalife does will not do anything to stop it. He conveniently ignored the fact that Herbalife is scamming these poor humble immigrants out of their savings.  Mayor Villaraigosa recently converted himself as a staunch defender of Latinos again.  Of course, he is seeking to become governor of California next year.

Herbalife is a well-established company and is being alleged that it has made this pyramid scheme legal. Yes, this company has everything a legitimate business has, its corporate headquarters are right here in Los Angels and is being led by a CEO, Michael O. Johnson who came from the Disney Company.  In 2011, he was the highest-paid CEO in America.  Mr. Johnson made almost 100 million dollars running this company. Herbalife is also a public company currently being traded on the New York Stock Exchange.
Betting on Zero” is a fascinating documentary in which one of the masters of the universe from Wall Street, Bill Ackman uses his power and resources as a hedge fund manager to bet on Herbalife. In this documentary, a journalist who writes in the financial pages for Bloomberg joined forces with Mr. Ackman to expose this lie to the world.  The former is trying to exercise her journalistic responsibilities while the latter is in it to make a buck.  Not sure what to make of this but it can be argued that at the very least they are trying to get rid of a fraudulent company that has caused so much pain.  At the end of the documentary, the Federal Trade Commission in 2016 came down hard on Herbalife and formally “charged this company with four of unfair, false, and deceptive business practices.” The company was fined with $2oo million and was asked to make major changes to its business model. The company is still operating as nothing happened.

There is no such thing as corporate citizenship any longer. Corporate citizenship is the idea that corporations have a social responsibility to society as a whole. The existence of a company must make the quality of life in communities better.  Better as they have to make principled centered decisions. Their business endeavors must somehow make society better, and that includes a corporation’s investors.

It seems that we are reliving the era of the gilded age when the captains of industries were robber barons who had utter disregard for the welfare of society. Yes, Corporations don’t care about workers and see them as liabilities and subjects of exploitation. We are currently living in a society where very few individuals control obscene amounts of wealth; we have stunning low wage disparity and grinding poverty.  It is hard not to argue that America is not a “government of corporations, by the corporations, and for corporations.  From MCI WorldCom to Enron both of these companies engaged in massive fraud and caused so much damage to their employees, consumers, and investors.

It is easy to cave in to the forces of cynicism when you see people who govern us lying very casually and prominent players in our economic system making money by building companies that cheat people.  But we shouldn’t.

Thank you for reading.

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Works used. 

Betting on Zero. Dir. Theodore Braun. Biltmore Films, 2017.

Brenner, Michael. “Plutocracy in America.”  Huffington Post April 1 2013.  Web. 1st May 2017

Derber. Charles. Corporate Nation:  How Corporations are taking over our lives and what we can do about it. New York:  St. Martin Press, 1998.

Devos, Rich.  Compassionate Capitalism:  People helping people help themselves. New York: Penguin Group, 1993.

Pfeifer, Stuart. “Herbalife hires former L.A. Mayor Antonio Villaraigosa as an advisor.” Los Angeles Times 5 Sept. 2013. Web. 3rd May 2017.

Pfeifer, Stuart. “Latinos crucial to Herbalife’s financial health.” Los Angeles Times 15 Feb. 2013. Web. 3rd May 2017.

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Photos credits:  Photos above were screenshots taken from the documentary listed on the works cited above.

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