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Death and Denial at Herbalife

The Untold Story of Mark Hughes' public image, Secret Vice and Tragic Destiny

February 18, 2001|MATTHEW HELLER | Matthew Heller's last story for the magazine was a profile of St. John Knits' Kelly Gray

On one trip to Beverly Hills, Mark inspired Ronald Reagan, who had recently completed his second term as governor of California, to part with $500. On a visit to a Beverly Hills lawyer's office, he got a rude reception. "The lawyer grabbed him by the collar, threw him out the door, and said, 'I don't see anyone without an appointment,' " says former Herbalife corporate counsel Perry Turner. Undaunted, Mark found a pay phone in the lobby of the building and made an appointment. The lawyer, admiring his chutzpah, duly opened his wallet.

Mark had found his calling as a salesman. "He could project his energy and feelings tremendously," says Rosen. "He was a star at it." Such a star, in fact, that he stayed on for a while as a staff member at CEDU after turning 18.

Like the other students, Mark was allowed to keep 5% of the money he raised. When he left CEDU, he was eager to apply his new skills and add to his bank balance. "I asked him, 'What did the program do?' " recalls friend Duane Livingston. "He said, 'They help you realize your goals. My big goal is I always wanted to be rich.' "

In 1976, Mark began selling Slender Now diet products for Seyforth Laboratories, a multilevel marketer, becoming one of its top 100 earners. After Seyforth collapsed in 1979, he sold exercise equipment and weight-control products for Golden Youth, another direct-sales outfit. By the time Golden Youth, too, went out of business, Mark was ready to start his own operation that would combine the Eastern philosophy of herbal medicine with the vitamin and mineral technology of the West. With Slender Now manufacturer Richard Marconi, he developed a line of products that promised "100% Satisfaction Guaranteed or Your Money Back." In February 1980, the 24-year-old entrepreneur--now Mark Reynolds Hughes, having taken his mother's maiden name--unveiled Herbalife.

The products weren't cheap. A weight-loss program alone cost about $30 a month, and, purchased at list price, the full line of vitamin supplements and diet powders would cost about 10 times as much. But Hughes had a way around that. Customers who became distributors would get a minimum 25% discount on everything they bought in lieu of the money-back guarantee; with that discount, you could make a profit selling products to others. You could even get commissions by recruiting other salespeople. The bigger the organization you built, the bigger the payoff.

The payoff for Herbalife, which didn't have to worry about sales-force overhead, was dramatic. In its first five years, sales soared from $386,000 to $423 million, an increase of more than 100,000%; the company progressed from the wig plant to a Culver City industrial complex to a high-rise near Los Angeles International Airport.

Hughes, a multimillionaire well before his 30th birthday, progressed quickly to gold rings and a Cartier watch, to custom-made cuff links and expensive suits, to two Rolls-Royces. He bought a $7-million mansion in Bel-Air from singer Kenny Rogers. Having just divorced his first wife, former Miss Santa Monica Kathryn Whiting, he wed former Swedish beauty queen Angela Mack in 1984, hiring Wayne Newton to entertain their 300 wedding guests.

At rally after rally--many of which were broadcast as infomercials over the USA Cable Network and by TV stations across the country--Hughes projected a boyish enthusiasm and charisma, his thick Prince Valiant hairstyle more appropriate to a rock 'n' roller than a corporate executive. And he perfected the story he had been telling since he started Herbalife, the new story of who he was.

Hughes' appearances were part revival meeting, part Richard Simmons-style pep talk, part the Apostle Paul finding his vocation as a missionary. But Hughes could deliver his rags-to-riches tear-jerker (complete with the death-by-diet-pills myth of his mother's death) so that it resonated with just about anyone who wished to lose weight--or dreamed of becoming fabulously rich like him. "Against all odds, he made it big," says one Herbalife distributor. "It was one of the things that drew people to him. He turned his life around. Maybe we could do it too."


IN 1985, HUGHES ATTRACTED a lot of attention, much of it from government regulators. That March, the California attorney general and the state Department of Health Services charged him and Herbalife with making "untrue or misleading" product claims--primarily involving the caffeine content of some Herbalife products--and operating an "endless chain marketing scheme."

Prompted by complaints alleging that Herbalife product users had suffered illness and death, a U.S. Senate subcommittee called Hughes before a hearing in May. He had lost none of his bravado. Referring to a panel of nutrition experts who had criticized Herbalife in testimony the previous day, he asked the senators, "If they're such experts in weight loss, why were they so fat?"

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