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Latino leader 'disappointed' Villaraigosa joined Herbalife

September 06, 2013|By Stuart Pfeifer
  • Distributors purchase Herbalife Ltd. products at a distribution center in Carson earlier this year.
Distributors purchase Herbalife Ltd. products at a distribution center… (Mark Boster / Los Angeles…)

The leader of a key Latino civil rights group said he’s disappointed that former Los Angeles Mayor Antonio Villaraigosa took a job advising nutritional products company Herbalife Ltd., which has been accused of preying on Latinos.

The Los Angeles company, battling allegations for more than eight months that it operates an illegal pyramid scheme, announced Thursday that it had signed Villaraigosa as a special advisor to chief executive Michael O. Johnson and its board of directors.

In a statement released by the company, Villaraigosa said Herbalife has been “a solid member of the Los Angeles business community and a strong presence within the Latino community since the company was founded here in 1980.”

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Villaraigosa's move came less than two months after Brent Wilkes, national executive director of the League of United Latin American Citizens, accused Herbalife of preying on Latinos and called on the Federal Trade Commission to investigate the company.

That’s why Wilkes was surprised by Villaraigosa’s decision to work for the company. Herbalife has not said how much it’s paying Villaraigosa, who left office June 30 after serving eight years as mayor.

"I’m disappointed. We’ve had a long and supportive role with Antonio Villaraigosa,” Wilkes said. “All I can surmise is he doesn’t know the extent of how the Latino community is being negatively impacted by this company.

“I have to believe in my heart he would not have taken this gig if he realized so many Latinos were being defrauded by the company because they sign up thinking they’re going to make money and they end up losing money instead.”

Villaraigosa did not respond to a request for comment from The Times.

Herbalife has said that Latinos make up at least 60% of its distributors, the independent salespeople who sell its line of diet shake powders, vitamins, snacks, drinks and personal care products. They receive products for a discount and can profit from selling them at wholesale and from commissions they receive  based on sales of others they recruit into the business.

The majority of its distributors make little or no money, which has prompted criticism from hedge fund manager Bill Ackman and others that the company is operating a pyramid scheme. In December, Ackman disclosed that he had bet $1 billion that Herbalife’s stock price would fall. He has said he expects regulators to intervene.

Herbalife, in business for more than 30 years, has denied the allegations, saying its multi-level marketing model is legal and used by several other companies. Most of its distributors sign up with the company to receive discounts on products they personally consume, not to make money selling its products, Johnson said.

Wilkes said he intends to reach out to Villaraigosa and tell him about his concerns.

“My guess is he doesn’t stay with the company long,” Wilkes said. “A guy like Villaraigosa wouldn’t want to tarnish his reputation with the Herbalife scandal.

“It’s not that they’re being paid too little. It’s that they’re not being paid at all, or are losing money. When he realizes that I think he’ll be gone.”

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