Herbalife antagonist Bill Ackman brought Main Street to Wall Street on Friday.
The head of the Pershing Square hedge fund, who has an estimated $1 billion bet that the Los Angeles company is a pyramid scheme, debuted a short documentary that chronicles stories of what he called “traditional middle class Americans” who say they were defrauded by the distributor of nutritional products.
“The actual experience of the people is rarely heard,” said Robert FitzPatrick, a multilevel marketing expert who moderated a panel discussion with four of the film’s participants.
Those profiled in the film include a dental hygienist, IT manager, former banker, legal secretary, two former Marines and a retired business owner.
A former naval ship commander said he lost $45,000 trying to build an Herbalife business.
Financial need drove their decisions to try Herbalife, several said.
“We were getting pretty desperate after the severance ran out,” said a former bank employee.
Many said they only stopped trying when they maxed out their credit cards. One woman quit after she dipped into her children’s college funds.
The former Herbalife distributors said their costs piled up because of not only the $3,000 to $4,000 they had to pay to be able to earn commissions but also the shipping costs, business credit cards, websites and other business “tools” that were endorsed by Herbalife.
“I dragged some people into it that didn’t have the money,” said Lynn Hamilton, a New York City legal secretary who lost $25,000. “I began to feel sleazy, like I needed to take a bath after I called people to ask for more money.”
Ackman, who has been battling Herbalife for 16 months, introduced the film by pointing out that 1 percent of Herbalife’s distributors earn 87 percent of its commissions, which he said leads to more than 90 percent of sales leaders leaving each year.
The growth of Herbalife is a sign of troubled economic times, said FitzPatrick.
“The hottest product on the market today is not an iPad; it’s an income,” he said.
Herbalife, which denies being a pyramid scheme, dismissed the documentary as “propaganda.”
Herbalife shares closed Friday at $59.95, up 0.6 percent.