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Herbalife Critics In Nevada Mirror Wall Street

Earlier this month, a group gathered outside the Grant Sawyer State Building in Las Vegas,  calling for a state investigation into the nutrition company Herbalife.

Jose Melendrez, president of the Nevada Alliance for Latino Education, led the group by claiming Herbalife purposefully targets Latinos, African Americans and poor communities by making promises of riches that most likely will never come.

It’s not the first time Herbalife has  come under fire in Nevada. In fact, in November 2013, almost one year ago, three similar groups also called on the Attorney General for an investigation, making the same claim.

There’s a little more than what lies on the surface here. In March, the New York Times wrote an article explaining how Wall Street’s pockets may be fueling the opposition to Herbalife. Nevada was one of the main states that would be under this influence.

Hedge fund manager William Ackman has publicly announced that he has put big money down on the failure of Herbalife. And so far, he’s gone to extreme lengths to try to make that happen – Ackman has spent more than $50 million on lobbying efforts against Herbalife.

In that same New York Times article, Nevada Attorney General Catherine Cortez Masto was quoted saying that there was not sufficient evidence that Herbalife targets certain demographics. A lack of evidence means a lack of victims.

Melendrez told KNPR’s State of Nevada that 64 people have come forward who are willing to testify against the company.

He also said he hadn’t heard of Ackman until he was asked a question about him.

For Melendrez, the numbers tell the story. Sixty percent of Herbalife members are Hispanic and 90 percent of distributors drop out after the first year, he said.

Esme Torres told KNPR’s State of Nevada that she spent $20,000 to become a distributor for the company and set up her own nutrition shop; however, after making just $61 in the first year, she dropped out.

Herbalife spokesman Michael Gutierrez disputed the idea that people become members to actually start a business. He said 70 percent of people join the company to get a discount on products.

He also said that a woman who told KNPR she created a Herbalife business primarily by recruiting more people to sell the product is not a common experience. He said most people are successful by selling product and getting people they have recruited to sell.

Gutierrez said the company is not a Ponzi or pyramid scheme, because people do not get paid to recruit. Members do get paid when people they have recruited sell product.

He defended the statistic that 60 percent of distributors are Hispanic.

“Roughly half are Latino because the direct selling nature is conducive to that one-on-one community environment where Latinos thrive,” Gutierrez said.

He also said Ackman's efforts are not just targeting the company but also the 6,500 people in Nevada who are using Herbalife as business opportunity.   

GUESTS

Esme Torres, Las Vegas resident, Herbalife independent distributor

Paula Pecorella, Las Vegas resident, Herbalife independent distributor

Jose Melendrez, President, Nevada Alliance for Latino Education

Michael Gutierrez, Public relations director, Herbalife
Copyright 2015 KNPR-FM. To see more, visit http://www.knpr.org/.

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