How Kamala Harris and Herbalife Failed California | Multi Level Mondays
- [Blair] Hello, and welcome to Multi Level Mondays, a weekly series all about pyramid schemes, ponzi schemes, multilevel marketing, and other forms of business fraud. I'm the Iilluminaughtii, and today I'm going to be talking about someone that I'm sure most of you in the States have heard of, or at least you probably should have by now, Kamala Harris, the current vice president. Now, just like when I've discussed Donald Trump's involvement with MLMs in the past, this is not a look at his political views or things he's done in his political career, this is about his involvement with MLMs, and with Kamala Harris, it's no different. So I'm not going to be addressing her political views because you do you when it comes to those stances, we're not here to discuss that we're here to discuss her frustrating involvement with MLMs and what she's done legally to give them a slide. So let's get into it. Now, there are some satirical websites out there just right off the top that praise Kamala Harris for being the overlord of girl bosses after taking a business deal with Monat.
Now, this is not true, this was very easily debunked but the truth is not much better unfortunately. You see, years ago, all the way back in 2015 when a Kamala Harris was the attorney general for California prosecutors in the San Diego office sent Harris a lengthy memorandum that argued for an investigation into Herbalife, one of my favorite MLMs to take a look at. This has been happening for years, and for many, many Latinos that have protested for change and probes into Herbalife, so it's not like this did not come out of nowhere.
According to an October 2013 Reuters article, "Latinos civil rights activists on Friday appealed to California's attorney general to probe the marketing practices of Herbalife as the nutrition and supplements company hosted a sales event for thousands of Latino distributors." Thousands of protesters with signs saying "Stop exploiting us" stood outside the Los Angeles convention center to urge Kamala Harris, the state's attorney general, and Bob Lee, the Santa Cruz district attorney, to investigate what they call predatory business practices and review how the $6.7 billion company targets minorities. "We are asking Attorney General Harris to help us protect vulnerable, low income Latinos, and other minorities from these schemes that have cost people their life savings," said Angelica Salas, executive director, Coalition for Humane Immigrant Rights of Los Angeles. They were meeting nearby the city's convention center where Herbalife was hosting 12,000 Latino distributors at its extravaganza Latina sales event. Some prominent wall street investors, as well as certain civil rights groups have accused Herbalife, which relies on thousands of independent distributors to sell its products, of being a pyramid scheme, something the company denies.
For those of you that don't know all the shady behavior behind Herbalife, I highly recommend you take a look at my two part series on them and it's on my YouTube channel, not on the podcast, but yes, there was a lot of dirt that I had to throw it into two videos. Herbalife is known for exploiting the Latino community and targeting immigrants that may be unaware of this company's horrible business practices. And they've been doing it with quite a track record for some time now. Latinos make up about 80% of the company sales and former CEO of Herbalife, Michael Johnson has even said, and I quote, "Latino, the blood if you will, it's in this company and it feels great" end quote.
The documentary "Betting on Zero" shines a massive light on this and I highly recommend you check that out if you haven't already. I found it on Netflix when I watched it on my own. Now the point is, this is absolutely nothing new. Herbalife is known for being one of the worst MLMs out there, and it's extremely scammy. You name it, they've probably been accused of it. According to The Hill, Herbalife targeted the Hispanic population according to Herbalife's own records which documented Hispanics being responsible for up to 80% of the company's sales.
The League of United Latin American Citizens, or LULAC, along with multiple victims pushed back against Herbalife deceptive practices and helped bring the issue to the attention of the FTC. The FTC conducted its investigation, filed its complaint, and recently forced Herbalife to restructure its multi-level marketing operations and stop its deceptive practices. In addition, Herbalife has been forced to pay $200 million to compensate consumers who suffered loss as a result of its wrongful conduct. The point that I'm trying to make here, the evidence of Herbalife taking advantage of these communities is massive, widespread, and well-known. So naturally, they called on the Attorney, Kamala Harris, to act. Investigations were already taking place elsewhere for this shady behavior, so again, it's not as if there wasn't precedent for Herbalife to be investigated by various states.
If you already remember everything Herbalife's done and the way in which they've misrepresented themselves, feel free to skip ahead perhaps a minute or two, but in case you haven't or you want a refresher, let me give you a brief summary of what was going on at the time, and highlight what some articles were also saying at the time. The Federal Trade Commission alleged in a complaint that the company had engaged in unfair and deceptive practices, in part by misrepresenting how much money people were likely to make if they signed on as Herbalife distributors. According to the complaint, Herbalife is a multi-level marketing scheme that attracted people by using videos and presentations featuring images of mansions and luxury cars, and testimonials about others who earn substantial income and even quit their jobs.
Settlement, which calls for broad changes to Herbalife's direct marketing program contains no admission of wrongdoing, and the company said in a press release that it believed many of the allegations by regulators were factually incorrect. FTC alleged that contrary to the company's promotion and marketing, the only way to make significant money was by recruiting others, not by selling products. It also alleged that the majority of distributors did not recruit a single new distributor. Participants in a business opportunity should have some reasonable prospect of earning profits from reselling products to customers. "However, most of Herbalife's participants earn little or no profit, or even lose money from retailing Herbalife products," the complaint states. It's bad enough that Herbalife was forced to restructure, overhaul everything, tear it down and start a new because their entire business model wasn't redeemable.
I absolutely believe they should have just been closed but whatever the case was, or money talks, or they found loopholes, or whatever, Herbalife still exists to this day, unfortunately. Again, we know this, I'm sure most of you know Herbalife is still around and kicking yet, strangely in this situation while everything was brewing, Kamala Harris did nothing, absolutely nothing. She declined to look into them and simply, as many have called it, let Herbalife off the hook. But why would she do that? Well, as it turns out, it seems that Kamala Harris may have some ulterior motives. According to multiple sources, three weeks after the San Diego letter was sent, Harris received the first of three donations to her campaign for the US Senate from Heather Podesta, the powerful Washington lobbyist who's ex-husband Tony's firm, then called the Podesta Group, had worked for Herbalife since 2013. Heather Podesta's own lobbying firm, Heather Podesta and Partners, would soon be hired by Herbalife too.
Harris did not pursue an investigation even as the Federal Trade Commission proceeded with an investigation of its own, which had been opened the previous March, and which suggested that sufficient grounds for such scrutiny did exist. In fact, the San Diego letter had meticulously laid out those grounds, pointing out that Herbalife presented itself to the public as a lawful enterprise, but that it could nevertheless be engaged in less obvious conduct that potentially harmed both Herbalife distributors and Herbalife customers. Allegations of such conduct, by 2015, had become commonplace in media reports. Harris never gave a reason for declining to investigate Herbalife, but the decision stands in contrast to her oft-expressed promise to fight for ordinary Americans, for whom the 21st century economy seems to hold little promise. Those are the very same Americans, critics say, that Herbalife recruited and exploited. Now I can not say with 100% certainty that this is why she refused to investigate Herbalife.
I can't say that because I don't wanna get sued honestly. But what I will say is that it's incredibly suspicious. Sometimes, it's really easy to call an MLM out for their dirty behavior because they just put it right out there in the open and people are admitting to it, and you can see the false advertising, or health claims, or income claims right before your eyes.
That's a pretty easy black and white situation where I can pretty easily say, "Hey, that's really disgusting, and here's why." But when we look at this case, because it's within this shady, behind the scenes gray area, it's just as bad, but there's less information. With Trump's MLM and his university, which that's coming soon, we're calling out disgusting actions he took.
Here, it's the disgusting inaction that let the people relying on Kamala down. I cannot overstate how much evidence there was against Herbalife at this time. The FTC took on the case, so why not her? How come there was enough evidence for other states, but apparently not enough for Kamala Harris to say, "Gee, willikers, maybe we should look into these people." One source states, "Illinois Attorney General, Lisa Madigan, managed to win a $3 million settlement from Herbalife around the same time. Kamala should have had that too," Wilkes said, with Yahoo News noting his audible disappointment.
The FTC won a $200 million settlement from Herbalife in July, 2016. Related to that settlement was one with Madigan, the Illinois attorney general for $3 million. California, which often leads the nation in consumer and environmental regulations remained on the sidelines. The Harris campaign pushed back saying she has a long record of going after bad corporate actors engaging in fraudulent behavior and delivering results for people who have been taken advantage of.
Now, her long record of going after bad corporate actors might be impressive, but it only makes this worse, if you ask me, because outwardly, her record of going after massive companies like BP, Chevron, Comcast, Costco, Exxon, and others, she looks like someone who won't take anyone's bullshit and stands up for the little guy. So to potentially, allegedly throw that away because of a donation from fucking Herbalife, I can't say for sure that this has happened, of course, but again, I'm just focusing on the MLM side of things here. But this situation, especially this situation, has justifiably upset a lot of people.
She still has not given any sort of explanation as to why Herbalife wasn't worth investigating, which has led to even further speculation and further reasoning by those that have been suspicious. But before we get into the issues of potential conflict of interest with Kamala Harris and Herbalife, let's take a moment to thank today's sponsors. We all shop online, and we've seen that promo code field taunt us at checkout but thanks to Honey, manually searching for coupon codes is a thing of the past.
Honey is the free shopping tool that scours the internet for promo codes and applies the best one to your cart. Honey supports over 30,000 stores online and they range from sites that have tech and gaming products, to popular fashion brands, and even food delivery. And it's super easy to get started because all you do is just download it onto your browser for free and it does all the work.
Like imagine you're shopping from one of your favorite sites, and when you go to checkout, all you have to do is wait for Honey to drop down and say apply coupons and just wait a couple seconds and then go. It will apply all the coupons that it knows are currently available for whatever website you're on, and test them out to see if it qualifies for your cart and then decide which one saves you the most money, and then it will apply that one. I was recently on Ulta because I was shopping for some new beauty products because I haven't really worn makeup much in the past year and I realized that as we're getting vaccinated and all of that, I probably should start to get used to the idea of maybe going out in public again, so I figured I needed to refresh some of my products. And Honey was right there waiting for me at checkout. So thank you, Honey.
Now, if you already don't use Honey, you could just be straight up missing out on free savings. It's literally free and it installs in just a few seconds. And by getting it, you'll be doing yourself a solid and supporting the channel. So if you wanna get started with Honey today, make sure to go to joinhoney.com/mlm.
Again, that's just joinhoney.com/mlm. This episode is also sponsored by Credit Karma. Credit Karma has always been there to help make better financial decisions, and I use them to check my credit score a lot.
But did you know that they have a new feature? With a Credit Karma Money Spend account, you can be rewarded for good money habits and who doesn't want some instant gratification? If you're looking for satisfaction, there's no need to wait. With Credit Karma Money, you could win cash reimbursements for debit purchases. Credit Karma Money, simply put, is a new checking account where you can win cash reimbursements for making purchases. And when you use Credit Karma Money debit card, you can win daily instant karma purchase reimbursements on items up to $5,000. Although my goodness, who's making $5,000 purchases? Anyway, all you have to do is just pay with your debit card and if you win, you get notified on the spot and you get some cash added right back into your spend account immediately. And just for the record, it is an FDIC insured spend account and it's for free, there's no minimum balance requirements, there's no overdraft fees, there's free withdrawals from a network of over 50,000 ATM's as well.
So if you wanna get started today, make sure to go to credit karma.com/winmoney to sign up for free and start winning Instant Karma. Again, that's credit karma.com/winmoney. Instant Karma is sponsored by Credit Karma, no purchases necessary, exclusions and terms apply.
Banking services provided by MVB bank, member FDIC, maximum balance and transfer limits do apply. Now we're going to talk about Kamala Harris's potential issues with conflict of interest involving Herbalife. One source writes, "Harris remained silent, activists met with members of her office.
"The concerns were clearly articulated to her staff," said Brent Wilkes, who at the time was executive director of the League of United Latin American Citizens, one of the groups asking Harris to investigate Herbalife. "They heard us, asked interesting questions," Wilkes recalls. He said he was hopeful that Harris will come around, but the activism failed to make a sufficient impact on her.
Wilkes did not know that at the time, Herbalife was represented by Venable, which also employed Harris's husband, Douglas Emhoff. Emhoff does not appear to have been involved in Herbalife's affairs, but his work at the firm came to the attention of Christopher Irons, financial journalist who first reported on the Emhoff-Herbalife connection. "Surely, this would seem like some sort of enormous conflict of interest, no?" He wrote in 2015. The activists asking Harris to investigate Herbalife did not seem to know that she had a personal connection to the law firm representing the corporation. "That's news to me," Wilkes said when told by Yahoo News about Emhoff's law firm. Emhoff since has left Venable, but as some have argued, this alone should have been reason enough for Kamala Harris to recuse herself.
Christopher Irons of Quoth the Raven research says that as early as 2014 he argued Kamala Harris had a conflict of interest since her husband worked for a law firm that was retained by Herbalife. He also wrote, "The California attorney general has, in my opinion, done her constituency a fantastically horrific disservice by failing to either comment or act on a company domiciled in her state, that the FTC recently deemed as misleading and a business opportunity that rewards recruiting at the expense of retail sales. Ipso facto, the FTC seemed to call Herbalife a pyramid scheme without using the terms. Other attorney generals like Illinois' Lisa Madigan had already sought and received restitution for victims. The bar is significantly higher and more important for Kamala Harris in California, why? States like Illinois have no previous history with the company, whereas the California attorney general has failed to enforce and act on an injunction that has already been in place in her state for 30 years, barring Herbalife from doing specifically what the FTC complaint alleges it has done, misrepresent themselves, make misleading income and health claims, and run an endless chain business focused on recruiting."
Again, this points back to the protesting. Kamala Harris knew that Herbalife was actively doing damage in California and they've been held accountable in the past. Need I remind people that their headquarters is in LA, so of course they have a history there. Other states have held them accountable for their actions whereas the state that frankly, should be holding them most responsible, doesn't do a damn thing. It definitely wasn't always this way either. Back in '86, the California attorney general acted on their health claims, settling for over $800,000.
And this is the injunction that Chris was mentioning, by the way. Again, let me remind you guys what was happening in these early years for just a brief moment. The company was founded in 1980 by 24 year old Mark Hughes who states he was inspired by his mother's unsuccessful struggle to control her weight with amphetamines.
However, this claim was contradicted by an autopsy report which indicated that she had died from an overdose of Darvon, a painkiller classified as a narcotic. Now, does anyone else here remember Mark Hughes spouting off lies about how if his mother had Herbalife, she surely would have survived, because I definitely do, and I wish I could forget that. It really doesn't take long for people to catch on that Herbalife was horrible, however.
In 1982, the FDA sent Herbalife a notice of adverse findings which stated that certain products were misbranded because of labeling claims that they were effective for treating many diseases, dissolving and removing tumors, rejuvenating, increasing circulation, and producing mental alertness. A 1984 FDA talk paper notes that the agency had received many complaints about side effects that had occurred during the use of Herbalife products, and had stopped when use of the products had stopped. "In fact," said the talk paper, "literature given Herbalife distributors states that up to 25% of product users will have adverse effects, but claims that this is evidence of the body's improving itself."
Several suits were filed by people who alleged that the products had harmed them. Some of these suits were settled out of court with substantial payment, but the amounts have not been disclosed and the case records are sealed. In 1985, a study with over 400 participants found that more than 40% of users experienced headache, constipation, diarrhea, nausea, palpitations, and a whole other slew of side effects from taking Herbalife products. Herbalife products were basically found to be nothing more than strong laxatives with a bunch of caffeine in them. In March, 1985, the California attorney general had charged Herbalife with violating California's consumer protection laws. The suit also charged that Herbalife had been operating an illegal pyramid scheme.
The case was settled in 1986 when Hughes and the company agreed to pay $850,000, and to abide by a long list of court ordered restrictions on claims and marketing practices. So why is it that California acted back then, seemingly telling Herbalife off in the early years, and now there's a massively high bar for the state to act? I give California massive credit for going after Herbalife within the first few years of them doing business. I wish they'd been able to shut them down here so they wouldn't continue to hurt people to this day, but the point here is that California, of all states, knew what Herbalife was capable of. They knew about the laxative effects, the caffeine, and years later, even the deaths. Shouldn't Kamala Harris be jumping at the chance to take them down? But I digress, let's go back to Chris Irons. But wait, there's more, the attorney general has not only failed to comment on the company at all, but she has failed to comment on her potential conflict of interest, and she certainly hasn't recused herself from her position, action I would deem appropriate in order to fairly assess the 1986 injunction and perhaps take legal relief necessary to help victims in her state.
Focus on California continues to get more prominent as a recent consumer watchdog group wrote a letter trying to compel California to act on this injunction, which was put in place 30 years ago specifically to prevent the harm that the company has caused over the last 30 years currently being addressed by the FTC. But even that's not the worst part, as part of the recent FTC settlement, Herbalife needs to appoint an administrator to help audit their North American business and make sure that 80% of their sales are going to retail end users. This audit needs to be done by an objective body agreed upon by both Federal Trade Commission and the company. It was reported on Friday in the National Law Journal that there are many offices vying for the contract of independent administrator. Among those is once again, you guessed it, Venable LLP. The same Venable that has been retained by Herbalife in the past, and the same Venable who has a partner married to the California attorney general.
Again, as I said earlier, Harris' partner isn't working for Venable now, so Harris' conflict of interest does not exist as of this moment, not by anything I've found, at least. She doesn't have a reason to care if Venable got the contract any longer, however, at the time, I can absolutely understand why people would be extremely upset and skeptical about this. Now, I was able to find the FTCs listing for an ICA or independent compliance auditor for Herbalife as well as see all the public statements and applications each one made. If you look at Venable's request for this contract, you won't see Emhoff's name listed anywhere as someone that would be working for this case specifically.
So I can't say that Emhoff as an individual absolutely represented Herbalife, but his firm most certainly did. They even admit on page 20 and 21, by the way, that they have multiple conflicts of interest. From what I could find, it doesn't look like Venable was chosen because later articles mentions a group called Affiliated Monitors as their ICA. One source reads, "In 2016, Herbalife and the commission mutually selected Affiliated Monitors as the independent compliance auditor. Eric Feldman of Affiliated Monitors said the company submitted its first report to the commission on November 22nd."
But, just to recap here, we've got many complaints from all over the states about Herbalife being a pyramid scheme, and in California, where they've been told not to write misrepresentative and misleading garbage since 1986, they are the state that didn't do a damn thing. Kamala Harris was not only getting money from a lobbyist that worked for Herbalife, but her husband's firm at the time was also employed by them. So does this mean Kamala Harris was acting of her own self-interest? I don't know, and I can't know the answer, but does that mean that there's enough to prove her bias that she should have recused herself? I absolutely think so, as my own opinion. Don't get me wrong, the donations were barely more than $5,000 in total. It's not as if she was being paid off in the tens of thousands, but even if it was a single dollar bill, that's still a bias.
It's still something to call her out on because I sure as hell don't see her taking any responsibility in the following years, even through current present times. Kamala was called on to take action for those that were hurt in her state, and she didn't without providing a reason. It's frustrating to say the very least and it's extremely disheartening too.
And look, I know some of you may argue, hey, people are allowed to make mistakes because you might support Kamala Harris, and that's true, absolutely. I mean, hell, I'd be one to talk if I said that mistakes simply aren't allowed because you're going to influence people, whether politicians like Kamala Harris, or YouTubers like me. For example, I misspoke in my Kirby Vacuums episode when I said Alabama was the only state with lower than $8 minimum wage. I meant to say that it's one of the few states that hasn't adopted its own minimum wage, and I just didn't say it right, but the point is it came wrong out of my mouth and that's really all that matters there is I messed that up. Just trying to summarize, I worded it poorly and as a result stated something that's untrue, and that absolutely happens from time to time, and mistakes do happen, believe me, me and my entire team are aware of that.
And I'm sure in the past, I've donated to a cause without doing proper research and I thought I was helping and I may have made a mistake. All we can do is live, grow, and do better. However, even with that being said, if someone as important as the vice president now does address, acknowledge, and apologize for something like this then it's extremely worrying. Not just for me as someone who creates MLM content explaining what these companies do, but as a US citizen who obviously wants people in the White House, whether it be left, right, wherever to be held accountable for their actions and to do the right thing for the people here.
This may be a mistake she made, but then why not acknowledge it and apologize for it? Why not recognize it? I've obviously found sources calling her out for this, so why doesn't she just say something and finish it, give us an answer. Why did you not do something about this? Now, as of me writing this right now, she has not acknowledged it and she's continuing to not acknowledge it and it's upsetting to say the least, especially for those of us that know just how harmful MLMs can be, and especially knowing that there's so many lobby groups right now for these MLM-ers to keep them being able to do what they do to stop laws being written to prevent them from doing what they're doing and how they hurt people. And now, our second command of the country as of right now is, in my opinion, a sympathizer or doesn't wanna deal with MLMs. And that's really worrying because I'm hopeful that legislation will pass that makes it harder for these MLMs to like occupy people's time. Now, I understand it's my job to make entertaining and hopefully educational episodes, and it's her job to help and serve the American people. In this case, I think she failed miserably and refuses to address it still.
I'm beyond disappointed in Kamala Harris and honestly, that's all I'm gonna say about that. So with all of that being said, that's where I'm going to end today's episode of Multi Level Mondays. Thank you so much for staying to the end of today's episode, I hope you enjoyed it. And if you did, make sure you're liking, following, and subscribing so you stay up to date on all the latest episodes. And if you want to connect with me outside of these episodes make sure you go to my description box where you're gonna find my link tree link which contains all of my links for all current projects I'm on, my social media, other channels, all that kind of stuff will be right there waiting for you. So again, thank you all so much for making it to another episode of Multi Level Mondays.
I love you all and I'll see you in the next one, bye. (bright music)