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Bill ackman:
<i>this will be the</i>
<i>most important presentation</i>

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<i>That I've made in my career.</i>

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<i>So, how's that for</i>
<i>raising expectations?</i>

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Man: <i>Uh,</i>
<i>what are we gonna learn?</i>

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Ackman: <i>You're gonna learn</i>
<i>why herbalife is</i>
<i>going to collapse,</i>

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<i>And that's</i>
<i>a pretty strong statement,</i>

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<i>But this is the largest fraud</i>
<i>in terms of scale,</i>
<i>of countries involved,</i>

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<i>Harm to people...</i>

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Man: <i>And right now, we are</i>
<i>joined by the ceo of</i>
<i>herbalife, michael johnson.</i>

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<i>He has called in.</i>

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Michael johnson:
<i>First of all, guys,</i>

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<i>This isn't about</i>
<i>herbalife's business model.</i>

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<i>This is about bill ackman's</i>
<i>business model.</i>

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<i>This is blatant</i>
<i>market manipulation.</i>

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<i>We're not a pyramid scheme.</i>
<i>That's a bogus accusation.</i>

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<i>This is a legitimate company.</i>

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<i>We've been in business</i>
<i>32 years.</i>

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<i>Millions of customers</i>
<i>around the world.</i>

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<i>Mr. Ackman's proposition</i>

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<i>That the United States</i>
<i>will be better</i>
<i>when herbalife is gone...</i>

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<i>The United States</i>
<i>will be better</i>
<i>when bill ackman's gone.</i>

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Good. How're you doing?

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Um, clock, countdown clock.

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Do you want time of day,
or do you want to count time?

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What do you mean?

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-We have a speaker timer.
-During the presentation
itself...

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Just count going up.

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-Count going up from zero?
-Yeah.

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You got it. Thank you, sir.

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Ackman:
<i>the company is</i>
<i>clearly panicking.</i>

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<i>They know what we have.</i>

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Male reporter:
<i>They say, bill, that</i>
<i>herbalife continues to face</i>

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<i>An unprecedented attack</i>

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<i>To support</i>
<i>your billion-dollar bet</i>

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<i>To manipulate and drive</i>
<i>herbalife stock price to zero.</i>

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Female reporter:
<i>Seems like all of wall street</i>
<i>is against you.</i>

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Man 2: <i>Ackman is a liar.</i>

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<i>You scare</i>
<i>the hell out of people,</i>
<i>get the stock down,</i>

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<i>And tells the world</i>
<i>how great he is.</i>

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Female reporter:
<i>You still believe</i>
<i>this company is worth zero?</i>

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Ackman: <i>Yes.</i>

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The company is the goose
that laid the golden egg.

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And trust me,
I have never seen a goose
put out so many golden eggs

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- In my entire life.

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Narrator: <i>For two years,</i>
<i>hedge fund ceo bill ackman</i>

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<i>Has been managing</i>
<i>a massive short position</i>
<i>in herbalife.</i>

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<i>Betting that company</i>
<i>would soon fail,</i>

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<i>And that, as the price of</i>
<i>herbalife stock</i>
<i>plummeted towards zero,</i>

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<i>His investors</i>
<i>in pershing square</i>
<i>would make a fortune.</i>

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I just need to be authentic.

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-Make you look like a zombie?
-Exactly.

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Ackman:
<i>we are managing capital</i>
<i>for others,</i>

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<i>And most of the time</i>

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<i>We buy stakes in companies</i>
<i>and work to make them</i>
<i>more valuable.</i>

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<i>But a couple times</i>
<i>in our history,</i>

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We come across a company
we think is causing harm

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Operating illegally, uh,

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And we can make money
betting against that company.

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How much money have you spent
betting against herbalife?

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Uh, we have a short position
of over a billion dollars.

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On the makeup, I'm kind of
a less-is-more guy.

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-Yeah.
-Okay.

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Ackman:
<i>I've had one other very big</i>
<i>public short in my career,</i>

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<i>Which was this short I took</i>
<i>in a company called mbia.</i>

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<i>We were saying that</i>
<i>a aaa-graded company</i>
<i>was basically insolvent.</i>

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<i>People thought</i>
<i>this was absurd.</i>

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The company accused us

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Of spreading false
and misleading information
about their business.

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<i>Mbia took seven years</i>
<i>for us to be proven right.</i>

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<i>And ultimately,</i>
<i>the company collapsed</i>
<i>during the credit crisis,</i>

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<i>Because of exposure</i>
<i>to subprime mortgages.</i>

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<i>A reporter named</i>
<i>christine richard</i>

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<i>At bloomberg news</i>
<i>got interested in the story,</i>

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<i>And then ended up</i>
<i>writing a book</i>

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<i>About my battle with mbia</i>
<i>called</i> confidence game.

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<i>And then she joined</i>
<i>an independent research firm</i>

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To focus on short ideas,

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Companies to bet against.

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And she called me one day
and said, "bill, I think
I've got the next mbia."

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Hello. I'm michael johnson.

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Chairman
and chief executive officer
of herbalife.

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And it's my pleasure
to be your guide
for our tour of herbalife.

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<i>In 1980, our company founder</i>
<i>mark hughes</i>
<i>started with a dream.</i>

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<i>That dream was</i>
<i>a mission for nutrition.</i>

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<i>For people to improve</i>
<i>their health</i>

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<i>And also to improve</i>
<i>their financial well-being</i>

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<i>Through our direct sales</i>
<i>business opportunity,</i>

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<i>Which, we believe,</i>
<i>is the best in our industry.</i>

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Herbalife is a multilevel
marketing company,

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Which means you can earn
on your own sales,

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And if you're a supervisor
or above,

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On the sales of
those you introduce

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And sponsor
directly or indirectly.

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<i>Our products are available</i>
<i>exclusively through you,</i>

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<i>Our independent</i>
<i>herbalife distributor.</i>

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<i>That's why we have a rule</i>

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<i>About not selling through</i>
<i>retail stores, outlets</i>
<i>or on auction sites.</i>

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Christine richard:
<i>If you look at it,</i>
<i>on the surface,</i>

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<i>It's a wildly</i>
<i>successful company</i>

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<i>Selling high-priced</i>
<i>nutritional supplements.</i>

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<i>But going back to the '80s,</i>

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There were questions about
how the products were pitched.

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You know, extreme promises
that were made
about the products,

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And of course,
always the extreme promises
about the income opportunity.

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I was really committed
to making herbalife work,

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And I was like,
"I'll do whatever it takes.

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"whatever it takes,
I'll do it."

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I'd always come out
fishing just way below

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And I always spotted
this particular house

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<i>With the staircase going down.</i>

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<i>As I grew in herbalife,</i>
<i>I ended up buying it.</i>

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Man:
<i>I step out of the ferrari,</i>
<i>the bentley, whatever,</i>

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<i>People go, "what does</i>
<i>that guy do for a living?"</i>

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And I go, "I'm an herbalife
independent distributor."

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And people are
absolutely amazed
that that's what I do.

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<i>It's an incredible</i>
<i>quality of life.</i>

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So far, in the last 90 days,
the company has paid us
over $15,000 part-time.

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And I make, right now,
I can't believe it myself,

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Over $8,000 a day

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To over $3,000,000 a year.

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It's unbelievable!

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If I can do it,
I've made a small fortune,

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Actually a large fortune,
with the company,

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Anyone can. It's simple.

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Richard: <i>I think</i>
<i>it's a fraudulent pitch,</i>

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<i>But it persists</i>
<i>over a decade, so...</i>

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It seems like
it should be something

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That wall street investors
would want to take a look at.

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Ackman: <i>I was</i>
<i>appropriately skeptical,</i>

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<i>Which is the approach</i>
<i>we try to take</i>

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<i>With any investment,</i>
<i>long or short,</i>

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<i>And then a belgian court</i>
<i>found herbalife</i>

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<i>To be a pyramid scheme</i>
<i>in 2011.</i>

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<i>I thought that was kind of</i>
<i>a materially</i>
<i>interesting development,</i>

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<i>And that's what motivated</i>
<i>the research.</i>

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And this is a case
where the more layers
of the onion you peeled away,

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The more interesting, uh,
it became.

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You follow what I say,
write this down,

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You're gonna make
a minimum of
$50,000 this year.

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That's
the least amount of money
that you're gonna make.

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The second year,
you'll make $125,000,

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And that's
the least amount of money
that you're gonna make.

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Narrator: <i>In 1986, founder</i>
<i>mark hughes and herbalife</i>

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<i>Received</i>
<i>a permanent injunction</i>
<i>from the state of california,</i>

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<i>Barring them from making</i>
<i>false income</i>
<i>and health claims.</i>

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<i>Nevertheless, the company</i>
<i>continued to thrive.</i>

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<i>But 14 years later,</i>
<i>hughes was found dead</i>
<i>in his malibu home</i>

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<i>Of an overdose of</i>
<i>antidepressants and alcohol.</i>

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<i>And a group</i>
<i>of private investors</i>

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<i>Soon took control</i>
<i>of herbalife.</i>

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<i>Before listing the company on</i>
<i>the new york stock exchange,</i>

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<i>They sought</i>
<i>and found a new leader.</i>

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<i>Michael o. Johnson.</i>

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<i>Johnson had risen</i>
<i>through the ranks</i>
<i>at the disney corporation</i>

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<i>To become president</i>
<i>of disney international.</i>

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Announcer: <i>The eyes</i>
<i>of the world are on herbalife.</i>

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<i>We will be faster, better,</i>
<i>stronger than ever before.</i>

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Narrator:
<i>A competitive triathlete,</i>

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<i>Johnson's passion for fitness</i>
<i>perfectly mirrored</i>
<i>his new company's image.</i>

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<i>At herbalife,</i>
<i>he had a midas touch.</i>

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<i>Revenues grew</i>
<i>at astonishing rates.</i>

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<i>From $1.3 billion</i>
<i>to $4.8 billion</i>
<i>in his first 10 years.</i>

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Oh, we're just
getting started.

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We're just scratching
the surface of what can be.

165
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We haven't penetrated
the markets and communities

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Anywhere close
to what we're gonna see.

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Narrator: <i>Johnson did well</i>
<i>by herbalife and himself.</i>

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<i>In 2011, he was</i>
<i>the highest paid ceo</i>
<i>in america.</i>

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<i>His compensation package</i>
<i>totaled $89.4 million.</i>

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Mexican sales, up 31%.
Asia pacific, up 29%.

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00:10:06,945 --> 00:10:11,005
India, 121%!
South, central america, 44%.

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00:10:11,015 --> 00:10:14,145
<i>This company seems</i>
<i>to be unstoppable.</i>

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You know, my mother and father
were incredibly
strong influences in my life.

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And integrity was the name
of the game in our house.

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Um, you know,
if you did something wrong,
own up to it.

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Just never tell that lie,
you know,

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00:10:31,433 --> 00:10:34,173
Because you're gonna
lose the trust.

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And I think
what we've done here is

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We've built an integrity
and a trust
in our organization,

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In our people, in our product.

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And if I'm the one
out in front,
leading that, okay.

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00:10:44,410 --> 00:10:47,250
You know,
I'll take that responsibility.

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00:10:49,114 --> 00:10:52,114
Scott wapner: <i>John desimone is</i>
<i>sitting here with me.</i>

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00:10:51,717 --> 00:10:53,717
<i>John, it's good to see you.</i>

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00:10:52,918 --> 00:10:53,918
John desimone:
<i>Thank you, scott.</i>

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00:10:53,718 --> 00:10:57,718
Wapner: <i>At this very moment,</i>
<i>bill ackman and</i>
<i>more than 500 people</i>

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00:10:56,954 --> 00:10:58,954
<i>Are inside a theater</i>
<i>in midtown manhattan.</i>

188
00:10:58,689 --> 00:11:02,319
Bill's getting ready to give
his latest presentation,

189
00:11:02,325 --> 00:11:04,325
And they're watching
this interview live.

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00:11:03,526 --> 00:11:08,456
<i>In his words, he's gonna</i>
<i>expose incredible fraud</i>
<i>at herbalife today.</i>

191
00:11:08,464 --> 00:11:09,634
<i>What do you expect?</i>

192
00:11:09,631 --> 00:11:12,631
Uh, we know this mo.
This is not the first time.

193
00:11:11,566 --> 00:11:17,196
As a matter of fact,
this has been 18 months
of always... The guy here...

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00:11:17,204 --> 00:11:20,204
It's always "the bark
is worse than the bite."

195
00:11:19,539 --> 00:11:21,539
<i>Uh, he's made some</i>
<i>outrageous statements.</i>

196
00:11:21,240 --> 00:11:26,080
<i>He's made 435 accusations</i>
<i>over the last 18 months,</i>

197
00:11:26,078 --> 00:11:31,178
<i>Each one is</i>
<i>the latest and greatest</i>
<i>until it's proven not to be.</i>

198
00:11:31,183 --> 00:11:35,083
First of all, what are you
accusing herbalife of?

199
00:11:35,086 --> 00:11:36,646
Of being a pyramid scheme.

200
00:11:36,654 --> 00:11:38,724
We believe herbalife
is a pyramid scheme.

201
00:11:38,722 --> 00:11:40,722
Explain,
what do you mean by that?

202
00:11:40,457 --> 00:11:43,887
Well,
herbalife sells products,
weight loss products,

203
00:11:43,893 --> 00:11:46,163
Nutritional supplements,
vitamins, things like that,

204
00:11:46,161 --> 00:11:50,161
But what they really sell
and what their distributors
make money from

205
00:11:50,098 --> 00:11:53,528
Is by selling what they call
a business opportunity.

206
00:11:53,534 --> 00:11:55,704
And the business opportunity
is to sell

207
00:11:55,702 --> 00:11:57,702
The business opportunity
to your friends,

208
00:11:57,036 --> 00:12:00,196
Who in turn sell
the business opportunity
to their friends.

209
00:12:01,838 --> 00:12:04,708
<i>You sign up to become</i>
<i>an herbalife distributor,</i>

210
00:12:04,708 --> 00:12:07,708
<i>You spend $55 or $100</i>
<i>to get a starter kit.</i>

211
00:12:07,577 --> 00:12:10,577
<i>And then eventually</i>
<i>you're convinced</i>
<i>to spend $3,000</i>

212
00:12:09,745 --> 00:12:13,345
<i>To buy the minimum amount of</i>
<i>inventory you need to acquire</i>

213
00:12:13,348 --> 00:12:15,578
<i>In order to become</i>
<i>a supervisor.</i>

214
00:12:15,583 --> 00:12:20,593
And you got
a business in a box
that can make you a fortune.

215
00:12:21,589 --> 00:12:24,589
And that's when
you're entitled
to get royalties

216
00:12:23,190 --> 00:12:26,190
From people beneath you
and your so-called downline.

217
00:12:25,792 --> 00:12:27,792
These are the people
you recruit.

218
00:12:27,992 --> 00:12:31,192
William keep:
<i>What generates income</i>
<i>are purchases.</i>

219
00:12:31,196 --> 00:12:36,426
<i>As products are purchased</i>
<i>from herbalife</i>
<i>by those in your downline,</i>

220
00:12:36,434 --> 00:12:39,804
<i>They generate</i>
<i>a commission upline.</i>

221
00:12:40,570 --> 00:12:43,270
So, as you build
your downline,

222
00:12:43,273 --> 00:12:46,873
And you recruit others,
friends, family members,
co-workers,

223
00:12:46,876 --> 00:12:50,636
It's their purchases that
generate your commissions.

224
00:12:50,646 --> 00:12:53,846
The secret is to get
five other people

225
00:12:53,849 --> 00:12:55,979
To do the same thing
every month.

226
00:12:55,984 --> 00:12:58,024
And teach them to get
five other people

227
00:12:58,019 --> 00:13:00,019
To do the same thing
every month.

228
00:12:59,186 --> 00:13:02,186
Before you know it,
not only will you
be a supervisor,

229
00:13:02,122 --> 00:13:04,122
But you'll have
five supervisors under you

230
00:13:04,090 --> 00:13:06,290
Who'll have five supervisors
underneath them

231
00:13:06,292 --> 00:13:08,832
Who'll have five supervisors
under them.

232
00:13:08,827 --> 00:13:10,657
That's 155 supervisors.

233
00:13:10,662 --> 00:13:15,662
And if they're each doing
about 2,000 to 2,500
volume points a month,

234
00:13:14,198 --> 00:13:19,868
You're gonna be making
somewhere in the neighborhood
of $42,000 a month.

235
00:13:19,870 --> 00:13:25,540
Keep: <i>In fact, building</i>
<i>the downline and product</i>
<i>purchases are required</i>

236
00:13:25,542 --> 00:13:28,542
<i>In order for you</i>
<i>to be eligible for income.</i>

237
00:13:27,944 --> 00:13:32,614
So, only about 17%
of all distributors

238
00:13:32,615 --> 00:13:35,245
Are eligible to earn anything
from herbalife.

239
00:13:35,250 --> 00:13:40,050
<i>According to herbalife's</i>
<i>earning statements,</i>
<i>of those 17%,</i>

240
00:13:40,054 --> 00:13:44,694
<i>We know for sure,</i>
<i>30% or so will earn zero.</i>

241
00:13:44,691 --> 00:13:47,531
<i>And approximately</i>
<i>48% will earn</i>

242
00:13:47,527 --> 00:13:51,597
<i>$1,000 or less gross</i>
<i>earnings for the year.</i>

243
00:13:52,363 --> 00:13:53,633
<i>Once we deduct expenses,</i>

244
00:13:53,631 --> 00:13:58,931
<i>And consider the fact that</i>
<i>they have to maintain</i>
<i>a purchase volume,</i>

245
00:13:58,936 --> 00:14:02,466
The net income is negligible.

246
00:14:02,637 --> 00:14:06,637
Ackman: <i>You're deceived</i>
<i>into believing that this is</i>
<i>a good business opportunity</i>

247
00:14:06,375 --> 00:14:08,375
<i>When, in fact,</i>
<i>you're selling a shake</i>

248
00:14:07,909 --> 00:14:10,909
<i>For three or four times</i>
<i>the price of slimfast.</i>

249
00:14:10,011 --> 00:14:13,211
<i>People can buy that</i>
<i>in their supermarket.</i>

250
00:14:13,680 --> 00:14:17,720
And those $3,000, $4,000,
$8,000 inventory purchases,

251
00:14:17,718 --> 00:14:21,718
Inventory that's sitting
in your garage
that you can't sell,

252
00:14:21,354 --> 00:14:23,624
Are fueling paychecks
for people

253
00:14:23,622 --> 00:14:25,622
At the very, very top
of the pyramid

254
00:14:24,923 --> 00:14:27,923
Who have hundreds of
thousands of people
beneath them.

255
00:14:27,725 --> 00:14:29,785
The top 50
herbalife distributors make

256
00:14:29,793 --> 00:14:33,733
Three, five, seven,
10-plus million dollars
a year.

257
00:14:33,730 --> 00:14:36,630
Hence it is robin hood
in reverse.

258
00:14:37,064 --> 00:14:38,064
Wapner: <i>But he claims today,</i>

259
00:14:38,032 --> 00:14:40,802
<i>He has hundreds of</i>
<i>hours of video, audio,</i>

260
00:14:40,801 --> 00:14:43,701
<i>Documents to support</i>
<i>his claims.</i>

261
00:14:43,703 --> 00:14:45,703
<i>On some level,</i>
<i>you must be worried.</i>

262
00:14:45,571 --> 00:14:49,571
Desimone: <i>I'm not worried</i>
<i>about the substance</i>
<i>of what he has.</i>

263
00:14:48,073 --> 00:14:51,343
<i>This is anecdotal,</i>
<i>it's very propaganda based.</i>

264
00:14:51,342 --> 00:14:54,442
<i>What he's missing is that,</i>
<i>fundamentally,</i>

265
00:14:54,445 --> 00:14:57,445
<i>We've got</i>
<i>millions of customers</i>
<i>that enjoy the product,</i>

266
00:14:56,880 --> 00:14:59,350
<i>That use the product,</i>
<i>that's indisputable.</i>

267
00:14:59,349 --> 00:15:02,349
<i>We actually had a release</i>
<i>today from a former ftc...</i>

268
00:15:01,884 --> 00:15:05,224
Keep: <i>What we don't really</i>
<i>have good information on is,</i>

269
00:15:05,220 --> 00:15:08,790
<i>Do herbalife purchases</i>
<i>translate into sales</i>

270
00:15:08,790 --> 00:15:13,690
<i>To customers</i>
<i>who are not also distributors</i>
<i>of herbalife?</i>

271
00:15:13,694 --> 00:15:17,734
Or are herbalife purchases
a mechanism
for sustaining recruitment

272
00:15:17,731 --> 00:15:23,401
And sustaining commissions
that have little to do
with outside customers.

273
00:15:23,403 --> 00:15:27,543
What the research shows is
that the majority
of our distributors

274
00:15:27,540 --> 00:15:28,770
Come and become distributors

275
00:15:28,774 --> 00:15:30,774
Because of their affinity
with the product,

276
00:15:30,308 --> 00:15:32,308
And they want to achieve
a product discount.

277
00:15:31,942 --> 00:15:33,942
So, effectively,
what they want to do

278
00:15:33,443 --> 00:15:36,213
Is become distributors
almost like members, right?

279
00:15:36,212 --> 00:15:38,252
Club members,
just like in costco.

280
00:15:38,247 --> 00:15:40,377
The lack of evidence,

281
00:15:40,382 --> 00:15:43,152
In terms of
what portion of products

282
00:15:43,151 --> 00:15:47,151
Ever leave herbalife's
distribution channel,

283
00:15:47,155 --> 00:15:49,615
Is part of the criticism

284
00:15:49,624 --> 00:15:52,624
And part of the wonder
about whether or not

285
00:15:51,559 --> 00:15:53,759
This company can
be a pyramid scheme.

286
00:15:53,761 --> 00:15:54,761
Here's the reality.

287
00:15:54,261 --> 00:15:58,261
Our core training is
for a new distributor
who wants to build a business,

288
00:15:57,797 --> 00:16:00,797
If they talk to
10 customers today,
10 people a day,

289
00:16:00,299 --> 00:16:02,629
About the products
and the business opportunity.

290
00:16:02,634 --> 00:16:04,634
I have never spoken
to any distributor,

291
00:16:04,469 --> 00:16:09,039
Who is doing that,
who is actively engaged,
who is not making money.

292
00:16:23,253 --> 00:16:29,463
Richard: <i>Multilevel marketing,</i>
<i>mlms, just tap into beliefs</i>
<i>we have in america</i>

293
00:16:29,460 --> 00:16:33,630
<i>That you really can accomplish</i>
<i>whatever you want to.</i>

294
00:16:33,630 --> 00:16:38,370
<i>The rags-to-riches story</i>
<i>that's there for everybody.</i>

295
00:16:38,834 --> 00:16:45,074
<i>Herbalife has done a great job</i>
<i>reaching into</i>
<i>the hispanic market.</i>

296
00:16:45,074 --> 00:16:51,384
<i>The lower-income immigrants</i>
<i>have these hopes to find</i>
<i>a successful life here</i>

297
00:16:51,380 --> 00:16:53,380
<i>To set up a small business.</i>

298
00:16:53,348 --> 00:16:57,348
Herbalife says, "yeah,
and here's how
you're gonna do it."

299
00:17:18,605 --> 00:17:22,105
Okay, so, we'll get
everybody on one side.

300
00:17:22,908 --> 00:17:27,908
Julie contreras:
<i>The beginning, for me,</i>
<i>was</i> senor <i>phillipe colon.</i>

301
00:17:27,914 --> 00:17:31,524
<i>Him and his wife called me,</i>
<i>talked about herbalife.</i>

302
00:17:31,517 --> 00:17:35,787
<i>I didn't know what it was,</i>
<i>or understand.</i>

303
00:17:35,787 --> 00:17:40,817
<i>When I went to his home,</i>
<i>it was completely filled</i>
<i>with product.</i>

304
00:17:40,924 --> 00:17:45,094
He had it in his living room,
his kitchen...

305
00:17:45,095 --> 00:17:48,525
He had it in his basement
and in his garage.

306
00:17:48,531 --> 00:17:50,931
That's how much product he had

307
00:17:50,933 --> 00:17:52,703
That he could never move.

308
00:17:52,933 --> 00:17:54,933
<i>But he continued</i>
<i>to pay into it</i>

309
00:17:54,769 --> 00:17:58,369
<i>Because he was told</i>
<i>that he would make more money.</i>

310
00:17:58,372 --> 00:18:00,372
<i>And he's a very ethical man.</i>

311
00:18:00,207 --> 00:18:06,207
So he said, "I notice
after this time, julie,
that this is a scam.

312
00:18:06,213 --> 00:18:08,753
"and I want my money back,"
he said.

313
00:18:09,414 --> 00:18:13,414
<i>So I just said,</i>
<i>"you know what?</i>
<i>Let's do a press conference</i>

314
00:18:12,451 --> 00:18:16,451
<i>"and looking to see</i>
<i>if there were any more</i>
<i>victims out there."</i>

315
00:18:15,454 --> 00:18:20,724
<i>And of course</i>
<i>when we made that call out,</i>
<i>the victims responded.</i>

316
00:18:21,725 --> 00:18:23,725
Where did you want to meet?
In here?

317
00:18:23,627 --> 00:18:24,627
They're gonna come here.

318
00:18:24,160 --> 00:18:28,160
They're all gonna
come up here.
They'll be arriving soon.

319
00:18:27,129 --> 00:18:33,299
Okay, so, this is an estimate,
but I'm gonna give you...

320
00:18:33,301 --> 00:18:36,301
-Contreras: Okay, that...
-This is unbelievable.

321
00:18:36,304 --> 00:18:38,304
And they're just
regular people, right?

322
00:18:37,138 --> 00:18:41,138
Contreras: They're regular
people and all the receipts
and everything to support it.

323
00:18:40,441 --> 00:18:43,441
Jay reyes:
You've got a real mess here.

324
00:18:45,477 --> 00:18:47,947
Contreras: <i>A majority of</i>
<i>the group are undocumented.</i>

325
00:18:47,947 --> 00:18:49,947
<i>So, they live</i>
<i>in that insecurity.</i>

326
00:18:49,281 --> 00:18:54,651
<i>They are people</i>
<i>who worked very hard,</i>
<i>people who are paying taxes,</i>

327
00:18:54,653 --> 00:18:57,323
<i>And people who were violated.</i>

328
00:18:57,322 --> 00:19:01,692
And they have a right to seek
what they call <i>"justicia."</i>
<i>justice.</i>

329
00:19:46,600 --> 00:19:48,600
Contreras:
She has suffered a lot

330
00:19:47,902 --> 00:19:50,142
Because her husband
continuously reminds her

331
00:19:50,137 --> 00:19:53,907
About the $8,000
that she owes to them.

332
00:21:11,716 --> 00:21:14,716
Contreras:
<i>Many immigrants migrate here</i>
<i>for a better life,</i>

333
00:21:14,519 --> 00:21:19,619
<i>And if people want to prey</i>
<i>on their lack of</i>
<i>knowledge and finances,</i>

334
00:21:19,624 --> 00:21:21,824
<i>I find that despicable.</i>

335
00:21:22,058 --> 00:21:24,458
And no one is doing anything.

336
00:21:24,461 --> 00:21:27,201
The federal trade commission,
the attorney general...

337
00:21:27,197 --> 00:21:31,127
I mean, should we start
go making police reports?

338
00:23:02,822 --> 00:23:06,822
Des walsh: <i>And another charge</i>
<i>is that we're actually going</i>
<i>after latino community</i>

339
00:23:06,092 --> 00:23:10,662
<i>Because, in some way,</i>
<i>this is an impoverished,</i>
<i>uneducated group.</i>

340
00:23:10,995 --> 00:23:13,995
If a supermarket chain
opens up a new store

341
00:23:13,598 --> 00:23:16,098
In an area
that is economically deprived,

342
00:23:16,100 --> 00:23:17,500
They're cheered and applauded

343
00:23:17,501 --> 00:23:19,501
Because they're bringing
good nutrition,

344
00:23:19,169 --> 00:23:21,169
They're bringing jobs
to that community.

345
00:23:21,004 --> 00:23:23,244
And yet when we support
the latino community,

346
00:23:23,239 --> 00:23:26,239
In some way,
this is a company
going after people

347
00:23:25,407 --> 00:23:29,407
Who aren't able
to make an educated decision
regarding their nutrition.

348
00:23:29,344 --> 00:23:31,344
I mean, frankly,
it's insulting to us,

349
00:23:30,912 --> 00:23:32,912
It's insulting
to our customers,

350
00:23:31,979 --> 00:23:34,779
Insulting to
the entire latino community.

351
00:23:35,914 --> 00:23:38,084
Ackman: <i>It's been happening</i>
<i>community by community.</i>

352
00:23:38,083 --> 00:23:41,753
Pyramid schemes are known for
the pop and drop phenomenon.

353
00:23:41,754 --> 00:23:43,754
They need to find new victims.

354
00:23:43,388 --> 00:23:45,388
<i>And there's an initial boom</i>

355
00:23:44,756 --> 00:23:47,756
<i>As a lot of people get excited</i>
<i>about the opportunity</i>

356
00:23:47,525 --> 00:23:48,525
<i>Of being</i>
<i>herbalife distributor,</i>

357
00:23:48,425 --> 00:23:51,425
<i>And as they run out</i>
<i>of people to recruit</i>

358
00:23:50,093 --> 00:23:53,093
<i>And they find</i>
<i>they can't sell their product,</i>

359
00:23:52,395 --> 00:23:53,925
Uh, it busts.

360
00:23:53,929 --> 00:23:59,329
Robert fitzpatrick:
<i>80%, according to</i>
<i>their sec filing in 2005,</i>

361
00:23:59,334 --> 00:24:05,974
<i>Of the people that had been</i>
<i>in the scheme quit,</i>
<i>and were replaced.</i>

362
00:24:05,973 --> 00:24:08,973
<i>If you added all those up</i>
<i>in a five-year...</i>

363
00:24:07,808 --> 00:24:13,008
<i>I mean, we're talking about</i>
<i>an absurd machine here,</i>

364
00:24:13,013 --> 00:24:16,513
Churning through
millions of people.

365
00:24:16,516 --> 00:24:20,716
Promising them
this utopian unlimited income,

366
00:24:20,720 --> 00:24:24,250
Delivering almost nothing.

367
00:24:25,923 --> 00:24:27,923
Narrator:
<i>Since its founding in 1980,</i>

368
00:24:27,792 --> 00:24:31,392
<i>Herbalife has extended</i>
<i>operations around the globe.</i>

369
00:24:31,395 --> 00:24:34,625
<i>Expanding across 10 countries</i>
<i>in their first decade</i>

370
00:24:34,631 --> 00:24:38,201
<i>To a current reach</i>
<i>of 93 countries worldwide.</i>

371
00:24:38,201 --> 00:24:42,201
Johnson: <i>We've just opened up</i>
<i>vietnam this week,</i>
<i>which is fantastic.</i>

372
00:24:41,737 --> 00:24:43,937
Why does that matter?
Do people in vietnam...

373
00:24:43,939 --> 00:24:46,839
They want supplements?
What do they know?

374
00:24:46,841 --> 00:24:48,841
I mean,
I'm not denigrating vietnam,

375
00:24:47,641 --> 00:24:52,641
But I'm saying,
how do you convince them
that this is right for them?

376
00:24:50,977 --> 00:24:53,137
Well, the company's
success recently

377
00:24:53,145 --> 00:24:56,145
Has been built
on daily consumption.
This is a meal.

378
00:24:55,347 --> 00:24:58,547
Vitamins, great nutrition,
good minerals, carbohydrates,

379
00:24:58,550 --> 00:24:59,780
Proteins, all that.

380
00:24:59,784 --> 00:25:01,784
Everybody needs
a good meal in their life.

381
00:25:01,185 --> 00:25:06,685
Vietnam has 87 million people.
40% of the population
is under 25 years old.

382
00:25:06,690 --> 00:25:08,690
They're looking for jobs,
looking for income.

383
00:25:08,491 --> 00:25:10,491
So, we have
this two-way street,

384
00:25:09,725 --> 00:25:13,185
Health and wealth. Great meal,
great business opportunity.

385
00:25:13,195 --> 00:25:16,555
Fitzpatrick:
<i>If they can grow globally,</i>
<i>go to new markets...</i>

386
00:25:16,565 --> 00:25:19,895
<i>China,</i>
<i>1.3 billion people there,</i>

387
00:25:19,901 --> 00:25:22,771
<i>Latino immigrants</i>
<i>into the us...</i>

388
00:25:22,770 --> 00:25:27,470
These will keep the thing
sustained for a bit longer.

389
00:25:27,474 --> 00:25:30,744
How long can they go?
Nobody really knows.

390
00:25:33,044 --> 00:25:35,044
Is there anything we can do
for capacity?

391
00:25:34,880 --> 00:25:36,880
We should be prepared
for a million people.

392
00:25:36,615 --> 00:25:40,615
We are prepared
for a million people.
I'm doing everything I can.

393
00:25:39,551 --> 00:25:42,021
We have all three servers
blazing right now.

394
00:25:42,020 --> 00:25:45,290
William cohan:
<i>Bill ackman is on a holy war.</i>

395
00:25:45,388 --> 00:25:49,288
Now, he may end up
being wrong about herbalife.

396
00:25:49,292 --> 00:25:52,392
Have you ever tried
herbalife's products?

397
00:25:53,161 --> 00:25:54,561
Ackman: A sip.

398
00:25:54,563 --> 00:25:56,563
I've actually heard
very negative things

399
00:25:56,264 --> 00:25:57,564
About the manufacturing
process.

400
00:25:57,565 --> 00:26:00,865
- I'm staying far away from it.

401
00:26:00,868 --> 00:26:02,868
Cohan: <i>I mean, this is the guy</i>

402
00:26:01,802 --> 00:26:04,802
<i>Who's one of</i>
<i>the more precocious,</i>
<i>uh, confident,</i>

403
00:26:04,704 --> 00:26:09,114
<i>Some people would say</i>
<i>arrogant, activist investors</i>
<i>on wall street.</i>

404
00:26:09,108 --> 00:26:11,938
<i>He's made himself</i>
<i>a lot of money,</i>

405
00:26:11,944 --> 00:26:14,014
<i>He spends a lot of that money.</i>

406
00:26:14,012 --> 00:26:18,482
Private jets,
beautiful apartments,
houses in the hamptons.

407
00:26:18,483 --> 00:26:22,353
<i>He's a master exploiter</i>
<i>of the media.</i>

408
00:26:22,353 --> 00:26:25,823
<i>People love to have him on,</i>
<i>he always makes good copy,</i>

409
00:26:25,823 --> 00:26:29,833
And he turns that copy
into riches for himself.

410
00:26:29,827 --> 00:26:34,257
And it's, frankly,
a brilliant strategy.

411
00:26:34,264 --> 00:26:38,264
Uh, look, pandg is
one of the great
companies of all time.

412
00:26:37,533 --> 00:26:39,603
Richard: <i>I remember</i>
<i>just sitting at my desk,</i>

413
00:26:39,601 --> 00:26:41,771
<i>After more than</i>
<i>a year of research,</i>

414
00:26:41,769 --> 00:26:44,839
<i>Bill ackman was being</i>
<i>interviewed about something</i>
<i>completely different...</i>

415
00:26:44,838 --> 00:26:47,838
And I'm confident
they're gonna do
the right thing.

416
00:26:45,972 --> 00:26:49,342
Real quick, you teased
in the sky investing
conference yesterday

417
00:26:49,342 --> 00:26:51,342
-That you had
a short position.
-Yes.

418
00:26:51,210 --> 00:26:52,540
-A secret short position.
-Yes.

419
00:26:52,544 --> 00:26:55,544
Would you like to
share your secret with us?

420
00:26:54,512 --> 00:26:54,782
Not yet.

421
00:26:54,778 --> 00:26:58,778
I'm sure he knew once
you put this idea out there

422
00:26:57,113 --> 00:27:00,113
Everyone would want to know,
"what is this short?"

423
00:27:00,082 --> 00:27:03,082
-I can't say.
-We gotta go to a commercial.

424
00:27:02,017 --> 00:27:05,017
I can't,
I'm happy to talk about it

425
00:27:03,218 --> 00:27:05,218
When we're ready
to talk about it.

426
00:27:05,452 --> 00:27:07,552
It's a good-for-america short.

427
00:27:07,555 --> 00:27:09,555
What I mean by that is,

428
00:27:08,355 --> 00:27:11,355
As soon as the company
goes out of business,

429
00:27:09,923 --> 00:27:12,063
The country
would be better off.

430
00:27:12,058 --> 00:27:13,058
Ackman: <i>Short selling.</i>

431
00:27:12,758 --> 00:27:18,258
Imagine for a moment that
a friend of yours
collects rare coins.

432
00:27:18,263 --> 00:27:22,303
And you have the view that
those coins are gonna go
down in value.

433
00:27:22,300 --> 00:27:25,300
So, the way you would
short those coins

434
00:27:25,303 --> 00:27:27,303
Is you call up your friend
and say,

435
00:27:26,537 --> 00:27:29,437
"can I borrow
a few of your coins?"

436
00:27:29,439 --> 00:27:31,009
And he says, "sure."

437
00:27:31,007 --> 00:27:32,637
And you borrow the coins,

438
00:27:32,641 --> 00:27:35,641
You then sell them
for the $1,000 each

439
00:27:35,477 --> 00:27:38,477
That they sell for in
the market at the time,

440
00:27:38,379 --> 00:27:41,379
And then you wait for them
to drop in value,

441
00:27:39,880 --> 00:27:44,880
And you turned out to be right
and the coins
dropped in value to $500.

442
00:27:43,550 --> 00:27:47,550
You go back into the market,
you buy them back for $500.

443
00:27:47,186 --> 00:27:51,186
You've sold them for $1,000,
you've repurchased them
for $500,

444
00:27:51,056 --> 00:27:53,056
You've made $500 on each coin,

445
00:27:52,924 --> 00:27:55,924
And then you return the coins
to your friend.

446
00:27:54,659 --> 00:27:58,659
Your friend is in
the same place he was
when he started

447
00:27:56,894 --> 00:27:59,894
And he has the same coins
that he started with.

448
00:27:58,762 --> 00:28:02,762
You might have to actually
pay him something
for borrowing the coins,

449
00:28:01,431 --> 00:28:05,431
'cause he loaned them to you,
so you might pay him
an interest rate.

450
00:28:03,966 --> 00:28:08,126
So he's happy
because he's made interest
lending you the coins,

451
00:28:08,136 --> 00:28:12,136
You've made money profiting
from the decline of
the value of the coins,

452
00:28:11,606 --> 00:28:13,436
And that's short selling.

453
00:28:13,441 --> 00:28:14,441
That's when it works.

454
00:28:14,341 --> 00:28:18,341
But if you sell it
at a high price
and it goes higher,

455
00:28:18,178 --> 00:28:20,178
<i>And it can go</i>
<i>infinitely higher,</i>

456
00:28:19,779 --> 00:28:22,879
<i>Because the stock can go</i>
<i>infinitely higher,</i>

457
00:28:22,882 --> 00:28:24,982
<i>Then you're on the hook</i>
<i>for that.</i>

458
00:28:24,984 --> 00:28:28,994
So, this is why it takes
big cojones to short stocks.

459
00:28:28,988 --> 00:28:35,288
Especially something as public
and as big as herbalife.

460
00:28:36,360 --> 00:28:40,000
Narrator: <i>At the end of 2012,</i>
<i>ackman took to the stage</i>

461
00:28:39,997 --> 00:28:42,857
<i>For the first time</i>
<i>to reveal his secret,</i>

462
00:28:42,866 --> 00:28:44,126
<i>Good-for-america short.</i>

463
00:28:44,133 --> 00:28:46,133
Just want to point out
a few things.

464
00:28:45,300 --> 00:28:47,300
We are short
the stock of herbalife.

465
00:28:47,001 --> 00:28:49,131
Herbalife stock goes down,
we make money.

466
00:28:49,136 --> 00:28:51,136
Herbalife stock goes up,
we lose money.

467
00:28:50,570 --> 00:28:56,270
Cohan: <i>The December, 2012</i>
<i>300-page presentation</i>
<i>was incredibly detailed.</i>

468
00:28:56,275 --> 00:28:57,275
<i>It's overwhelming.</i>

469
00:28:57,209 --> 00:29:00,839
Ackman: One percent get 88%
of the rewards.

470
00:29:00,845 --> 00:29:03,175
Cohan: <i>When he advocates</i>
<i>for an idea,</i>

471
00:29:03,180 --> 00:29:05,480
<i>He could sell ice</i>
<i>to the eskimos.</i>

472
00:29:05,482 --> 00:29:07,482
Ackman: <i>Recruiting rewards are</i>
<i>substantially greater</i>

473
00:29:07,116 --> 00:29:09,816
<i>Than the retail profit</i>
<i>that they generate.</i>

474
00:29:09,818 --> 00:29:12,818
<i>You can lose a lot</i>
<i>of money being short.</i>

475
00:29:11,853 --> 00:29:14,853
So, in order to be short
a pyramid scheme

476
00:29:13,588 --> 00:29:15,588
Like herbalife
and not get killed,

477
00:29:15,156 --> 00:29:18,916
You have to be prepared to
share your thinking publicly.

478
00:29:18,926 --> 00:29:20,926
Let's put it this way,

479
00:29:19,459 --> 00:29:23,459
This is the best
managed pyramid scheme
in the history of the world.

480
00:29:22,562 --> 00:29:25,562
Mr. Johnson should get
a lot of credit for that.

481
00:29:24,263 --> 00:29:29,103
Male reporter: <i>There's</i>
<i>herbalife stock down 14.6%.</i>
<i>The news bill ackman...</i>

482
00:29:29,101 --> 00:29:30,431
Richard: <i>The reaction</i>
<i>was stunning.</i>

483
00:29:30,435 --> 00:29:33,435
I mean, it felt like,
"wow, people are getting out.

484
00:29:33,304 --> 00:29:36,174
"they've seen something
that scares them."

485
00:29:36,173 --> 00:29:38,343
Johnson: <i>These guys are</i>
<i>listening to a report</i>

486
00:29:38,341 --> 00:29:41,881
<i>That was generated by</i>
<i>a research firm in new york</i>

487
00:29:41,877 --> 00:29:43,877
<i>And we sent her</i>
<i>a legal letter.</i>

488
00:29:43,745 --> 00:29:45,975
<i>This is</i>
<i>a ridiculous assertation</i>

489
00:29:45,980 --> 00:29:49,880
<i>By people who are trying</i>
<i>to manipulate our stock.</i>

490
00:29:50,215 --> 00:29:53,215
Reporter: <i>What would you say</i>
<i>to those who say</i>

491
00:29:51,250 --> 00:29:55,190
That you are trying
to manipulate the success
of the company

492
00:29:55,187 --> 00:29:57,417
-And therefore
the stock price?
-False.

493
00:29:57,422 --> 00:29:59,422
We simply want
the truth to come out.

494
00:29:59,290 --> 00:30:02,490
The moral argument that
he's making is

495
00:30:02,493 --> 00:30:05,563
Closely aligned
with his financial interests,

496
00:30:05,562 --> 00:30:09,562
And that's why he can seem
like he's holier than thou.

497
00:30:09,165 --> 00:30:12,165
If you succeed, you're gonna
be donating the money,

498
00:30:11,433 --> 00:30:13,433
By the way, to charity,
you said.

499
00:30:13,435 --> 00:30:15,065
You called it "blood money."

500
00:30:15,069 --> 00:30:16,199
-Yes.
-Because?

501
00:30:16,203 --> 00:30:18,203
Everyone says,
"well, you can't believe

502
00:30:17,571 --> 00:30:19,741
"what he says
because he short the stock

503
00:30:19,739 --> 00:30:23,739
"and he's gonna profit
from this.
You can't trust him."

504
00:30:22,274 --> 00:30:26,414
So,
by taking the economic part
out of my investment,

505
00:30:26,411 --> 00:30:28,411
I.E., giving the money away,

506
00:30:27,545 --> 00:30:30,545
It's harder for them
to make that argument.

507
00:30:29,647 --> 00:30:31,647
You know, I am a moral person,

508
00:30:31,148 --> 00:30:33,348
But we are, again,
managing capital for others,

509
00:30:33,350 --> 00:30:37,090
And it's actually
in the best interests
of our investors

510
00:30:37,087 --> 00:30:40,487
For us to bet
against the company
that's causing harm.

511
00:30:40,490 --> 00:30:42,490
<i>'cause those are</i>
<i>the kind of companies</i>

512
00:30:41,991 --> 00:30:43,461
<i>That the government</i>
<i>and regulators</i>

513
00:30:43,459 --> 00:30:47,189
<i>Will be more likely</i>
<i>to take action against.</i>

514
00:30:52,133 --> 00:30:56,503
Narrator: <i>Now,</i>
<i>two years after his first</i>
<i>herbalife presentation,</i>

515
00:30:56,505 --> 00:30:58,505
<i>Ackman is set to make</i>
<i>more revelations</i>

516
00:30:58,406 --> 00:31:02,306
<i>That he believes will</i>
<i>deliver a death blow</i>
<i>to the company.</i>

517
00:31:02,309 --> 00:31:05,209
All poor people
are being exploited.

518
00:31:05,211 --> 00:31:07,241
The deception knows no bounds.

519
00:31:07,246 --> 00:31:08,246
Yeah, it's incredible.

520
00:31:07,779 --> 00:31:12,249
Four hours later,
we get done with it,
great presentation,

521
00:31:12,250 --> 00:31:14,250
And some genius
in the audience

522
00:31:13,851 --> 00:31:16,851
Looks at the stock
and it's gone up.

523
00:31:16,086 --> 00:31:17,086
What's our response?

524
00:31:16,686 --> 00:31:21,686
It's irrelevant.
It's not going up though.
It's okay.

525
00:31:21,691 --> 00:31:23,691
Question's
whether it opens again.

526
00:31:23,125 --> 00:31:27,125
Jon silvan: What can we come
up with other than irrelevant?
Something.

527
00:31:26,695 --> 00:31:28,655
Stock's not going up.

528
00:31:29,362 --> 00:31:30,362
It's a certainty.

529
00:31:30,097 --> 00:31:33,157
Stock's irrelevant,
but it's not going up.

530
00:31:41,473 --> 00:31:44,483
Ackman:
<i>we are gonna expose</i>
<i>an incredible fraud</i>

531
00:31:44,477 --> 00:31:46,477
<i>In the way</i>
<i>they fundamentally operate.</i>

532
00:31:46,245 --> 00:31:47,245
<i>These so-called</i>
<i>nutrition clubs</i>

533
00:31:47,145 --> 00:31:50,145
<i>Where they talk about places</i>
<i>for people to get together</i>

534
00:31:49,580 --> 00:31:51,580
<i>And learn about good nutrition</i>
<i>and lose weight,</i>

535
00:31:51,281 --> 00:31:54,281
<i>That's not what's happening</i>
<i>at these venues.</i>

536
00:31:53,383 --> 00:31:57,053
Woman:
<i>ladies and gentlemen,</i>
<i>please welcome...</i>

537
00:31:57,053 --> 00:31:57,383
Thank you.

538
00:31:57,386 --> 00:32:02,616
<i>...Founder and ceo of pershing</i>
<i>square capital management,</i>
<i>mr. Bill ackman.</i>

539
00:32:10,496 --> 00:32:13,726
Richard:
<i>In the nutrition clubs,</i>
<i>herbalife has a story.</i>

540
00:32:13,733 --> 00:32:15,733
<i>It's very eager</i>
<i>to tell that story</i>

541
00:32:15,367 --> 00:32:19,067
<i>Once bill ackman</i>
<i>goes after the company.</i>

542
00:32:19,070 --> 00:32:21,070
Announcer: <i>Herbalife fitness</i>
<i>and nutrition clubs</i>

543
00:32:20,872 --> 00:32:25,142
<i>Are at the heart of how</i>
<i>herbalife is helping people</i>
<i>change their lives.</i>

544
00:32:25,142 --> 00:32:31,512
At a time when so many people
in the United States are
obese and overweight,

545
00:32:31,515 --> 00:32:33,775
<i>And in the latino community,</i>

546
00:32:33,783 --> 00:32:37,353
Where those percentages
are even higher

547
00:32:37,353 --> 00:32:39,123
Than the national average,

548
00:32:39,121 --> 00:32:43,591
It's important that there's
a company like herbalife

549
00:32:43,592 --> 00:32:47,632
<i>To send the message</i>
<i>that we need to change</i>
<i>our eating habits,</i>

550
00:32:47,629 --> 00:32:50,199
<i>That we need to change</i>
<i>our lifestyle.</i>

551
00:33:00,774 --> 00:33:03,774
Richard: <i>Initially I couldn't</i>
<i>understand how it worked.</i>

552
00:33:03,477 --> 00:33:11,177
How are lower-income people
finding the resources
to run these clubs?

553
00:33:11,716 --> 00:33:17,086
<i>And so I, several times,</i>
<i>went to go look at some</i>
<i>of these nutrition clubs.</i>

554
00:33:17,089 --> 00:33:20,789
<i>I noticed in queens,</i>
<i>herbalife has a lot of them.</i>

555
00:33:20,792 --> 00:33:26,832
<i>It's an immigrant population</i>
<i>from mexico and</i>
<i>guatemala and ecuador.</i>

556
00:33:27,831 --> 00:33:29,831
<i>You have to search</i>
<i>to find them.</i>

557
00:33:28,933 --> 00:33:32,933
<i>If you're standing</i>
<i>right in front of it,</i>
<i>you could almost miss it.</i>

558
00:33:31,769 --> 00:33:36,609
<i>Tiny little stores</i>
<i>with a green curtain</i>
<i>covering the window.</i>

559
00:33:37,840 --> 00:33:41,480
<i>There is no sign saying</i>
<i>this is an herbalife club,</i>

560
00:33:41,477 --> 00:33:44,107
<i>Or hours of operation.</i>

561
00:33:44,112 --> 00:33:44,382
Hello.

562
00:33:44,378 --> 00:33:49,148
<i>They're supposed to be clubs,</i>
<i>they're not supposed to be</i>
<i>retail establishments.</i>

563
00:33:51,517 --> 00:33:55,517
Cost you $5,000 to $6,000,
sometimes something
greater than that,

564
00:33:55,054 --> 00:33:59,054
To open one of these things,
in terms of the start-up cost.

565
00:33:58,023 --> 00:33:59,023
The rules are
fairly interesting.

566
00:33:59,024 --> 00:34:03,024
You're not allowed to display
the name of the company,
the logo,

567
00:34:01,626 --> 00:34:03,626
Or the words
"nutrition club" or "shakes"

568
00:34:02,793 --> 00:34:06,563
Or any implication that
it's an herbalife business,
outside.

569
00:34:06,563 --> 00:34:09,563
You can't advertise
and you can't promote.

570
00:34:08,765 --> 00:34:12,295
You're not allowed
to attract customers.

571
00:34:14,001 --> 00:34:17,001
Richard: <i>Can I get a shake,</i>
<i>can I buy a shake?</i>

572
00:34:16,337 --> 00:34:17,337
Man: <i>Who are you?</i>

573
00:34:16,904 --> 00:34:19,074
Richard: <i>I'm doing research.</i>
<i>Man:</i> <i>Research?</i>

574
00:34:19,072 --> 00:34:22,412
<i>-Yeah, I'm not a member.</i>
<i>-Okay, take a seat.</i>

575
00:34:22,408 --> 00:34:25,408
Richard: <i>You go in</i>
<i>and pay $5 a day.</i>

576
00:34:25,310 --> 00:34:29,280
<i>They would serve you</i>
<i>a protein shake,</i>
<i>the formula one...</i>

577
00:34:29,280 --> 00:34:34,320
<i>You also drink an aloe water</i>
<i>and you drink an herbal tea.</i>

578
00:34:34,684 --> 00:34:38,224
So, we looked at the economics
of 10 nutrition clubs

579
00:34:38,221 --> 00:34:40,221
And we had people sit outside,

580
00:34:39,956 --> 00:34:41,956
Track traffic trends,
people coming in and out...

581
00:34:41,857 --> 00:34:46,857
<i>We knew what the rent was,</i>
<i>how big they were,</i>
<i>how often they were open,</i>

582
00:34:44,626 --> 00:34:49,896
<i>Estimate the utility cost,</i>
<i>the start-up cost,</i>
<i>inventory cost for serving...</i>

583
00:34:49,897 --> 00:34:51,897
When you do the math,
you find out,

584
00:34:51,164 --> 00:34:55,164
Your average club,
these are the 10
we went to in queens,

585
00:34:54,800 --> 00:34:56,800
<i>Loses $12,000 a year.</i>

586
00:34:56,802 --> 00:35:01,802
This doesn't seem to be
a particularly good business
model and this is before

587
00:35:01,473 --> 00:35:04,273
Paying for the person
who runs the club.

588
00:35:04,275 --> 00:35:07,335
How do they make money?

589
00:35:07,344 --> 00:35:09,344
Well, tell them
it's not about shakes,

590
00:35:09,212 --> 00:35:11,512
It's about something
they call duplication.

591
00:35:11,514 --> 00:35:14,514
Let's hear it from
the horse's mouth.

592
00:35:13,182 --> 00:35:18,922
Even right now because, guys,
where your money's made is
not serving smoothies.

593
00:35:18,921 --> 00:35:23,321
Where your money's made
is having hundreds or tens

594
00:35:23,325 --> 00:35:27,685
Or thousands of distributers
around the globe.

595
00:35:28,028 --> 00:35:31,158
Here's a presentation of
how nutritional clubs work

596
00:35:31,165 --> 00:35:34,195
From one of
the top distributors.

597
00:35:34,201 --> 00:35:36,201
Important to remember,
operators need to realize

598
00:35:35,502 --> 00:35:39,502
<i>The end goal is not how many</i>
<i>$4 services they sell each day</i>

599
00:35:38,071 --> 00:35:42,071
<i>As that is not the way</i>
<i>for them to achieve</i>
<i>their financial goals.</i>

600
00:35:41,274 --> 00:35:44,274
<i>Rather it's upgrading</i>
<i>a consumer</i>
<i>to become a customer</i>

601
00:35:44,110 --> 00:35:45,110
<i>And eventually a distributor.</i>

602
00:35:44,777 --> 00:35:48,847
And ultimately having
distributors become operators
who will duplicate

603
00:35:48,847 --> 00:35:50,177
The nutrition club method.

604
00:35:50,181 --> 00:35:55,851
<i>Note the, "duplicate again</i>
<i>and again and again!"</i>

605
00:36:00,823 --> 00:36:04,863
This is previously
an herbalife nutrition club.

606
00:36:08,263 --> 00:36:10,733
Yeah, so this is turned over.

607
00:36:12,834 --> 00:36:15,304
So, the last four clubs
that were here

608
00:36:15,304 --> 00:36:18,314
A year and half ago
are no longer clubs.

609
00:36:18,307 --> 00:36:21,407
<i>There's too many</i>
<i>in one neighborhood.</i>

610
00:36:22,510 --> 00:36:25,510
Reporter: <i>And what do you</i>
<i>say to your critics,</i>

611
00:36:23,645 --> 00:36:26,645
Who say, "yeah,
but the majority of
your distributors

612
00:36:26,047 --> 00:36:27,047
"do not make any money,

613
00:36:27,048 --> 00:36:29,048
"they make less
than 1,000 bucks

614
00:36:28,215 --> 00:36:31,215
"in an entire year
and no commissions in a year?"

615
00:36:29,950 --> 00:36:34,950
I'd say 1,000 bucks?
That's a lot of money
to a lot of people.

616
00:36:34,120 --> 00:36:36,790
This is what these elitists
don't get,

617
00:36:36,789 --> 00:36:39,789
That most people come in here
for part-time income

618
00:36:38,757 --> 00:36:42,757
They're not coming in here
to recruit someone
or build an organization,

619
00:36:42,427 --> 00:36:44,127
We know all the numbers.

620
00:36:44,293 --> 00:36:46,293
Richard: <i>Herbalife's lawyers</i>
<i>will tell you that</i>

621
00:36:45,962 --> 00:36:48,432
<i>Everyone gets pointed</i>
<i>to the disclosure</i>

622
00:36:48,431 --> 00:36:52,431
<i>But when you look</i>
<i>at how it's sold,</i>
<i>person to person</i>

623
00:36:52,435 --> 00:36:55,235
<i>There's a very clever system</i>
<i>that drove</i>

624
00:36:55,237 --> 00:36:59,137
A continually
renewed group of people
to come into the business.

625
00:36:59,140 --> 00:37:01,910
--announcer:
<i>Ladies and gentlemen,</i>

626
00:37:01,909 --> 00:37:06,039
<i>Welcome to</i>
<i>the herbalife extravaganza...</i>

627
00:37:06,046 --> 00:37:11,046
Richard: <i>It's about a promise</i>
<i>that you would make it</i>
<i>to the president's team.</i>

628
00:37:10,784 --> 00:37:11,784
Man: <i>I promise you,</i>

629
00:37:11,284 --> 00:37:16,054
<i>If someone that was homeless,</i>
<i>that was lost on</i>
<i>the inside can do it,</i>

630
00:37:16,055 --> 00:37:18,455
<i>Every last person breathing,</i>

631
00:37:18,457 --> 00:37:22,757
<i>With a beating heart</i>
<i>that was born from</i>
<i>a mother and a father</i>

632
00:37:22,761 --> 00:37:25,191
<i>Can do the exact same thing.</i>

633
00:37:25,196 --> 00:37:27,196
And they see these
distributors put on stage

634
00:37:26,997 --> 00:37:28,997
At these extravaganzas
and they have

635
00:37:28,531 --> 00:37:31,771
Pins with diamonds on them
and that's the american dream.

636
00:37:31,767 --> 00:37:34,567
And the president's team,
that's basically

637
00:37:34,569 --> 00:37:38,569
Half a million dollars a year
for the rest of your life.

638
00:37:37,305 --> 00:37:42,435
Those are the top thousand
out of about
3.9 million distributors.

639
00:37:42,443 --> 00:37:44,383
Richard: All right.
<i>Muchas gracias.</i>

640
00:37:44,378 --> 00:37:48,378
Richard: <i>So,</i>
<i>this club that I went into,</i>
<i>they said to me,</i>

641
00:37:47,881 --> 00:37:52,921
<i>"come back in two years</i>
<i>and I'll be on</i>
<i>the president's team."</i>

642
00:37:53,051 --> 00:37:58,061
You so want
the people that you meet
in these clubs to succeed.

643
00:37:58,057 --> 00:38:02,257
You know, and they seem
so sincere and hopeful,

644
00:38:02,261 --> 00:38:04,261
But you know
the clubs don't last

645
00:38:03,695 --> 00:38:06,325
And I think they take
individuals' life savings

646
00:38:06,330 --> 00:38:09,860
With them when
they were convinced
to believe in this idea

647
00:38:09,866 --> 00:38:12,926
And this business opportunity.

648
00:38:15,670 --> 00:38:18,810
This is a great opportunity
for anybody, everybody

649
00:38:18,807 --> 00:38:21,937
And latinos grabbed
it a little stronger.

650
00:38:21,943 --> 00:38:25,943
What other ceo gets
to walk into their job
every day, going,

651
00:38:24,779 --> 00:38:29,209
"I'm improving lives today,
I'm making people
healthier and better."

652
00:38:29,216 --> 00:38:32,216
Their stories
are real stories,
you know at disney,

653
00:38:32,185 --> 00:38:36,185
We sold stories
and we told stories
and we're really good at it.

654
00:38:35,721 --> 00:38:37,551
Here we create stories.

655
00:38:42,960 --> 00:38:46,330
Keep: <i>The way an illegal</i>
<i>pyramid scheme works,</i>

656
00:38:46,331 --> 00:38:49,671
<i>Success is based</i>
<i>almost exclusively</i>

657
00:38:49,667 --> 00:38:53,037
<i>On the ability</i>
<i>to keep recruiting others.</i>

658
00:38:53,202 --> 00:38:57,212
<i>A new recruit comes in towards</i>
<i>the bottom of that pyramid</i>

659
00:38:57,207 --> 00:39:01,037
<i>And at any time if we stop</i>
<i>the recruitment process</i>

660
00:39:01,044 --> 00:39:07,314
<i>We find that, those people</i>
<i>at those lower levels have</i>
<i>no way to earn income.</i>

661
00:39:07,548 --> 00:39:12,148
The probability
of success declines
as the number of people join

662
00:39:12,153 --> 00:39:14,393
And we can prove
mathematically

663
00:39:14,388 --> 00:39:19,918
That 95% of these people
literally have to lose
their money.

664
00:39:21,259 --> 00:39:24,029
Fitzpatrick:
<i>Multilevel marketing</i>
<i>presents this</i>

665
00:39:24,029 --> 00:39:27,429
<i>As normal</i>
<i>business competition.</i>

666
00:39:27,798 --> 00:39:28,198
<i>For example,</i>

667
00:39:28,199 --> 00:39:32,399
<i>20 people enter a field,</i>
<i>they're all gonna</i>
<i>sell this product,</i>

668
00:39:32,403 --> 00:39:35,203
<i>Only one will probably</i>
<i>be successful.</i>

669
00:39:35,205 --> 00:39:38,865
And the other 19
just didn't have what it took.

670
00:39:39,574 --> 00:39:40,574
<i>We all understand that.</i>

671
00:39:40,442 --> 00:39:44,512
<i>You go through this in sports,</i>
<i>you go through it in school,</i>

672
00:39:44,512 --> 00:39:47,682
<i>Then you enter</i>
<i>the business world.</i>

673
00:39:47,946 --> 00:39:51,346
Competition.
That's not what this is.

674
00:39:51,350 --> 00:39:54,050
This is something
entirely different.

675
00:39:54,684 --> 00:39:56,854
<i>This is</i>
<i>a money transfer scheme,</i>

676
00:39:56,853 --> 00:39:59,853
<i>In which the one managed</i>
<i>to get the 19</i>

677
00:39:59,255 --> 00:40:03,355
<i>To give him or her</i>
<i>their money.</i>

678
00:40:10,832 --> 00:40:12,132
We are here

679
00:40:12,134 --> 00:40:16,344
By the place where my office,
my construction office was.

680
00:40:16,338 --> 00:40:18,808
<i>I was sitting in</i>
<i>my office when the</i>

681
00:40:18,807 --> 00:40:21,767
<i>Herbalife guy</i>
<i>came to knock my door.</i>

682
00:40:21,776 --> 00:40:23,936
He started showing me
the products,

683
00:40:23,944 --> 00:40:26,644
He started
preparing me things...

684
00:40:27,178 --> 00:40:29,408
Uh, teas...

685
00:40:30,781 --> 00:40:32,211
Shakes...

686
00:40:32,415 --> 00:40:36,345
<i>And they are telling me,</i>
<i>they are making lot of money.</i>

687
00:40:36,353 --> 00:40:39,623
<i>$20,000, $80,000 in a month.</i>

688
00:40:39,887 --> 00:40:43,317
So, that was something
to think a little bit.

689
00:40:43,324 --> 00:40:45,424
Help a lot of people...

690
00:40:46,392 --> 00:40:48,462
Do an easy work...

691
00:40:49,127 --> 00:40:51,457
Not dangerous anymore,
so that's why

692
00:40:51,463 --> 00:40:56,003
<i>I started switching</i>
<i>my construction business</i>
<i>to herbalife.</i>

693
00:41:01,971 --> 00:41:04,141
<i>So, I opened the club,</i>

694
00:41:04,140 --> 00:41:07,510
<i>Buying thousands of</i>
<i>dollars of products.</i>

695
00:41:09,010 --> 00:41:11,380
I was feeling,
"I found herbalife,

696
00:41:11,380 --> 00:41:13,850
"the best company
in the world."

697
00:41:15,316 --> 00:41:18,616
<i>And my upline,</i>
<i>miguel ruchiman,</i>

698
00:41:18,620 --> 00:41:21,050
<i>He helped me to fix the place.</i>

699
00:41:21,055 --> 00:41:24,715
<i>Anything that I need</i>
<i>to open the club.</i>

700
00:41:25,057 --> 00:41:27,857
<i>Like anybody can dream,</i>
<i>you know?</i>

701
00:41:30,461 --> 00:41:31,531
Nice neighborhood here.

702
00:41:31,529 --> 00:41:35,899
There is a lot of
hispanic people,
they were coming to my club.

703
00:41:36,332 --> 00:41:41,772
I was trying to do my best
for the people,
I was not pushing them

704
00:41:41,771 --> 00:41:47,041
To take the product,
I was just letting them to...

705
00:41:47,875 --> 00:41:50,775
To taste... To rest...

706
00:41:50,778 --> 00:41:53,248
To talk in my place...

707
00:41:53,479 --> 00:41:56,009
To start liking the place.

708
00:41:57,115 --> 00:42:01,645
This was my club,
nutritional club here.

709
00:42:02,252 --> 00:42:03,692
So...

710
00:42:04,020 --> 00:42:08,920
From here, all the way,
that was a big front

711
00:42:09,090 --> 00:42:10,790
Of my business.

712
00:42:12,392 --> 00:42:14,562
My upline told me,

713
00:42:14,561 --> 00:42:19,261
"the more you spend
the more you will make."

714
00:42:20,732 --> 00:42:23,032
That was the thing

715
00:42:23,367 --> 00:42:26,937
That make me feel so sad,

716
00:42:26,938 --> 00:42:29,868
Because I believed
this person.

717
00:42:29,874 --> 00:42:33,384
That I thought
he was my friend.

718
00:42:33,377 --> 00:42:39,247
Our business opportunity comes
from the sale of our products.

719
00:42:39,249 --> 00:42:42,619
<i>If I sponsor or</i>
<i>recruit 1,000 people,</i>

720
00:42:42,619 --> 00:42:43,619
I receive zero for that.

721
00:42:43,386 --> 00:42:47,386
I only start earning money
from my downline,
as we call it,

722
00:42:47,356 --> 00:42:50,716
<i>Only based on product sales</i>
<i>or consumption.</i>

723
00:42:51,459 --> 00:42:56,629
Julio ulloa: <i>I realized</i>
<i>in four months that I was</i>
<i>not making any money.</i>

724
00:42:56,631 --> 00:42:58,101
<i>He lied to me.</i>

725
00:42:58,298 --> 00:43:01,698
He was just interested in

726
00:43:02,134 --> 00:43:04,134
Making me spend all my money

727
00:43:04,036 --> 00:43:08,196
Because he was
getting commission.

728
00:43:08,471 --> 00:43:10,511
That's what I realized.

729
00:43:10,507 --> 00:43:12,907
So, one day what I did...

730
00:43:13,842 --> 00:43:16,082
I turned off everything.

731
00:43:16,243 --> 00:43:18,313
The hot water for the tea...

732
00:43:18,312 --> 00:43:20,312
I put the blenders
in one side,

733
00:43:20,213 --> 00:43:24,383
Everything,
I covered everything,
then I locked this door.

734
00:43:25,316 --> 00:43:27,176
I locked this door,

735
00:43:27,185 --> 00:43:29,115
And just got away.

736
00:43:29,385 --> 00:43:33,685
I said, "no more.
No more herbalife."

737
00:43:41,763 --> 00:43:42,763
<i>I lost a lot.</i>

738
00:43:42,698 --> 00:43:48,268
<i>I lost my money that I had</i>
<i>to keep my construction</i>
<i>company running.</i>

739
00:43:56,176 --> 00:43:58,806
This is miguel
ruchiman's club.

740
00:43:58,812 --> 00:44:02,812
This is the one who told me,
this is the best business.

741
00:44:03,181 --> 00:44:05,021
See, he's there.

742
00:44:09,453 --> 00:44:11,523
Yeah, that's him.

743
00:44:23,499 --> 00:44:26,329
<i>They took my dreams,</i>

744
00:44:26,336 --> 00:44:29,766
<i>My hope to be successful.</i>

745
00:44:43,084 --> 00:44:45,254
Narrator: <i>Just weeks after</i>
<i>bill ackman announced</i>

746
00:44:45,253 --> 00:44:46,653
<i>He was shorting</i>
<i>herbalife stock,</i>

747
00:44:46,654 --> 00:44:50,094
<i>Another wall street</i>
<i>heavyweight</i>
<i>leapt into the fray.</i>

748
00:44:50,090 --> 00:44:54,060
<i>Dramatically changing</i>
<i>the nature of</i>
<i>ackman's campaign.</i>

749
00:44:54,060 --> 00:44:57,560
Paul vigna: <i>Herbalife is up</i>
<i>much more in pre-market.</i>

750
00:44:57,563 --> 00:44:59,563
<i>Why are they up so much?</i>

751
00:44:58,530 --> 00:45:01,600
<i>'cause carl icahn,</i>
<i>the famed hedge fund trader</i>

752
00:45:01,599 --> 00:45:04,599
<i>Has taken out a big</i>
<i>stake in the company.</i>

753
00:45:04,134 --> 00:45:05,134
<i>Why has he done that?</i>

754
00:45:05,034 --> 00:45:10,034
It kind of seems like
he's done it pretty much
'cause he hates bill ackman.

755
00:45:09,138 --> 00:45:11,138
Carl icahn:
<i>most guys on wall street,</i>

756
00:45:10,906 --> 00:45:13,906
<i>I sort of like</i>
<i>and I get along with.</i>

757
00:45:12,707 --> 00:45:15,707
<i>And it's no secret,</i>
<i>I don't like ackman.</i>

758
00:45:14,375 --> 00:45:19,375
<i>I don't respect him</i>
<i>and I don't like him</i>
<i>and that's not a secret.</i>

759
00:45:18,145 --> 00:45:21,145
Carl icahn is one of
the world's richest men

760
00:45:20,680 --> 00:45:22,950
He's probably worth
like 25 billion dollars.

761
00:45:22,948 --> 00:45:26,118
<i>Carl was an activist investor,</i>
<i>you know</i>

762
00:45:26,117 --> 00:45:28,947
<i>When bill was just</i>
<i>getting out of diapers.</i>

763
00:45:28,953 --> 00:45:32,593
He essentially could
buy out this company

764
00:45:32,589 --> 00:45:34,819
And really just
crush ackman's short.

765
00:45:34,824 --> 00:45:36,824
Icahn:
<i>as far as I'm concerned,</i>

766
00:45:36,559 --> 00:45:40,559
<i>He wanted to have</i>
<i>dinner once with me,</i>
<i>I had dinner with him,</i>

767
00:45:39,128 --> 00:45:44,128
<i>And I gotta tell you, I left.</i>
<i>I couldn't figure out</i>
<i>if he was</i>

768
00:45:42,798 --> 00:45:48,298
<i>The most sanctimonious guy</i>
<i>I ever met in my life</i>
<i>or the most arrogant.</i>

769
00:45:49,002 --> 00:45:52,202
Cohan: <i>Ten years before,</i>
<i>they had invested in a deal.</i>

770
00:45:52,206 --> 00:45:56,236
Bill ackman
ended up suing icahn
for $10,000,000

771
00:45:56,243 --> 00:45:58,713
That he thought
that carl owed him.

772
00:45:58,712 --> 00:46:00,712
Ackman:
<i>he's a bully, okay.</i>

773
00:45:59,879 --> 00:46:03,879
<i>I was not in</i>
<i>a very good place</i>
<i>in my business career</i>

774
00:46:02,348 --> 00:46:04,348
<i>And carl icahn thought,</i>
<i>you know what,</i>

775
00:46:03,716 --> 00:46:06,716
<i>This guy is road kill</i>
<i>on the hedge fund highway.</i>

776
00:46:06,051 --> 00:46:09,051
<i>I'm never gonna have to worry</i>
<i>about this kid again.</i>

777
00:46:08,553 --> 00:46:10,823
<i>So, I'm not going to pay him.</i>

778
00:46:11,353 --> 00:46:13,353
They went to court
and ackman won

779
00:46:13,222 --> 00:46:17,222
And icahn ended up having to
pay him this $10,000,000,

780
00:46:16,592 --> 00:46:19,592
Which is kind of like nickel
and dimes to these guys.

781
00:46:19,328 --> 00:46:21,328
Icahn:
<i>and I'm telling you,</i>

782
00:46:20,362 --> 00:46:23,362
<i>He's like the cry-baby</i>
<i>in the school yard,</i>

783
00:46:21,730 --> 00:46:24,760
<i>You know I went</i>
<i>to a tough school</i>
<i>in queens that</i>

784
00:46:24,766 --> 00:46:27,766
<i>They used to beat up</i>
<i>the little jewish boys</i>

785
00:46:26,234 --> 00:46:29,234
<i>And he was like</i>
<i>one of these little</i>
<i>jewish boys crying</i>

786
00:46:29,003 --> 00:46:31,743
<i>That the world was</i>
<i>taking advantage of him.</i>

787
00:46:31,739 --> 00:46:34,739
<i>You know,</i>
<i>it's like in the old song</i>

788
00:46:33,507 --> 00:46:36,507
<i>You rue the day</i>
<i>I ever met the guy.</i>

789
00:46:37,809 --> 00:46:40,809
Cohan: <i>For 10 years,</i>
<i>they couldn't</i>
<i>stand each other.</i>

790
00:46:40,746 --> 00:46:45,316
<i>This sort of</i>
<i>expressed itself when icahn</i>
<i>saw a technical opportunity</i>

791
00:46:45,317 --> 00:46:50,047
<i>To put what's called</i>
<i>a "short squeeze"</i>
<i>onto bill ackman.</i>

792
00:46:50,055 --> 00:46:53,055
Some people have said this is
the ultimate short squeeze,

793
00:46:52,690 --> 00:46:54,690
We've got a stock now,

794
00:46:53,691 --> 00:46:56,061
<i>It's up 20% year to date.</i>

795
00:46:56,060 --> 00:46:58,090
Icahn:
<i>ackman has given us</i>

796
00:46:58,095 --> 00:47:01,995
<i>An opportunity</i>
<i>to buy a company</i>
<i>at a discounted price.</i>

797
00:47:01,998 --> 00:47:04,828
<i>And for that,</i>
<i>I thank him, actually.</i>

798
00:47:04,834 --> 00:47:08,574
Again, the worst thing
for a short seller

799
00:47:08,571 --> 00:47:10,571
Is when the stock goes up

800
00:47:09,905 --> 00:47:14,365
<i>Because that stock can go</i>
<i>to infinity, theoretically.</i>

801
00:47:14,376 --> 00:47:18,376
That's gonna just make
his losses massive.

802
00:47:18,579 --> 00:47:20,579
Why is the stock going up?

803
00:47:19,247 --> 00:47:24,377
Simply because carl icahn
and others have been
promoting it, that's why.

804
00:47:24,385 --> 00:47:24,775
Ultimately...

805
00:47:24,785 --> 00:47:28,315
Meaning that the people
in investment communities
believe in carl icahn

806
00:47:28,321 --> 00:47:30,321
More than they believe in you.

807
00:47:29,522 --> 00:47:32,562
Certainly on this investment,
that's the case.

808
00:47:32,558 --> 00:47:35,558
Icahn: <i>I bought it</i>
<i>'cause I really do think,</i>

809
00:47:34,092 --> 00:47:37,692
<i>It's an opportunity for</i>
<i>unemployed people</i>
<i>in these countries</i>

810
00:47:37,695 --> 00:47:42,155
<i>To make money</i>
<i>and I think the product</i>
<i>is a good product.</i>

811
00:47:42,166 --> 00:47:46,166
Cohan: <i>He's not there</i>
<i>because he believes</i>
<i>in herbalife's products</i>

812
00:47:46,003 --> 00:47:48,003
And what herbalife is
doing to lift people

813
00:47:48,005 --> 00:47:50,165
Out of poverty
and into the middle class.

814
00:47:50,173 --> 00:47:55,173
He's doing it because
he thinks he can make money
by squeezing bill ackman.

815
00:47:55,111 --> 00:47:58,111
Ackman:
<i>carl can try to orchestrate</i>
<i>a short squeeze,</i>

816
00:47:57,913 --> 00:47:59,913
<i>He can try to scare</i>
<i>my investors,</i>

817
00:47:59,547 --> 00:48:00,547
<i>From investing with me,</i>

818
00:48:00,147 --> 00:48:03,147
<i>Which sounds like</i>
<i>he's attempting to do</i>
<i>on this call.</i>

819
00:48:02,716 --> 00:48:04,246
Icahn: <i>Ackman takes</i>
<i>inordinate risk.</i>

820
00:48:04,250 --> 00:48:07,250
<i>What the hell?</i>
<i>He's not risking his money.</i>

821
00:48:06,151 --> 00:48:08,151
<i>He's risking</i>
<i>his investors' money</i>

822
00:48:08,052 --> 00:48:09,052
<i>And I'll tell you,</i>

823
00:48:08,619 --> 00:48:11,749
<i>This could be the mother</i>
<i>of all short squeezes.</i>

824
00:48:13,021 --> 00:48:16,021
Now, how long can bill ackman
hold out now?

825
00:48:15,224 --> 00:48:20,224
He's got a billion dollars bet
that this company
is going to go down.

826
00:48:18,894 --> 00:48:21,894
Man: <i>How big do you</i>
<i>think their egos are?</i>

827
00:48:20,862 --> 00:48:25,162
Icahn:
<i>then he talks about charity,</i>
<i>that's complete...</i>

828
00:48:25,166 --> 00:48:27,166
<i>He's not giving it to charity.</i>

829
00:48:26,667 --> 00:48:28,197
Reporter: <i>Carl, let me...</i>

830
00:48:28,201 --> 00:48:31,201
<i>Let me remind you that we are</i>
<i>on live television.</i>

831
00:48:31,037 --> 00:48:34,637
That kind of
defines the market
for months and months.

832
00:48:34,640 --> 00:48:38,680
<i>All the discussion about</i>
<i>what herbalife is really doing</i>

833
00:48:38,677 --> 00:48:43,277
Gets displaced and it becomes
like a big wall street circus.

834
00:48:43,281 --> 00:48:45,281
Ackman:
<i>I told carl after</i>
<i>the whole thing,</i>

835
00:48:45,116 --> 00:48:47,116
<i>He called me up</i>
<i>and he literally said,</i>

836
00:48:46,951 --> 00:48:48,951
<i>"you know,</i>
<i>bill, we can be friends now,"</i>

837
00:48:48,352 --> 00:48:51,352
<i>I wish I had a recording</i>
<i>of the conversation.</i>

838
00:48:49,519 --> 00:48:54,519
<i>I simply said to him, "look,</i>
<i>carl, you are no friend of</i>
<i>mine," and that was it.</i>

839
00:48:53,923 --> 00:48:57,923
Icahn: <i>I never said that</i>
<i>I wanted to be</i>
<i>friends with you, bill.</i>

840
00:48:57,693 --> 00:48:59,693
<i>I wouldn't be</i>
<i>friends with you,</i>

841
00:48:58,960 --> 00:49:00,960
<i>-And you said to me...</i>
<i>-Ackman:</i> <i>Okay, carl...</i>

842
00:48:59,961 --> 00:49:03,961
Icahn: <i>You'd like to be</i>
<i>friends so that we can</i>
<i>invest together.</i>

843
00:49:02,797 --> 00:49:04,797
Ackman: <i>Carl,</i>
<i>I have no interest...</i>

844
00:49:04,064 --> 00:49:07,064
<i>Do you think</i>
<i>I want to invest with you?</i>

845
00:49:05,065 --> 00:49:09,065
<i>-Okay, let's move on...</i>
<i>-Icahn:</i> <i>I wouldn't</i>
<i>invest with you</i>

846
00:49:07,400 --> 00:49:09,400
<i>If you were</i>
<i>the last man on earth.</i>

847
00:49:09,201 --> 00:49:10,831
Reporter: <i>Let's move on.</i>

848
00:49:32,989 --> 00:49:37,329
Zac kirby: <i>I was in</i>
<i>my last semester of college,</i>
<i>finishing at business school.</i>

849
00:49:37,327 --> 00:49:39,327
<i>Didn't really have</i>
<i>any job prospects,</i>

850
00:49:38,828 --> 00:49:42,828
<i>Any idea what</i>
<i>I really wanted to do</i>
<i>even at that time</i>

851
00:49:41,864 --> 00:49:44,864
<i>And I had</i>
<i>an old high school friend</i>
<i>approach me</i>

852
00:49:44,666 --> 00:49:48,926
<i>About these nutrition clubs</i>
<i>that were popping up</i>
<i>everywhere.</i>

853
00:49:49,368 --> 00:49:53,068
We're in oklahoma
and the obesity rate
is extremely high,

854
00:49:53,072 --> 00:49:54,872
It's 67% among adults

855
00:49:54,873 --> 00:49:59,783
Over the age of 30,
so a weight loss company,

856
00:50:00,042 --> 00:50:02,442
In a region where it was...

857
00:50:02,445 --> 00:50:05,075
Weight loss is greatly needed.

858
00:50:05,080 --> 00:50:07,210
I thought it'd be a good fit.

859
00:50:09,216 --> 00:50:13,216
<i>The person who signed me up</i>
<i>took me down to oklahoma city</i>

860
00:50:12,353 --> 00:50:15,093
<i>To one of their</i>
<i>success trading seminars.</i>

861
00:50:15,089 --> 00:50:18,389
<i>It's like a big</i>
<i>motivational event.</i>

862
00:50:18,958 --> 00:50:21,258
Johnson: <i>Herbalife is</i>
<i>a global nutrition company</i>

863
00:50:21,261 --> 00:50:23,131
<i>That sells our</i>
<i>products exclusively</i>

864
00:50:23,129 --> 00:50:26,199
<i>Through a network of people</i>
<i>just like you.</i>

865
00:50:26,198 --> 00:50:27,198
<i>After the presentation</i>

866
00:50:26,865 --> 00:50:29,865
<i>You will have a chance</i>
<i>to discuss our products</i>

867
00:50:29,000 --> 00:50:30,130
<i>And our business</i>
<i>opportunity</i>

868
00:50:30,134 --> 00:50:32,474
<i>With the person who</i>
<i>invited you here today.</i>

869
00:50:32,469 --> 00:50:35,039
<i>And welcome to</i>
<i>our herbalife family</i>

870
00:50:35,038 --> 00:50:36,938
<i>And our herbalife opportunity.</i>

871
00:50:39,240 --> 00:50:42,240
<i>These pres team guys,</i>
<i>they would actually</i>
<i>show you their checks</i>

872
00:50:42,077 --> 00:50:43,577
<i>What herbalife</i>
<i>was sending them.</i>

873
00:50:43,578 --> 00:50:45,578
<i>Saying how you should get</i>
<i>involved right now</i>

874
00:50:45,012 --> 00:50:48,812
<i>Because these</i>
<i>nutrition clubs could</i>
<i>easily produce, you know,</i>

875
00:50:48,815 --> 00:50:52,315
$20-30,000 in sales
apiece each month.

876
00:50:52,318 --> 00:50:56,318
So I'm thinking,
I've found a cash cow here.

877
00:50:56,322 --> 00:50:59,322
<i>Right as soon as somebody</i>
<i>gets into our club,</i>

878
00:50:58,424 --> 00:51:00,424
<i>We say,</i>
<i>"welcome to the club."</i>

879
00:50:59,725 --> 00:51:03,725
<i>And that's a little something,</i>
<i>we welcome them to the club...</i>

880
00:51:03,261 --> 00:51:05,261
<i>You know,</i>
<i>they feel the high energy</i>

881
00:51:04,662 --> 00:51:06,662
<i>That's in there,</i>
<i>there's music going.</i>

882
00:51:05,796 --> 00:51:08,796
<i>You wanna watch out how much</i>
<i>you tell him about,</i>

883
00:51:08,199 --> 00:51:09,199
<i>You know, the business,</i>

884
00:51:08,799 --> 00:51:12,799
<i>'cause they're gonna be like,</i>
<i>"they're just looking</i>
<i>to recruit me,"</i>

885
00:51:11,301 --> 00:51:13,301
<i>Or, "they're just looking for,</i>
<i>you know,</i>

886
00:51:12,835 --> 00:51:14,835
<i>"to get me into</i>
<i>their business."</i>

887
00:51:13,902 --> 00:51:15,902
<i>So you really</i>
<i>wanna start building</i>

888
00:51:15,169 --> 00:51:17,169
<i>Your relationships</i>
<i>with these people first.</i>

889
00:51:17,070 --> 00:51:18,570
<i>On that very first day,</i>

890
00:51:18,571 --> 00:51:22,211
<i>It's all part of</i>
<i>planting the seeds.</i>

891
00:51:22,207 --> 00:51:24,437
<i>You don't need</i>
<i>the whole tree yet.</i>

892
00:51:24,442 --> 00:51:27,182
<i>That'll come in time.</i>
<i>Trust me.</i>

893
00:51:27,178 --> 00:51:29,178
<i>But be patient. Do the deal.</i>

894
00:51:28,979 --> 00:51:30,979
<i>The deal is here.</i>
<i>What we're doing</i>

895
00:51:30,313 --> 00:51:33,013
<i>Inside the club, it's about</i>
<i>building herbalife.</i>

896
00:51:33,015 --> 00:51:34,605
<i>It's about duplicating.</i>

897
00:51:34,616 --> 00:51:36,616
<i>It's about</i>
<i>growing our royalty.</i>

898
00:51:36,184 --> 00:51:40,184
<i>And if we're just there,</i>
<i>just, you know,</i>
<i>slinging a bunch of shakes,</i>

899
00:51:40,054 --> 00:51:43,054
<i>And yes, having a lot</i>
<i>of fun in doing that.</i>

900
00:51:42,089 --> 00:51:45,089
<i>But the thing is,</i>
<i>is that we're there</i>

901
00:51:44,324 --> 00:51:46,864
<i>To duplicate,</i>
<i>to grow our checks.</i>

902
00:51:48,860 --> 00:51:51,860
Kirby: <i>What kind of sold</i>
<i>me on the idea was,</i>

903
00:51:51,263 --> 00:51:52,633
<i>I think, 40 nutrition clubs</i>

904
00:51:52,631 --> 00:51:54,631
<i>That opened over</i>
<i>the course of two years</i>

905
00:51:54,499 --> 00:51:56,499
<i>Down in</i>
<i>the southern part of oklahoma.</i>

906
00:51:56,167 --> 00:51:58,227
<i>So, generally when you see</i>
<i>an industry</i>

907
00:51:58,235 --> 00:52:00,795
<i>That's throwing up</i>
<i>brick and mortar storefronts</i>

908
00:52:00,804 --> 00:52:02,804
<i>At that rapid of a pace,</i>

909
00:52:01,905 --> 00:52:04,735
<i>There's some money being made.</i>

910
00:52:05,006 --> 00:52:06,006
I had student loan debt

911
00:52:05,874 --> 00:52:10,184
And I didn't have
a savings account
for sure and, uh...

912
00:52:10,178 --> 00:52:14,178
The only thing I did have was,
I have a '73 mach 1 mustang

913
00:52:13,948 --> 00:52:16,618
That I restored all
through high school.

914
00:52:17,383 --> 00:52:19,383
<i>I actually used it</i>
<i>as collateral</i>

915
00:52:18,585 --> 00:52:23,085
<i>To get a $15,000 loan</i>
<i>to actually open</i>
<i>a nutrition club.</i>

916
00:52:24,422 --> 00:52:27,062
<i>The way herbalife</i>
<i>is structured, it sets</i>

917
00:52:27,058 --> 00:52:30,428
Small goals and macro goals
for the distributor.

918
00:52:30,428 --> 00:52:33,428
The small goals
would be obtainable
and it keeps him going,

919
00:52:32,963 --> 00:52:37,133
It keeps him in it.
They start him out
at a 25% discount.

920
00:52:37,133 --> 00:52:39,173
Then later bump him up to a 35

921
00:52:39,168 --> 00:52:43,168
And then soon on to a 42
and then a 50% discount.

922
00:52:42,604 --> 00:52:45,604
So, I mean, those are little
stepping stone incentives

923
00:52:45,206 --> 00:52:47,206
To keep people in the company.

924
00:52:46,574 --> 00:52:48,574
And that,
for the average person

925
00:52:48,208 --> 00:52:50,208
Will take six months to a year

926
00:52:49,409 --> 00:52:52,739
Just to have finally achieved
that 50% discount.

927
00:52:52,745 --> 00:52:55,775
I bought in and went straight
to the 50% marker

928
00:52:55,781 --> 00:52:57,651
And opened a nutrition club.

929
00:52:58,782 --> 00:53:02,682
Announcer: <i>At herbalife,</i>
<i>your success is our business.</i>

930
00:53:02,686 --> 00:53:05,686
<i>That's why we've developed</i>
<i>a training program</i>

931
00:53:04,854 --> 00:53:07,854
<i>That can teach you everything</i>
<i>you need to know</i>

932
00:53:07,623 --> 00:53:09,093
<i>To grow a successful business.</i>

933
00:53:09,091 --> 00:53:12,091
Kirby: <i>Dan waldron,</i>
<i>he's been with the company</i>

934
00:53:11,626 --> 00:53:13,086
<i>Almost since the beginning.</i>

935
00:53:13,094 --> 00:53:14,094
I had dinner with dan

936
00:53:13,994 --> 00:53:16,994
And that really
legitimized it,
the fact that I'm meeting

937
00:53:16,029 --> 00:53:20,029
This individual who's been
in the company
for nearly 30 years.

938
00:53:19,532 --> 00:53:21,532
He's got this huge mansion.

939
00:53:21,500 --> 00:53:24,500
<i>$80,000 cars in the driveway,</i>
<i>you know.</i>

940
00:53:24,503 --> 00:53:27,543
<i>And he's sitting there</i>
<i>telling me over dinner that</i>

941
00:53:27,539 --> 00:53:31,539
"you guys have got it
so much easier than I had it

942
00:53:30,008 --> 00:53:32,008
"because you can
open a nutrition club

943
00:53:31,342 --> 00:53:33,342
"and they'll just
come to you."

944
00:53:33,277 --> 00:53:36,277
<i>So, hook, line and sinker,</i>
<i>the next three months,</i>

945
00:53:35,779 --> 00:53:38,779
<i>We were just all about opening</i>
<i>nutrition clubs because</i>

946
00:53:38,181 --> 00:53:42,681
<i>The dude at the top told me</i>
<i>this is where the money's at.</i>

947
00:53:48,523 --> 00:53:52,523
<i>I achieved</i>
<i>a level in the company,</i>
<i>they called the g.E.T. Team.</i>

948
00:53:52,461 --> 00:53:55,801
<i>Global expansion team</i>
<i>is what it stands for.</i>

949
00:53:55,797 --> 00:54:00,067
<i>You go from</i>
<i>supervisor to world team</i>
<i>to g.E.T. Team.</i>

950
00:54:00,067 --> 00:54:02,067
<i>You're halfway up the ladder.</i>

951
00:54:01,902 --> 00:54:03,972
<i>You're halfway</i>
<i>to the top already</i>

952
00:54:03,970 --> 00:54:06,200
<i>And I achieved that</i>
<i>in six months.</i>

953
00:54:06,205 --> 00:54:09,305
<i>That seemed</i>
<i>like a great start.</i>

954
00:54:10,541 --> 00:54:12,541
The only thing
that separates you

955
00:54:12,510 --> 00:54:14,680
From not getting
on the president's team

956
00:54:14,678 --> 00:54:17,578
Is one thing. Write this down.

957
00:54:18,012 --> 00:54:20,082
Giving up.

958
00:54:30,490 --> 00:54:33,490
Cohan: <i>Herbalife</i>
<i>just didn't sit there and say,</i>

959
00:54:33,126 --> 00:54:34,786
"oh, bill ackman's right.

960
00:54:34,794 --> 00:54:36,794
"we're just gonna
pull the plug

961
00:54:36,228 --> 00:54:37,228
"on this operation."

962
00:54:37,162 --> 00:54:39,432
<i>You know, they fought back.</i>

963
00:54:39,430 --> 00:54:42,400
<i>They built their</i>
<i>case in the media</i>

964
00:54:42,399 --> 00:54:44,869
<i>And with their investors.</i>

965
00:54:45,534 --> 00:54:46,534
This is a war,

966
00:54:45,935 --> 00:54:49,935
And for any of us to think
otherwise in here
would be foolish.

967
00:54:48,437 --> 00:54:51,437
<i>'cause name another company</i>
<i>this has ever happened to.</i>

968
00:54:50,572 --> 00:54:54,912
<i>This is unique in</i>
<i>the american</i>
<i>business landscape.</i>

969
00:54:54,909 --> 00:54:57,909
Female reporter:
<i>Your stock price</i>
<i>has taken a hit.</i>

970
00:54:57,111 --> 00:54:59,241
What do you say to
your shareholders?

971
00:54:59,246 --> 00:55:02,376
How they should rally
to ride out this storm.

972
00:55:02,382 --> 00:55:03,552
We're highly profitable,

973
00:55:03,549 --> 00:55:06,549
Um, we're gonna continue
to be highly profitable.

974
00:55:06,251 --> 00:55:09,451
And that stock price
will reflect the value

975
00:55:09,454 --> 00:55:11,594
That's truly in this company.

976
00:55:15,391 --> 00:55:17,391
Richard:
<i>This company has built up</i>

977
00:55:16,860 --> 00:55:18,830
<i>Such a protective armor.</i>

978
00:55:18,828 --> 00:55:23,258
<i>They have the best law firms,</i>
<i>they have the best pr firms.</i>

979
00:55:24,431 --> 00:55:28,331
<i>They hire all these</i>
<i>major sports figures</i>

980
00:55:28,335 --> 00:55:30,165
<i>To promote the brand.</i>

981
00:55:55,593 --> 00:56:00,403
Now the best pyramid schemes
try to recruit credible people

982
00:56:00,398 --> 00:56:02,928
Uh, to give them,
you know, credibility.

983
00:56:02,933 --> 00:56:03,933
<i>We've got richard carmona.</i>

984
00:56:03,867 --> 00:56:06,867
<i>He was the surgeon general</i>
<i>of the United States.</i>

985
00:56:05,635 --> 00:56:06,635
He happens to be hispanic

986
00:56:06,602 --> 00:56:09,602
And this is a person
of very high integrity.

987
00:56:09,204 --> 00:56:11,204
He's on
the board of herbalife.

988
00:56:10,872 --> 00:56:12,872
<i>And then they have</i>
<i>this nobel laureate</i>

989
00:56:12,707 --> 00:56:15,167
<i>To create credibility</i>
<i>around the products.</i>

990
00:56:15,176 --> 00:56:16,706
<i>I believe dr. Ignarro</i>

991
00:56:16,710 --> 00:56:19,240
<i>Is the wealthiest</i>
<i>nobel laureate. Why?</i>

992
00:56:19,245 --> 00:56:22,305
<i>Herbalife has paid</i>
<i>him $21.2 million</i>

993
00:56:22,314 --> 00:56:25,854
<i>For serving as the company's</i>
<i>spokesperson.</i>

994
00:56:26,416 --> 00:56:28,476
And for money...

995
00:56:28,485 --> 00:56:30,275
Well, take a look.

996
00:56:30,618 --> 00:56:33,618
<i>And I like the idea</i>
<i>of an american product</i>

997
00:56:33,622 --> 00:56:37,062
<i>Being helpful to people</i>
<i>in other parts of the world.</i>

998
00:56:37,058 --> 00:56:37,418
<i>And so,</i>

999
00:56:37,425 --> 00:56:40,425
<i>It has every combination</i>
<i>of things that I like.</i>

1000
00:56:39,393 --> 00:56:43,393
<i>I mean, the hardest part,</i>
<i>I have to tell you,</i>
<i>michael, is</i>

1001
00:56:41,995 --> 00:56:44,455
<i>We all diet and other</i>
<i>people are starving.</i>

1002
00:56:44,464 --> 00:56:48,334
<i>And you actually</i>
<i>have a product</i>
<i>that deals with both.</i>

1003
00:56:48,334 --> 00:56:49,504
<i>It's kind of amazing.</i>

1004
00:56:49,501 --> 00:56:51,071
<i>It's kind of amazing.</i>

1005
00:56:51,501 --> 00:56:53,501
I do think it's amazing.

1006
00:57:04,111 --> 00:57:06,911
and no sticking
your hands out the windows.

1007
00:57:06,914 --> 00:57:08,354
You understand me?

1008
00:57:08,580 --> 00:57:13,850
<i>I was raised</i>
<i>to be loud and proud</i>
<i>by my parents.</i>

1009
00:57:13,852 --> 00:57:17,152
<i>I do remember my mom</i>
<i>is part italian</i>

1010
00:57:17,155 --> 00:57:19,155
<i>And no one talked about that</i>

1011
00:57:18,022 --> 00:57:22,092
<i>Because they were such</i>
<i>a strong mexican family.</i>

1012
00:57:27,363 --> 00:57:29,563
<i>sometimes I could be wrong,</i>

1013
00:57:29,565 --> 00:57:32,295
<i>The mannerism in</i>
<i>which I conduct myself,</i>

1014
00:57:32,301 --> 00:57:34,301
<i>But it's out of passion.</i>

1015
00:57:35,601 --> 00:57:38,371
herbalife has
come into our community

1016
00:57:38,371 --> 00:57:40,371
Like a thief in the night.

1017
00:57:39,939 --> 00:57:41,239
Stealing from our people.

1018
00:57:41,240 --> 00:57:44,110
We say,
<i>"afuera</i> with herbalife!"

1019
00:57:45,477 --> 00:57:46,637
Herbalife!

1020
00:57:46,644 --> 00:57:49,214
<i>These people are</i>
<i>going to their gala</i>

1021
00:57:49,213 --> 00:57:51,413
<i>And, with no shame,</i>
<i>knowing that</i>

1022
00:57:51,415 --> 00:57:54,415
<i>On the other side of</i>
<i>the building are people</i>

1023
00:57:53,817 --> 00:57:57,287
<i>Who have received</i>
<i>financial harm from them.</i>

1024
00:57:57,853 --> 00:58:00,223
<i>They were preyed upon.</i>

1025
00:58:00,422 --> 00:58:01,392
Herbalife!

1026
00:58:02,791 --> 00:58:04,161
Herbalife!

1027
00:58:07,194 --> 00:58:08,494
Herbalife!

1028
00:58:22,541 --> 00:58:24,541
You guys go and
enjoy the extravaganza.

1029
00:58:24,342 --> 00:58:25,342
But what are they saying?

1030
00:58:25,242 --> 00:58:28,242
Excuse me, could you guys
get on the sidewalk, please?

1031
00:58:27,711 --> 00:58:28,811
Thank you.

1032
00:59:17,287 --> 00:59:21,517
Contreras:
<i>in 2002, my life changed.</i>

1033
00:59:22,224 --> 00:59:24,834
There was this young man,

1034
00:59:24,828 --> 00:59:27,758
That was shooting people
in the neighborhood.

1035
00:59:27,764 --> 00:59:31,534
We understand he was part of
an aryan nation gang.

1036
00:59:32,200 --> 00:59:35,440
<i>I was shot in</i>
<i>the back of my head.</i>

1037
00:59:36,370 --> 00:59:38,500
<i>When I was</i>
<i>losing consciousness</i>

1038
00:59:38,506 --> 00:59:42,006
<i>All I could think about was</i>
<i>my son and my daughter.</i>

1039
00:59:44,777 --> 00:59:47,777
<i>I think that's</i>
<i>when I was really born</i>

1040
00:59:46,846 --> 00:59:48,846
<i>Because before</i>
<i>I used to worry about</i>

1041
00:59:48,614 --> 00:59:53,224
<i>My house, my bank account,</i>
<i>that was my priorities.</i>

1042
00:59:53,218 --> 00:59:57,688
And in an instant,
your life can be taken away.

1043
00:59:57,689 --> 00:59:59,889
Maybe that's why

1044
00:59:59,891 --> 01:00:04,261
I'm so sensitive
to victims of whatever.

1045
01:00:04,262 --> 01:00:06,262
Herbalife or whatever.

1046
01:00:06,796 --> 01:00:10,126
<i>We need to be</i>
<i>understanding to them.</i>

1047
01:00:17,172 --> 01:00:20,442
Yeah, we're gonna do that.
Um...

1048
01:00:21,308 --> 01:00:22,908
Yeah, I have returned.

1049
01:00:22,910 --> 01:00:24,780
-Are you hearing?
-Yeah.

1050
01:00:24,778 --> 01:00:26,778
Okay. I can see the return...

1051
01:00:25,712 --> 01:00:27,712
Not the most comfortable
chair in the world.

1052
01:00:27,413 --> 01:00:29,583
The return is behind bill.

1053
01:00:34,251 --> 01:00:35,251
What's new?

1054
01:00:34,919 --> 01:00:38,189
We saw this idea from you
late last December.

1055
01:00:38,188 --> 01:00:40,188
Since then we saw
the stock double.

1056
01:00:40,089 --> 01:00:43,089
You need the government
to get involved. They haven't.

1057
01:00:42,424 --> 01:00:44,424
What aren't they listening to?
Tell me.

1058
01:00:43,925 --> 01:00:46,925
The stock is up from
where we shorted it.

1059
01:00:45,493 --> 01:00:48,493
We shorted it in
the mid to high 40s.

1060
01:00:46,994 --> 01:00:49,994
So we've certainly lost
money mark to market

1061
01:00:49,229 --> 01:00:51,029
But what we focus on...

1062
01:00:51,030 --> 01:00:53,030
-How much?
-You know, a lot of money.

1063
01:00:52,664 --> 01:00:54,134
Four, five hundred
million dollars.

1064
01:00:54,132 --> 01:00:55,132
Something like that.

1065
01:00:54,832 --> 01:00:57,102
Uh, but what we focus
on with herbalife

1066
01:00:57,100 --> 01:00:59,230
Is telling a story
with regulators.

1067
01:00:59,235 --> 01:01:00,695
Making sure that
they understand

1068
01:01:00,703 --> 01:01:01,703
What the issues are,

1069
01:01:01,270 --> 01:01:03,500
And getting regulators
interested in the company.

1070
01:01:03,505 --> 01:01:06,505
But the fact that
you've been so outspoken

1071
01:01:05,640 --> 01:01:07,940
And we haven't seen
anything happen yet,

1072
01:01:07,942 --> 01:01:09,112
Could one make the argument

1073
01:01:09,109 --> 01:01:11,139
You might be
helping the company?

1074
01:01:11,144 --> 01:01:13,584
Okay. People can make
whatever arguments they want.

1075
01:01:13,579 --> 01:01:16,979
I'm quite comfortable
the government
is gonna do its job.

1076
01:01:20,284 --> 01:01:23,424
Narrator: <i>With ackman</i>
<i>pressing regulators</i>
<i>to investigate,</i>

1077
01:01:23,421 --> 01:01:26,691
<i>Herbalife executives launched</i>
<i>a series of reforms.</i>

1078
01:01:26,690 --> 01:01:30,990
<i>Reducing shipping costs,</i>
<i>simplifying product returns,</i>

1079
01:01:30,994 --> 01:01:32,864
<i>And cracking down</i>
<i>on distributors</i>

1080
01:01:32,862 --> 01:01:35,432
<i>With questionable</i>
<i>side operations.</i>

1081
01:01:36,164 --> 01:01:38,474
Richard: <i>They outlawed</i>
<i>this deceptive system</i>

1082
01:01:38,467 --> 01:01:41,167
Which is referred to
as lead generation.

1083
01:01:41,169 --> 01:01:44,939
<i>Distributors would run ads</i>
<i>in television, on radio.</i>

1084
01:01:44,939 --> 01:01:47,939
<i>"be your own boss,"</i>
<i>"make unlimited income,"</i>

1085
01:01:47,942 --> 01:01:49,982
<i>And no details.</i>

1086
01:01:49,977 --> 01:01:52,277
<i>I had about $200 to my name</i>

1087
01:01:52,279 --> 01:01:55,279
<i>And so I found</i>
<i>an ad that said,</i>
<i>"work from home,"</i>

1088
01:01:55,282 --> 01:01:59,682
<i>And I called on it</i>
<i>and it happened</i>
<i>to be herbalife.</i>

1089
01:02:00,152 --> 01:02:05,962
But a big part of it was to
spam out your message.

1090
01:02:05,958 --> 01:02:08,088
That was the real income.

1091
01:02:10,094 --> 01:02:11,434
<i>The big players</i>

1092
01:02:11,429 --> 01:02:15,659
<i>Knew how to send out</i>
<i>a million emails.</i>

1093
01:02:15,666 --> 01:02:18,596
<i>And they were doing that</i>
<i>once a month.</i>

1094
01:02:20,769 --> 01:02:22,769
<i>Somebody would be sitting</i>
<i>on their computer,</i>

1095
01:02:22,505 --> 01:02:24,505
<i>All of a sudden</i>
<i>something would pop up.</i>

1096
01:02:24,507 --> 01:02:28,137
And it would say,
"lose 30 pounds,
30 days for $30.

1097
01:02:28,143 --> 01:02:30,813
"put in your credit
card number. Click here."

1098
01:02:31,344 --> 01:02:33,554
And the top
distributors would sell

1099
01:02:33,547 --> 01:02:35,577
These names and
numbers of people

1100
01:02:35,582 --> 01:02:38,122
<i>To existing</i>
<i>herbalife distributors</i>

1101
01:02:38,117 --> 01:02:41,377
For as much as $130 a name.

1102
01:02:41,386 --> 01:02:43,386
And they would be
brand new leads,

1103
01:02:43,054 --> 01:02:46,224
Someone clicked on this
five minutes ago,

1104
01:02:46,223 --> 01:02:47,293
And here's your information,

1105
01:02:47,290 --> 01:02:49,290
Call the person,
they're ready to go.

1106
01:02:49,025 --> 01:02:52,025
<i>They pick up the phone.</i>
<i>"hi, mary, this is aaron.</i>

1107
01:02:51,093 --> 01:02:54,563
<i>"don't you want to earn</i>
<i>an extra $500 a month?"</i>

1108
01:02:54,563 --> 01:02:57,803
Richard:
<i>Distributors were told,</i>
<i>you gotta buy these leads.</i>

1109
01:02:57,799 --> 01:02:58,799
<i>You gotta keep buying them.</i>

1110
01:02:58,633 --> 01:03:02,743
<i>And at some point</i>
<i>you're gonna start</i>
<i>recruiting enough people,</i>

1111
01:03:02,737 --> 01:03:03,997
<i>Who will recruit</i>
<i>enough people</i>

1112
01:03:04,004 --> 01:03:07,844
<i>That you will make it to</i>
<i>the president's team.</i>

1113
01:03:08,340 --> 01:03:09,840
These lead generation systems

1114
01:03:09,842 --> 01:03:12,182
Were so
financially devastating.

1115
01:03:12,177 --> 01:03:16,607
Because people would
not just have to
buy the products,

1116
01:03:16,614 --> 01:03:18,614
But they would buy,
in some cases,

1117
01:03:18,415 --> 01:03:20,545
<i>Thousands of dollars</i>
<i>of leads a month.</i>

1118
01:03:20,550 --> 01:03:24,620
<i>So people lost</i>
<i>their retirements,</i>
<i>and they lost their savings</i>

1119
01:03:24,620 --> 01:03:26,520
<i>Following this system.</i>

1120
01:03:27,454 --> 01:03:28,924
<i>When herbalife shut this down,</i>

1121
01:03:28,923 --> 01:03:32,823
<i>Wall street said,</i>
<i>"too bad if</i>
<i>people lost that money.</i>

1122
01:03:32,826 --> 01:03:34,826
"as long as they
clean it up,

1123
01:03:34,527 --> 01:03:36,687
"you know,
we're fine with it."

1124
01:03:37,695 --> 01:03:40,595
Johnson: <i>Build it better</i>
<i>every single day,</i>

1125
01:03:40,598 --> 01:03:42,328
And building it
better means

1126
01:03:42,333 --> 01:03:45,203
Changing a few
philosophies in the company.

1127
01:03:45,202 --> 01:03:48,202
Get rich quick.
That's for someone else to do.

1128
01:03:47,904 --> 01:03:50,904
Get healthy now.
That's for us to do.

1129
01:03:57,579 --> 01:03:59,579
Kirby: <i>We opened five</i>
<i>nutrition clubs,</i>

1130
01:03:58,881 --> 01:04:01,621
<i>Kind of spread out</i>
<i>around northern oklahoma.</i>

1131
01:04:01,617 --> 01:04:04,617
<i>And when I achieved the g.E.T.</i>
<i>Team level,</i>

1132
01:04:03,685 --> 01:04:05,685
Then the pres team
members start telling me

1133
01:04:05,620 --> 01:04:08,790
How the payout system
really works.

1134
01:04:09,822 --> 01:04:11,822
<i>I'll never forget</i>
<i>we had a meeting</i>

1135
01:04:11,758 --> 01:04:12,958
<i>At tim files' nutrition club.</i>

1136
01:04:12,959 --> 01:04:16,889
<i>He's like the head honcho</i>
<i>here in oklahoma of herbalife.</i>

1137
01:04:16,896 --> 01:04:19,296
<i>He was actually my upline.</i>

1138
01:04:19,463 --> 01:04:22,333
30k executive
president team member,

1139
01:04:22,333 --> 01:04:23,533
Tim files.

1140
01:04:26,202 --> 01:04:29,202
I'm telling you
every one of you guys

1141
01:04:27,571 --> 01:04:30,571
Have an opportunity to
live this kind of life.

1142
01:04:30,106 --> 01:04:33,206
Whatever you want,
just dream big...

1143
01:04:33,209 --> 01:04:34,209
Kirby: <i>Tim was saying</i>

1144
01:04:33,909 --> 01:04:35,909
<i>That we used to just</i>
<i>make commission</i>

1145
01:04:35,677 --> 01:04:37,307
<i>Off of our top three,</i>

1146
01:04:37,311 --> 01:04:40,311
<i>But now we're</i>
<i>also going to make it</i>

1147
01:04:38,712 --> 01:04:40,982
<i>Off our fourth,</i>
<i>fifth and sixth.</i>

1148
01:04:40,980 --> 01:04:43,410
And once you got past
your sixth downline,

1149
01:04:43,415 --> 01:04:46,415
Once you got to your
seventh, eighth and ninth,

1150
01:04:45,350 --> 01:04:49,350
There was still a pay out,
it was like half a percent.

1151
01:04:48,486 --> 01:04:51,946
So, I mean, essentially,
what he told us was,

1152
01:04:51,956 --> 01:04:52,956
It never stops.

1153
01:04:52,890 --> 01:04:55,890
And this was his
little hand motion
he would do.

1154
01:04:55,592 --> 01:04:58,862
Because he says it
just keeps going down.

1155
01:04:58,861 --> 01:05:02,831
Because it goes
down on everybody.

1156
01:05:06,799 --> 01:05:09,099
No matter where it goes.

1157
01:05:10,836 --> 01:05:13,266
I mean,
I got a degree in business.

1158
01:05:13,272 --> 01:05:14,272
It's pretty obvious...

1159
01:05:13,805 --> 01:05:18,035
That's gonna keep going down.
That's a pyramid.
It's not sustainable.

1160
01:05:18,042 --> 01:05:21,042
Ackman: <i>The idea here is</i>
<i>you're gonna</i>
<i>build this business</i>

1161
01:05:20,344 --> 01:05:24,284
<i>Only recruiting six people</i>
<i>and each of them</i>
<i>recruiting six people.</i>

1162
01:05:24,281 --> 01:05:28,281
<i>But you're coming in at</i>
<i>nearly the bottom</i>
<i>of the pyramid.</i>

1163
01:05:27,484 --> 01:05:31,654
<i>And by the time</i>
<i>you get to level 13,</i>
<i>your prospects are pretty dim.</i>

1164
01:05:31,654 --> 01:05:36,264
<i>'cause you have to</i>
<i>recruit more than twice</i>
<i>the population of the world.</i>

1165
01:05:38,492 --> 01:05:41,492
Kirby: <i>That's when I</i>
<i>started to learn more about</i>

1166
01:05:40,161 --> 01:05:43,201
<i>The different ways that</i>
<i>they use to recruit people.</i>

1167
01:05:43,197 --> 01:05:47,967
<i>Right before I got</i>
<i>into the company,</i>
<i>it was selling leads.</i>

1168
01:05:50,135 --> 01:05:55,135
<i>I'm like, "okay,</i>
<i>so I'm basically caught up</i>
<i>in a phase right now.</i>

1169
01:05:53,906 --> 01:05:56,066
"I'm in the nutrition club
phase."

1170
01:05:56,074 --> 01:06:00,074
And I was like, "and I'm
on the tail end of it."

1171
01:06:02,846 --> 01:06:03,846
<i>I'd made a mistake.</i>

1172
01:06:03,848 --> 01:06:07,848
<i>But I've signed</i>
<i>a three-year lease</i>
<i>for five clubs.</i>

1173
01:06:08,117 --> 01:06:11,487
<i>Most people will</i>
<i>recruit a new distributor,</i>

1174
01:06:11,488 --> 01:06:14,958
<i>And convince them to</i>
<i>actually take over the lease,</i>

1175
01:06:14,958 --> 01:06:17,958
And then they'll skate off
and draw commission off

1176
01:06:17,627 --> 01:06:21,897
Of the person
they'd just scammed
into taking over their lease.

1177
01:06:23,564 --> 01:06:29,404
The kind of people
that can do that,
I mean, they're crooks.

1178
01:06:29,404 --> 01:06:31,404
When you know,
when you're trying

1179
01:06:31,305 --> 01:06:33,305
To get somebody
into a business

1180
01:06:32,639 --> 01:06:37,109
That you know they
are going to fail,
that is a crook.

1181
01:06:38,510 --> 01:06:42,150
<i>I did have a close friend,</i>
<i>roommates through college,</i>

1182
01:06:42,147 --> 01:06:44,807
<i>And his</i>
<i>nutrition clubs failed.</i>

1183
01:06:44,816 --> 01:06:47,916
We had a pretty much
complete falling out

1184
01:06:47,919 --> 01:06:50,319
Over the deal because

1185
01:06:50,321 --> 01:06:53,461
I'm the one that
introduced him to herbalife.

1186
01:06:55,024 --> 01:06:57,094
<i>It was clearly</i>
<i>a pyramid scheme,</i>

1187
01:06:57,093 --> 01:06:59,093
<i>But when you're</i>
<i>that heavily invested,</i>

1188
01:06:58,694 --> 01:07:03,334
<i>It's kind of hard</i>
<i>six months in to say,</i>
<i>"oops, screwed up."</i>

1189
01:07:12,439 --> 01:07:16,679
Keep: <i>Herbalife is</i>
<i>a company with a business</i>
<i>model in an industry</i>

1190
01:07:16,677 --> 01:07:19,937
<i>That has been subject</i>
<i>to criticism for years.</i>

1191
01:07:19,946 --> 01:07:23,706
<i>But even</i>
<i>the federal trade commission</i>
<i>doesn't know the difference</i>

1192
01:07:23,716 --> 01:07:25,276
Between
an illegal pyramid scheme

1193
01:07:25,284 --> 01:07:27,354
And a legal multilevel
marketing company

1194
01:07:27,352 --> 01:07:31,452
Without having
a fact intensive inquiry.

1195
01:07:31,955 --> 01:07:34,585
Fitzpatrick: <i>They had</i>
<i>one court case against amway</i>

1196
01:07:34,591 --> 01:07:37,361
<i>That gave multilevel</i>
<i>marketing a loophole.</i>

1197
01:07:37,360 --> 01:07:39,830
<i>But far more important,</i>
<i>the government,</i>

1198
01:07:39,829 --> 01:07:42,499
<i>Starting with</i>
<i>the reagan administration,</i>

1199
01:07:42,498 --> 01:07:44,798
<i>Adopted a position</i>
<i>of deregulation</i>

1200
01:07:44,800 --> 01:07:51,700
<i>And the industry</i>
<i>started pouring millions</i>
<i>into our political system.</i>

1201
01:07:51,706 --> 01:07:52,806
<i>All with one goal.</i>

1202
01:07:52,807 --> 01:07:54,907
<i>The same goal</i>
<i>the cigarette industry had</i>

1203
01:07:54,909 --> 01:07:56,839
<i>Because like</i>
<i>the cigarette industry,</i>

1204
01:07:56,844 --> 01:08:00,784
<i>It had an existential need</i>
<i>to prevent regulation.</i>

1205
01:08:01,814 --> 01:08:03,754
It has one advantage though,

1206
01:08:03,750 --> 01:08:06,350
That the cigarette
industry didn't have.

1207
01:08:06,352 --> 01:08:11,662
Until now,
there has really been
no voice of the victim.

1208
01:08:20,464 --> 01:08:24,464
Douglas brooks:
<i>A lot of times, people think</i>
<i>the reason they fail</i>

1209
01:08:24,035 --> 01:08:26,035
<i>Is that they</i>
<i>didn't try hard enough,</i>

1210
01:08:25,002 --> 01:08:29,972
<i>Or that they weren't</i>
<i>suited to the recruiting</i>
<i>that you have to do.</i>

1211
01:08:29,973 --> 01:08:34,443
<i>But once they find</i>
<i>out that other people</i>
<i>are in the same situation,</i>

1212
01:08:34,444 --> 01:08:38,014
<i>Then they realize that</i>
<i>it wasn't their fault.</i>

1213
01:08:38,014 --> 01:08:42,424
<i>That there is a system here</i>
<i>that prevented them from</i>

1214
01:08:42,419 --> 01:08:46,289
Having the kind of success
that was portrayed to them.

1215
01:08:51,226 --> 01:08:52,256
hi, mr. Brooks.

1216
01:08:52,260 --> 01:08:54,460
Ackman: <i>In an attempt to</i>
<i>recover their losses,</i>

1217
01:08:54,462 --> 01:08:56,732
<i>The herbalife</i>
<i>distributors from chicago</i>

1218
01:08:56,730 --> 01:08:58,630
<i>Retained</i>
<i>attorney douglas brooks</i>

1219
01:08:58,631 --> 01:09:01,601
<i>To represent them</i>
<i>in the class action lawsuit,</i>

1220
01:09:01,600 --> 01:09:04,400
Bostick vs. Herbalife.

1221
01:09:04,901 --> 01:09:06,471
<i>Instead of going to trial,</i>

1222
01:09:06,470 --> 01:09:07,870
<i>Lawyers for</i>
<i>herbalife and bostick</i>

1223
01:09:07,871 --> 01:09:12,941
<i>Had agreed to</i>
<i>a cash settlement</i>
<i>of $15 million.</i>

1224
01:09:13,074 --> 01:09:16,074
<i>On the eve of</i>
<i>the federal court's approval,</i>

1225
01:09:15,110 --> 01:09:17,880
<i>The chicago group</i>
<i>has come to california</i>

1226
01:09:17,879 --> 01:09:19,779
<i>To object to the settlement.</i>

1227
01:09:19,780 --> 01:09:22,780
Fairly early on,
when I heard
about this settlement,

1228
01:09:22,482 --> 01:09:27,452
I realized that this
was a very bad deal.

1229
01:09:27,453 --> 01:09:31,123
How many of you
have ever played the lottery?

1230
01:09:35,159 --> 01:09:38,329
when you became
herbalife distributors,

1231
01:09:38,329 --> 01:09:40,329
You were buying
a lottery ticket

1232
01:09:40,297 --> 01:09:43,057
For a lottery that
was already over.

1233
01:09:43,066 --> 01:09:48,196
<i>The class is approximately</i>
<i>1.5 million herbalife</i>
<i>distributors.</i>

1234
01:09:48,204 --> 01:09:52,914
<i>Herbalife is paying</i>
<i>a settlement</i>
<i>fund of $15 million,</i>

1235
01:09:52,908 --> 01:09:56,008
Which works out to
about $10 a person.

1236
01:09:56,011 --> 01:09:58,911
- Tomorrow in court...

1237
01:09:58,913 --> 01:10:02,183
<i>I'm saying to</i>
<i>the judge that at least</i>

1238
01:10:02,182 --> 01:10:04,952
<i>280,000 people</i>
<i>reached supervisor level</i>

1239
01:10:04,951 --> 01:10:10,991
<i>And the average losses</i>
<i>are around 8,000</i>
<i>or maybe even more.</i>

1240
01:10:11,556 --> 01:10:14,756
I think that the aggregate
damages for the class

1241
01:10:14,760 --> 01:10:18,530
Are between $700 million
and $1.1 billion.

1242
01:10:18,530 --> 01:10:22,030
I want the judge to see
that there are real people

1243
01:10:22,033 --> 01:10:25,533
Who have been really damaged
by this company.

1244
01:10:25,536 --> 01:10:30,336
The rules are that the judge
has to find that
the settlement is

1245
01:10:30,340 --> 01:10:33,540
Fair, reasonable and adequate.

1246
01:10:34,175 --> 01:10:37,175
<i>I had each of these people</i>
<i>sign a declaration</i>

1247
01:10:36,244 --> 01:10:40,954
<i>About their experiences</i>
<i>and their objection</i>
<i>to the settlement.</i>

1248
01:10:40,948 --> 01:10:44,218
<i>They understood that</i>
<i>this is a long shot.</i>

1249
01:10:49,421 --> 01:10:52,421
if you wanna
come here in the circle.

1250
01:10:56,460 --> 01:11:02,430
Father god, I ask you today
to call upon our ancestors,

1251
01:11:02,433 --> 01:11:05,003
And I call upon you,
mother earth,

1252
01:11:05,002 --> 01:11:08,302
To come into
the life of douglas brooks.

1253
01:11:08,305 --> 01:11:10,305
Brooks: <i>Thirty-three years</i>
<i>of practicing law,</i>

1254
01:11:09,806 --> 01:11:15,536
<i>I've never had clients put me</i>
<i>in the middle of</i>
<i>a prayer circle.</i>

1255
01:11:16,378 --> 01:11:19,378
Contreras: I ask you to hold
each one of our victims

1256
01:11:19,048 --> 01:11:21,048
And douglas brooks
by their hand,

1257
01:11:20,716 --> 01:11:27,846
And that inside of douglas
is the energy of
the holy spirit, father god.

1258
01:11:27,856 --> 01:11:29,086
Amen.

1259
01:11:29,090 --> 01:11:29,990
Amen.

1260
01:11:29,990 --> 01:11:32,720
It brought home to me

1261
01:11:32,726 --> 01:11:36,386
That this is not just
an abstract legal issue.

1262
01:11:36,396 --> 01:11:40,056
This is something
that affects people's lives.

1263
01:11:40,632 --> 01:11:42,832
<i>If I can do</i>
<i>something to help them,</i>

1264
01:11:42,835 --> 01:11:47,865
<i>That will make me feel like</i>
<i>I'm doing</i>
<i>something meaningful.</i>

1265
01:11:52,977 --> 01:11:54,377
<i>Questions?</i>

1266
01:11:55,345 --> 01:11:56,375
Yes, sir.

1267
01:11:56,380 --> 01:11:57,380
<i>I don't understand something.</i>

1268
01:11:57,047 --> 01:12:01,047
<i>You got this nice presentation</i>
<i>which you spent</i>
<i>a lot of money on.</i>

1269
01:12:00,750 --> 01:12:04,850
<i>Everybody is</i>
<i>clueless except for you.</i>

1270
01:12:04,854 --> 01:12:05,854
<i>I don't understand.</i>

1271
01:12:05,454 --> 01:12:08,454
<i>Tell me why is carl icahn</i>
<i>making a mistake?</i>

1272
01:12:07,589 --> 01:12:11,859
<i>Show me exactly the illegality</i>
<i>that herbalife is doing</i>

1273
01:12:11,859 --> 01:12:13,859
<i>To get this company shut down.</i>

1274
01:12:13,560 --> 01:12:14,560
<i>I don't see it.</i>

1275
01:12:14,060 --> 01:12:17,060
<i>And why is everybody else</i>
<i>on the other side?</i>

1276
01:12:16,896 --> 01:12:20,026
Okay, well,
sounds like you're bull.

1277
01:12:20,032 --> 01:12:23,032
No, no.
I'm not a bull, or a bear.

1278
01:12:22,934 --> 01:12:24,934
By the way,
it's a great question.

1279
01:12:23,801 --> 01:12:26,801
Okay, it's a great question.
Let me answer it.

1280
01:12:25,903 --> 01:12:27,303
<i>Give me a great answer.</i>

1281
01:12:27,304 --> 01:12:30,304
We've had an army
working on this project.

1282
01:12:29,806 --> 01:12:33,166
Hundreds of people,
investigators, lawyers.

1283
01:12:33,176 --> 01:12:37,176
Carl icahn didn't do
the kind of due
diligence we did.

1284
01:12:35,845 --> 01:12:39,975
Look, the nutrition club thing
is designed to be secretive.

1285
01:12:39,982 --> 01:12:41,512
This is an ingenious fraud.

1286
01:12:41,516 --> 01:12:47,286
You go after people who are
the lowest income,
most unsophisticated,

1287
01:12:47,288 --> 01:12:48,418
Many of them are undocumented.

1288
01:12:48,422 --> 01:12:52,222
You don't complain when you're
an undocumented immigrant

1289
01:12:52,225 --> 01:12:55,225
Because you might
get thrown out of the country.

1290
01:12:54,827 --> 01:12:57,157
Are all of these
latino distributors

1291
01:12:57,162 --> 01:12:58,932
Documented here in the us?

1292
01:12:58,930 --> 01:13:00,930
So, every
distributor that signs up,

1293
01:12:59,830 --> 01:13:02,830
First they provide us
with a taxpayer id number.

1294
01:13:02,232 --> 01:13:04,232
That is our obligation
to ensure

1295
01:13:03,733 --> 01:13:06,733
That us taxes are being
paid by all our distributors.

1296
01:13:06,001 --> 01:13:08,841
Well, then, what is
a "no-fly distributor"?

1297
01:13:08,837 --> 01:13:11,837
Because that doesn't
seem to make sense to me.

1298
01:13:10,905 --> 01:13:12,905
When you look
at the rewards,

1299
01:13:12,673 --> 01:13:14,973
Points that you
get within herbalife,

1300
01:13:14,975 --> 01:13:17,175
You have those eligible
to go on

1301
01:13:17,177 --> 01:13:18,477
Cruises and airplanes,

1302
01:13:18,478 --> 01:13:21,478
But then a separate group
that are no-fly.

1303
01:13:21,080 --> 01:13:22,080
What does that mean?

1304
01:13:21,747 --> 01:13:23,747
So, that's not part
of our terminology.

1305
01:13:23,715 --> 01:13:26,245
Our focus is on supporting
all the distributors.

1306
01:13:26,250 --> 01:13:29,250
Woman: They don't know what
a "no-fly distributor" is?

1307
01:13:28,252 --> 01:13:31,622
It's not something
that's in our terminology.

1308
01:13:34,256 --> 01:13:35,956
Narrator: <i>Late in 2013,</i>

1309
01:13:35,958 --> 01:13:39,228
<i>Herbalife stock soared</i>
<i>towards an all-time high</i>

1310
01:13:39,227 --> 01:13:40,927
<i>As a series of developments</i>

1311
01:13:40,928 --> 01:13:43,758
<i>Undercut ackman's</i>
<i>short position.</i>

1312
01:13:44,063 --> 01:13:45,063
<i>He went after belgium,</i>

1313
01:13:44,964 --> 01:13:47,964
<i>When belgium looked like</i>
<i>it was going in his favor.</i>

1314
01:13:47,099 --> 01:13:49,099
<i>And when belgium</i>
<i>came out in our favor,</i>

1315
01:13:48,700 --> 01:13:50,930
<i>Actually discrediting</i>
<i>ackman's thesis,</i>

1316
01:13:50,935 --> 01:13:52,895
<i>It was no longer important.</i>

1317
01:13:53,636 --> 01:13:55,636
Bill ackman at
one point had said,

1318
01:13:54,971 --> 01:13:57,971
He didn't believe the audit
would come back clean.

1319
01:13:57,506 --> 01:13:58,466
It did.

1320
01:13:58,473 --> 01:14:00,773
<i>That stock right now is up 7%.</i>

1321
01:14:00,775 --> 01:14:02,875
<i>This is viewed as</i>
<i>a very positive move.</i>

1322
01:14:02,877 --> 01:14:04,877
<i>What does this news</i>
<i>mean to you, carl?</i>

1323
01:14:04,612 --> 01:14:08,612
Icahn: <i>You know</i>
<i>sometimes investment</i>
<i>is just sort of a no-brainer.</i>

1324
01:14:08,048 --> 01:14:10,148
<i>I think this one,</i>
<i>when I bought it,</i>

1325
01:14:10,150 --> 01:14:12,120
<i>Obviously it was.</i>

1326
01:14:13,351 --> 01:14:15,991
<i>You've laid out</i>
<i>an argument today</i>

1327
01:14:15,987 --> 01:14:18,547
<i>That seems, frankly,</i>
<i>largely circumstantial.</i>

1328
01:14:18,556 --> 01:14:21,686
<i>And so...</i>
<i>Maybe you could</i>
<i>connect the dots.</i>

1329
01:14:21,692 --> 01:14:24,692
There's nothing
circumstantial about it.
We have facts.

1330
01:14:24,227 --> 01:14:27,427
It seems like all of
wall street is against you.

1331
01:14:27,430 --> 01:14:30,230
Analysts,
investment bankers...

1332
01:14:30,232 --> 01:14:33,102
Ackman: <i>People on wall street,</i>
<i>it seems,</i>

1333
01:14:33,101 --> 01:14:35,101
<i>Don't really</i>
<i>care whether or not</i>

1334
01:14:34,402 --> 01:14:36,442
<i>The company is</i>
<i>a pyramid scheme.</i>

1335
01:14:36,437 --> 01:14:37,437
All they really care about

1336
01:14:37,271 --> 01:14:39,271
Is the stock price
in the short term.

1337
01:14:40,306 --> 01:14:44,306
<i>Since you haven't looked</i>
<i>at the stock price,</i>
<i>I'll tell you,</i>

1338
01:14:43,176 --> 01:14:45,906
<i>It's up about 13%</i>
<i>bouncing around.</i>

1339
01:14:45,912 --> 01:14:47,912
Herbalife is
gonna use the fact

1340
01:14:47,146 --> 01:14:49,146
That the stock price
is up today

1341
01:14:47,946 --> 01:14:50,946
To say that
everyone is ignoring
what we have to say.

1342
01:14:50,214 --> 01:14:53,214
My advice is
you probably
shouldn't ignore it.

1343
01:14:53,982 --> 01:14:54,652
Next?

1344
01:14:54,650 --> 01:14:59,120
It's not a good idea to take
moral issues to wall street

1345
01:14:59,121 --> 01:15:01,791
And have them be the judge.

1346
01:15:01,790 --> 01:15:05,360
<i>But at heart,</i>
<i>it is a moral issue.</i>

1347
01:15:15,535 --> 01:15:19,535
Ackman: <i>I think a good model</i>
<i>in terms of how to behave,</i>

1348
01:15:17,738 --> 01:15:21,208
<i>Is to think about</i>
<i>how your actions</i>
<i>would be perceived</i>

1349
01:15:21,208 --> 01:15:24,208
<i>If they were written about</i>
<i>on the front page</i>

1350
01:15:22,576 --> 01:15:24,976
<i>Of</i> the new york
times <i>tomorrow,</i>

1351
01:15:24,978 --> 01:15:26,978
<i>And your friends</i>
<i>and your family</i>

1352
01:15:26,980 --> 01:15:28,980
<i>Open up the paper</i>
<i>and they read it,</i>

1353
01:15:28,948 --> 01:15:31,448
<i>It accurately</i>
<i>describes your behavior.</i>

1354
01:15:31,450 --> 01:15:34,450
<i>And is that a story</i>
<i>you'd like them to read?</i>

1355
01:15:34,319 --> 01:15:37,319
<i>To learn more</i>
<i>about the wonderful</i>
<i>things you're doing,</i>

1356
01:15:36,087 --> 01:15:40,217
<i>Or is it a story that would</i>
<i>cause them to</i>
<i>think ill of you?</i>

1357
01:15:40,224 --> 01:15:43,364
If your actions would cause
your friends to be concerned,

1358
01:15:43,360 --> 01:15:44,360
If they understood the facts

1359
01:15:44,194 --> 01:15:47,194
On the front page of
<i>the new york times,</i>

1360
01:15:46,429 --> 01:15:48,499
Then you shouldn't do it.

1361
01:15:49,263 --> 01:15:52,163
Narrator: <i>Fifteen months</i>
<i>after his opening salvo</i>

1362
01:15:52,166 --> 01:15:52,756
<i>Against herbalife,</i>

1363
01:15:52,766 --> 01:15:55,496
<i>Ackman did find himself</i>
<i>on the front page</i>

1364
01:15:55,502 --> 01:15:56,502
<i>Of</i> the new york times,

1365
01:15:56,503 --> 01:16:00,273
<i>But in a way he neither</i>
<i>anticipated nor welcomed.</i>

1366
01:16:00,273 --> 01:16:04,273
Michael schmidt:
<i>This is a guy who made a bet</i>
<i>against a company,</i>

1367
01:16:03,676 --> 01:16:05,936
<i>Who's now trying</i>
<i>to get regulators</i>

1368
01:16:05,944 --> 01:16:07,814
<i>To bring down that company.</i>

1369
01:16:07,812 --> 01:16:09,142
He needs to have victims.

1370
01:16:09,146 --> 01:16:12,146
These people that have been
harmed by this company,

1371
01:16:12,149 --> 01:16:14,149
Able to connect
with the regulators,

1372
01:16:14,050 --> 01:16:17,420
And show the regulators
how they'd been hurt by this.

1373
01:16:17,420 --> 01:16:20,750
<i>He's been paying non-profit</i>
<i>hispanic groups</i>

1374
01:16:20,756 --> 01:16:22,856
<i>For their help in this.</i>

1375
01:16:22,858 --> 01:16:25,188
Richard: <i>Undocumented</i>
<i>former distributors</i>

1376
01:16:25,193 --> 01:16:27,193
<i>Are not going to</i>
<i>go to the government</i>

1377
01:16:26,427 --> 01:16:29,457
<i>And give them their name</i>
<i>and their information.</i>

1378
01:16:29,463 --> 01:16:31,463
<i>Which people tend not to do</i>

1379
01:16:31,097 --> 01:16:34,567
<i>When they've been victims of</i>
<i>pyramid schemes anyway.</i>

1380
01:16:34,567 --> 01:16:36,567
They feel ashamed.
They feel embarrassed.

1381
01:16:36,068 --> 01:16:40,538
They feel they've been
part of perpetuating
the crime.

1382
01:16:40,804 --> 01:16:44,574
Ackman: <i>So we reached out</i>
<i>to latino grassroots</i>
<i>organizations</i>

1383
01:16:44,575 --> 01:16:46,975
<i>For a national victim</i>
<i>recruiting campaign.</i>

1384
01:16:46,977 --> 01:16:51,477
<i>I think we</i>
<i>committed as much as</i>
<i>$130,000 to that effort.</i>

1385
01:16:51,481 --> 01:16:53,811
Mr. Ackman has made
a lot of donations

1386
01:16:53,816 --> 01:16:56,076
To these non-profit
organizations,
stuff like that,

1387
01:16:56,084 --> 01:16:58,084
That we simply
don't know about.

1388
01:16:57,552 --> 01:16:59,652
We only know a sliver of that.

1389
01:17:00,320 --> 01:17:01,320
<i>So people question,</i>

1390
01:17:01,021 --> 01:17:03,591
<i>Is he simply bringing</i>
<i>the information to regulators,</i>

1391
01:17:03,590 --> 01:17:08,130
<i>Or is he doing things that</i>
<i>maybe he shouldn't be doing?</i>

1392
01:17:08,526 --> 01:17:10,656
Ackman: <i>The day after</i>
<i>this fairly horrible</i>

1393
01:17:10,662 --> 01:17:11,662
New york times <i>article,</i>

1394
01:17:11,329 --> 01:17:13,329
<i>I was having</i>
<i>an advisory board meeting.</i>

1395
01:17:12,863 --> 01:17:15,863
<i>I said,</i>
<i>"look, what do we have to do?</i>

1396
01:17:15,031 --> 01:17:18,031
<i>"I can't believe</i>
<i>the government hasn't acted."</i>

1397
01:17:17,400 --> 01:17:21,400
<i>And maybe</i>
<i>the right thing to do</i>
<i>is we cover the position,</i>

1398
01:17:20,269 --> 01:17:22,899
<i>And just decide that</i>
<i>we're somehow interfering.</i>

1399
01:17:22,905 --> 01:17:24,905
<i>Because</i>
<i>the government is afraid to</i>

1400
01:17:24,339 --> 01:17:26,339
<i>Step into a situation</i>
<i>with a short seller.</i>

1401
01:17:26,007 --> 01:17:28,307
<i>We actually had a discussion.</i>

1402
01:17:29,742 --> 01:17:33,742
In the middle of
that discussion,
I got a call from our trader.

1403
01:17:33,580 --> 01:17:37,720
Our head trader, ramy, said,
"bill, herbalife stock's
been halted."

1404
01:17:37,717 --> 01:17:42,717
And I said,
"perhaps there is a god."

1405
01:17:44,656 --> 01:17:46,656
Less than 90 minutes ago,
we learned

1406
01:17:46,625 --> 01:17:47,715
The controversial maker

1407
01:17:47,726 --> 01:17:49,056
Of health shakes
and supplements

1408
01:17:49,060 --> 01:17:50,490
Has been served with notice

1409
01:17:50,494 --> 01:17:51,994
By the federal
trade commission

1410
01:17:51,995 --> 01:17:53,055
That it will be investigated.

1411
01:17:53,062 --> 01:17:56,502
Male reporter:
<i>The investigation could last</i>
<i>six months to a year.</i>

1412
01:17:56,498 --> 01:17:58,928
<i>The stock has</i>
<i>just taken a pounding</i>

1413
01:17:58,933 --> 01:18:00,633
<i>And is actually giving ackman</i>

1414
01:18:00,634 --> 01:18:02,404
<i>Back to somewhat</i>
<i>near breakeven.</i>

1415
01:18:02,402 --> 01:18:05,072
Female reporter: <i>Herbalife</i>
<i>says it welcomes the inquiry,</i>

1416
01:18:05,071 --> 01:18:07,701
<i>And is "confident that</i>
<i>herbalife is in compliance</i>

1417
01:18:07,706 --> 01:18:10,536
<i>"with all applicable</i>
<i>laws and regulations."</i>

1418
01:18:10,542 --> 01:18:12,112
This is the one thing

1419
01:18:12,110 --> 01:18:14,010
That herbalife
wanted to avoid,

1420
01:18:14,011 --> 01:18:16,011
I can tell you that,
from day one.

1421
01:18:16,311 --> 01:18:18,311
Icahn:
<i>Now with the ftc in there,</i>

1422
01:18:17,746 --> 01:18:21,746
<i>I'm just hoping that</i>
<i>we get a clean bill of health,</i>

1423
01:18:19,914 --> 01:18:22,884
<i>'cause I really do</i>
<i>think that this company...</i>

1424
01:18:22,883 --> 01:18:25,423
<i>Yeah, yeah,</i>
<i>did some marketing stuff.</i>

1425
01:18:25,418 --> 01:18:26,418
<i>Was that wrong?</i>

1426
01:18:26,085 --> 01:18:28,385
<i>Look, do they make promises?</i>
<i>Possibly,</i>

1427
01:18:28,387 --> 01:18:32,387
<i>But there was</i>
<i>also a lot of people</i>
<i>earning a lot of money.</i>

1428
01:18:31,022 --> 01:18:34,922
<i>And ackman has this mantle,</i>
<i>"I'm saving the hispanics."</i>

1429
01:18:34,925 --> 01:18:37,625
<i>Why doesn't he</i>
<i>go save himself?</i>

1430
01:18:39,762 --> 01:18:43,762
Female anchor: We wanna
bring you an update
on this breaking news story

1431
01:18:43,398 --> 01:18:44,128
On herbalife.

1432
01:18:44,132 --> 01:18:46,272
Herbalife is now
being investigated

1433
01:18:46,267 --> 01:18:48,397
By the fbi,
by federal authorities,

1434
01:18:48,402 --> 01:18:50,402
<i>And this looks</i>
<i>like an escalation</i>

1435
01:18:49,836 --> 01:18:51,836
<i>Of the probe,</i>
<i>but the company themselves,</i>

1436
01:18:51,304 --> 01:18:54,344
<i>Saying they have</i>
<i>no knowledge of it whatsoever.</i>

1437
01:18:54,340 --> 01:18:57,940
Ackman: <i>You've got multiple</i>
<i>government regulators,</i>
<i>agencies</i>

1438
01:18:57,943 --> 01:18:59,943
<i>Looking at the company</i>
<i>from civil</i>

1439
01:18:59,611 --> 01:19:00,941
<i>And criminal point of view.</i>

1440
01:19:00,945 --> 01:19:02,945
<i>And I think</i>
<i>that's where the rubber</i>

1441
01:19:02,479 --> 01:19:03,479
<i>Ultimately meets the road,</i>

1442
01:19:03,446 --> 01:19:05,446
<i>In terms of</i>
<i>whether or not herbalife</i>

1443
01:19:04,814 --> 01:19:06,854
<i>Gets found to be</i>
<i>a pyramid scheme.</i>

1444
01:19:07,381 --> 01:19:10,381
-Man: <i>A quick question...</i>
<i>-Wait. I'm gonna go...</i>

1445
01:19:10,385 --> 01:19:12,385
My father is
asking a question.

1446
01:19:11,753 --> 01:19:14,753
It is always risky to
call on your father.

1447
01:19:14,454 --> 01:19:19,364
<i>The definition of</i>
<i>a pyramid scheme</i>
<i>is what, bill?</i>

1448
01:19:19,359 --> 01:19:22,759
<i>And how close are you</i>
<i>getting to be able to prove</i>

1449
01:19:22,762 --> 01:19:24,762
<i>That it is a pyramid scheme?</i>

1450
01:19:23,963 --> 01:19:27,503
- Dad, if you don't
know it by now...

1451
01:19:39,643 --> 01:19:42,313
Brooks:
<i>I've always hated bullies.</i>

1452
01:19:42,712 --> 01:19:47,152
<i>People that use their</i>
<i>force of personality</i>

1453
01:19:47,150 --> 01:19:49,020
<i>To push other people around.</i>

1454
01:19:49,817 --> 01:19:51,817
-Good morning, mr. Brooks.
-Good morning.

1455
01:19:51,719 --> 01:19:54,719
<i>When I look at</i>
<i>the victims of these things,</i>

1456
01:19:54,154 --> 01:19:57,764
<i>I hope I can do something</i>
<i>to fight back</i>

1457
01:19:57,757 --> 01:19:59,417
<i>Against the bullies.</i>

1458
01:19:59,924 --> 01:20:01,264
We're ready.

1459
01:20:01,758 --> 01:20:02,758
So am I.

1460
01:20:02,025 --> 01:20:06,025
And we're gonna put these away
when we get to the courthouse.

1461
01:20:06,827 --> 01:20:09,497
We object to the settlement!

1462
01:20:09,497 --> 01:20:10,427
Herbalife!

1463
01:20:11,932 --> 01:20:13,332
Herbalife!

1464
01:20:18,203 --> 01:20:21,943
Brooks: <i>Today's hearing is</i>
<i>a final approval hearing.</i>

1465
01:20:21,941 --> 01:20:26,811
<i>I filed a fairly lengthy</i>
<i>objection to the settlement.</i>

1466
01:20:26,812 --> 01:20:32,552
For herbalife to get a release
from 1.5 million class members

1467
01:20:32,551 --> 01:20:34,781
In exchange for $15 million,

1468
01:20:34,786 --> 01:20:36,686
Is getting off very cheap.

1469
01:20:36,687 --> 01:20:39,247
We're gonna
follow you in, okay?

1470
01:20:39,256 --> 01:20:41,156
Okay, yes.

1471
01:20:42,024 --> 01:20:46,494
Brooks: <i>I hope that</i>
<i>the judge comes out and says,</i>

1472
01:20:46,495 --> 01:20:48,995
<i>"I'm really troubled</i>
<i>by this settlement.</i>

1473
01:20:48,997 --> 01:20:52,197
<i>"I think mr. Brooks</i>
<i>and his objectors</i>

1474
01:20:52,200 --> 01:20:54,770
<i>"have raised some concerns,</i>

1475
01:20:54,769 --> 01:20:57,469
"and I'm not gonna
approve this deal."

1476
01:20:57,471 --> 01:20:59,371
I mean, that's my...

1477
01:20:59,372 --> 01:21:01,342
That's my dream.

1478
01:21:18,589 --> 01:21:22,589
Well, every once in a while
you get kicked in the head,

1479
01:21:22,327 --> 01:21:25,057
And I just got
kicked in the head.

1480
01:21:25,063 --> 01:21:25,763
Oh, yeah.

1481
01:21:25,763 --> 01:21:27,833
I think there's
very little doubt

1482
01:21:27,831 --> 01:21:30,571
That she is going to
approve this settlement.

1483
01:21:30,567 --> 01:21:33,827
She rejected every
argument that I made.

1484
01:21:33,836 --> 01:21:36,896
I didn't score a single point.

1485
01:21:37,738 --> 01:21:41,008
Nothing... Nothing moved her.

1486
01:21:41,008 --> 01:21:42,568
Not the slightest.

1487
01:21:42,576 --> 01:21:45,576
Contreras:
Whatever decision she makes,

1488
01:21:45,579 --> 01:21:46,839
We won today,

1489
01:21:46,846 --> 01:21:49,206
Because you
brought our message.

1490
01:21:49,215 --> 01:21:52,345
And for her to say
it didn't matter,

1491
01:21:52,351 --> 01:21:53,351
They do matter.

1492
01:21:53,218 --> 01:21:55,888
And we're not
gonna stop this fight.

1493
01:21:55,887 --> 01:21:58,047
We thank you. I thank you.

1494
01:21:58,055 --> 01:21:59,485
-Yeah. Thank you.
-Thank you.

1495
01:22:02,891 --> 01:22:05,091
Thank you.
Thank you for helping us.

1496
01:22:05,094 --> 01:22:11,334
I'm very afraid that herbalife
are going to say to the ftc,

1497
01:22:11,333 --> 01:22:13,533
"look,
a federal district judge

1498
01:22:13,535 --> 01:22:14,535
"has approved a settlement.

1499
01:22:14,269 --> 01:22:17,699
"we've got a release
from 1.5 million
class members,

1500
01:22:17,705 --> 01:22:19,705
"we paid a bunch of money..."

1501
01:22:19,006 --> 01:22:22,006
<i>And there's gonna be at least</i>
<i>a faction</i>

1502
01:22:21,575 --> 01:22:23,575
<i>Within the ftc that will say,</i>

1503
01:22:22,909 --> 01:22:25,909
<i>"well, why shouldn't we</i>
<i>just sort of go onboard?</i>

1504
01:22:25,411 --> 01:22:27,411
<i>"maybe we'll make</i>
<i>them pay a fine.</i>

1505
01:22:27,312 --> 01:22:31,112
<i>"but basically we're not</i>
<i>going to go to the heart</i>

1506
01:22:31,115 --> 01:22:36,485
<i>"of why this industry is gonna</i>
<i>continue to burn people."</i>

1507
01:22:40,957 --> 01:22:43,957
Ackman: So how could they have
gotten away with this?

1508
01:22:43,660 --> 01:22:47,230
What pyramid scheme
has five billion in revenues,

1509
01:22:47,230 --> 01:22:49,360
Is listed on the new
york stock exchange,

1510
01:22:49,365 --> 01:22:51,325
Is audited by pricewaterhouse?

1511
01:22:51,333 --> 01:22:55,903
Now big lies are used
by totalitarian regimes,

1512
01:22:55,904 --> 01:22:59,074
And by the nazis,
and by lots of people.

1513
01:22:59,073 --> 01:23:01,873
And people
generally believe big lies

1514
01:23:01,875 --> 01:23:03,265
Because they are so bold,

1515
01:23:03,276 --> 01:23:06,136
That how can it
possibly be false?

1516
01:23:06,145 --> 01:23:07,275
<i>Madoff was</i>
<i>managing $50 billion.</i>

1517
01:23:07,279 --> 01:23:11,579
<i>The notion that</i>
<i>a $50 billion money manager</i>
<i>was running a pyramid scheme,</i>

1518
01:23:11,583 --> 01:23:14,583
<i>Well, that's why people</i>
<i>kept putting money into it,</i>

1519
01:23:14,185 --> 01:23:17,185
<i>'cause it was</i>
<i>the biggest lie of all time.</i>

1520
01:23:16,453 --> 01:23:18,853
Small lies people
don't get away with.

1521
01:23:18,855 --> 01:23:21,515
Big lies people get away with.

1522
01:23:25,727 --> 01:23:27,727
Kirby:
<i>You open your nutrition club,</i>

1523
01:23:27,296 --> 01:23:29,956
<i>You realize you've</i>
<i>gotta recruit people,</i>

1524
01:23:29,965 --> 01:23:33,665
<i>And start making a commission</i>
<i>from your downlines.</i>

1525
01:23:33,933 --> 01:23:35,933
<i>But I couldn't lie to people</i>

1526
01:23:35,468 --> 01:23:38,898
<i>And tell them,</i>
<i>"you're gonna make</i>
<i>really good money,"</i>

1527
01:23:38,904 --> 01:23:40,974
When I knew I had
five nutrition clubs

1528
01:23:40,972 --> 01:23:42,972
That had been
operating for six months,

1529
01:23:42,840 --> 01:23:45,340
And we had yet
to turn a profit.

1530
01:23:46,375 --> 01:23:50,175
<i>So, uh, we try to make</i>
<i>their business model work,</i>

1531
01:23:50,545 --> 01:23:52,575
<i>And stay away</i>
<i>from the recruiting</i>

1532
01:23:52,581 --> 01:23:54,581
<i>And trying to sell the dream,</i>

1533
01:23:54,082 --> 01:23:56,182
<i>We tried to just</i>
<i>sell the products.</i>

1534
01:23:57,317 --> 01:23:59,277
<i>It didn't work.</i>

1535
01:24:00,919 --> 01:24:02,989
<i>The products</i>
<i>are too expensive.</i>

1536
01:24:02,988 --> 01:24:04,988
And you're
trying to get people

1537
01:24:04,589 --> 01:24:07,589
To drink a liquid shake
over eating a meal.

1538
01:24:07,491 --> 01:24:10,861
You're going
against human nature here.

1539
01:24:13,462 --> 01:24:16,462
<i>For the most part,</i>
<i>we would eat half of it,</i>

1540
01:24:15,965 --> 01:24:18,965
<i>And try to sell</i>
<i>the other half.</i>

1541
01:24:18,968 --> 01:24:21,438
Interviewer:
What happened to the rest?

1542
01:24:21,437 --> 01:24:24,037
You throw it in the dumpster.

1543
01:24:24,905 --> 01:24:27,905
<i>We kept it going</i>
<i>for a year and a half.</i>

1544
01:24:27,408 --> 01:24:29,408
For a lot of
people in herbalife,

1545
01:24:29,076 --> 01:24:31,076
They would just
go look for a job

1546
01:24:30,544 --> 01:24:32,944
And feel like a failure
and be embarrassed,

1547
01:24:32,946 --> 01:24:35,946
Because they'd brought
all their friends and family

1548
01:24:35,148 --> 01:24:36,208
Into this scam.

1549
01:24:36,215 --> 01:24:39,215
Let's see if I can handle this
without choking myself.

1550
01:24:39,184 --> 01:24:42,184
<i>But I was one of</i>
<i>the fortunate ones that</i>

1551
01:24:40,952 --> 01:24:44,492
Luckily found
a new and emerging
industry to get into,

1552
01:24:44,488 --> 01:24:46,488
That went right along
with the storefronts

1553
01:24:46,389 --> 01:24:48,389
That I'd already built out.

1554
01:24:47,757 --> 01:24:53,557
<i>We just made a quick switch</i>
<i>and turned it</i>
<i>into a vapor lounge.</i>

1555
01:24:56,463 --> 01:24:58,463
We were helping
people to lose weight,

1556
01:24:58,132 --> 01:25:01,502
Now we help people
to stop smoking.

1557
01:25:03,003 --> 01:25:07,573
<i>So it all worked out,</i>
<i>but not as a nutrition club.</i>

1558
01:25:09,308 --> 01:25:12,978
<i>Luckily I didn't lose</i>
<i>my collateral with the bank.</i>

1559
01:25:12,979 --> 01:25:15,649
<i>I still have the car.</i>

1560
01:25:18,082 --> 01:25:19,082
Mark hughes: <i>Trust me.</i>

1561
01:25:18,817 --> 01:25:21,317
<i>I can tell you with</i>
<i>absolute sincerity,</i>

1562
01:25:21,319 --> 01:25:27,789
The wildest dreams
you've ever thought of
can come true in herbalife.

1563
01:25:36,332 --> 01:25:41,342
I came home today and
this was on my door.

1564
01:25:41,870 --> 01:25:44,870
It's addressed to me.
It says, "dear ms. Contreras.

1565
01:25:44,540 --> 01:25:46,540
"on July 15, 2014,

1566
01:25:46,542 --> 01:25:48,782
"univision chicago
aired a piece

1567
01:25:48,777 --> 01:25:51,347
"in which it published
the following statement.

1568
01:25:51,347 --> 01:25:54,077
"according to
lulac's julie contreras,

1569
01:25:54,083 --> 01:25:56,083
"there is fear
in the community

1570
01:25:55,784 --> 01:25:57,784
"that herbalife is
spreading the rumor

1571
01:25:57,685 --> 01:25:59,615
"that those who make
accusations

1572
01:25:59,620 --> 01:26:00,620
"against the company,

1573
01:26:00,621 --> 01:26:03,051
"will be reported
to immigration authorities."

1574
01:26:03,056 --> 01:26:05,916
They say, "we suspect
that your statement

1575
01:26:05,925 --> 01:26:08,225
"is the product
of misinformation,

1576
01:26:08,227 --> 01:26:13,157
"disseminated by
pershing square
capital management."

1577
01:26:13,165 --> 01:26:16,465
Who in the hell is
pershing square
capital management?

1578
01:26:16,468 --> 01:26:18,938
I've heard of that
in the newspapers.

1579
01:26:18,937 --> 01:26:21,867
Well, we went on money
that we collected

1580
01:26:21,873 --> 01:26:22,973
From our community,

1581
01:26:22,974 --> 01:26:24,274
From the victims.

1582
01:26:24,275 --> 01:26:25,275
No one's paying us.

1583
01:26:25,009 --> 01:26:29,279
"nonetheless this statement
is illegal and defamatory."

1584
01:26:29,279 --> 01:26:32,679
"the statement is
illegal and defamatory."

1585
01:26:32,682 --> 01:26:37,222
Herbalife distributors
have intimidated,

1586
01:26:37,219 --> 01:26:40,149
Have threatened our people.

1587
01:26:40,155 --> 01:26:43,155
Threatened them
with their legal status.

1588
01:26:43,158 --> 01:26:46,458
Threatened them
with physical harm.

1589
01:26:46,461 --> 01:26:48,491
Waiting outside of
walmarts for them,

1590
01:26:48,496 --> 01:26:50,496
Or grocery stores
that they go to,

1591
01:26:50,364 --> 01:26:55,074
To collect their $1,500,
or $500, or $200.

1592
01:26:55,068 --> 01:26:59,068
It says, "we demand that
you cease and desist
from this conduct

1593
01:26:58,504 --> 01:27:02,844
"and that you submit
a written retraction
of your statement

1594
01:27:02,841 --> 01:27:04,371
"to univision immediately.

1595
01:27:04,375 --> 01:27:07,005
"we also request
that you meet with us.

1596
01:27:07,010 --> 01:27:09,480
"that we might correct
your misunderstandings

1597
01:27:09,479 --> 01:27:11,509
"regarding
herbalife's relationship

1598
01:27:11,514 --> 01:27:13,384
"within the latino community."

1599
01:27:13,382 --> 01:27:17,752
It's almost the exact tone
of people who attack me

1600
01:27:17,753 --> 01:27:22,163
When I defend the most
vulnerable in my community.

1601
01:27:22,157 --> 01:27:25,857
And this is an intimidation.

1602
01:27:31,231 --> 01:27:33,271
my dad used to tell me,

1603
01:27:33,267 --> 01:27:36,597
"never apologize
for being mexican."

1604
01:27:36,603 --> 01:27:39,603
And we used to grow
up and we used to say,

1605
01:27:38,738 --> 01:27:41,168
"we're mexican-american."

1606
01:27:41,173 --> 01:27:44,973
And my dad died when
he was 50 years old.

1607
01:27:47,310 --> 01:27:51,380
<i>I think I have</i>
<i>this tiger inside of me.</i>

1608
01:27:51,381 --> 01:27:53,951
<i>My dad is inside of me.</i>

1609
01:27:54,749 --> 01:27:57,749
I'm not gonna
apologize for who I am,

1610
01:27:56,885 --> 01:28:00,485
And I'm definitely,
sure as hell,

1611
01:28:00,488 --> 01:28:01,818
Not gonna apologize

1612
01:28:01,822 --> 01:28:04,422
For bringing
a truth to the public

1613
01:28:04,424 --> 01:28:07,594
Of what's happening
to my community.

1614
01:28:07,593 --> 01:28:11,233
The truth is not far away.

1615
01:28:27,978 --> 01:28:28,978
Johnson: <i>It's the recruiting,</i>

1616
01:28:28,913 --> 01:28:31,253
Meaning bringing
new distributors
into our company,

1617
01:28:31,248 --> 01:28:34,248
Which is the most vital part
of our bloodstream.

1618
01:28:34,251 --> 01:28:37,151
We bring new
distributors in, we grow.

1619
01:28:37,153 --> 01:28:38,853
It's that simple.

1620
01:28:38,854 --> 01:28:39,854
It's that simple.

1621
01:28:39,421 --> 01:28:43,921
And the company has built
its whole reputation,

1622
01:28:43,925 --> 01:28:45,485
Its whole life on recruiting.

1623
01:28:45,493 --> 01:28:46,663
Our top dogs,

1624
01:28:46,660 --> 01:28:49,530
Greg calls them
the "hunters" out there,

1625
01:28:49,529 --> 01:28:52,229
Our hunters,
our top distributors,

1626
01:28:52,231 --> 01:28:54,231
Our chairman's club,
our pres team,

1627
01:28:53,532 --> 01:28:55,132
They're professionals at this.

1628
01:28:55,133 --> 01:28:56,273
Nobody can do it better.

1629
01:28:56,267 --> 01:28:58,267
You get next to alan lorenz,

1630
01:28:57,368 --> 01:28:59,998
And he'll recruit
taxi cabdrivers, and busboys,

1631
01:29:00,003 --> 01:29:01,503
And waiters, and everybody.

1632
01:29:01,504 --> 01:29:03,504
He doesn't care who it is.

1633
01:29:02,705 --> 01:29:04,805
Boom!
He's got him in this game.

1634
01:29:04,807 --> 01:29:06,537
Ackman: <i>So, herbalife,</i>

1635
01:29:06,542 --> 01:29:09,882
<i>The business opportunity</i>
<i>is a scam.</i>

1636
01:29:09,878 --> 01:29:12,878
This is being orchestrated
not just by senior management,

1637
01:29:12,814 --> 01:29:14,814
By the chairman's club
members,

1638
01:29:14,715 --> 01:29:16,045
By the president's team,

1639
01:29:16,049 --> 01:29:19,749
They conceived, designed,
and executed the strategy

1640
01:29:19,752 --> 01:29:21,252
To exploit the poor.

1641
01:29:21,253 --> 01:29:24,693
The recruiting tactics,
very positive
for the most part.

1642
01:29:24,689 --> 01:29:27,619
Sometimes led people
down a false road.

1643
01:29:27,625 --> 01:29:31,125
$4,000, jam it into them,
by an instant distributorship.

1644
01:29:31,128 --> 01:29:33,128
Load that product in.

1645
01:29:33,130 --> 01:29:34,530
See ya.

1646
01:29:34,531 --> 01:29:35,561
Good luck.

1647
01:29:35,565 --> 01:29:37,995
The credit card bill comes,
spouse says,

1648
01:29:38,000 --> 01:29:41,370
"how are we gonna pay this?

1649
01:29:41,370 --> 01:29:44,370
"you didn't sell the stuff
that's in the garage.

1650
01:29:43,472 --> 01:29:46,472
"that's in the pantry.
That's out there..."

1651
01:29:44,706 --> 01:29:47,706
Ackman:
<i>This company was a fraud</i>
<i>before michael johnson.</i>

1652
01:29:47,608 --> 01:29:50,578
<i>Michael johnson</i>
<i>elevated the fraud,</i>

1653
01:29:50,577 --> 01:29:53,737
<i>Brought modern</i>
<i>management techniques.</i>

1654
01:29:53,746 --> 01:29:56,046
Johnson:
<i>So what happens today?</i>

1655
01:29:56,048 --> 01:29:57,578
<i>Today, we're recruiting.</i>

1656
01:29:57,582 --> 01:29:59,582
<i>We're still</i>
<i>a recruiting company.</i>

1657
01:29:58,983 --> 01:30:01,023
We've gotta never not be this.

1658
01:30:01,018 --> 01:30:04,588
Michael johnson is a predator,
okay?

1659
01:30:04,588 --> 01:30:08,088
This was
a criminal enterprise, okay?

1660
01:30:08,091 --> 01:30:10,791
I hope you're listening,
michael.

1661
01:30:11,559 --> 01:30:13,789
It's time to shut
the company down.

1662
01:30:13,795 --> 01:30:16,455
Bill ackman's
got a lot of money

1663
01:30:16,464 --> 01:30:17,464
Invested against this.

1664
01:30:17,164 --> 01:30:20,164
And I think the only thing
he cares about

1665
01:30:19,399 --> 01:30:21,399
Is being the richest man
in the world.

1666
01:30:20,833 --> 01:30:25,143
And to me,
that's a very sad pursuit.

1667
01:30:26,537 --> 01:30:29,737
All right, you guys
have been incredibly patient.

1668
01:30:29,741 --> 01:30:31,371
Stay tuned. Thank you.

1669
01:30:34,543 --> 01:30:36,543
Female reporter 1:
<i>Just a short while ago,</i>

1670
01:30:35,645 --> 01:30:37,645
<i>Pershing square capital's</i>
<i>bill ackman</i>

1671
01:30:37,013 --> 01:30:40,013
<i>Delivering what</i>
<i>was promised to be</i>
<i>the death blow to herbalife.</i>

1672
01:30:39,815 --> 01:30:45,285
Male reporter 1: <i>Investors</i>
<i>just got a three hour, wonky,</i>
<i>regulatory presentation</i>

1673
01:30:45,287 --> 01:30:48,287
<i>That was not what</i>
<i>they were promised</i>
<i>the day before.</i>

1674
01:30:47,489 --> 01:30:52,119
Female reporter 1:
<i>He's trying to basically</i>
<i>make his wish materialize,</i>

1675
01:30:52,126 --> 01:30:53,286
<i>And they weren't impressed.</i>

1676
01:30:53,293 --> 01:30:57,633
<i>And in fact,</i>
<i>shares rose more than 23%</i>

1677
01:30:57,630 --> 01:30:59,700
<i>Coming in at six-year highs.</i>

1678
01:30:59,698 --> 01:31:00,698
Here he comes, guys.

1679
01:31:00,432 --> 01:31:02,432
Female reporter 2:
<i>Herbalife said in a statement,</i>

1680
01:31:02,000 --> 01:31:04,330
<i>"bill ackman</i>
<i>further demonstrated today</i>

1681
01:31:04,335 --> 01:31:06,565
<i>"that the facts</i>
<i>are on our side."</i>

1682
01:31:06,570 --> 01:31:08,570
Male reporter 2:
<i>It's highly unusual</i>

1683
01:31:07,504 --> 01:31:10,504
<i>That you can just charge</i>
<i>a company with fraud,</i>

1684
01:31:10,006 --> 01:31:13,006
<i>And then think you</i>
<i>can get away with it,</i>

1685
01:31:11,540 --> 01:31:14,470
<i>Without the kind of</i>
<i>smoking gun evidence</i>

1686
01:31:14,476 --> 01:31:16,776
<i>That ackman lacked.</i>

1687
01:31:20,547 --> 01:31:22,247
Congratulations, sir.

1688
01:31:22,249 --> 01:31:23,749
Okay.

1689
01:31:25,016 --> 01:31:26,346
What a day.

1690
01:31:26,850 --> 01:31:28,180
What a day.

1691
01:31:30,452 --> 01:31:34,152
It was a good day.
It was a very good day.

1692
01:32:01,382 --> 01:32:03,382
Contreras: <i>Herbalife's</i>
<i>a huge corporation.</i>

1693
01:32:03,184 --> 01:32:06,424
<i>And after they sent me</i>
<i>the cease and desist letter,</i>

1694
01:32:06,420 --> 01:32:07,920
I sent them a response.

1695
01:32:07,921 --> 01:32:09,721
And the response was that,

1696
01:32:09,722 --> 01:32:11,092
I welcomed them

1697
01:32:11,090 --> 01:32:12,290
To come to tell me

1698
01:32:12,291 --> 01:32:13,891
About their commitment

1699
01:32:13,892 --> 01:32:14,922
To the latino community.

1700
01:32:14,926 --> 01:32:17,926
And we invite them
to come to our church.

1701
01:32:19,028 --> 01:32:23,968
<i>For months on end,</i>
<i>they continued to</i>
<i>string us along.</i>

1702
01:32:23,967 --> 01:32:26,427
"okay, this date..."
then canceled.

1703
01:32:26,436 --> 01:32:28,766
"okay, this date..."
then canceled.

1704
01:32:28,771 --> 01:32:29,871
Then they had the nerve

1705
01:32:29,872 --> 01:32:32,072
To invite us to
go to their gala

1706
01:32:32,074 --> 01:32:35,844
And pay for our
airplane tickets
and pay for our hotel,

1707
01:32:35,844 --> 01:32:39,614
As if we would take
something like that.

1708
01:32:40,947 --> 01:32:43,747
<i>Just as I sent</i>
<i>herbalife a letter,</i>

1709
01:32:43,750 --> 01:32:47,520
<i>That's the same</i>
<i>thing I sent bill ackman.</i>

1710
01:32:47,919 --> 01:32:50,449
I was getting
frustrated that I was hearing

1711
01:32:50,455 --> 01:32:52,655
About all the things
he was doing,

1712
01:32:52,657 --> 01:32:54,657
But, "okay,
you're doing those things,

1713
01:32:54,091 --> 01:32:57,991
"but they're not
really helping my people."

1714
01:32:57,994 --> 01:33:01,304
And by the way, "we're here."

1715
01:33:01,297 --> 01:33:02,057
Hello.

1716
01:33:02,064 --> 01:33:03,464
Hey. Thanks for having me.

1717
01:33:03,465 --> 01:33:06,225
Contreras:
I'm glad you are here. Yes.

1718
01:33:06,234 --> 01:33:08,234
-How you feeling?
<i>-I didn't know him.</i>

1719
01:33:08,035 --> 01:33:10,265
<i>He's from another world,</i>

1720
01:33:10,270 --> 01:33:13,270
<i>And he came into</i>
<i>our world for a little while.</i>

1721
01:33:13,939 --> 01:33:15,939
Regardless of the investment,

1722
01:33:15,941 --> 01:33:18,941
I will pursue this to
the end of the earth...

1723
01:33:18,944 --> 01:33:20,214
All right.

1724
01:33:20,211 --> 01:33:22,211
Until the company's shut down,

1725
01:33:21,345 --> 01:33:24,345
The people who caused the harm
are held accountable,

1726
01:33:23,847 --> 01:33:25,847
And I also commit
to give away 100%

1727
01:33:25,782 --> 01:33:27,782
Of any profit
I make from this.

1728
01:33:27,683 --> 01:33:31,083
I think we'll make
100 plus million dollars.

1729
01:33:31,086 --> 01:33:32,286
These are big numbers.

1730
01:33:32,287 --> 01:33:35,287
I really did not know
the latino community before.

1731
01:33:35,256 --> 01:33:37,256
You guys are
the principle victims

1732
01:33:36,423 --> 01:33:40,223
So the money is gonna focus
on the latino community.

1733
01:33:43,628 --> 01:33:47,628
Can you send two
or three officers
over here to the church,

1734
01:33:47,032 --> 01:33:49,032
Because there are
three coach buses

1735
01:33:48,967 --> 01:33:50,367
Of herbalife protestors.

1736
01:33:50,368 --> 01:33:53,268
Like they're for herbalife.

1737
01:33:55,070 --> 01:33:57,470
Contreras:
<i>Herbalife paid them to come.</i>

1738
01:33:57,473 --> 01:33:59,473
<i>One of them, he told me,</i>

1739
01:33:58,707 --> 01:34:01,637
<i>"they gave us $200</i>
<i>to be out there."</i>

1740
01:34:01,975 --> 01:34:04,975
I said,
"oh, well, I can't blame you."

1741
01:34:04,511 --> 01:34:08,411
I can't blame my people.
Who doesn't need $200?

1742
01:34:08,414 --> 01:34:11,054
Crowd:  herbalife!
Herbalife! Herbalife!

1743
01:34:11,049 --> 01:34:13,879
Herbalife!
Herbalife! Herbalife!

1744
01:34:13,885 --> 01:34:16,515
Herbalife!
Herbalife! Herbalife!

1745
01:34:16,520 --> 01:34:18,090
Herbalife! Herbalife!

1746
01:34:18,088 --> 01:34:21,158
Herbalife!
Herbalife! Herbalife!

1747
01:34:21,157 --> 01:34:23,187
Hello, herbalife.

1748
01:34:32,566 --> 01:34:35,566
<i>We're ready to rock and roll</i>
<i>with this company.</i>

1749
01:34:34,702 --> 01:34:36,702
<i>We got a long</i>
<i>road ahead of us,</i>

1750
01:34:36,570 --> 01:34:39,800
<i>And guess what, we're just</i>
<i>getting started, right?</i>

1751
01:34:39,806 --> 01:34:41,806
<i>This is the name of the game.</i>

1752
01:34:50,382 --> 01:34:53,382
So the history is
I come from
an immigrant family.

1753
01:34:52,884 --> 01:34:57,854
Except my family immigrated
to this country in the 1890s.

1754
01:34:57,855 --> 01:34:58,855
120 years ago.

1755
01:34:58,789 --> 01:35:03,189
And my great-grandfather
was born in the ukraine

1756
01:35:03,193 --> 01:35:04,433
Which was part of russia.

1757
01:35:04,427 --> 01:35:10,427
And so at 17 years old,
he walked 1,400 miles
to austria

1758
01:35:10,433 --> 01:35:11,503
And he learned a trade.

1759
01:35:11,500 --> 01:35:14,000
Someone taught him
how to be a tailor.

1760
01:35:14,002 --> 01:35:17,642
And then he went
from austria to hamburg,

1761
01:35:17,638 --> 01:35:18,638
Which was another 600 miles,

1762
01:35:18,538 --> 01:35:22,538
And he got on a boat
and he came to this country.

1763
01:35:21,707 --> 01:35:23,567
He arrived with no money.

1764
01:35:23,575 --> 01:35:25,905
Then eventually,
he started making coats,

1765
01:35:25,910 --> 01:35:28,910
And he had his own factory
in staten island.

1766
01:35:28,846 --> 01:35:30,276
And so I'm here.

1767
01:35:30,280 --> 01:35:33,880
I'm one of the most
fortunate people in america.

1768
01:35:33,883 --> 01:35:35,283
Uh, I think back,

1769
01:35:35,284 --> 01:35:37,354
Imagine if my
great-grandfather

1770
01:35:37,352 --> 01:35:38,582
Had gotten to america,

1771
01:35:38,586 --> 01:35:40,586
And instead of being a tailor,

1772
01:35:40,321 --> 01:35:42,791
Someone sucked him
into a pyramid scheme. Right?

1773
01:35:42,790 --> 01:35:46,790
So I stand on the shoulders
of people who came before me,

1774
01:35:46,126 --> 01:35:50,186
It is my obligation
to protect people
who come now.

1775
01:35:50,196 --> 01:35:53,456
<i>You gotta understand</i>
<i>we're gonna</i>
<i>protect this company,</i>

1776
01:35:53,465 --> 01:35:55,465
<i>We're gonna grow this company,</i>

1777
01:35:55,099 --> 01:35:57,099
<i>And any of these</i>
<i>outside sources</i>

1778
01:35:57,101 --> 01:35:59,671
<i>Who wanna portray us,</i>

1779
01:35:59,670 --> 01:36:01,940
<i>We will seize</i>
<i>the narrative from them.</i>

1780
01:36:01,938 --> 01:36:04,168
<i>Time is on our side.</i>

1781
01:36:04,372 --> 01:36:05,372
We've spent $50 million...

1782
01:36:05,073 --> 01:36:10,813
A little more than $50 million
in the last...
It's now three years

1783
01:36:10,812 --> 01:36:12,912
In our investigation
of the company.

1784
01:36:12,914 --> 01:36:16,254
I'm glad that there are
a lot of governmental
organizations

1785
01:36:16,250 --> 01:36:17,250
Looking into herbalife.

1786
01:36:17,217 --> 01:36:20,217
But I'm a bit
frustrated about the pace

1787
01:36:19,752 --> 01:36:21,792
The issues are
being addressed.

1788
01:36:21,787 --> 01:36:26,487
<i>And you with us together,</i>
<i>it's family,</i>

1789
01:36:26,491 --> 01:36:29,491
<i>And nobody messes</i>
<i>with the family.</i>

1790
01:36:29,494 --> 01:36:29,834
<i>Right?</i>

1791
01:36:29,827 --> 01:36:32,887
<i>- Nobody.</i>
<i>-</i>

1792
01:36:35,664 --> 01:36:37,164
<i>Nobody.</i>

1793
01:36:40,067 --> 01:36:43,537
So, uh, this was
a very lonely battle.

1794
01:36:43,538 --> 01:36:45,768
Our battle against herbalife.

1795
01:36:45,773 --> 01:36:47,943
Contreras: No more.

1796
01:36:49,708 --> 01:36:52,938
<i>We're taking this</i>
<i>fight smart to the street.</i>

1797
01:36:52,945 --> 01:36:54,005
<i>We will win.</i>

1798
01:36:54,012 --> 01:36:55,282
<i>And we got you covered.</i>

1799
01:36:55,279 --> 01:36:57,279
<i>And this guy is not</i>
<i>gonna get away</i>

1800
01:36:56,913 --> 01:36:59,913
<i>With what he thinks he's</i>
<i>gonna get away with,</i>

1801
01:36:58,981 --> 01:37:00,981
<i>Because he isn't fighting me.</i>

1802
01:37:00,415 --> 01:37:03,415
<i>He thinks he's fighting me,</i>
<i>he's fighting an army.</i>

1803
01:37:03,418 --> 01:37:05,448
<i>And we've got</i>
<i>an army of people</i>

1804
01:37:05,453 --> 01:37:07,453
<i>Doing good out there</i>
<i>in the world.</i>

1805
01:37:07,221 --> 01:37:10,261
All:  herbalife!
Herbalife! Herbalife!

1806
01:37:10,257 --> 01:37:13,517
Herbalife! Herbalife!
Herbalife! Herbalife!

1807
01:37:13,526 --> 01:37:17,256
Herbalife had all
of the earmarks of something

1808
01:37:17,263 --> 01:37:19,403
That probably should
not have been shorted.

1809
01:37:19,398 --> 01:37:23,398
Certainly not to
the tune of a billion dollars

1810
01:37:23,402 --> 01:37:25,402
And in such a public way.

1811
01:37:24,503 --> 01:37:27,003
They are all victims.
This is olivia torres.

1812
01:37:27,005 --> 01:37:29,005
Cohan: <i>But he's on a crusade.</i>

1813
01:37:27,672 --> 01:37:32,172
<i>And I don't see him stopping</i>
<i>till he gets to</i>
<i>the promised land.</i>

1814
01:37:32,176 --> 01:37:36,306
I gave $20,000
in the business.
I had nothing back.

1815
01:37:36,313 --> 01:37:39,313
Ackman: <i>When you meet</i>
<i>the people who've been harmed</i>

1816
01:37:38,214 --> 01:37:39,214
<i>And you hear their stories,</i>

1817
01:37:39,181 --> 01:37:41,451
<i>It's very moving</i>
<i>and very troubling.</i>

1818
01:37:41,449 --> 01:37:45,449
<i>And the fact that</i>
<i>the company knows</i>
<i>they've been ripping off,</i>

1819
01:37:44,752 --> 01:37:48,092
Literally, millions of
these people over time.

1820
01:37:48,088 --> 01:37:50,788
And they don't care.

1821
01:37:50,790 --> 01:37:52,820
It's incredible.

1822
01:37:52,825 --> 01:37:55,355
You know, it's incredible.

1823
01:37:55,360 --> 01:37:58,630
We are very, very
confident that as the ftc

1824
01:37:58,629 --> 01:38:01,759
Comes to their
investigation's finality,

1825
01:38:01,765 --> 01:38:04,765
Or they get all
the facts on the table,

1826
01:38:03,600 --> 01:38:07,600
They're gonna go,
"this is a pretty good
company."

1827
01:38:15,477 --> 01:38:18,407
<i>Your company,</i>
<i>in mark hughes word,</i>

1828
01:38:18,414 --> 01:38:22,184
<i>"the future is</i>
<i>bright beyond compare."</i>

1829
01:38:22,184 --> 01:38:24,954
- Let's go herbalife!

1830
01:38:41,368 --> 01:38:46,938
Crowd:
herbalife! Herbalife!
Herbalife! Herbalife!

1831
01:39:02,288 --> 01:39:04,618
The ftc has charged herbalife

1832
01:39:04,624 --> 01:39:06,924
With deceiving
hundreds of thousands

1833
01:39:06,926 --> 01:39:07,956
Of hopeful people,

1834
01:39:07,960 --> 01:39:11,160
Who saw herbalife's
promotional campaigns

1835
01:39:11,163 --> 01:39:13,133
In english and in spanish,

1836
01:39:13,131 --> 01:39:15,131
And signed on for
what they thought

1837
01:39:15,032 --> 01:39:19,272
Was a legitimate
and lucrative
business opportunity.

1838
01:39:19,269 --> 01:39:22,339
The ftc has charged
that this wasn't true.

1839
01:39:22,338 --> 01:39:25,968
That the dream portrayed
by herbalife was an illusion.

1840
01:39:25,974 --> 01:39:28,214
The vast majority of
herbalife distributors

1841
01:39:28,209 --> 01:39:30,539
Found they could
make little or no money

1842
01:39:30,544 --> 01:39:33,554
Selling herbalife products.

1843
01:39:33,547 --> 01:39:34,707
People who leased space

1844
01:39:34,714 --> 01:39:37,954
To open a nutrition club
and worked long hours,

1845
01:39:37,950 --> 01:39:41,580
Made no money, or lost money.

1846
01:39:41,586 --> 01:39:43,886
The small minority of
herbalife distributors

1847
01:39:43,888 --> 01:39:45,888
Who did make a lot of money

1848
01:39:45,489 --> 01:39:46,919
Were paid by herbalife,

1849
01:39:46,923 --> 01:39:49,293
Not for selling
the company's products,

1850
01:39:49,292 --> 01:39:51,392
But for buying
the products themselves,

1851
01:39:51,394 --> 01:39:53,234
And then
successfully recruiting

1852
01:39:53,229 --> 01:39:56,929
Large networks of others
to do the same.

1853
01:39:56,932 --> 01:39:59,972
That's why, in addition to
charging deception,

1854
01:39:59,968 --> 01:40:02,168
The complaint
alleges that herbalife's

1855
01:40:02,170 --> 01:40:03,640
Compensation
structure is unfair,

1856
01:40:03,638 --> 01:40:07,438
Because it
rewards its distributors
for recruiting others to join

1857
01:40:07,441 --> 01:40:11,411
And purchase products
to advance in
the marketing program,

1858
01:40:11,411 --> 01:40:12,941
Rather than in response

1859
01:40:12,945 --> 01:40:16,845
To actual retail demand
for the product.