MLM / Chain Money
Herbalife: 'I Thought I was Going to Make it Big'
Former distributor says a class-action settlement isn't going to help a majority of recruits who lost money
 
Eric Rodensky was working hard driving trucks for a company that distributes candy and groceries to convenience stores, but the long hours weren’t yielding enough pay to make ends meet. Then Rodensky heard an ad on the radio by Fox News host Sean Hannity about earning income from home. 
 
During the ad, Hannity read a testimonial from a woman who said she had earned a hefty income in her first month with this business opportunity. Hannity advised listeners to go to a website with the vague name of “income at home” to learn more. Rodensky was intrigued. He’s also been a big fan of Hannity.
 
“I trusted him,” said Rodensky.
 
So he went online and visited the website, which offered what seemed to be an easy way to earn substantial income. It seemed like a perfect opportunity. Just what he needed. Something that could help him pay his bills. Something that would allow him to someday move out of his small apartment, maybe even get a nice car.
 
  
Although he didn’t know it at the time, the “income at home” business opportunity Hannity was talking about was for Herbalife, a California-based nutritional supplement MLM company that touts high incomes and luxurious lifestyles for affiliates who purchase products each month and recruit new members to their teams.
 
Hannity never mentioned Herbalife and the income at home site didn’t either, but that website (which is no longer online) led Rodensky to another site, Online Business Systems (OBS), which was a lead generation site of potential recruits for Herbalife.
 
Rodensky signed up, putting $2,000 on his credit card to purchase enough products to qualify for maximum income potential. But none of the promised prosperity happened. In fact, Rodensky lost money in his Herbalife venture — most distributors do. And now he is one of more than a dozen distributors who are objecting to a proposed class-action settlement pending in California.
 
The settlement would give a majority of distributors in the class — who purchased up to $3,745 worth of products from Herbalife between 2009-2014 — just $20 or less. Those who purchased $750 or more worth of products in at least one year are eligible for additional compensation. In exchange, distributors affected by the settlement would be essentially banned forever from any further suits against the company and Herbalife would be allowed to continue business as usual. Today, a federal court judge based in Los Angeles will hear arguments regarding the fairness of the settlement, which affects not only Rodensky but also potentially more than a million distributors.
 

READ: TINA.org’s argument about why the settlement is unfair

 
Rodensky and more than a dozen other distributors who are objecting contend that Herbalife is a pyramid scheme and they were doomed to fail. The company, which earned more than $4.9 billion in revenue in 2014, is being investigated by the FTC and SEC, and is at the center of a Wall Street battle initiated by Pershing Square hedge fund activist Bill Ackman who made a $1 billion bet against it. Ackman is alleging Herbalife is a pyramid scheme and is urging regulators to take action. Several state attorneys general and the Department of Justice are also looking into the company.
 
‘I thought I was going to make it big’
 
Rodensky said he didn’t know what a multi-level marketing company was before becoming involved in Herbalife. Though he viewed the company’s average gross compensation statement, which showed in 2012 that 88 percent of distributors earned nothing from Herbalife, he was paying more attention to the testimonials from distributors who said they earned enough money to quit their jobs — distributors such as Shawn Dahl who owned Online Business Systems. In a 2010 video OBS sent Rodensky as part of his “decision” package, Dahl, who was in the “Chairman’s Club” at Herbalife, talks about earnings of $30,000 a month and his jet-set lifestyle.
 
“I was so excited. I thought I was going to make it big,” Rodensky said. “I thought this was the big break I was looking for.”
 
Rodensky signed up to be a supervisor and also purchased a list of 20 potential recruits from OBS for $100. He started a website and posted fliers around his community to advertise Herbalife products and the business opportunity. But neither got much of a response. He also called the list of potential recruits, but none of the phone numbers he called panned out.
 
“When I called, it was a dead end number, or they didn’t want to talk to me, or no one answered,” he said.
 
Rodensky said he spent about $6,000 in total on his Herbalife venture, but never made a dime.
 
“I was working my butt off,” he said. “They told me if I failed I didn’t try hard enough, but they also said it was so easy even a caveman could do it.”
 
Settlement is no help 
 
Rodensky said he was involved in Herbalife for about six months before he called it quits in 2012. As he sat in his studio apartment in a small Connecticut town one recent day recounting his experience, he pulled a plastic tub from his closet that was filled with remaining Herbalife products. The tub contained vitamins, protein powders and nutritional supplements. It was the second of two tubs filled with unsold products. For a while, Rodensky, who suffers from colitis, was taking the supplements hoping they would help him feel better. But his health didn’t improve and the process for returning the products to Herbalife was onerous, he said, so he decided to just throw the products in that bin out.
 
When he heard about the class-action settlement through a notice he received in the mail, he said he thought he’d finally have a chance to recoup his losses. But when he found out there would be no serious repercussions for the company or significant compensation for a majority of distributors who lost money, he decided to object to the settlement.
 
Rodensky’s losses were not the highest listed among the objectors. Some of the objecting distributors said in court filings that instead of making six-figure incomes, they lost more than $100,000. Rodensky said he would like to see more robust action against Herbalife. But it’s not just about the money for Rodensky.
 
“I had a dream of working from home and having plenty of money and paying off all my bills and instead of paying off all my bills, I had to go to my parents for help. This isn’t fair. They played me for a fool,” said Rodensky, who is 43. “… I think they should pay up. And I think some people should go to prison.”
 
TINA.org will continue to update readers on the settlement and the Herbalife investigations. More information on MLMs and pyramid schemes can be found here.
 
 

User

COMMENTS

???? ?????

9 months ago

he must be a complete idiot if he decided to just throw it.... i started to eat HLF more than 6 years ago - and still happy about it... i do not sale it. it's not so easy as that loser thought...

MOHAN

2 years ago

AMWAY MADE FALSE HEALTH CLAIMS FOR NUTRILITE DAILY PILLS: UP COURT

http://www.dailypioneer.com/nation/amway...

REPLY

Rene E Porcile

In Reply to MOHAN 2 years ago

Thanks MOHAN !!!
As you can see India regulator's move against misleading advertisements by the food firms.
And HERBALIFE has no problem there or anywhere in the world. The FTC already slapped GNC and other in 2014 for false advertisement - and HERBALIFE was not included!!!

Scott Johnson

In Reply to Rene E Porcile 2 years ago

Not yet. Of course, there's plenty of highly ranked HLF distributors making outrageous medical claims, so it's not as if HLF is innocent.

Rene E Porcile

2 years ago

Herbalife's return policy:

Herbalife will buy back any unsold product from a resigning member - for up to 1 year from the date of purchase.

Herbalife will even pay for the return postage. Just call FedEx and products are picked up from your home or office for FREE.

REPLY

Scott Johnson

In Reply to Rene E Porcile 2 years ago

Just because Herbalife is willing to take back products (and the distributor must quit in order to return products) doesn't mean it isn't a scam, it just means they are trying to look legitimate, but Herbalife is actually a scam.

Rene E Porcile

2 years ago

False statement >> "a California-based nutritional supplement MLM company that touts high incomes and luxurious lifestyles for affiliates who purchase products each month and recruit new members to their teams."

Please, show everyone where Herbalife states where a member can make an income. If you have no such link...then you are lying!
Herbalife is a business opportunity where members efforts, business knowledge, hard work, ethics, etc earns them the right to make an income. Just like any sale job or business venture.

REPLY

David Steedson

In Reply to Rene E Porcile 7 months ago

Rene Porcile is a scammer from Herbalife. Here's a link of HIM making false income claims. https://www.ftc.gov/system/files/documents/public_comments/2006/07/522418-07771.pdf

Scott Johnson

In Reply to Rene E Porcile 2 years ago

Herbalife has many upper level distributors who make these statements, and many of these people sit/have sat on the Herbalife corporate Board of Directors. Since Board members have a corporate fiduciary duty, then by definition these statements came from Herbalife.

Scott Johnson

2 years ago

Herbalife operates very similar to Amway, the largest MLM scam on the planet, and there are hundreds of Amway copycats. Read about them here, forward the link to all non-Amway people you know, so they don't get scammed, and encourage them to do the same. When enough people know, these scams will collapse: http://www.StopTheAmwayToolScam.wordpress.com

Smart-City Challenge: Building on pillars of good governance

Media reports reveal that a top government panel has approved an allocation of Rs.2.73 lakh crore over the next 10 years for 100 Smart Cities and 500 NURM habitations for modernisation of cities

 

The second budget of the Narendra Modi government has been presented. The Smart Cities programme and 500 habitations under the National Urban Rejuvenation Mission (NURM) together have been allocated Rs. 6,000 crore (approximately $1 billion). This is more than one third of the total allocation under the Ministry of Urban Development (MoUD).
 
At the same time, media reports reveal that a top government panel has approved an allocation of Rs.2.73 lakh crore over the next 10 years for 100 Smart Cities and 500 NURM habitations for modernisation of cities. It is a welcome move that Smart Cities and NURM are thought as complementary and not mutually exclusive programmes. Recently, Urban Development Minister M. Venkaiah Naidu spoke about a selection process for cities called the 'City Challenge'.
 
The months since the interim budget in 2014 had seen meetings, workshops and deliberations taking place in Delhi, in academic and expert circles, and in the social media on how to go about making cities smart. 
 
Meanwhile, some number crunching has revealed that about one-third of the budget on smart cities last year was not spent. The decision on pilot cities has been confusing, or apparently so, based on the news available in media. State-level departments and agencies are awaiting directions from the centre, while cities are awaiting a decision from the state governments. Speculation is running high and it's time that something decisive came out of the deliberations.
 
The idea of selecting pilot cities under the Smart Cities programme at the state level has been so far understood as a political decision. In this context, the 'City Challenge' is a positive approach towards bringing objectivity in selecting cities and thus increasing the chances of being successful in the pilot projects. The modalities of the 'City Challenge' are, however, not clear. There exists a good opportunity to build this process on the pillars of good governance, which was the driving message of the new government while coming to power.
 
The two primary objectives of a pilot project would be to enhance: 1)The probability of success - so as to enhance the buy-in of the concept from stakeholders, especially investors; and 2) The opportunity for replication in other cities and scalability - in this case to other cities of different characteristics spread across diverse geographic and socio-political jurisdictions.
 
The pilot cities can serve a larger development agenda by addressing: 1)Larger regional development goals; and 2) vulnerability concerns.
 
The process of selection requires a bottom-up as well as a top-down approach. While the bottom-up approach would give a platform for cities to show proactiveness, the top-down approach would ensure that the larger goals of urban development are not pushed out of focus. 
 
The next step is to operationalise this approach on the ground, for which the process would be as follows:
 
Step 1: Develop indices for cities
 
There is a plethora of indicators available from various sources which could be deliberated to select suitable indicators that address the four objectives, namely, probability of success, replicability and scalability, attaining larger development goals and reducing vulnerability. For example, the probability of success can be represented by broader themes such as economic growth potential, infrastructure preparedness, educated and aware citizenry, proactive city government and the like.
 
The indicators for infrastructure preparedness may include the status of physical infrastructure and facilities such as roads, water, sanitation, drainage, solid waste management and the like. Weightages for indicators can be decided based on a scientific method decided by consensus. Indices can be developed using nationally and internationally accepted methodologies.
 
Step 2: Call for proposals from cities
 
This step will entail a bottom-up approach. Proposals can contribute towards two major aspects of the city selection process: First, the city-level data required to measure the indicators, and second, the city's vision towards its future development which is necessary for any programme's success. The responsiveness of cities in participating in a competitive proposal bid can be indicative of the pro-activeness of a city's government.This is a critical factor for the success of the programme.
 
Step 3: Evaluation of proposals
 
This step would involve the evaluation of the proposals submitted based on the methodology decided during Step 1 and Step 2. An expert committee in each state, with representation from academia, research, think tanks and independent experts can be constituted. This committee can help state governments develop the framework for evaluation, be part of the evaluation process as well as support cities in preparing proposals.
 
The results may not be sacrosanct, and might require further deliberation in order to reach a consensus on the shortlisted cities for the first phase of the Smart Cities programme. The biggest outcome would be the practice of transparency, participation, consensus building, responsiveness, equity and inclusiveness - the critical spokes of good governance.
 

User

Another Big Tobacco Bond Deal in the US, Cajun Style
Facing a giant budget deficit, Louisiana Gov. Bobby Jindal plans to borrow $750 million against future income from a landmark legal settlement with cigarette makers 
 
The allure of tobacco bonds appears to have won over another customer – cash-strapped Louisiana.
 
Gov. Bobby Jindal, a potential GOP presidential candidate, is scrambling to deal with a $1.6 billion hole in his next budget. Now, over the opposition of the state's treasurer, Jindal has lined up a $750 million deal to borrow against future income from the state's share of a 1998 legal settlement with cigarette makers.
 
We've covered tobacco bond deals in depth, most recently focusing on a handful of deals to bail out these costly debts held by many state and local governments.
 
New Jersey, Rhode Island and two New York counties have rescued failing bonds in the past year. In New Jersey's case, a tobacco bond bailout turned a profit of more than $100 million for a hedge fund in middle of the deal. Six more New York counties have OK'd similar transactions.
 
As we've reported, these bailouts are the legacy of a borrowing binge by politicians who wanted to turn annual payments from the landmark settlement into upfront cash. Many got just pennies for every dollar they promised to repay.
 
Louisiana's budget problems, brought on by spending down state savings accounts and a decline in revenues from falling oil and gas prices, quickly caught the attention of Wall Street firms. 
 
In February, Citigroup brought state officials a flashy 62-slide presentation titled "Financing Tools for Managing Budgetary Stress." It featured a list of 36 revenue sources that governments have borrowed against to tide over budgets – everything from taxi surcharges to income from the 1998 tobacco settlement.
 
Borrowing against future revenues could "buy more runway" for Louisiana, the presentation said, highlighting tobacco bonds as one major option.
 
Rival Goldman Sachs approached the state in March and also suggested borrowing against the tobacco settlement money or lottery revenues.
 
At 5 p.m. on Friday, March 13, Jindal's office announced the appointment of four members to a state-run corporation that oversees Louisiana's tobacco borrowing. Four days later, the corporation's 13-member board held a hastily called meeting to approve a $750 million deal with the help of Citigroup.
 
That didn't sit well with Treasurer John Neely Kennedy, also a Republican, who sits on the board along with Jindal's appointees and other statewide elected officials. "This is about the last savings account left that we haven't taken money from," Kennedy complained at the March session.
 
The deal would pledge 40 percent of Louisiana's annual tobacco settlement revenues in bond repayment that would stretch out nearly 30 years. In 2001 and 2013, the state borrowed against the other 60 percent of its tobacco settlement money, netting about $1.2 billion. Citigroup served as an underwriter in 2013.
 
Turning recurring revenues like the tobacco money into upfront payouts is widely considered poor fiscal management.
 
"You're borrowing money from the future to pay today's expenses. That's how we got into this problem, and this is only kicking the can down the road and paying interest on top of it," said Steven Procopio, Policy Director for Public Affairs Research Council of Louisiana, a Baton Rouge research group that has studied the state's financial woes.
 
Firms like Citigroup get paid based on the size of the bond issue, creating an incentive for big deals. A Citigroup spokesman declined to comment.
 
Given the size of the new Citigroup deal – it would be Louisiana's second-biggest bond issue after the original 2001 tobacco bond sale – Kennedy wanted to bid out the underwriting and related services contracts to ensure the best price. A spokeswoman for the Louisiana Treasury said it would have been “best practice” to do so.
 
Competitive bids aren't mandatory under Louisiana law, state budget officials said, but the deal requires approval by the legislature, which adjourns on June 11.
 
 
Courtesy: ProPublica.org

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)