On this thought-provoking Blog, English author, David Brear, guides us to the dark heart of a modern-day, totalitarian labyrinth and shines a piercing light on its manipulative rulers and manipulated inhabitants. First, he provides a spool of unbreakable thread so that we can all find our way safely home.
Sunday, 21 December 2014
Nevada: The trickle of 'Herbalife (HLF)' victims might soon turn into a flood.
Several weeks ago, I was sent information from a concerned resident of Las Vegas about the tragic results of the 'Herbalife' racket in Nevada.
At that time, I gave my correspondent the following brief analysis.
The fundamental rule of all Las Vegas casino managers is to keep their winning customers playing, because although it is possible for anyone occasionally to win by chance in any independently regulated casino, in the end, if winning customers don't quit whilst they are ahead, eventually the odds will always favour the house and they will lose.
The fundamental rule of all 'MLM'racketeers is to keep their chronic victims playing, because, in practise, the 'MLM' game of make-believe has not been independently regulated and has been secretly rigged so that only the few crooks who keep setting it up, can win. Thus, the longer victims play the 'MLM' game of make-believe, in the false hope of one day winning the jackpot, the more cash they will lose and the more, fresh victims they will attract.
Southern Nevadans who say they lost thousands of dollars to a pyramid scheme run by Herbalife called on the state attorney general Thursday to investigate the company, which sells nutritional and weight-loss products.
Activist Jose Melendrez said Herbalife preyed on Latinos and poor people by promising they’d make good money as “distributors” — but only after they shelled out thousands of dollars up front.
“Folks are being sold something that’s not a reality, that’s not going to happen,” said Melendrez, president of Nevada Alliance for Latino Education and Justice.
He spoke to reporters standing before a small group outside the Sawyer Building in Las Vegas. Some carried signs in English or Spanish with slogans including “Herbalife is a FRAUD!”
Melendrez said he knows of at least 60 victims in Nevada, but added people often are reluctant to come forward because they’re embarrassed.
“I just felt like a big fool and a sucker,” said David Furniss of Henderson, who said he lost about $7,000 trying to be a distributor for Herbalife. While laid up after a motorcycle accident, he heard a radio ad for an online business that sounded promising.
After paying $79 for an introductory packet that came in the mail, he said, he paid $1,500 for lists of phone numbers he could use to recruit new distributors. Marketing programs that call for participants to make money by recruiting others are often pyramid schemes, according to U.S. Securities and Exchange Commission advisories. Furniss said he also was given a “coach” in Canada who talked to him on the phone about how to make money.
In a statement, Los Angeles-based Herbalife said it has “millions of satisfied customers” nationally and more than 8,600 members — its word for distributors — in Nevada. Any members who are unhappy, the company said, can call 866-866-4744 so it can address the problem.
Herbalife said attacks against it in Nevada and other states have been fomented by hedge fund manager William Ackman, who has bet on the collapse of the company and campaigned for government investigations of it.
An Herbalife spokesman said he had no evidence Ackman had any connection to Thursday’s protest in Las Vegas.
Melendrez said he had never heard of Ackman and first heard about Herbalife through other advocacy and community groups. Melendrez added that he has a personal connection to the Herbalife issue: His brother-in-law lost several thousand dollars.
Herbalife recently agreed to pay $15 million to settle similar allegations in a federal class-action lawsuit in California, including up to $2.5 million in refunds for people who return unsold products.
The company didn’t admit wrongdoing, but agreed to change some of its business practices, such as shipping charges on the return of unsold products, Reuters reported. The settlement is scheduled for final approval by a judge in May.
Melendrez said he hopes Nevada officials will seek more reimbursement for victims here.
A spokeswoman for the attorney general’s office, Beatriz Aguirre, said the office “cannot confirm or deny an investigation.” But she said it has received 38 official complaints about Herbalife. Attorney General Catherine Cortez Masto will be replaced in January by Adam Laxalt.
Edme Torres of Las Vegas said she spent $10,000 on Herbalife products and another $10,000 opening a “nutrition club” on Twain Avenue to try to sell products. Torres and her husband, Edgar Solis, said they lost their home and had to declare bankruptcy in 2012.
Torres said she was told spending more money would get her steeper discounts on Herbalife products that she could supposedly then sell at regular price. But every dollar she got went back into Herbalife, she said.
Melendrez said Latinos can be especially vulnerable to such schemes thanks to lack of education and “a big entrepreneurial spirit.”
Furniss said he’s lucky the money he lost didn’t ruin him. But he said Herbalife seems to target poor people by giving them “the glimpse of the gold.”
Readers are reminded that the hidden overall loss/churn rate for 'Herbalife' participation has been effectively 100%. Therefore, anyone claiming, or implying, that it is possible for the average 'Herbalife' contractee to generate an overall net-profit out of the operation a (so-called) 'Herbalife Business,' is not telling the truth.