Chig asked on another thread whether Herbalife had any links to Scientology. I don't know that/if it does, and since it would be a huge research task to try to find out, I was going to just stop my answer at "I don't know."
But....Well. I'll explain the rest after the intro materials.
Starting with a few excerpts from the Herbalife wiki entry, first of all...
In February 1980, Mark Hughes began selling the original Herbalife weight loss product from the trunk of his car. Hughes often stated that the genesis of his product and program stemmed from the weight loss concerns of his mother, whose death he attributed to an eating disorder and an unhealthy approach to weight loss. Adopting the multi-level marketing system for distribution and growth, the company attracted thousands of distributors who sold its products door-to-door or through word-of-mouth, shunning commercial distribution in retail stores.
The company's slogan, "Lose Weight Now, Ask Me How", became a marketing theme for distributors, featuring heavily on badges, flyers and posters. Early methods to recruit distributors included seminars, which would feature distributors giving health and weight loss testimonials on the Herbalife products and a keynote address by Hughes. By 1982 Herbalife had reached USD 2 million in sales and had expanded into Canada.
In 1985, the California Attorney General sued the company for making inflated claims about the efficacy of its products. The company settled the suit for USD 850,000 without admitting wrongdoing. In 1986 Herbalife became a publicly traded company on the NASDAQ, and in 1996 Herbalife reached USD 1 billion in annual sales.
Mark Hughes died at age 44. The Los Angeles County Coroner autopsy results ruled that the entrepreneur had died of an accidental overdose of large quantities of alcohol and the prescription anti-depressant Doxepin. The company continued to grow after his death and in 2002 was acquired by Whitney and Co LLC and Golden Gate Capital for USD 685 million, who took the company private again.
In April 2003, Michael O. Johnson joined Herbalife as CEO following a 17-year career with The Walt Disney Company[***], most recently as president of Walt Disney International. On December 16, 2004, the company had an initial public offering on the NYSE of 14,500,000 common shares at $14/share. 2004 net sales were reported as USD 1.3 billion. In April 2005, the company celebrated its 25th anniversary with a four-day event attended by 35,000 Herbalife Independent Distributors from around the world. In August 2005, Dr. Steve Henig joined the company as Chief Scientific Officer, responsible for product research and development. In 2008, President and COO Greg Probert resigned after it was reported that he had not completed the degree requirements for the MBA he claimed on his resume./quote]
So right out of the gate, you've got:
* The extremely unlikely and very rapid rise of the company from nowhere to millions, and then billions of dollars in sales annually.
* The sudden, early quasi-suspicious death of the founder, more on whom in the next installment.
* And a classic, AmWay-style not-technically-a-Ponzi-scheme MLM company that used AmWay-style charsimatic-leader cult rallying and recruitment tactics.
Also, if you read the whole entry, you'll notice that the company just seems to be under a lucky star or something when it comes to somehow always managing to beat the charges for what seem like they ought to have been open-and-shut cases on a whole slew of crimes and misdemeanors.
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*** Hugh! That bold-face type is dedicated with love from me to you.
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Next, real quick is the part of the wiki entry that caught my eye as potentially having multiple destructive-cult red flags, which I'll explain in the next post, since they require a little unpacking:In May 2008 the Fraud Discovery Institute, which claims to be a consumer watchdog organisation, reported that laboratory test results of Herbalife products showed lead levels in excess of limits established by law in California under Proposition 65. The Fraud Discovery Institute was founded by fraudulent entrepreneur Barry Minkow, who served seven years in jail for stock fraud, and since disclosed that his company was profiting from the allegations by shorting Herbalife stock. Herbalife responded stating its products met federal FDA requirements and released independent lab tests proving the products did not exceed Proposition 65 limits.