The Salty Droid vs Herbalife

The Salty Droid aka Jason Jones has recently gone to court on behalf of victims of the Herbalife scam: JEFF RODGERS, PATRICIA RODGERS, MICHAEL LAVIGNE, JENNIFER LAVIGNE, CODY PYLE, JENNIFER RIBALTA, IZAAR VALDEZ, and FELIX VALDEZ. The Salty Droid has a long history as a scam buster and has taken on the Herbalife scam with satire for many years.  Now he and Mark Migdal & Hayden are taking them on in court.

Here is how the Salty Droid describes his latest action:

So the new era of this semi-satirical-site starts with an event racketeering lawsuit filed on behalf of hundreds of thousands of victims :: in conjunction with a law firm of lawyers experienced at lawyering … and representing eight extremely brave and amazing victims of an ongoing humanitarian tragedy.

An interesting focus of this lawsuit is the events that Herbalife puts on regularly.  These events are pushed on representatives as a key to their success.

Here are some important details from this lawsuit:

This action seeks recovery from a corrupt organization of individuals and entities who act together, using misrepresentation and deceit, to sell access to a series of emotionally manipulative live events.

The events are pitched as the guaranteed pathway to attaining life changing financial success with the multi-level marketing business opportunity sold by Defendant Herbalife. Events are held each month in dozens of locations across the country, and range in size from 200 to 20,000 attendees.

Herbalife business opportunity participants are told that they must “attend every event” if they want to be successful; and that they must “qualify” for special treatment at these events by making large monthly purchases of Herbalife’s products.

On or about October 26, 2011, from the stage of the year’s largest event, Defendant Mark Addy concisely stated the mantra that is used to deceive thousands of Herbalife distributors and potential recruits in the U.S. every year: “If you go to all the events, you qualify for everything – you will get rich.” This mantra has been repeated thousands of times over the past four years by the Individual Defendants in close collaboration with Herbalife.

Herbalife has long been the object of allegations, litigation, and regulation. Most recently the Federal Trade Commission (the “FTC”) acted against the company, asserting that Herbalife’s structure and deceptive business practices were harming consumers.

But untouched by the FTC’s action (and ultimate resolution of that action as discussed below) is the single most effective fraud in the arsenal of Herbalife and its top distributors – the Circle of Success event system. The event system lures and ensnares people such as Plaintiffs with the guarantee of significant income, a better lifestyle, and even happiness – all to be easily attained through event attendance.

If Defendants told the truth – that there is no correlation between financial success and event attendance – Plaintiffs would not have attended Circle of Success events, would not have paid for tickets to Circle of Success events, and would not have paid for incidental expenses (such as hotel and airfare) to attend Circle of Success events.

The Circle of Success is valueless.

Defendant Herbalife and its highest-ranking members (including the Individual Defendants), jointly produce and sell these events in close association. Defendants market their  event system as some variation of the “Wheel of Success,” the “Cycle of Success,” or the “Circle of Success” (referred to herein as the “Circle of Success”).

Herbalife produces its own large-scale events four times a year: a regional $50 “January Spectacular,” two regional $100 “Leadership Development Weekends” in April and October, and a national $120 “Extravaganza” each July.

None of Herbalife’s top distributors, past or present, including the Individual Defendants, has built a significant income by retailing Herbalife’s products according to Herbalife’s rules. Defendants have actual knowledge that – despite their incessant misleading claims to the contrary – there is no viable retailing opportunity.

Although Herbalife’s compensation plan includes eleven levels of distributors, there are effectively two classes of Herbalife participants: the infinitesimally small percentage of “haves,” insiders who will trumpet alleged successes and “you can do it too” encouragement; and the “have-nots,” outsiders comprising over 99 percent of all Herbalife participants.

A large percentage of the wealth amassed by President’s Team members came from selling leads, systems, trainings, websites, marketing materials, mentoring group access, private events, etc. directly to recruits. These side businesses, collectively known as the “tools business,” are fully detached from Herbalife’s compensation plan.

– Source Rodgers et al v. HERBALIFE, LTD et al