Facing Wall Street challenges, Herbalife takes battle to Sacramento

Herbalife, the Los Angeles-based nutritional products company, made a boisterous show of force at the state Capitol on Wednesday, swarming the halls with neon green-shirted supporters, conducting calisthenics on the outside steps and offering product samples near the basement cafeteria.

“We’re bringing our personal stories, experience, passion with Herbalife to the Capitol,” said Leila Jelloule, an Herbalife distributor from Culver City. “We’re putting a face to the name.”

But there was no bill that prompted the full-court press. Rather, the company was urging lawmakers to stay out of a years-long Wall Street brawl that has increasingly played out in California’s political scene.

The fight pits the company -- which sells supplements, protein shakes and personal care products -- against hedge fund manager Bill Ackman, an activist investor who bet more than $1 billion on Wall Street that the company’s value would tumble.

Herbalife is a multilevel marketing company, in which distributors earn a profit from their own sales as well as a commission for the sales made by those they’ve recruited to the business.

Ackman has accused the company of being a pyramid scheme. The Federal Trade Commission launched an investigation last year into the company, and several state attorneys general have opened inquiries as well.

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FOR THE RECORD

1:15 p.m., Feb. 19: An earlier version of this post incorrectly said the FTC launched an investigation into Herbalife this year. The investigation was launched last year.

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Now, Herbalife critics want California Atty. Gen. Kamala D. Harris to start an investigation of her own -- and have been urging lawmakers to put pressure on her to do so. Herbalife’s backers want to keep Harris -- and the Legislature -- out of the fray.

The saga’s ripple effects extend to the 2016 U.S. Senate race, for which Harris is mounting an aggressive campaign. Antonio Villaraigosa, former Los Angeles mayor and a potential challenger to Harris, is an advisor to Herbalife.

The two sides have each brought on lobbying heavyweights. KP Public Affairs, which racked up the most billings among California lobbying firms in 2014, is representing Herbalife, and Ackman’s fund Pershing Square Capital Management hired Mercury Public Affairs.

Herbalife’s supporters stuck mostly to the soft sell Wednesday, touting the benefits of the company and its product.

“The best weapon that any company has is its membership talking directly to folks,” said Pedro Carrillo, an Herbalife consultant from Boyle Heights.

Glennis Seldon, a coach and competitive runner from Long Beach, spent much of her time with a staffer for Senate President Pro Tem Kevin de León (D-Los Angeles), describing how she incorporated the products into her training regimen.

Anti-Herbalife forces made their own push Wednesday, distributing “Stop Herbalife!” fliers urging lawmakers to call Harris and request an investigation into Herbalife’s business practices. The packet included questions for Herbalife’s distributors and lobbyists; one suggested query asked why Herbalife would oppose an investigation “if there is nothing to hide?”

Brent Wilkes, executive director of the League of United Latin American Citizens, said Herbalife “does not shy away from trying to get influence” with elected officials, especially as its business practices face scrutiny.

His group has been critical of the company, arguing it takes advantage of its largely Latino distributors. Wilkes, who said his group was not involved in distributing the anti-Herbalife materials in the Capitol on Wednesday, said Ackman’s campaign against Herbalife has turned up the pressure on the company.

“It may end up being that Bill Ackman is the guy that helps us rein in these companies that were beating up on our communities for a long time,” Wilkes said.

Follow @melmason for more on California government and politics.