Los Angeles nutritional products company Herbalife Ltd., battling allegations that it operates an illegal pyramid scheme, has a new and unexpected advocate: former Los Angeles Mayor Antonio Villaraigosa.
The former mayor, who left in June after eight years in office, will serve as a senior advisor to Herbalife Chief Executive Michael O. Johnson and the company’s board of directors, the company said in a news release.
Villaraigosa will counsel Herbalife on “strategic business development and global community outreach,” the company said. Herbalife did not disclose how much Villaraigosa will be paid.
“Herbalife has been a solid member of the Los Angeles business community and a strong presence within the Latino community since the company was founded here in 1980,” Villaraigosa said.
Word of Villaraigosa’s new job comes as Herbalife faces criticism about its business model from Latino civil rights groups and calls for investigations from several elected officials.
Latinos make up at least 60% of Herbalife distributors in the U.S., company officials have said.
In July, a key national Latino civil rights group accused Herbalife of misleading people about the prospect of making money selling its products.
“I absolutely think they’re being victimized, and I think it’s a really bad idea to become a distributor,” Brent Wilkes, national executive director of the League of United Latin American Citizens, said at the time.
LULAC was one of the five groups that met with the Federal Trade Commission in July to discuss concerns about Herbalife.
In December, billionaire hedge fund manager Bill Ackman said he had concluded after extensive research that the company was operating a pyramid scheme in which most of its independent salespeople lose money.
He said he took a $1-billion short position on Herbalife’s stock, betting it would fall. But so far, the stock is up 95% year to date, closing Thursday at $64.20.
Ackman did not immediately respond to a request for comment about Villaraigosa’s new job.
Herbalife denied the allegations, saying its multi-level marketing model is legal and similar to several other companies. The company said its products help people lose weight and lead healthy lives, while providing its salespeople with a valuable business opportunity.
In Herbalife’s news release, Villaraigosa said the company has “demonstrated its commitment to the city by choosing to locate its corporate offices in the LA Live complex and through its association with the LA Galaxy and the Herbalife LA Triathlon.”
“I’m excited to have the opportunity to work with the Herbalife leadership team to help the company continue to grow and contribute.”