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.
Villaraigosa, who left office June 30 after eight years as mayor, will serve as a senior advisor to Herbalife Chief Executive Michael O. Johnson and the company’s board of directors, the company said Thursday in a news release.
Villaraigosa will counsel Herbalife on “strategic business development and global community outreach,” the Los Angeles company said.
Herbalife did not disclose how much Villaraigosa will be paid. He already receives a government pension totaling $8,115 a month, or more than $97,000 annually.
“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, the first Latino mayor of modern L.A., said in a statement released by Herbalife.
He did not respond to an interview request from The Times. Herbalife executives also did not respond to requests to elaborate on their release.
This is the second post-mayoral job for Villaraigosa. In July, he was retained as a strategic advisor at Banc of California Inc., a community bank led by high finance specialists, to help expand the Irvine bank’s home and small business loan portfolios.
Word of Villaraigosa’s new job comes as Latino civil rights groups joined with others in criticizing Herbalife’s business model and calling for investigations.
Latinos make up at least 60% of Herbalife distributors in the United States, company officials have said.
In July, a 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 sales people 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 Ackman’s allegations, saying its multi-level marketing model is legal and similar to that of several other companies. Herbalife said its products help people lose weight and lead healthy lives, while providing its salespeople with a potentially rewarding business opportunity.
Herbalife sells weight-loss shake mixes, vitamins, snacks and personal care products through a team of independent sales people throughout the country. The sales people receive discounts on products and commissions based on their sales and sales made by others they recruit into the business.
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 L.A .Galaxy and the Herbalife L.A. Triathlon.”
Times staff writers David Zahniser and Maeve Reston contributed to this report.