2017 Tribeca Film Review: 'Betting On Zero' Spurs More Questions on Herbalife's Pyramid Scheme
NEW YORK, NY — By the time BETTING ON ZERO, a documentary about Herbalife Ltd., premiered at the Tribeca Film Festival last spring, and hit U.S. theaters March 10, millions of dollars have already been mailed to about 350,000 alleged victims of Herbalife’s pyramid scheme.
Those checks are the result of a $200 million Herbalife’s settlement with the Federal Trade Commission. As part of the settlement, Herbalife was also ordered to restructure its business.
The film, which features billionaire hedge-fund manager Bill Ackman, founder and CEO of Pershing Square — who began a massive campaign against Herbalife in December 2012 with $1 billion wager against the company’s stock — chronicled a group of distributors seeking justice for their financial losses on Herbalife. These distributors were mostly immigrants from Chicago’s predominantly Latino neighborhoods.
Led by activist Julie Contreras, the distributors were recruited into Herbalife’s multi-level-marketing network. They invested their life’s savings in the nutrition products company, hoping that they would run their own business and somehow make a profit.
Reports reveal that 60 percent of Herbalife’s sales in the United States came from the Latino community. And because the business model does not require immigration documentation, other immigrants of diverse ethnic backgrounds are also believed to have invested in Herbalife.
According to FTC officials, the settlement will “put money back into the pockets” of Herbalife distributors across the United States.
These refunds, while they may be partial, will go to people who ran an Herbalife business between 2009 and 2015, and who invested “at least $1,000 to Herbalife but got little or nothing back from the company,” FTC officials added.
“Most of these checks are between $100 and $500, and the largest checks exceed $9,000,” said Monica Vaca, assistant director of FTC’s Bureau of Protection.
Speculations remain whether the film exerted an impact on the settlement — one of the biggest in FTC history — or whether the people behind the film had aimed at lobbying against Herbalife.
The settlement, though it may be coincidental, came in July, 2016, about three months after BETTING ON ZERO was first shown at the Tribeca Film Festibal The film was also financed by John Fichthorn, co-founder of Dialectic Capital Management and a strong critic of Herbalife.
But the film’s director, Ted Braun, told the news media that the making of the documentary was entirely independent from its financiers and Bill Ackman. Earlier this month, however, Fortune reported that hundreds of the nearly 350,000 recipients of partial refunds are not Herbalife “victims” but are in fact fans of the nutrition product company.
Some of the check recipients, the report says, are actually happy customers and may use the settlement money to buy more Herbalife products.
That kind of feedback from Herbalife happy customers who received the settlement payout raises the question whether the FTC’s two-year investigation and plan to go after Herbalife actually boomeranged. But it also overshadows the situation of those Herbalife victims who do exist.
There’s no data that shows how many Herbalife supporters have already received the check in the mail, and how many of the victims. And there’s also no data that reveal how many victims did not receive the check.
Specifically, the FTC says that 8,600 checks worth about $4.7 million were sent to Herbalife recipients in North Carolina, and checks worth about $15 million were sent to New York State.
“The FTC used Herbalife’s records to determine who would receive a refund and the amount of the refund,” Vaca noted.
Author's Note: This article was first published in New America Media and The Word on February 28, 2017.