Back on Dec. 20, 2012, Pershing Square Capital Management announced it had shorted the stock of Herbalife to the tune of $1 billion. Pershing’s CEO, Bill Ackman, claimed Herbalife was a massive fraud, its business built not on product sales to consumers but upon a chain of recruits endlessly recruiting others.
He called his position a “good for America short,” and pressed regulators to take action. Herbalife’s CEO, Michael Johnson, angrily asserted Herbalife was “a legitimate company” and declared “the United States will be better off when Bill Ackman’s gone.”
From the outset, what’s good for America and government’s role in determining that has been front and center in the battle over Herbalife.
Intrigued by money’s place in the American Dream I wrote and directed a feature documentary, Betting On Zero, that follows this titanic Wall Street struggle. But equally significant to me was the experience of Americans at a lower economic altitude – those who joined Herbalife in the hope of making a good living and transforming their lives.
Julio Ulloa is one of these Americans and a subject of Betting On Zero. In 2011, heclosed his successful construction business in Chicago to join Herbalife, persuaded he would get rich and help the local Hispanic community lead healthy lives. After he concluded he could only profit by misleading others he cut ties to the company. By then he’d lost his savings, his home, and become estranged from his family. When we met he shared a cramped three-bedroom apartment with two other former Herbalife distributors - his room so tiny there wasn’t space for our camera.
Believing he’d been wronged and looking for justice, he joined the class action lawsuit Bostick v. Herbalife and, as part of the settlement, eventually received $14,094 - a fraction of his total loss but enough to begin to rebuild his life. He got his own apartment and reestablished contact with his two sons. They met, and Julio, feeling guilt for neglecting them during his Herbalife years, urged his sons to make the most of their lives. The next day his eldest, Pablo, was killed in a shooting. When I got the dreadful news I reached out, but Julio didn’t respond. He remained cut off for months, broken with grief - until July 15, 2016, when the Federal Trade Commission announced it too had reached a settlement with Herbalife.
The FTC found the vast majority of Herbalife distributors – around half a million Americans annually – “make little or no money, and a substantial percentage lose money.” FTC Chair, Edith Ramirez, characterized the company’s business opportunity as “an illusion.” The FTC charged Herbalife with four counts of unfair, false, and deceptive business practices and required Herbalife to pay a $200 million fine, restructure its business model, and “start operating legitimately.”
I was curious to see how Julio felt about all this and, without much hope I’d get through, called him. The first effect I noticed was the simplest and perhaps most profound. He answered the phone. He was on his way to a meeting of former Herbalife distributors who’d been fighting for justice. Their mood had lifted. Julio had begun to live again. He said, “The FTC saw what I’d been through and did something.”
FTC Chairwoman Edith Ramirez, a Latina daughter of immigrants from Mexico City, and the federal government investigated the wrongs Julio and others had experienced and concluded they were just that: wrongs, violations of law. A signal to Julio, and millions like him, that the most powerful government in the world could also represent his interests. A film I thought had been about the place of money in American values had transformed itself into a story about the power of facts and justice.
Over the last 30 years the unequal distribution of wealth in this country has grown and mirrored an increasingly unequal access to government and justice. The experience of Julio Ulloa reminds us of the human value of the work of our government, especially the courts and regulatory bodies, and of the important role they and our elected officials can play in protecting the lives and interests of millions of citizens who fly below Wall Street battles. It is time consuming and laborious, done far from the spotlight.
But it knits our society together as few things can. And thus reminds us the American Dream is founded not only upon a promise of boundless economic opportunity, but also on a bedrock of representative government and equal protection under the law.
Braun is the director of Betting on Zero which premiered in the World Doc Competition at the Tribeca Film Festival where it received a special jury mention for investigative work. Braun’s film Darfur Now won the NAACP Image Award for best documentary of 2007 and was named one of 2007’s top five documentaries by the National Board of Review. Braun’s an Associate Professor in Writing for the Screen and Television at USC’s School of Cinematic Arts where he holds the Joseph Campbell Endowed Chair in Cinematic Ethics. Follow Betting on Zero on Twitter @bettingonzero.
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