In his retirement, former L.A. Mayor Antonio Villaraigosa has decided to enter the exciting world of multi-level marketing, taking on a new role as adviser to Herbalife, the Amway of nutritional supplements.
The move comes as Herbalife hires lobbyists and gears up for a battle on Capitol Hill over its business model. Congresswoman Linda Sanchez has asked the Federal Trade Commission to investigate whether the company is actually operating as a pyramid scheme.
Herbalife looks to be signing up Democrats who might have some sway with the Obama administration. Today, the New York Post reported that Herbalife has hired the Podesta Group, the high-powered D.C. lobbying firm with close ties to Democrats.
Sanchez (D-Lakewood) has raised concerns about whether Herbalife exploits its distributors, who are disproportionately Latino. It makes sense that Herbalife would want to recruit some high-profile help from the Latino political world.
“Antonio knows our company well,” Herbalife CEO Michael Johnson said in a news release. “He understands our nutrition products as well as the way our business model works and the value it can bring to communities.”
But if it makes sense for Herbalife, it's hard to see how it makes sense for Villaraigosa. He's not going to be a lobbyist, at least not officially. (According to the release, he will “provide counsel on strategic business development and global community outreach.”)
But inevitably, he will be advocating for a company that has an aura of controversy around it. He has talked in the past about running for governor, but this might make that more complicated. (Picture a negative ad that uses the words “lobbyist” and “pyramid scheme.”)
Herbalife has been engaged for the last several months in a public battle with Bill Ackman, a hedge fund manager who claims the firm is a pyramid scheme. Ackman has made a $1 billion bet that Herbalife's stock price will drop, and has encouraged the FTC to shut the company down.
Despite the negative press attention that has resulted from that fight, Herbalife has continued to expand around the world, especially in Latin America.