Video blast at H’life
Sales star in ‘deception’ chiller
Even those in Herbalife’s upper sales echelon admit the vast majority of people are doomed to fail peddling the company’s protein shakes.
One of Herbalife’s biggest moneymakers was captured on camera blasting the company’s business model during a closeddoor meeting with management and other distributors in 2005.
“We sell people on a dream business that they can make it, yet deep down inside we know that most of them aren’t going to,” said Stephan Gratziani, according to a recording of the Anaheim, Calif., meeting obtained by The Post.
Despite making $1.75 million that year, he bemoaned the “struggle” of people trying to build an Herbalife business, revealing that 90 percent quit within the first year.
“If people knew what our lives were like, they would never sign” the distributor agreement, said Gratziani, a highschool dropout who joined Herbalife in 1999 and became one of the elite distributors named to its Chairman’s Club in 2010.
Gratziani said he wouldn’t want his family to join Los Angelesbased Herbalife because it was an “eventual deception.”
The Gratziani video was presented under seal in federal court by former Herbalife distributors who were sued in 2009 by the company after starting a rival. Herbalife has since dropped the suit.
Earlier this year the video was subpoenaed by federal investigators probing claims that Herbalife is a pyramid scheme, said sources famil iar with the matter.
Gratziani details Herbalife’s high turnover, emphasis on recruitment and a compensation structure that leads distributors to stockpile product — key areas regulators investigate to determine whether a company is a pyramid scheme.
The video was also obtained by hedge fund activist Bill Ackman, who has bet $2 billion that Herbalife is a fraud. Ackman’s Pershing Square on Wednesday posted excerpts from the video on its Herbalife site.
“The video demolishes any suggestion by the company or its defenders that deceptive recruiting practices and misleading income claims are the work of ‘a few bad actors’ in the Herbalife distributor ranks,” Peshing said.
Herbalife denies it’s a pyramid.