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How lobbying dollars prop up pyramid schemes

08
Apr
2014

Last month, a front page New York Times investigative report revealed that Bill Ackman, the hedge fund manager crusading against nutritional supplement company Herbalife, had pressured legislators and paid civil rights organizations upwards of $130,000 to start a federal investigation into the company’s business practices. The New York Times acknowledged that Herbalife has mobilized its own army of lobbyists to defend itself against Mr. Ackman’s charges. But it didn’t emphasize that Herbalife spent nearly 800 percent more on lobbying in 2013 than Ackman did. It also didn’t mention that Herbalife’s intense lobbying effort last year is part of an influential, decades-old political strategy undertaken by the multi-level marketing (MLM) industry — a group of companies and industry groups like Herbalife that promote so-called direct sales businesses, which sell products in tandem with the opportunity to sell products. This political strategy — with ties to dozens of current congressional representatives who have received handsome donations from MLM companies and industry lobbyists — has pushed federal regulators away from investigating these companies.

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