herbalife immigrants bankrupt
A poster displays an Herbalife logo. A estimated 60 percent of the company’s recruited “distributors” are Latino. A publicity campaign aimed against the company has showcased the stories of a handful of former distributors who lost tens of thousands of dollars trying to sell Herbalife products, including many Spanish-speaking immigrants. REUTERS/Robert Galbraith

Latino immigrants who went broke selling Herbalife diet and fitness products appear to be pawns in a battle between two multi-billion dollar entities. In a series of interviews released this week, a dozen former Herbalife distributors explained how the lost between $30,000 and $100,000 investing in sales and merchandising to sell the company’s products. The testimonies were collected and promoted by Pershing Square Capital Management , a Wall Street firm that openly discloses that it holds around a $1 billion dollar short against Herbalife. Only if Herbalife stocks drop significantly will Pershing Square make a return on on its investment.

This is the latest chapter in a long feud between Pershing Square, led by Bill Ackman against Herbalife, backed by Carl Icahn. Ackman has said that Herbalife is essentially a pyramid scheme, reliant more on recruiting distributors than selling actual products. Those accusations led to two investigations. One, by the FBI was later dropped. Another, by the Federal Trade Commission has not let to a charge, according to Business Insider. Aside from Ackman, traders on Wall Street don’t seem to fear a major government indictment, as evidenced by generally healthy stock prices.

Caught in the middle are aspiring Latino entrepreneurs. The Pershing Square documentary includes heart-breaking testimony from former distributors, many of them immigrants, whose lives were ruined financially in the pursuit of a profitable careers as a Herbalife distributors. The company itself admits that only 11 percent of its “distributors” ever make a dime as salesman, maintaining that around three-quarters sign up just to that they can get discounts on Herbalife products. Still, some have ruined themselves financially trying to get into top 3 percent of Herbalife distributors that the company says earn a middle-class income selling their products.

Among the costs incurred by many of these immigrant entrepreneurs are brick-and-mortar stores, as well as lots and lots of Herbalife product to put on the shelves. With real products, real consumers and a refund policy, the company argues that it not a pyramid scheme. A spokesperson for Herbalife pointed to the company’s website, which guarantees refunds on “all products in re-saleable condition that were purchased within the prior 12 months,” including the cost of shipping. For those who don’t read the fine print in the pursuit of economic opportunity, the consequences are drastic. To hear the stories, check out the video, below.

Do you consume Herbalife products, or know an Herbalife distributor? Let us know your thoughts below or by emailing the author here.

Here are the video testimonials, produced by Pershing Square.

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