BRAD HARRIS

Background on Herbalife-Related Businesses

• Brad Harris owns and operates Nutrition Club Pro, LLC (“NCP”), a digital marketing system for Herbalife nutrition clubs that is registered in Missouri (Charter Number: LC1114319, Articles of Organization attached as Harris Exhibit A; see also https://www.sos.mo.gov/BusinessEntity/soskb/Corp.asp?3137487). The Articles of Organization for NCP use the address 5316 N.W. 60th Street, Kansas City, MO 64151, and list Brad D. Harris as NCP’s registered agent. The Articles of Organization note that the purpose of the company is “[t]o sell and provide internet training programs and website systems to businesses.” NCP’s website is www.nutritionclubpro.com.

• Harris also operates KC Nutrition, an Herbalife Nutrition club located in Kansas City, MO (Charter Number: X00913365, registration filing attached as Harris Exhibit B; see also https://www.sos.mo.gov/BusinessEntity/soskb/Corp.asp?2618515). While Harris’ registration expired in August 2013, KC Nutrition continues to operate (see http://kcnutrition.nutritionclubpro.com/fit-club/index.html). The registration filing uses the address 10030 N. Ambassador Drive, Kansas City, MO 64153—the same address listed on the KC Nutrition website. The filing lists BP Harris & Associates, Inc. (see infra at 36 (Pershing Square believes “BP” stands for Brad and Pam—Harris’ wife)) as the owner and Bradley Dale Harris as the company’s President. Harris’ LinkedIn profile also lists “President, KC Nutrition, 2006 – Present” under “Experience”. Harris Exhibit C, available at http://www.linkedin.com/in/braddharris. The KC Nutrition website attributes a copyright to Nutrition Club Pro at the bottom of each of its webpages.

• Harris also appears to operate another Herbalife nutrition club called Life Sport Fuel (“LSF”) (http://www.lifesportfuel.com/). The club is located at 11144 Antioch Road, Overland Park, Kansas 66210, and the website lists Brad Harris as the contact person. The LSF website is largely identical in format to that of KC Nutrition. Indeed, the alternative web address for the LSF site is http://bradandpam.nutritionclubpro.com/fit-club/aboutus.html—a Nutrition Club Pro-powered site, just like KC Nutrition. Moreover, as with KC Nutrition, each webpage attributes a copyright to Nutrition Club Pro.

• Harris has registered the following Internet domains: www.kansascitysts.com (Harris Exhibit D (“STS” stands for Success Training Seminar)); www.financialfreedom101.com (Harris Exhibit E); and www.harrismarketing.info (Harris Exhibit F).
  • Neither the Kansas City STS nor the Harris Marketing website appear to be active at this time, but a version of the Kansas STS site from January 2014 can be viewed at http://web.archive.org/web/20140103070831/http://kansascitysts.com/

•  The Financial Freedom 101 website hosts an Herbalife video and provides visitors with a link to sign up to become a “Wellness Coach.” The site also features a link to Nutrition Club Pro at the bottom of the webpage.

Primary Source Data on Business Practices

Videos and Audio Recordings [1]

• Harris appears in a number of videos promoting nutrition clubs and the Herbalife business opportunity, as well as providing guidance to new distributors..
  • Harris produced a four-part video presentation on building an MLM organization entitled “Own Your Life.” Set with the backdrop of an exotic beach, the video series describes the Herbalife business opportunity, without ever explicitly mentioning Herbalife. In part one, available at https://vimeo.com/user15264273/review/100549891/d197633b16, Harris explains that “[t]he goal is to make the most money possible with the least time required.” Harris further notes that the “two keys to financial freedom” are “leverage”—i.e., building a downline of distributors—and “residual income”—i.e., “income earned for a long time after the work is complete.”

• Part two, available at https://vimeo.com/user15264273/review/100549820/4977d7f5fa, introduces the viewer to the concept of network marketing, which “should not be confused with direct sales, because if done correctly, there are no sales involved. With network marketing, income is residual.” Speaking directly to the legality of the network marketing companies to which he is implicitly referring, Harris tells the viewer that “network marketing should not be confused with illegal pyramid sales. The key distinction between network marketing and pyramid sales is a product moving to market. All reputable network marketing companies have a product moving into the market and are 100 percent legal. . . . Pyramid schemes are money games and involve no true product.” In fact, the legality of an MLM is not dependent solely on the existence of some product (indeed the use of a product is what distinguishes a pyramid scheme from a Ponzi scheme), but rather whether the MLM’s compensation system “tends to induce participants to focus on the recruitment side of the business at the expense of their retail marketing efforts.” See Webster v. Omnitrition, 79 F.3d 776, 781 (9th Cir. 1996). Harris proceeds to discuss the “pyramid myth,” in which “people at the top make all the money.” Harris attempts to refute this myth by telling viewers that it only exists in typical corporate structures, like Wal-Mart’s, for instance, and not a network marketing structure, where “you work your way up the marketing plan all the way to the top. It allows equality. Everybody has equality in the marketing plan.” Of course, it is highly misleading to suggest to new Herbalife distributors that they have any hope of rising to the top of the Herbalife pyramid. Indeed, Pershing Square estimates that the odds of a new distributor making it even to President’s Team are approximately 1 in 10,000. See also https://www.herbalifepyramidscheme.com/pyramid-scheme-industry/ for a white paper analyzing MLM industry data and concluding that “Only the Top ½ of 1% Receive Livelihood Income Levels.” Harris concludes by emphasizing the importance of recruiting in the Herbalife scheme, noting that “a common misunderstanding about network marketing is the notion that you have to sell retail to be successful. But in regards to the larger sums of money, the real success is in building the organization, not sales.” This is a remarkably candid admission that the Herbalife business opportunity is focused on recruiting as opposed to retail sales.

•  In part three, available at https://vimeo.com/user15264273/review/100549819/88fdbb3bbe, Harris focuses on “leverage,” noting that “you don’t have to sponsor a lot of people to build a very large organization.” Harris describes the purported ease with which one can build a substantial pyramidal business organization by “just adding” a few people to the “first level” of one’s pyramid and then “duplicat[ing].”

•  In part four, available at https://vimeo.com/user15264273/review/100549816/dedf37889e, Harris reemphasizes that “sponsoring” other distributors is of paramount importance to building a residual income, and that “you’re not looking for people who want to sell,” but rather distributors who also want to sponsor others and build a network marketing career.

•  In a video hosted on Nutrition Club Pro’s Vimeo webpage, now available at https://vimeo.com/user15264273/review/100549814/cba59c58f5, Harris provides prospective nutrition club operators with advice on “keep[ing] your [nutrition] club legal.” With a portrait of Herbalife founder Mark Hughes in the background, Harris lists words that an operator is not permitted to use in nutrition club signage. According to Harris, Herbalife prohibits use of “the word shake, the word meal, breakfast, lunch, dinner, food, bar, club, store, shop. Those are words we don’t wanna use. You can’t use the word Herbalife, you can’t use that. Nutrition club in the name, you can’t use those. Herbalife has asked us not to use any of those names, because that makes it look retail-ish.” Describing “what we do” in nutrition clubs, Harris tells the viewer that “with our memberships, of course, [club attendees] get a free [Herbalife] shake and tea, and, of course, we give them body analyses, weight loss challenges, nutrition training . . . .” Harris further explains that “It’s all about duplication. Remember, this club is your model home. People are going to see this and want to duplicate this and that’s when you start making royalties, which is the exciting part of our business.” In other words, the principal function of a nutrition club is recruiting new distributors. Later, referring to the taxes an operator must pay on nutrition clubs, Harris notes that “everything is a business write-off. One of the greatest things about a business is you have a lot of a lot, a lot, a lot of write-offs.”

• The KC Nutrition website hosts another video featuring Harris, entitled “Weight Loss Coaches Needed – Kansas City MO.” See https://vimeo.com/user15264273/review/100549813/43d37aeffa. see also http://bradandpam.nutritionclubpro.com/coach_apply.html. Referring to the sorts of vulnerable people that senior Herbalife distributors target in their recruiting efforts, Harris says, “I don’t know why you’re here today. Maybe you’ve been corporate downsized. Maybe you just got out of college and you have all those school loans that you’re trying to pay off. Maybe you want a new home. Maybe you want a new car. Whatever it is, we can help you.”

• In an audio recording produced to teach potential recruits about conducting a weight loss challenge—a promotional activity intended to draw prospective recruits to Herbalife nutrition clubs—Harris begins by recounting his life before he became involved with—Herbalife.  See https://soundcloud.com/#hlfaudio/brad-harris.  Harris tells recruits that he “used to be a hydraulic mechanic, never dreamed I’d be doing this. . . . 13 years, going on 14 years now, and it’s just been incredible.  We’ve made millions of dollars in the company.  I share it with you not to impress you, but just to impress upon you it’s just an exciting time to be in Herbalife right now.”  (0:32-1:37.)  After Harris and his sister, President’s Team member Rox Anna Chauvenne, discuss sources of recruits for a weight loss challenge (e.g., schools, banks, car dealerships, churches), (8:45-10:32), Harris explains that “weight loss competitions are very simple, ok.  It’s very simple.  What you’re trying to do is get people to throw their money into the pot [which is paid out to the winners of the competition].”  (13:42-13:47.)  Eventually, Harris describes more explicitly the purpose of hosting weight loss challenges in one’s nutrition club is to move Herbalife products.  “What we find is that way over half the people get on the Herbalife products, and we end up selling, you know—I mean the minimum I’ve heard of . . . is like $800 to $1,000 in a [weight loss] class that’s ten and more.  I mean we sell La Bambas [a mixture of Herbalife aloe, tea, protein powder, and other Herbalife ingredients] . . . . You’re gonna sell so much product.”  Then Harris emphasizes the critical point: “[W]hat the great thing about this is you’re gonna find some great distributors out of this. . . .  [A]nd you’ll see them branch off and do their own weight loss competitions from your class after graduation.  So you see some phenomenal, phenomenal recruiting that comes out of this. . . .  It’s a system . . . that’s truly a system.  We can actually build a distributorship by doing what we’re doing here.”  (26:30-28:14.)

Recruiting Materials

• Harris’ Nutrition Club Pro (“NCP”) offers members digital marketing services to promote their Herbalife nutrition club businesses for a fee of $29.95 per month (unless the new member refers five paying customers, in which case the system is free of charge).
  • On the NCP homepage (http://nutritionclubpro.com/index_enter.html), Harris tells visitors that his system can help them do the following:
    
  • Harris then lists the various services NCP provides to its paying customers:
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• As mentioned above, NCP’s Articles of Organization note that the purposes of the company is “[t]o sell and provide internet training programs and website systems to businesses.” Harris Exhibit A.

• The KC Nutrition and Life Sport Fuel nutrition club websites, which are largely identical to one another, advertise the following opportunities for visitors:
  

o Both nutrition clubs also maintain active Facebook websites that promote weight loss challenges. See https://www.facebook.com/KCNutrition; https://www.facebook.com/lifesportfuel.

• In 2007, Harris delivered a presentation, attached as Harris Exhibit G, available at http://www.nutritionclubtraining.com/secure/files/Chairman%27s%20Plan%20Revised.pptx, at an Herbalife training session in Kansas City, in which he purported to demonstrate the simplicity of progressing to President’s Team, and then to Chairman’s Club, using the nutrition club model.  The slides tell distributors that if they establish five “first line clubs,” those five “first lines gets [sic] [5] Clubs underneath them doing 10,000 [volume points], and then they “[t]each the 5 first lines under your 5 first lines to get 3 clubs. . . .  Drum Roll Please………CHAIRMAN’S CLUB‼‼‼”  The diagram Harris uses is the familiar pyramid used by other senior Herbalife distributors in their recruiting efforts.

• Harris spoke to distributors at an Herbalife STS event in August 2012, emphasizing that Herbalife is “not a Direct Marketing Company” but rather a “Multilevel Marketing” company.  The photographs included below were originally downloaded from the public Facebook website of Herbalife distributor Christina Slagle (https://www.facebook.com/ChristinaSlagle/photos#!/ChristinaSlagle/photos_albums), but no longer appear on Slagle’s site.

• On his Facebook website, Harris posts photo albums of Herbalife-sponsored trips to places like Costa Rica, the Bahamas, and Paris.

Links to Other Senior Distributors

• Pershing Square believes Harris is a member of Chairman’s Club member Dan Waldron’s downline. As such, Harris is often associated with Waldron at Herbalife events.
  • Harris’ Herbalife story was profiled on Waldron’s Herbalife lead generation website, “Work From Home!” (http://web.archive.org/web/20000510160902/http://www.work-from-home.net/).
    

o  Harris has also been a featured speaker at Waldron’s Dallas STSs. Herbalife knows, or could easily learn about, the misleading income claims that Harris and other senior Herbalife distributors make on a routine basis at STSs and other distributor events.

o Harris also frequently appears with Waldron at Herbalife events.

• Harris works with President’s Team member Tina White and Millionaire Team member Tonja Bridges on his Herbalife nutrition club business.  Indeed, in Harris’ weight loss challenge audio clip (supra at 20), Harris says, “Of course, you know, we’ve been doing nutrition clubs, . . .working with Tonja and Tina.”  (3:52.)

• As mentioned above, Harris’ sister is President’s Team member Rox Anna Chauvenne (see weight loss challenge audio clip supra at 20).  Chauvenne was profiled in a 2000 edition of Herbalife Today, a magazine published by Herbalife, alongside her husband John (excerpt attached as Harris Exhibit H; see also http://factsaboutherbalife.comcontent/uploads/2016/01/64.pdf at 9).  The article quotes Chauvenne as saying, “We were living paycheck to paycheck, and there were no ‘extras’ in our budget.”  But now “[w]e are earning on average $20,000 a month.  So many things have changed since Brad [Harris] told us about Herbalife . . . .  Now we can take vacations whenever we want and stay in the most luxurious hotels.  And we recently purchased a brand-new Ford Expedition.  Before Herbalife, I had never owned a new car.  We are also saving for our daughters’ college education, so they can go to whatever schools they choose.  Herbalife is a dream come true for us!”

• Harris frequently appears at Herbalife-sponsored events with other senior Herbalife distributors.

Links to Herbalife Corporate Leadership

• The Harrises were profiled in a 1998 edition of Herbalife Today (excerpt attached as Harris Exhibit I, available at http://factsaboutherbalife.comcontent/uploads/2016/01/49.pdf at 12).  The article quotes Pam Harris as saying, “Before we found Herbalife, I was baby-sitting.  Brad was working as a mechanic, and we could not keep up with our expenses, especially [Pam’s] medical bills.”  However, in just her second week after joining Herbalife, Pam claims that she “earned $1,900, becoming a World Team member, and after five months Brad quit his job to help me full time with the business.  By the end of our third year, we qualified for President’s Team.”  The article notes that “[n]ow Pam and Brad are earning $32,000 a month!”
• In a January 2004 edition of the “HerbalHerald,” a flier advertising upcoming events and broadcasts published by Herbalife, the company promotes an Herbalife Broadcast Network (HBN) program entitled “Plan of Action” hosted by Brad Harris.  See Harris Exhibit J, available at http://www.herbalifeww.com/shared/pdf/News_More_Info_Items/HerbalHeraldJan04.pdf.
• The Harrises have appeared at Herbalife events with top Herbalife executives.

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  Harris has been a keynote speaker at multiple Herbalife Leadership Development Weekends (LDWs), most recently in Orange County, CA, in April 2014.  These events are sponsored by Herbalife itself.

• Harris has also been a featured speaker on Herbalife “Ride the Wave” training calls for distributors.

Other Businesses

• BP Harris & Associates, Inc., is registered in Missouri  (Charter Number:  00441782, registration filing attached as Harris Exhibit K, see also https://www.sos.mo.gov/BusinessEntity/soskb/Corp.asp?373420).  The registration filing uses the address 5316 N.W. 60 Street, Kansas City, MO 64151, and lists Bradley D. Harris as the company’s sole registered agent.  BP Harris’ previous legal name is listed as Brad and Pam Harris, Inc.  The company was administratively dissolved on August 28, 2013, for “[f]ailure to file a correct and current annual report.”  See Harris Exhibit L.

[1] To the extent that any of the videos in this report requires a password, the password is “harris”.