Dates of Herbalife Distributorship: 1982 – present
Status in Herbalife: Chairman’s Club
Business Methods: Training Videos, Calls and Presentations; Online Recruiting Businesses; Herbalife Opportunity Meetings and Success Training Seminars
All statements in this report are made pursuant to Pershing Square’s disclaimer, available at http://factsaboutherbalife.com/disclaimer/.
BACKGROUND ON HERBALIFE-RELATED BUSINESSES
- Dan Waldron is affiliated with several businesses that appear to have ties to Herbalife.
- Waldron Marketing, Inc., is registered in Texas (Filing Number: 145708200, registration attached as Exhibit A). The registration filing uses the address 1116 W. Parker Road, Suite 380B, Plano, TX 75075, and the articles of incorporation, attached as Exhibit B, list Waldron and his then-wife Carla Waldron (now Berg) as the sole members of the company’s board of directors. According to Waldron’s LinkedIn website, attached as Exhibit C, Waldron Marketing is directly related to his Herbalife distributorship.
- W3 Capital Investments, LLC, is registered in Texas (Filing Number: 800530584, registration attached as Exhibit D). The registration filing uses the address 1116 W. Parker Road, Plano, TX 75075—the same address used for Waldron Marketing. The registration lists Waldron and his now-wife and fellow Chairman’s Club member Vicki Waldron as the company’s registered agents, and the articles of incorporation, attached as Exhibit E, list Waldron and President’s Team member Glenn Wells as the Managers of the company.
- Taylor Marketing, Inc., was registered in Texas (Filing Number: 800417687, registration (two pages) attached as Exhibit G). The registration uses the address 15303 Dallas Parkway, Suite 700, Addison, TX 75001, which is the same address listed in the W3 Capital Investments articles of incorporation, see Exhibit E. The registration filings list Waldron as a registered agent, along with James Patterson, whom we believe is Waldron’s lawyer. The company filed its last Information Report on April 11, 2012, and may no longer be active.
- Latino Marketing, LLC, is registered in Nevada (Filing Number: E0839802005-8, registration attached as Exhibit H), and the registration lists Taylor Marketing as a Managing Member.
- The two other Managing Members of Latino Marketing are SBP Family Partnership, Ltd., and JOP Family Partnership, Ltd, which we believe are owned by Founder’s Circle members Susan and John Peterson (whose initials are SBP and JOP, respectively). Both SBP and JOP are registered in Texas (SBP Filing Number: 800362109, registration attached as Exhibit I; JOP Filing Number: 800362116, registration attached as Exhibit J). The registration filing for both companies uses the address 2702 Jackson St., Houston, TX 77004, and the listed agent for both companies is Stanley Fortson, whom we believe is the Peterson family’s accountant.
- Waldron has registered a number of domain names to attract potential recruits to his Herbalife business operation.
- Waldron is the registrant of www.dallassts.com, a website that provides local distributors information on Herbalife “training” opportunities. See Exhibit L; Exhibit C (Waldron lists Dallas STS (Success Training Seminar) under “Groups and Associations” on his LinkedIn website); see also Recruiting Materials, infra at 10.
- Dallas STS, at the bottom of the homepage, links to six other local STS websites:
Lubbock STS (http://lubbocksts.com/)
Oklahoma STS (http://oklahomasts.com/)
Prague STS (http://praguests.com/)
The Phoenix STS (http://thephoenixsts.com/)
Upstate NY STS (http://www.upstatenysts.com/)
Ohio STS (http://www.ohiosts.com/)
- These websites are nearly identical to Waldron’s Dallas STS site.
- Waldron is the registrant of www.work-from-home.net, a lead generation website. See Exhibit M; see also Lead Generation, infra at 8.
- Waldron has registered many websites with Hispanic community references in the domain names. See Exhibit N.
- Waldron has also registered a number of other Herbalife-related websites. See Exhibit O.
Primary Source Data on Business Practices
- Dan Waldron appears in videos promoting the Herbalife business opportunity.
- In one such video, available at https://vimeo.com/user24651359/review/85484438/9e7defbe8c, Waldron promotes a 2012 Herbalife “Spectacular” in New Mexico by telling new distributors that he relied on Herbalife success stories when he was a fledgling distributor. Waldron tells his audience of new distributors, “I never thought in a million years Herbalife was for me, but I went to a meeting, just like some of you are at today, kind of looking around like, what’s the deal here, what is this Herbalife? And when the stories walked across the stage, I couldn’t even believe what I was seeing. I was so excited, I joined . . . and I went out there and I started making $500 a month, $1,000 a month. It turned into a fulltime income. I’ve made millions of dollars with the company, but I’m so excited for the future.” It is highly misleading to suggest that new recruits could earn such income. According to Herbalife’s Statement of Average Gross Compensation of U.S. Distributors in 2012, attached as Exhibit P and available at http://opportunity.herbalife.com/Content/en-US/pdf/business-opportunity/StatementAverageCompensation2011EN.pdf, only three-hundredths of one percent of Herbalife distributors in the U.S. earn even $250,000 per year in payments from Herbalife, while 88% of those distributors earn $0 per year in payments from Herbalife.
- In Waldron’s Chairman’s Club profile video, available at http://factsaboutherbalife.com/?s=dan+waldron, Waldron tells distributors that success was fast and easy with Herbalife. Waldron claims that Herbalife paid for his college education, saying “When I first started I was a—you know, repairing furniture in Houston. And then when I got involved in the business, very, very shortly after that I moved to Austin and I started going to school. And four years, Herbalife paid, you know, all the university—books, tuition, everything. For four years. Walked out with no loans. Which is unheard of. And then I went right in, went full-time with it.”
- The video features depictions of Waldron’s mansion, his BMW and Mercedes vehicles, the Waldron family playing sports around the house like swimming, billiards, and soccer, and other visuals that depict a life of wealth and little stress. Waldron tells a story from 1993, when he was “at 12 to 15,000 a month” as a Millionaire Team member, where he drove his $2,000 car into a Lexus dealership “ten minutes before they closed, and I wrote a check and I bought a brand new Lexus. And that’s what I’d buy my kids on, you know, for Christmas now [laughs].”
- Later in the video, Waldron’s wife, Vicki, tells distributors that life is easy as an Herbalife distributor, saying, “We just have such flexibility in our lives”, and noting that even “with four kids, really busy kids, we never miss anything.”
- At the conclusion of the video, Waldron tells distributors that the only way to fail is to quit. “The only way anybody’s ever failed at Herbalife—and I’ve been around over 20 years—is they dropped out. You concentrate, and you focus in on it, and no question about it. I mean, we’re just getting going, and we’re at three billion. Can you imagine in five years where we’re gonna be? What a great company. How blessed we are. Incredible.” This is highly misleading. In reality, Herbalife’s 2012 Statement of Average Gross Compensation of U.S. Supervisors, discloses that two-thirds of first-time Supervisors, and half of all Supervisors, failed in 2012. (Exhibit P.) And the last time Herbalife disclosed failure rates for distributors who had not reached the level of Supervisor, in its 2005 10-K, Herbalife disclosed that “more than 90% of our distributors that are not supervisors turned over.” (Page 24 of Herbalife’s 2005 10-K, excerpt attached as Exhibit Q.)
- Waldron delivered a highly deceptive speech at Herbalife’s Chairman’s Club Tour event in New York on December 18, 2013, which focused largely on Waldron’s own rise through the Herbalife marketing plan and the supposed ease with which any distributor can achieve life-changing financial success with the Herbalife business opportunity. The speech is available at https://soundcloud.com/hlfaudio/waldron-12-18-2013, and a transcript is attached as Exhibit R. See also infra at 23 for the Waldron Chairman’s Club Tour flyer.
- Waldron begins his speech by briefly recounting his supposed rags-to-riches story with Herbalife, telling the audience of new distributors that they, too, could experience the same level of success. Waldron says, “When I got started, you know, as an Herbalife member, I got an international business package—membership package. And I started at 25 percent . . . I was a furniture repair man and I was very poor. And then I moved up to the thirty percent and forty two percent and then I became a supervisor. So you can start wherever you are tonight, at the twenty five percent commission, you can work up to thirty five percent, you can work forty two percent as a success builder and ultimately you can become a supervisor in our company.” (1:11:29 – 1:12:24.; see also 1:15:24 – 1:19:38) (discussing how “beat up” his former homes were when he was “very poor.” “I never thought I would ever have anything in my life.”))
- Waldron then refers to the importance of recruiting for Herbalife’s business model, invoking the image of a “family.” Talking about “the business opportunity we have,” Waldron tells the distributors in the audience, “Let’s help tons of people out there to make $500 a month, $1,000 a month, $1,500 a month. That can completely and totally change all of New York. I mean, there’s thousands of people that would be here tonight if they understood who we are and what we stand for. And it’s your job to work as a family together with our company.” (1:14:17.)
- Waldron describes, with great excitement, using every penny to his name to join Herbalife in December 1982, implicitly encouraging new distributors to do the same. (1:21:45 – 1: 22:54.)
- Waldron tells the audience that all they have to do is follow the program they are taught to have immense monetary success with the Herbalife business opportunity. “You can have all this [referring to Waldron’s life]. If you pay attention, you work as a unit together with each other, you use the products, wear the button, talk to people, become teachable and you can have your dreams to [sic] come true as my dreams have come true.” (1:24:09 – 1:24:26.)
- Waldron spends approximately eight minutes describing (and showing photographs of) his Herbalife-related travel, including trips to Yellowstone National Park, Colorado, Cabo San Lucas, Hawaii, Australia and New Zealand, Vietnam and Japan. Waldron notes that “[t]he vacations and the experiences that you have the possibility to be a part of if you just use the products, wear the button, talk to people, come to the support systems, keep a great attitude all day long, all kinds of things can happen for you as well. . . . [J]ust the places I’ve been able to go in the last 15 years is just remarkable.” (1:24:34 – 1:32:.28.)
- Waldron tells the story of asking his “Latino friend” Gabriel Sandoval to help Waldron train his downline Latino distributors in the Dallas area. Waldron recounts that “when I was going for Chairman’s club, I had a girl, Maria Sosa . . . in Dallas, and she was building up GET [Global Expansion] Team and Gabriel and I were good friends. I said, I need your help. I says, I have a Latino, I says, half my organization, you know, they don’t speak English and I’m working hard with them, but man, if you could come and help me and do this thing.” (1:32:48 – 33:05.) Later, Waldron encourages the “98% Latin” audience to attend the “Extravaganza for the Latinos in Atlantic City” in October 2014. (1:52:29.) As Pershing Square showed in its December 20, 2012 presentation at the Ira Sohn Investor Conference, Herbalife targets Hispanics as potential recruits.
- Waldron later notes that “seventy million dollars [is] gonna be distributed” at the Herbalife Honors event in Hawaii in March of 2014. Waldron continues, telling his audience that “Herbalife is so generous, it’s like they stay up at night trying to figure out what to give you guys. . . . They’re such a generous, unbelievable company. We’re so blessed, we’re so fortunate to be working with such a great, great company. And it’s all you have to do is your job. You’ve just got to do your job.” (1:54:20 – 54:58.)
- Waldron tells the audience that education is not a prerequisite to success with Herbalife, saying, “When I really fell in love with Herbalife is when I recognized you didn’t have to be that smart to do it. That was exciting for me.” He quotes Herbalife founder Mark Hughes, explaining to the audience that to be a successful distributor with Herbalife, “Hughes . . . says, you’ve just got to use the products, you got to wear the button, you got to talk to people . . .” Waldron also notes that “Mark [Hughes] [only] graduated from the 9th grade. . . . Unbelievable guy, but he didn’t have a lot of education.” (1:55:08; 1:58:48.)
- Waldron hosts “Mansion Parties” at his home in Plano, TX, for distributors who order the highest amount of volume of Herbalife products.
- Waldron also speaks regularly at Herbalife Opportunity Meetings (HOMs) around the world. According to Herbalife, HOMs are presentations to which potential distributors are invited to learn more about the business opportunity. See Exhibit S for explanation of HOMs by Herbalife in a company presentation on “How to grow a STRONG royalty check.”
Waldron speaks at Herbalife’s July 2012 “Super HOM” in Singapore, available at https://www.facebook.com/media/set/?set=a.447036778652787.94576.377627508927048&type=1#!/media/set/?set=a.447036778652787.94576.377627508927048.
- Members of Waldron’s downline repeat Waldron’s deceptive income claims in their efforts to recruit other distributors into the scheme.
- President’s Team member Kris Bickerstaff tells an audience at an Herbalife event that “I sat in Dan Waldron’s house’s living room, and he showed me a picture of Shawn Dahl and his wife, and said, ‘You could be like them,” and then he told me how much money they make, and I said, I’m in, let’s do it.” See https://vimeo.com/user24651359/review/85485784/932759df0a, at 1:27.
- President’s Team member Tim Files, speaking from a pool at the “President’s Team vacation” in Costa Rica for a promotional video for the Northern California region, says, “my upline and mentor Dan Waldron said, ‘Every STS, if you can get ten people there, you’ll be Pres Team in one year.’ And listen, I hit five—I averaged five at every STS, and I hit Pres Team in two and a half years.” See https://vimeo.com/user24651359/review/85486089/7a06cad89f, at 0:53. Yet the 2012 Statement of Average Gross Compensation states that, among distributors who reached President’s Team in 2012, they averaged nine years with Herbalife before reaching that level, “with the longest being 20 years and the shortest being less than three years.” See Exhibit P
- Waldron features Bickerstaff and Files at his Dallas STS meetings. See infra at 15-16.
Lead Generation Materials
- After his divorce from Carla Berg in 2000, Dan Waldron took over their lead generation website called “Work From Home!” (www.work-from-home.net). The Work From Home! site now links directly to Waldron’s official Herbalife Independent Distributor website (www.goherbalife.com/dwaldron/). However, the older site can still be viewed at http://web.archive.org/web/20000510160902/http://www.work-from-home.net/.
- The site promoted Waldron’s “proven Internet Marketing system,” and provided a link for potential recruits (i.e., leads) to order a $39.00 “decision pack (book, audio tape, and videocassette)” and then be put in touch with a “personal business coach” (i.e., an Herbalife distributor who would attempt to recruit the lead). See http://web.archive.org/web/20000510221252/http://www.work-from-home.net/request.htm. The Order Form page tells prospective buyers that “[a]ll you need is the courage to get started. You can do this business, as long as you are teachable and have the desire to succeed.”
- The site also featured articles with titles like “The Road to Success: Why this will work for you, too!” and “Build a Worldwide Business: How you can build a world-wide business from the comfort of your home.”
- The 2-4-1 Plan is a plan that pairs new Herbalife distributors with an experienced “sponsor” and purportedly enables distributors to reach President’s Team status in under one year. See http://www.the241plan.com/. The site provides a presentation that outlines the plan. See Exhibit T.
- The presentation encourages the use of scripts to recruit new distributors into the scheme. “Work with your sponsor— they have Scripts for you to use! How to APPROACH your acquaintances . . . . What to say to them . . . .”
- The 2-4-1 Plan also puts forth deceptive income claims that a distributor can make “$8,000/Month” by his or her seventh month as a distributor.
- Dallas STS is a series of training seminars that similarly rely on deceptive income claims and encourage distributors to focus on recruiting new distributors into the scheme rather than making retail sales of Herbalife products. The Dallas STS website, www.dallassts.com, which is registered to Waldron, also advertises Herbalife recruiting events and publicly lists “Top Producers” in the region.
- Waldron was also featured on a website called “3 Step Recruiting,” which purports to offer a “3 Step Home Business Solution . . . to Several Thousands of Dollars Every Month.” See http://www.3steprecruiting.com/.
- The site features a “Signup Presentation” which contains sample scripts, tailored to a variety of recruiting-related scenarios, available at http://www.3steprecruiting.com/office/3stepSignupPresentation.pdf. See also Exhibit U for PDF version. The script reminds distributors that “the more distributors you sign up, the more supervisors you’ll get, the more clubs you’ll open, and the higher your royalties!”
Links to Other Senior Distributors
- As explained above (supra at 1-2), Dan Waldron runs several Herbalife-related businesses along with other senior Herbalife distributors.
- Waldron is a co-director of Waldron Marketing with President’s Team member Carla Berg. Carla was formerly Waldron’s wife, until their divorce in 2000. She then married Rick Berg, who is also a member of the President’s Team. See Exhibit V.
Dan and Carla Waldron (now Berg) featured on their Work From Home! Website in May 1999, available at http://web.archive.org/web/20000510160902/http://www.work-from-home.net/.
- Waldron co-owns W3 Capital Investments with President’s Team member Glenn Wells, among others. Waldron also sued Wells over a dispute concerning a joint real estate transaction (supra at 1 n.1).
- Waldron’s business Taylor Marketing is a co-manager of Latino Marketing. along with businesses that we believe are owned by Founder’s Circle member Susan Peterson and former Founder’s Circle member John Peterson, who is now deceased.
- Waldron is also linked to several senior Herbalife distributors through local STS sites, which are linked at the bottom of the Dallas STS homepage (http://dallassts.com/) and are nearly identical to that page.
When Maurice Smith and his wife Sandra first qualified for the President’s Team in 2005, they were profiled in Herbalife Today, a magazine published by Herbalife, available at http://factsaboutherbalife.com/wp-content/uploads/2012/12/120.pdf. The profile encouraged other distributors to “[a]dvertise every day; promote that you’re in the business,” “[t]alk to people about Herbalife excitedly,” and “[r]egularly listen to inspirational stories—other people’s testimonials and motivational tapes.”
- Lubbock STS (http://lubbocksts.com/) is registered to President’s Team member Mike Patterson. See Exhibit Y.
- Oklahoma STS (http://oklahomasts.com/) is registered to President’s Team member Tim Files, who is also a member of Waldron’s downline. See Exhibit Z.
- Upstate NY STS (http://www.upstatenysts.com/) is registered to Dan Penick, see Exhibit AA, who is the President of Herbalife recruiting business Merelle Worldwide LLC, see Exhibit AA). Merelle Worldwide also has ties to President’s Team member Michael Burton through his daughter, Sydney Mercedes Burton, who is the Vice President of Merelle Worldwide. Id. In addition, the former President and CEO of Merelle Worldwide was Eric Do, see Exhibit CC, who is also the IT director of Herbalife recruiting business LineLogix, see Exhibit DD.
Waldron with Eric Do (second from left) of LineLogix , an Herbalife recruiting business, Dan Penick (second from right) of Merelle Worldwide, and Michael Burton (right).
- Many of the senior Herbalife distributors listed above, including Susan Peterson, Tim Files, Kris Bickerstaff, and Michael Burton, along with many others, appear as featured speakers or special guests at Dallas STS events.
Waldron and his wife Vicki (seated middle) with Michael Burton (seated right) at the Dallas STS Fitness Professionals Training, available at https://www.facebook.com/dallassts/info#!/photo.php?fbid=387771197918239&set=s.265461300200019
- In addition, Waldron’s Dallas STS site advertises HOMs at Burton’s Nutrition Addiction club, taking place “Every TUESDAY at 7pm.” See http://www.dallassts.com/ (under “Herbalife Opportunity Meeting” on the left side of the page). Moreover, Burton is listed as an Administrator of the Dallas STS Facebook page.
- Waldron also frequently appears at Herbalife-sponsored events with other Herbalife senior distributors.
Dan and Vicki Waldron (standing) with Founder’s Circle member and former Herbalife board member Leslie Stanford (seated left), Founder’s Circle member Geri Cvitanovich (seated second from left), Founder’s Circle member Susan Peterson (seated second from right), and Chairman’s Club member and current Herbalife board member John Tartol (seated right) at the Herbalife Extravaganza in October 2013. See http://www.herbalifephotos.com/Extravaganza/2013-NAM-Las-Vegas/Home/Day3-Extravaganza-Training.
The Waldrons with President’s Team members Donte and Trina Andry (left).
Links to Herbalife Corporate Leadership
- When Waldron became a member of the Chairman’s Club in 2007, Herbalife sent a flyer to distributors congratulating Waldron and celebrating his supposed rags-to-riches story.
- When Waldron and his wife, Vicki, qualified for the Chairman’s Club in 2007, they were featured on the cover of Herbalife Today as the company’s “Newest Chairman’s Club Members.” Full edition attached as Exhibit-EE, see pp. 8 – 10 for Waldron profile.
- In his profile in Herbalife Today, Waldron tells distributors that, given the company’s sponsorship of Major League Soccer’s Los Angeles Galaxy, success with Herbalife is now virtually guaranteed. The article quotes Waldron as saying, “Herbalife and the Galaxy have created a buzz that has made it impossible for us not to score. . . . Can you imagine 1 million people walking around wearing Galaxy jerseys with the Herbalife name on them? This could be the biggest thing in our history!”
- Waldron often appears at Herbalife-sponsored events with top Herbalife executives.
Waldron with CEO Michael O. Johnson (second from left), John Peterson (third from right), and Geri Cvitanovich (second from right).
The Waldrons with CEO Michael O. Johnson (second from left) and President Des Walsh (right).
Waldron with Chairman’s Club members Stephan Gratziani (left) and Gabriel Sandoval (second from left) and CEO Michael O. Johnson (second from right).
- Herbalife awarded Waldron the Mark Hughes Bonus Award—a large, discretionary bonus that Herbalife awards to top distributors—in 2009.
- In 2012 and 2013, Herbalife promoted Waldron in its Chairman’s Club Tour.
- In its 2013 flier, Herbalife notes that “Dan [Waldron] focused on building his business in the Dallas Latino community.”
- In its 2012 flier, Herbalife quotes Waldron as saying, “Now it’s easier than ever for all of us to build our business successfully!”
- Waldron was a guest speaker at Herbalife’s 2013 New Mexico Spectacular. See also https://vimeo.com/user24651359/review/85484438/9e7defbe8c, detailed supra at 3.
- Waldron was a guest speaker at Herbalife’s Asia Pacific Extravaganza, which took place in Seoul, South Korea in June 2013.
- John Heiss, Ph. D, the director of Herbalife’s sports and fitness products for worldwide product marketing, was a featured speaker at a Dallas STS event in 2012
 Waldron and Wells also co-owned two properties in Austin, TX. A dispute arose over the division of proceeds following the sale of one such property, and Waldron brought suit against Wells in Texas’ Denton County District Court in September 2011. See Exhibit F. Waldron and Wells settled the case in February 2012.
 The process of lead generation involves luring potential recruits to provide their name and contact information, and then selling the name and contact information to a fledgling distributor (sometimes for more than $100 per lead), so that the distributor can try to recruit the potential recruit.
 “2-4-1” stands for . . . “sponsoring” (i.e. recruiting) 2 new “members” (i.e. distributors), . . . acquiring 4 new customers, and . . . attending 1 STS per month, in order to progress quickly through Herbalife’s marketing scheme.
 Although the site has changed, the Waldron images can still be found at http://www.3steprecruiting.com/images/, see “Dan Waldron-010 copy.jpg” and “story3.jpg”.
 Although Herbalife and Waldron hold the Smiths out as an example of financial success, the Smiths have faced significant debt issues in the past few years. In 2012, a judgment was issued against the Smiths for a debt owed to American Express in excess of $25,000 and the IRS placed a tax lien in excess of $31,000 on Maurice Smith. In 2009, the Smiths were issued a Notice of Default by Deutsche Bank for an outstanding home loan in the amount of $943,900. See Exhibit X for public records associated with the Smiths’ debts.