Leon Waisbein

Background on Herbalife-Related Businesses

• Leon Waisbein (“Waisbein”) operates Herbalife distributorships in 30 countries, focusing principally on emerging markets. He is often featured at Herbalife sponsored events and in Herbalife Today with his wife Irina.

Primary Source Data on Business Practices

Videos and Presentations

• Waisbein regularly appears at Herbalife sponsored events promoting the Herbalife business opportunity, at which he purports to give participants the “training” they need to climb the Herbalife pyramid.
• Waisbein was a featured speaker at a “Future President’s Team Retreat” sponsored by Herbalife in 2010. Waisbein delivered a presentation that purported to teach attendees “how to get to President’s Team.” Waisbein Exhibit A.

(The three pins shown above are given to distributors as they reach the level of President’s Team, Chairman’s Club, and Founder’s Circle. Less than 1% of all distributors ever achieve the level of President’s Team and a mere handful have ever made it to the Founder’s Circle.)

Notwithstanding the title of the presentation—and the fact that it was delivered at an event entitled the “Future President’s Team Retreat”—Waisbein immediately acknowledged that reaching the President’s Team is too difficult and pivoted instead to training attendees how to “plan and execute GET Team project.”

• Waisbein first explained the importance of recruiting Supervisors six levels deep, meaning that each attendee should recruit Supervisors, who recruit Supervisors, who recruit Supervisors, and so on until each attendee had at least six levels of downline Supervisors.
• Waisbein explained that, because “royalty is calculated from three active levels . . . we strive to building 6 levels deep” since “not all supervisors will be active.” He further told attendees that merely “recruiting into [the] 1^st line without developing and building 5-6 levels deep will yield no results.”
• He showed attendees some diagrams purporting to highlight the importance of building a downline organization with multiple levels:

• Waisbein also stressed the “three inseparable parts of Herbalife business”

• Each of Waisbein’s three “inseparable parts” of the Herbalife business relates in one way or another to recruiting:
  • “Sponsoring new distributors”: recruiting new distributors into the scheme;
  • “Developing downline”: training, equipping and motivating those distributors to recruit; and
  • “Building customer base”: finding retail customers who are prospective new distributors and who whose purchases of products enable a distributor to hit monthly volume requirements.

• In another presentation, ostensibly focused on “leadership,” Waisbein repackaged the concept of recruiting as “leadership.” He stressed that a “leader is focused on duplication” and that a leader “develops leaders,” again emphasizing the importance of recruiting new distributors into the scheme and then training and equipping those distributors to recruit still more victims. Waisbein also pressured attendees to constantly qualify for higher levels in the Sales and Marketing plan. Waisbein Exhibit B.
  

• Illustrating the constant pressure on distributors to order products in order to climb the Herbalife pyramid, Waisbein stressed that a “leader always moves forward and never stops,” and he emphasized the point with a graphic showing the progression of qualification levels in the Herbalife Sales and Marketing Plan.

• At another Herbalife sponsored event—this one in Beverly Hills—Waisbein made a presentation on “organization analysis.” He asked several important questions:

 

• The correct answer to all of these questions is as simple as it is obvious: Herbalife is a pyramid scheme. New distributors are pressed to order large quantities of products in order to qualify as a Supervisor and then drop out when they realize there is no retail demand for Herbalife’s overpriced commodity products.
• Nevertheless, Waisbein used these questions to encourage attendees to recruit, including by telling recruits to “create tools and scripts for Supervisors,” “develop a cheap and duplicable advertising campaign,” and “take care of recruiting in your organization.” Waisbein Exhibit C.

• Waisbein made another presentation in 2010 at an Herbalife-sponsored “extravaganza” in Sun City, South Africa. In notes from his presentation, Waisbein stressed that “our business objective is to have constantly growing royalties” and that your “focus must be on ROYALTIES.” Waisbein Exhibit D.
  • The presentation reiterated many of the themes covered by Waisbein’s “leadership training”—“[l]eaders are focused on DUPLICATION”—but also gave further instruction on how to build a downline structure that earns the most Royalty Overrides. Foremost among his instructions to distributors was the need to build a downline with a pyramidal shape:

Waisbein noted that the inverted pyramid in his diagram “is not a good shape” because “it means that you are focused mostly on first line recruiting and not on DUPLICATION.” He contrasted this “flawed shape” with a “correct shape”:

According to Waisbein, the “correct shape” is a “very healthy shape” that means “there is DUPLICATION happening at all levels.”

• To help recruit distributors fill all three levels, Waisbein encouraged supervisors to engage in lead generation, a predatory practice from which Herbalife has tried—belatedly—to distance itself from. A description of lead generation and the harm it does to victims can be found at https://www.herbalifepyramidscheme.com/media/2014/02/WhitePaper020414.pdf.
• Waisbein concluded his presentation by telling attendees that “this is how you build your royalty empire!!!!!!”

• Waisbein was profiled in a video produced by Herbalife. In the video, Waisbein recounted his own Herbalife rags-to-riches story, saying that when he first emigrated to Israel, “I was making $400 a month picking up oranges. It was not enough to support the family . . . the only problem was I was falling down from trees on almost a daily basis.” (https://www.youtube.com/watch?v=nDhwykUDQDs, 2:29-2:33.) But once introduced to Herbalife, Wasbein claimed that “in my first month, I got 36 customers and I made $2,000 [and] months later . . . I’m making over $3,000 a month.” (3:39-4:08.) Thanks to Herbalife, Waisbein was no longer a “poor immigrant.” (4:09-4:12.) Waisbein explained that “Herbalife gave us everything, including money.” (0:10-0:14.)

Recruiting Materials

• With the assistance of two other senior Herbalife distributors, Waisbein wrote a so-called “Distributor Guide,” which purported to teach distributors how to “create a successful business model, ensure stable growth of the distributor organization and achieve impressive financial success.” Waisbein Exhibit E.
  • The guide contains a section entitled “how to build a successful distributor organization” that purports to lay out a simple, three-year plan to generate, at minimum, $11,600 of income per month. In order to achieve that level of income, Waisbein’s guide directs distributors to recruit three first-line supervisors, who themselves must recruit three supervisors, who in turn must each recruit three more.

  

  • If distributors are able to build an organization of this size, Waisbein “calculates” that they will earn $11,600 per month before even incorporating:
    
  • He then implies that distributors can expect royalties to continue growing with the statement: “[a]nd now imagine what will happen in the fourth year.”
  • The guide concludes with a testimonial from Chairman’s Club and current Herbalife Board of Directors member Pedro Cardoso, who writes that “you wouldn’t believe what happened” when Waisbein first taught others the approach laid out in the guidebook. “It was like a BOMB!” Cardoso then presents a “typical story” of one of the 30 supervisors who had been taught the “new approach,” which “allowed them to have 4 times fewer customers and 5 times more money.” (Emphasis added.)

Recruiting Scripts

• Waisbein also provides recruiting scripts that explain to distributors “how you build your royalty empire!!!!!!” Waisbein Exhibit F and Exhibit G (emphasis orig.). One such script walks the distributor through how to recruit a retail customer as a distributor and then how to teach that distributor how to recruit his or her own victims.
  • The script starts with the distributor contacting a retail customer to see how they are doing. The distributor is then instructed to suggest that other people need to know about Herbalife, and that the customer should name ten people who might be interested in Herbalife products. Those ten people then get invited to a Herbalife Opportunity Meeting (“HOM”), where the distributor following the script and the retail customer describe the retail customer’s purported results. Following the meeting, the distributor is told to tell the retail customer that “she can sign up” those customers and that the distributor will “help her carry on duplicating this with some more people.”
  • The script concludes by telling the distributor that “once [other retail customers] see how simple it can be to get a few customers, they get excited and carry on duplicating that . . . . [T]he MOST IMPORTANT POINT of all of this [is] Mary starts doing this with HER customers too!!!! She also builds little customer groups under her own customers!!” (Emphasis orig.)

Links to Other Senior Distributors

• Waisbein (right) with Chairman’s Club member and Herbalife Board member John Tartol (left) and the late Herbalife founder Mark Hughes (left center). A profile of John Tartol can be found at John Tartol Dossier.

• Irina Waisbein (left) with Pedro and Juliane Cardoso. Pedro Cardoso is a Chairman’s Club member and a current member of the Herbalife Board of Directors. A profile of Mr. Cardoso can be found at Pedro Cardoso Dossier.

• Irina Waisbein (left) with Chairman’s Club member and Herbalife Board member John Tartol (right).

Links to Herbalife Corporate Leadership

• Waisbein served on the Herbalife board of directors from 2005-2009. See, g., Herbalife 2005 Prospectus, at 78, attached as Waisbein Exhibit H. As a board member, Waisbein served on “various strategy and planning groups for Herbalife.” Id.

• Waisbein standing with Herbalife CEO Michael Johnson at an Herbalife Extravaganza.
• The Waisbeins have been repeatedly interviewed and honored by Herbalife in Herbalife Today, a magazine published by Herbalife.
  • In a 2003 issue of Herbalife Today, Waisbein stressed that distributors should attend Success Training Seminars “twice a month” and that distributors should “use all the Herbalife products.” Although Waisbein said he never imagined he would become so successful, he now enjoys all aspects of his lifestyle, including financial freedom, travelling and seeing the world, and a great social life. Asked to sum up what Herbalife has meant to him in a sentence, Waisbein remarked that “it is hard to believe what has happened and what is still happening to us, our friends and relatives; if we had been told what would have happened, we would not have ever believed it.” Waisbein Exhibit I.
  • In 2009, the Waisbeins were honored by Herbalife for achieving the rank of Founder’s Circle and the Waisbeins again shared their rags-to-riches Herbalife story. Before Herbalife, the Waisbeins faced “all the usual hardships of a young couple in a new country,” and “struggl[ed] to support the family.” After they were introduced to Herbalife by a friend, Waisbein had 36 customers in his first month and “earned a great retail profit.” Waisbein made Chairman’s Club in less than three years.

  Waisbein Exhibit J.

  • Also in 2009, the Waisbeins were featured on the cover of Herbalife Today. The issue opened with a letter penned by Herbalife CEO Michael Johnson welcoming the Waisbeins “into our prestigious Founder’s Circle.” It went on to include a profile entitled “Achieving the Ultimate Dream” that recounted the Waisbeins tale of woe about “all the usual hardships of a young couple in a new country” after emigrating from a disintegrating Soviet Union. The article concluded with further remarks from Herbalife CEO Michael Johnson, who wrote that “Leon has made considerable contributions to our company as a member of Herbalife’s Board of Directors, and is known for . . . participating in leadership activities, and educating Distributors all over the world. We are delighted to welcome Leon and Irina to our Founder’s Circle.”

  Waisbein Exhibit K.

  • Waisbein’s rapid ascent up the Herbalife Sales and Marketing Plan is repeatedly highlighted in Herbalife Today, including in an advertisement for an emerging markets Extravaganza hosted by the company. “Of the 18 Supervisors I took with me to [the] Barcelona [Extravaganza] in 1993,” Waisbein wrote, “15 of them qualified for the President’s Team and I qualified for the Chairman’s Club in just two years! I have no doubt that our success was attributed to the tips we learned from other leading Distributors in Barcelona.” The advertisement concluded by directing distributors to “MAKE SURE YOU QUALIFY – BRING AS MANY PEOPLE WITH YOU AS POSSIBLE.” Waisbein Exhibit L (Emphasis orig.).

• Waisbein (far right) with Herbalife CEO Michael Johnson (far left), now deceased former Founder’s Circle member John Peterson (second from left), and Herbalife President Des Walsh (back row left).
• The Waisbeins have also been repeatedly awarded the discretionary Mark Hughes bonus paid by the company to top distributors at extravagant ceremonies, including at last year’s Herbalife Honors: