Pedro Cardoso

Dates of Herbalife Distributorship: 1992 – present
Status in Herbalife: Chairman’s Club Member; Current Member of the Board of Directors (2009 – present)
Business Methods: Nutrition Clubs; Online Recruiting Tools

All statements in the report are made pursuant to Pershing Square’s disclaimer available at dev-facts-about-herbalife.pantheonsite.io.

Background on Herbalife-Related Businesses

• Pedro José Oliveira Gordalina Cardoso (“Cardoso”) and his wife Juliane “Ju” Machado Virtuoso Cardoso (“Ju Cardoso”) own Lusitânia Marketing Group (“LMG”), a business that used to provide an online “academy” for Herbalife distributors primarily in Brazil and to sell books written by Cardoso. Exhibit A.[1]
  • LGM maintained a website (www.lmg.info) that provided new distributors with an “informative roadmap of how you should proceed to enroll and subsequently enroll in courses offered by us” at “Academia LMG.”[i] Exhibit B, available at http://web.archive.org/web/20120201051550/http://www.lmg.info/guiaacademia/index2.html .
  • Through Academia LMG, Cardoso encouraged distributors to “attend courses” and use “our online academy” to learn how to become a successful Herbalife distributor.[ii] Exhibit C.
  • Cardoso also used to use the LMG website to sell his book titled “The Journey to Success – Lesson From the Salesman Who Became a Millionaire.”[iii] Exhibit D, available at http://web.archive.org/web/20121023074053/http://www.lmg.info/livro/ . The LMG website sold the books in bundles of one, five or ten. Each book cost R$ 15,00, or approximately $7.

Primary Source Data on Business Practices

Online Recruiting Tools

• Cardoso runs a Yahoo! group called “Herbabem,” which he uses to communicate with his large organization of Herbalife distributors. In that group, Cardoso exhorts his downline to continue investing time and money in pursuing the Herbalife business, even if they are losing money. “I know some of you guys are struggling and that things have not happened yet but do not lose hope and faith and do what must be done.”[iv] Exhibit E, available at https://br.groups.yahoo.com/neo/groups/herbabem/conversations/topics/2414?var=1.
  • Along with telling his distributors to “do what must be done,” Cardoso advertises costly courses, called “schools of success,” on the Herbabem Yahoo! group site. The prices for these courses vary depending on whether the distributor is already a paid member of Cardoso’s system.[v] Exhibit F, available at https://br.groups.yahoo.com/neo/groups/herbabem/conversations/topics/7375 .
  • In the same Yahoo! group, Cardoso tells his downline to “[s]top complaining and go talk to 10 per day . . . because our is mission much more important than any personal tiredness. If I can, anyone can.”[vi] Exhibit G, available at https://br.groups.yahoo.com/neo/groups/herbabem/conversations/topics/2444 .
  • The site is also rife with misleading pronouncements that there has “never been a better time” to sign up as an Herbalife distributorship, even with the Brazilian economy suffering. For example, Cardoso says that although there is “recession and unemployment for 2015 regardless of who is elected President,” there’s never been a better time . . . to go against the grain of the market and offer a real opportunity to work with Herbalife.” The reason, according to Herbabem, is that “people will always need to eat, so we see no crisis in our industry!”[vii] Exhibit H, available at https://br.groups.yahoo.com/neo/groups/herbabem/conversations/topics/7274.
  • Herbabem also links to videos promoting the extravagant lifestyle that Cardoso claims is possible with Herbalife. Available at https://www.youtube.com/watch?v=h0uKB8sikeo .
    • The video is accompanied by an exhortation to “discover a world of possibilities” and “learn more about Herbalife.”[viii] Available at https://www.youtube.com/watch?v=h0uKB8sikeo .
  • Herbabem also distributes books promoting the use of nutritional supplements, telling distributors that “what your doctor does not know about nutritional medicine may be killing you.”[ix] Exhibit I, available at https://br.groups.yahoo.com/neo/groups/herbabem/conversations/topics/2490 .
  • In another Yahoo! group, Cardoso promotes his Motoworkshop association, which is an Herbalife recruiting tool aimed at motorcycle enthusiasts. According to Cardoso, it “was created in 2006 with the intention of joining the distributors who enjoy riding motorcycles and so combine leisure and business.”[x] Exhibit J, https://br.groups.yahoo.com/neo/groups/inforaneinat/conversations/messages/4829 .
  • Cardoso’s motorcycle club even has its own biker vests. Exhibit K, available at https://www.facebook.com/photo.php?fbid=10151882902469247&set=pb.669299246.-2207520000.1397575162.&type=3&theater .

• Cardoso appears on several other websites promoting the Herbalife business opportunity, where he offers misleading income testimonials to recruit new distributors to join Herbalife.
  • On a website entitled “Lose Weight Now,”[xi] Cardoso states that within one year of joining Herbalife, he fulfilled the “big dream” of his life, which was to own a Ferrari. Now he lives “in a triplex dream apartment at the beach” and “apart from the Ferrari [he has] two Mercedes, a Rolls Royce, a yacht, and many other things.” Exhibit L, available at http://www.percapesoagora.com.br/opportunity.htm .[xii]
  • In a testimonial posted to another website, Cardoso remarks that “I stuck to the basics – and it made me rich.” Described as “extremely humble” on the website, Cardoso informs readers that he spends his days washing his 12 cars, including several BMWs and a Ferrari. He says, “[b]y the time I’ve washed my last vehicle, the first one has gotten dirty again.” Exhibit M, available at http://123shop4me.tripod.com/training.htm .[xiii]
  • The Cardosos’ picture and income testimonial appeared on the Work From Home Herbalife recruiting website run by Founder’s Circle Member Susan Peterson. Visitors to the website were told that Cardoso made $2,000 in his first month with Herbalife, and that “[t]he only difference between you and them is the fact that they had the courage, the strength, and the desire to act on making a change in their life.  . . . I know a lot of these stories may sound hard to believe, or unusual, or even fictional, but the fact is: THEY’RE ALL TRUE.” Exhibit N, available at http://web.archive.org/web/20020807231247/http:/www.topopportunity.com/?ADID=0&FuseAction=proofindex&LID=&domainname=topopportunity.com (emphasis original).[xiv]

 Nutrition Clubs

• The Cardosos oversee Espaco 100, which is a Brazilian version of the nutrition club “training program” Club 100. As detailed in Pershing Square’s July 22^nd Presentation on Nutrition Clubs (the “July 22 Presentation”), Espaco and Club 100 require aspiring nutrition club operators to (i) purchase and consume Herbalife products every day, (ii) pose as consumers to help established club operators convince prospective recruits that they will have no trouble finding customers, and (iii) enlist their family and friends to do the same. July 22 Presentation, available at https://www.herbalifepyramidscheme.com/media/2014/07/Nutrition_Club_Presentation_The_Big_Lie_7.22.14.pdf .
• Plan Club 100 is also called Espaço 100, EVS 100 or Plano 100 in Brazil. See http://www.adripandas.com.br/Produto.asp?t=cartaz-espaco-100&produto=4897 for presentation titled “Espaco 100.”
  • In the presentation, Espaço 100 stresses that it is important to have an “attractive and duplicable business.”[xv] http://www.slideshare.net/emprendeperu/espaco-100# at Slide 7.

 

 

http://www.slideshare.net/emprendeperu/espaco-100#

• Cardoso frequently posts about EVS 100 on his Facebook page.
  • In one post, Cardoso attributes poor sales numbers by his downline to Espaco 100 participants “not inviting as they should.”[xvi] Exhibit O, available at https://www.facebook.com/permalink.php?story_fbid=390504534411710&id=329324407196390) .
  • In another post, Cardoso details the manner by which participants in the Espaco 100 system can earn pins. Exhibit P, available at https://www.facebook.com/permalink.php?story_fbid=390504534411710&id=329324407196390#!/permalink.php?story_fbid=564707426976269&id=329324407196390 .
• Cardoso also hosts workshops at which he presents the misleading financial records detailed at Slides 130-135 of the July 22 Presentation in order to entice recruits into joining Herbalife and making their first purchase. Exhibit Q, available at https://br.groups.yahoo.com/neo/groups/herbabem/conversations/topics/6032?var=1) ,

Cardoso announced the launch of the EVS 100 plan on his Harbabem Yahoo! Group in 2010. Exhibit R, https://br.groups.yahoo.com/neo/groups/herbabem/conversations/topics/2937 .

 LINKS TO OTHER SENIOR DISTRIBUTORS

• Cardoso seems to have participated in John and Susan Peterson’s lead generation system Work From Home. Cardoso’s LMG website historically featured the Work From Home logo with a photo of the Peterson’s. Exhibit S, available at http://web.archive.org/web/20031001070955/http:/www.lmg.info/wfhLandForm/WFHDomainLand.cfm?&PID=!*@.%22%0a&ADID=0&v=WFH&s=&bid=offline&domainname=lmg.info&tid=&language_id=PORT&speed=Low&showpop=1) .
• In addition to serving on the Herbalife board of directors together, Cardoso and Chairman’s Club member John Tartol appear to have a close personal friendship. They exercise and enjoy boating trips together.

https://www.facebook.com/photo.php?fbid=545032732249914&set=pb.100002295775265.-2207520000.1397498788.&type=3&theater .

• The boating trips, which sometimes include Founder’s Circle member Leslie Stanford, among others, are catalogued online. They seem intended to show recruits the lifestyle that senior Herbalife distributors supposedly maintain. Of course, no mention is made of the fact that very few, if any, of their recruits will ever enjoy anything vaguely approaching that level of financial success.

https://www.facebook.com/photo.php?fbid=545032568916597&set=pb.100002295775265.-2207520000.1397499059.&type=3&theater .

 

Links to Herbalife Corporate Leadership

• Cardoso serves on Herbalife’s board of directors along with Chairman’s Club Member John Tartol.[2] Exhibit T, available at http://ir.herbalife.com/directors.cfm . Cardoso’s service on the Herbalife board continues notwithstanding the indictment against him in Brazil for his involvement in a scheme to appropriate public funds from the legislature of the state of Espírito Santo under the guise of funding cultural events and other festivities. The indictment (attached as Exhibit U, translation attached as Exhibit V) asserts claims against Cardoso, among others, for violations of article 312 of the Brazilian Criminal Code—a serious charge that we understand is akin to embezzlement.
• In connection with his service as an Herbalife board member, Cardoso earns fees for speaking at Herbalife events, and as a senior distributor he also receives generous gifts from the company. As disclosed to the SEC in 2013:

Tartol and Cardoso may be entitled to speaking fees for presenting at certain Herbalife events and, from time to time, may receive gifts from the Company. Other than the foregoing and the reimbursement or payment of reasonable expenses related to these activities, neither director receives any compensation for their activities related to training other distributors or for their services on any strategy, planning or other groups for Herbalife. Messrs. Tartol and Cardoso participate in these additional functions voluntarily because their participation helps grow their downline distributor networks.

Exhibit W, available at http://www.sec.gov/Archives/edgar/data/1180262/000119312513127204/filename1.htm) .

• A 2005 Herbalife flier promoting Cardoso as a guest speaker described him as “The Humble Rich Guy.” The flier states that “[h]e quickly qualified as a Supervisor and President’s Team by the end of his first year. In only three years doing the business, his monthly earnings were over $100,000 per month.” Exhibit X, available at http://www.herbalifeww.com/hk/pdf/News_More_Info_Items/05WTS_Pedro_e.pdf) .[xvii]
• In a video produced by the Herbalife Broadcast Network, Cardoso appears with his wife on his yacht and tells viewers that “in my first month, I made $2,000 extra and my life totally changed.” (00:56).   Later, he says, “As far as material things, we’ve attained all we ever wanted already. We have our houses, we have our boats, we have money.” (02:53). Available at https://www.youtube.com/watch?v=uum5gxjAvuM .
  • In the same video, Cardoso says he uses a car wash as his main location for recruiting. “People arrive, we chat, they ask what Herbalife is. Some already know it, some don’t. So my day is simple, I sit at the carwash and people come up and we talk. It’s a great life because I make my contacts.” (04:31)
• Cardoso also appears in several other videos highlighting his wealth, including videos featuring his Herbalife-branded Ferrari and Lamborghini. Available at http://www.youtube.com/watch?v=G-7pAWfqOps and https://www.youtube.com/watch?v=1N3e_WB3W5E&list=PL5iiyzBxEld0DSkK08DIesvNYzSpmH3uT .

• Cardoso also appears in a video produced by the Herbalife Broadcast Network in which he describes the structure of the Herbalife Sales and Marketing Plan. Available at https://www.youtube.com/watch?v=0L9lbK8FEz8 .

• In 2011, the Cardosos were featured in Herbalife Today, a magazine published by Herbalife. Exhibit Y, available at http://issuu.com/henriqueautran/docs/today_ptm . Asked how a “simple guy built an organization of 12,500 Supervisors and lives in a luxurious penthouse on a beautiful Brazilian island,” Cardoso simply says that he “found something that works” and has done it every day for 16 years.

• Later in the article, Cardoso concedes that it can be financially challenging for new recruits to qualify as a Supervisor, noting that “I felt some pressure when I was close to qualify, but the best thing about having achieved is that now I can go back to doing what I’ve always liked and what first made me reach this level: be a common Distributor again. I’m leaving right now to talk to people about Herbalife. I can’t wait!”[xviii]

• A 2010 Herbalife Extravaganza flier touted Cardoso as a “direct collaborator of CEO Michael Johnson.”[xix] Exhibit Z,  available at https://br.groups.yahoo.com/neo/groups/herbabem/conversations/topics/2752?l=1) .

 

• Herbalife CEO Michael Johnson with Ju Cardoso at a 2013 Herbalife event. Exhibit AA, available at https://www.facebook.com/photo.php?fbid=543860285700492&set=pb.100002295775265.-2207520000.1397499059.&type=3&theater .
• Cardoso with Herbalife CEO Michael Johnson at a 2013 Herbalife event.
• The Cardosos seated with Herbalife CEO Michael Johnson and Herbalife President Des Walsh at a 2013 Herbalife event.
• Cardoso has spoken at many Herbalife sponsored “training” events. One such event was Escola para Equipe Mundial (School to World Team), where he appeared beside Herbalife CEO Michael Johnson, Founder’s Circle Member Leslie Stanford, and paid Herbalife spokesman Secretary Madeleine Albright. “Escola para Equipe Mundial” is a training organization that encourages lower-level distributors to continue trying to ascend the Herbalife pyramid. Exhibit BB, available at https://www.facebook.com/139863049433088/photos/a.139868952765831.36767.139863049433088/139869356099124/?type=1&theater .

• Cardoso also had ties to Herbalife corporate leadership through his LMG organization. Angela Martinelli, who served as Sales and Communications Director for Herbalife for 17 years, was often copied on emails from Cardoso to his LMG downline. (Exhibit P – https://br.groups.yahoo.com/neo/groups/herbabem/conversations/topics/2225 ).

[1] Note: All quotes were translated using online translation software from their original Portuguese, unless otherwise noted. The original Portuguese is included in endnotes.

[2] A profile of John Tartol is available at https://www.herbalifepyramidscheme.com/perpetrators/john-tartol/ .

[i] Este é um pequeno roteiro informativo de como você deve proceder para se inscrever e posteriormente se matricular nos cursos oferecidos por nós.

[ii] Para você distribuidor, frequentar os cursos a distância do LMG – Lusitânia Marketing Group, leia atentamente o roteiro explicativo de como cadastrar-se e utilizar a nossa academia online.

[iii] A Viagem ao Sucesso – Lições do Vendedor que Ficou Milionário

[iv] Sei que alguns de vcs estão lutando e que as coisas não aconteceram ainda mas não percam a esperança e a fé e façam o que tem de ser feito, se foque totalmente no seu negócio pois estarão sendo anunciados muito brevemente alterações no plano de marketing que deixarão todos muito animados e com potencial de crescimento ainda maior.

[v] – Supervisores que sejam cotistas do Sistema de São Paulo, Suzano e São João da Boa Vista – gratuito para convidados e distribuidores

– Supervisores AVULSO – R$ 20,00 por contrato / casal com direito a um convidado (demais convidados R$ 5,00)

– Distribuidores cujo o supervisor não esteja presente R$ 10,00 + R$ 5,00 por convidado

[vi] Pare de se queixar e va falar com 10 por dia do produto e 10 do negocio pois nossa missao eh muito mais importante que qualquer cansaco pessoal. Se eu posso qualquer um pode.

[vii] Recessão e desemprego para 2015 independente do Presidente que se eleger! Enfim, nunca houve época melhora para cartazes, panfletos, convites , HOM, Jantares, STS, etc com muito KIT para irmos na contramão do mercado e oferecermos uma real oportunidade de trabalho com Herbalife. Comer as pessoas sempre vão ter necessidade, então não vemos crise em nosso setor!

[viii] Conheça um mundo de possibilidades! Conheça mais sobre Herbalife!

[ix] O que seu médico não sabe sobre medicina nutricional, pode estar matando.

[x] O Motoworkshop foi criado em 2006 com a intenção de juntar os distribuidores que gostam de andar de moto e assim combinar lazer e negócios. Teremos saídas de vários pontos do país assim como locais de encontro, onde os distribuidores poderão encontrar os motociclistas e tirar fotos com presidentes que normalmente vêem de terno e gravata.

[xi] Perca Peso Agora

[xii] Originally in English

[xiii] Originally in English

[xiv] Originally in English

[xv] Importante preencher o mapa todos os dias para ter um negocio atrativo e duplicavel.

[xvi] Reflexão: Se de cada 10 evs 7 aumentaram os numeros então 3 diminuiram… na mesma cidade, no mesmo pais, com os mesmos produtos…porque será? Simples, não estão convidando como deveriam…com o problema resolvido e voltando ao básico acredito que em 15 dias teremos todos com melhores numeros….

[xvii] Originally in English

[xviii] Senti um pouco de pressão quando estava perto de me qualificar, mas a melhor coisa quanto a ter conseguido é que agora posso voltar a fazer o que sempre gostei e o que em primeiro lugar me fez chegar a esse nível: ser um Distribuidor comum novamente. Estou saindo exatamente agora para conversar com as pessoas sobre a Herbalife. Não vejo a hora!

[xix] Colaborador direto do CEO Michael Johnson.