Bill Ackman, who runs Pershing Square Capital, has released an internal Herbalife video from 2005 that he says shows a top distributor talking about deceptive recruiting practices.

According to Pershing Square, the video is from a 2005 meeting of distributors and management in Anaheim, California. 

The video shows the meeting’s keynote speaker Stephan P. Gratziani, a former US national cyclist who is now an Herbalife Chairman’s Club Member.

“The Herbalife business model, at this point in time, is not based on customers purchasing, it’s based on distributors purchasing volume,” Gratziani says.

Here are some of his statements from the video: 

“We sell people on a dream business, that they can make it. Yet deep down inside, what do we really know? Yeah. We know that the reality is that most of them aren’t going to make it.” (Video 1, 1:00:16.)

“Who wants to bring their family into a struggle to make it? Who wants to bring their family into an eventual deception?” (Video 2, 7:20.)

“We tell people, hey, you know, sign on the dotted line, you know, start working from home, it’s going to be unbelievable, you’re going to have this incredible life. . . . So there really is this situation or this level of inauthenticity that’s there.” (Video 2, 8:28.)

“The Herbalife business model is based on distributors purchasing volume from them. . . . The Herbalife business model, at this point in time, is not based on customers purchasing, it’s based on distributors purchasing volume.” (Video 2, 14:34.)

“These sixty thousand people [whom the speaker lost as distributors over the preceding five years], primarily, why do you think they came into the business? Primarily? Primarily? Opportunity! Money! Right?” (Video 1, 46:05.

“[S]uccessful people in retailing in our business, it’s a very small percentage. (Video 2, 28:08.)

“The majority of our people have a difficulty in selling products, in general.” (Video 2, 29:46.)

“‘Fake it ‗til you make it.’ Some of us got so good at faking it, we

forgot to make it!” (Video 1, 54:04.)

Ackman, who runs Pershing Square Capital, has been publicly shorting Herbalife for two years. He believes the company operates as a “pyramid scheme.” 

Shares of Herbalife were last trading down 2.5%. 

Here’s the video: 

You can watch the full presentation below: 

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