Why did Kamala Harris let Herbalife off the hook? by alexnazaryan
WASHINGTON, D.C. — At a rally in late January in her native Oakland, Calif., U.S. Sen. Kamala Harris announced her intention to seek the presidential nomination by casting herself as a tireless advocate of men and women who lack power and wealth. The former attorney general of California — who since 2017 has been the state’s junior senator — described her first appearance in the courtroom, as a young San Francisco district attorney.
Harris never gave a reason for declining to investigate Herbalife, but the decision stand in contrast to her oft-expressed promise to fight for ordinary Americans for whom the 21st century economy seems to hold little promise. Those are the very same Americans, critics say, that Herbalife recruited — and exploited.
He noted that as California’s attorney general, Harris “got $20 billion for California homeowners after taking on mortgage fraud by the big banks, secured a billion dollar judgment against for-profit Corinthian Colleges for scamming students, and put Ponzi and pyramid schemers in prison.” But that did little to stop the company’s growth, and it continued to rapidly expand both in the United States and around the world. In 2003, Herbalife hired Disney executive Michael O. Johnson, who brought management sophistication to its operations. A tanned triathlete, he seemed a living embodiment of the company’s promises. The company went public the following year; a 2005 annual report declared its market capitalization to be $359.8 million.
At the time, Herbalife was fending off another existential challenge, from Manhattan hedge fund Pershing Square Capital Management, whose founder, Bill Ackman, had become convinced that though the company was worth $8.1 billion at the time, that valuation was predicated on illusion. He declared war on Herbalife with the public presentation of a 334-page PowerPoint dossier, the 64th page of which contained his central argument: “Herbalife is a Pyramid Scheme.
Wilkes did not know that at the time, Herbalife was represented by Venable, which also employed Harris’s husband, Douglas Emhoff. Emhoff does not appear to have been involved in Herbalife, but his work at the firm raised eyebrows with Christopher Irons, a financial journalist who first reported on the Emhoff-Herbalife connection. “Surely this would seem like some sort of enormous conflict of interest, no?” he wrote back in 2015.
The letter went on to cite precedent for conducting such a probe, and noted that a preliminary investigation had already taken place. That investigation “revealed that Herbalife, at least in publicly available documents, has carefully drawn its corporate policies and conducted itself in a manner that is outwardly consistent with the 1986 Injunction.
Podesta, the Herbalife lobbyist, donated $1,000 to Harris’s campaign for the U.S. Senate on March 31, 2015, at the end of the same month that had seen the arrival of the letter from the San Diego office, asking for an Herbalife investigation. She donated $4,400 to Harris’s senate campaign the following year.
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