Pershing Square is what\u2019s called an \u201cactivist\u201d hedge fund. Ackman uses its considerable resources\u2014around eleven billion dollars, raised from wealthy investors, institutions, and employees\u2014to amass major stakes in publicly traded companies. The intention is then to push the companies to improve their businesses, or at least their stock price, which is how an activist investor generally makes money. There are debates over whether activist funds strengthen the companies they invest in or simply force them into taking short-term measures\u2014laying off employees, selling off divisions\u2014to drive up profits and the share price. Ackman, who is sensitive to stereotypes about profiteering, says that Pershing Square has fewer than a dozen investments in its portfolio at a time, and sees them as long-term commitments. He maintains that his firm puts tremendous resources into each one, gives strategic advice over a period of years, and often recruits C.E.O.s and board members.<\/p>\n
\u201cThis is going to sound goofy,\u201d Ackman told me recently, when we met at his midtown offices, \u201cbut we try to do things that we think are good for America.\u201d Ackman, a youthful-looking fifty, is tall, with steel-white hair and intense blue eyes. A devotee of tennis, he\u2019s muscular and trim; he can give the appearance, when you stand next to him, of leaning over you in a slightly possessive manner. He seems accustomed to employing his physical charisma in the service of his business interests.<\/p>\n
\u201cThere\u2019s a good-for-America reason to do that, and there\u2019s also an economic reason to do that,\u201d he went on. \u201cIt\u2019s much easier, if you\u2019re an activist, if you\u2019re on the right side of things.\u201d He was gazing out over Central Park, through panoramic windows that cast the grand public space as his own back yard. To the far right of the vista was One57, a ninety-story skyscraper that looms over the city like a blade. He recently bought a duplex apartment there for $91.5 million.<\/p>\n
To make his case, Ackman cited the example of Canadian Pacific Railway, a company that was established in 1881. Pershing Square bought fourteen per cent of its stock six years ago, and recruited a new C.E.O., who took it from the \u201cworst-run railroad in North America\u201d to the best, in Ackman\u2019s appraisal\u2014while reaping a $2.6-billion return on the fund\u2019s investment. A less flattering example of Ackman\u2019s judgment is the fund\u2019s $3.3-billion investment in Valeant, the pharmaceutical company. Valeant was known for borrowing money to buy competitors and then raising the prices of their drugs\u2014sometimes by a thousand per cent or more\u2014while closing their R.\u00a0&\u00a0D. divisions. Valeant\u2019s profits soared, for a time, and other drug companies followed its example. Then Valeant came under federal investigation; its share price is now a fraction of what it was when Pershing Square bought it.<\/p>\n
Valeant was the sort of company that Pershing Square should have bet against rather than bought into, but shorting stocks wasn\u2019t a big part of what the fund did. Short selling\u2014betting that a company\u2019s stock price will go down\u2014requires a special level of fortitude. It involves borrowing a stock from a brokerage or a bank (and paying a small fee to do so), selling the stock in the open market, and then returning the borrowed shares at some point in the future, having bought back the stock for much less than you sold it for. That\u2019s if things go well; the losses are potentially limitless if the stock keeps rising.<\/p>\n
Short sellers are generally reviled by corporations as malevolent opportunists. But, unlike most investors, they\u2019re motivated to expose problems in public companies. \u201cI think short selling, and in fact\u00a0public<\/em>\u00a0short selling, where you share your concerns in a public way, is an incredibly healthy thing, not just for the capital markets but because the regulators do not have the resources to find these things,\u201d Ackman said. \u201cWhat short sellers do is identify the problem, because they\u2019re economically incentivized to do so. But if you don\u2019t tell anyone about it, you know, nothing necessarily is going to happen.\u201d By shorting, he maintained, an investor can find that rare opportunity to profit handsomely while also providing a public service. \u201cIf you can find a really crooked company that\u2019s causing harm to poor people? The government\u2019s going to be a lot more interested in that company than some other kind of fraud that\u2019s ripping off rich people.\u201d He added, \u201cIt\u2019s more interesting to fight evil than just to play with stock certificates.\u201d<\/p>\n <\/a><\/a><\/p>\n Ackman grew up in the affluent New York City suburb of Chappaqua, where his father ran a brokerage firm. He graduated from Harvard College and then Harvard Business School, where he was on the rowing team, and had a reputation as someone who couldn\u2019t keep his opinions to himself. He and the rest of the team had rowed with oars adorned with dollar signs. \u201cLet\u2019s face up to what HBS represents,\u201d he wrote in the student newspaper. \u201cWe spend 90% of our studies at HBS pursuing the maximization of the dollar.\u201d<\/p>\n He started his first hedge fund, Gotham Partners, in 1993, at the age of twenty-six. Ten years later, after a series of misjudged investments and unfavorable court rulings, he was forced to close it. He was left with only one investment, a large short position in M.B.I.A., Inc., originally named the Municipal Bond Insurance Association. M.B.I.A. insured bonds issued by cities, states, corporations, and mortgage lenders; its backing gave bonds a high credit rating, assuring buyers that they were protected in case a borrower defaulted. At the time, M.B.I.A. was one of the most profitable companies in America. Ackman, though, had determined that it was concealing billions of dollars in potential losses on high-risk debt, including vast amounts of subprime-mortgage debt. He made a bet against the company, and then set about publicizing his opinion that it was in danger of going bankrupt. With the support of much of the financial industry, the company fought back, accusing Ackman of spreading false information to benefit his investment, and New York\u2019s attorney general, Eliot Spitzer, started investigating him. (Charges were never filed.)<\/p>\n Christine Richard, who is fifty-two, joined the financial-news service Bloomberg News in 2006 as a wire reporter covering the bond market. She has an earnest air, speaks with a soft voice, and has sympathetic blue eyes. She grew up in Union County, New Jersey, and earned a degree in psychology at Boston University while waitressing part time. As she pursued an M.B.A. at Georgetown University, she started reading the\u00a0Wall Street Journal<\/em>, which had distinguished itself as a source of consequential business journalism, and decided that she would rather write about the business world than work in it. Wire-service reporting was by nature a mechanical exercise, however, and Richard yearned to write longer, more narrative pieces.<\/p>\n It was just the sort of ambition that Ackman knew how to tap into. Part of his strategy for publicizing his investments was to favor certain journalists and shower them with attention. For a time, a reporter might find herself given scoops, granted interviews, invited to join a Wall Street luminary in his town car, while the rest of the media scrum were stuck outside. Ackman chose Richard to help bring scrutiny to M.B.I.A. The investment was Ackman\u2019s first short position that involved a concerted effort to convince regulators, auditors, Wall Street analysts, and Washington lawmakers that the target was hiding something. But M.B.I.A.\u2019s credibility exceeded Ackman\u2019s, and for years Ackman got nowhere.<\/p>\n Then, in 2008, the financial crisis arrived, and, in just over a year, M.B.I.A.\u2019s stock price plummeted from seventy-two dollars a share to three dollars. Ackman\u2019s position yielded a profit of a billion dollars. It also made him one of the few investors who foresaw\u2014and made money from\u2014the disintegration of the subprime-mortgage market. In 2010, Richard published a book about Ackman and M.B.I.A., titled \u201cConfidence Game: How Hedge Fund Manager Bill Ackman Called Wall Street\u2019s Bluff.\u201d<\/p>\n After the book came out, to modest sales, Richard left journalism and joined Indago Group, a small research firm that catered to hedge-fund investors. It had been successful developing short-selling ideas in the for-profit education sector, where low-income students took out government-backed loans to earn largely worthless degrees\u2014leading to a high default rate. Now Richard was charged with finding another industry that had been allowed to inflate into a fraudulent, and presumably fragile, bubble. She started researching Herbalife. \u201cJust looking at it, I vaguely felt that it was a fraud,\u201d she said. \u201cI remember thinking, If someone smart were to just call it out, someone who had the ear of the market, it would collapse.\u201d<\/p>\n <\/a><\/p>\n She called Ackman. \u201cBill,\u201d she told him, \u201cI think I found your next M.B.I.A.\u201d It looked to her like a billion-dollar idea.<\/p>\n Multilevel-marketing companies such as Herbalife\u2014and Amway, Mary Kay, and Nu Skin\u2014peddle their products to the public through networks of salespeople rather than through retail venders. The salespeople both sell products and recruit more salespeople, and how much they do of each helps determine whether the company will run into regulatory trouble. Herbalife, which is based in Los Angeles, sells weight-loss-shake powder, vitamins, supplements, protein bars, and skin-care products, and when Richard started investigating the company it reported more than four billion dollars in sales.<\/p>\n Herbalife cultivates an image of wellness and athleticism; it sponsors more than sixty sports teams and a hundred and fifty professional athletes, including Cristiano Ronaldo, the Real Madrid soccer star. But most people who were getting involved in Herbalife, Richard believed, were responding to the company\u2019s aggressive promises, advertised in both English and Spanish, of a business opportunity that might lead to wealth and financial independence. Testimonials spoke of how much money they could make. (\u201cNow, while earning $25,000 a month with Herbalife, I get to do all the things I love: play music and ride my motorcycle!\u201d)<\/p>\n <\/a><\/p>\n Herbalife\u2019s recruiting technique involved revival-style \u201cseminars\u201d where distributors in company T-shirts stood up and shared stories about the weight that they had lost and the money that they had gained. On a Saturday this fall, one such seminar took place at a hotel near Newark Airport. About a hundred people, mostly black and Latino, were crowded into a small ballroom, many wearing buttons pinned to their shirts: \u201cI \u2665 Herbalife\u201d or \u201close weight now<\/small>.\u00a0ask me how<\/small>!\u201d The fee to attend the meeting, which was ostensibly for sales training, was thirty dollars, and the aesthetic in the room tended toward high heels and gold jewelry.<\/p>\n At the front of the room, a man named Reggie walked back and forth on a riser before a table of Herbalife products, pumping up the crowd. He had a bushy beard and wore a tight purple sweater that accentuated his upper-body musculature and slender waist. (The company encourages its distributors to use themselves as walking billboards.) Reggie was discussing a key skill for Herbalife entrepreneurs: how to deal with friends who were skeptical of the bold health claims made about the company\u2019s offerings. \u201cThis is why we don\u2019t have to know what\u2019s in the products,\u201d Reggie said. He gestured toward a slide on a screen, showing head shots of a group of medical experts affiliated with Herbalife. \u201cWe have awesome doctors, awesome scientists that make the product!\u201d<\/p>\n The crowd roared (\u201cYeah!\u00a0<\/em>\u201d), music blasted, and rocket sounds blared.<\/p>\n \u201cIf somebody asks you, \u2018What\u2019s in the products?,\u2019\u00a0they<\/em>\u00a0know!\u201d Reggie went on. \u201cI<\/em>know it works!\u201d<\/p>\n At the core of Herbalife\u2019s appeal is the individual testimonial\u2014here\u2019s how I did it, and here\u2019s how you can, too\u2014and Reggie began inviting people from the audience to come up and share their \u201cproduct stories.\u201d He called out, \u201cWho here has lost a pound?\u201d There were cheers. \u201cFive pounds? Who here has gained some muscle? Who here\u2019s got softer skin?\u201d More enthusiastic applause. Many of those who spoke expressed gratitude for being able to spend more time with their kids.<\/p>\n Between the testimonials, a man named Juan\u2014a member of Herbalife\u2019s Active World Team, one of the upper echelons of the sales hierarchy\u2014spoke to the crowd. He said that he didn\u2019t want to \u201cdo\u201d Herbalife at first, but he was unhealthy and overweight, and \u201cmy wife told me that there were going to be some services that were going to be cut off at home if I didn\u2019t start trying their products\u2014if you know what I mean.\u201d Because of Herbalife, he said, he had lost thirty pounds and looked amazing.<\/p>\n Juan was there to explain how the business of Herbalife worked. It was based on a system of product discounts. Once people used the products and liked them, they could sign up and get them at a twenty-five-per-cent discount. They could use the products themselves, or become distributors and sell to friends and acquaintances at full price, keeping the difference. Distributors were required to purchase a \u201cbusiness pack,\u201d priced at ninety-four dollars. The pack included copies of a sales video, buttons, and product samples. As their purchase volume increased, they qualified for deeper discounts. \u201cThat is based on how many people you\u2019re sharing your story with,\u201d Juan said. \u201cIt doesn\u2019t happen overnight.\u201d<\/p>\n <\/a><\/p>\n Distributors could bring in new salespeople and earn commissions from their \u201cdownline,\u201d the recruiting activities and purchases of everyone on the chain below them. The company also encouraged distributors to open \u201cnutrition clubs,\u201d where they could invite prospects to come in and try Herbalife protein shakes, work out, talk about weight loss and fitness, and sign up to become distributors themselves. Juan explained that, if you bought enough Herbalife products each month, you would eventually qualify for a fifty-per-cent discount. If, over time, the friends in your downline started buying enough to qualify for the fifty-per-cent discount, \u201cthe business gets really, really, really exciting, because we start talking about something that is called \u2018royalties,\u2019 O.K.?\u201d In addition to the commissions on your recruits\u2019 purchases, and on their recruits\u2019 purchases, and on\u00a0their<\/em>\u00a0recruits\u2019 purchases, the company would start paying you a production bonus.<\/p>\n \u201cI\u2019ve managed a company with over six hundred people, and I only get paid on what I do, O.K.?\u201d Juan said, referring to his previous career. \u201cWhen they told me in Herbalife I can get paid on teaching some other people how to do a good job, and when they do it I get paid as well, I was, like, yes, this is the kind of business that I want to be in!\u201d<\/p>\n In a pyramid scheme, according to the definition most commonly used by courts and by the Federal Trade Commission, participants derive most of their compensation from recruiting other people into the network as salespeople, rather than from selling products to actual consumers. If recruiting is a company\u2019s main purpose, its survival depends on constantly bringing new people in, and those at the top of the pyramid make money largely from those coming in at the bottom. Still, it can be hard to distinguish between enterprises that are legally considered fraudulent and those which aren\u2019t, and no specific statute outlaws pyramid schemes. A series of settlements with the F.T.C. dating back to the nineteen-seventies have shown companies how to adjust their business models in order to remain in the zone of legality.<\/p>\n Christine Richard was doubtful that Herbalife had done so. From her research, she had concluded that the company\u2019s real business was recruiting people to recruit more people to recruit more people to sell its products. \u201cDistributors were put on this treadmill of purchases in order to advance,\u201d she told me. \u201cIt was so manipulative.\u201d Most of the recruits appeared to be low-income people, particularly native Spanish speakers; many were spending thousands of dollars to open nutrition clubs that would never turn a profit. Herbalife was using the dearth of economic opportunity for people who lacked college degrees and other advantages in order to recruit more distributors. \u201cPeople are losing their homes, their jobs\u00a0.\u00a0.\u00a0. markets are crashing,\u201d one company recruiting video from 2008 says. \u201cLet\u2019s face it, it\u2019s a scary time, the economy\u2019s in trouble.\u201d But Herbalife, viewers were assured, was \u201crecession-proof.\u201d An Indago Group report was blunt: Herbalife was \u201ca pyramid scheme whose revenue comes not from retail sales of its products, as it contends, but from capital lost by failed investors in its business opportunity.\u201d<\/p>\n <\/a><\/p>\n After her initial meeting with Shane Dinneen, Richard gathered documents from the many lawsuits that had been brought against Herbalife over the years. If the company was a tempting target for a short seller, it was also an elusive one. Its structure, like that of many multilevel-marketing firms, was complex to the point of opacity. It had powerful lawyers and advisers on its payroll, including former Secretary of State Madeleine Albright, who appeared at several of the company\u2019s extravaganzas.<\/p>\n Meanwhile, Dinneen\u2014described by a colleague as \u201cAckman\u2019s right hand\u201d\u2014began applying his own methods to studying the weight-loss-nutrition industry. \u201cI think that looking at companies is like solving a puzzle,\u201d he says. \u201cI like to understand the narrative behind a company.\u201d He and a colleague, Mariusz Adamski, started researching Herbalife intensively. Adamski told me, \u201cWe read some presentations, did some legal work, spoke to a bunch of consultants, and thought, This company looks like actual garbage.\u201d<\/p>\n Herbalife said that its flagship product, the Formula 1 nutrition-shake powder, had sales of $1.2 billion every year, about as much as Palmolive dish soap or Gerber baby food. Compared with SlimFast or other nutrition shakes you could buy at Whole Foods or G.N.C., Formula 1 was, Dinneen and Adamski believed, sold at an inflated price, and the claims that had been made for it\u2014that it could swiftly produce enormous weight loss, even help curb diabetes and heart disease\u2014seemed implausible. The more they looked into it, the more dubious it appeared to be.<\/p>\n <\/a><\/p>\n None of this meant that the company would collapse, though, and certainly not on Pershing Square\u2019s schedule. Short sellers look for a catalyst\u2014a precipitating event that will trigger the decline. This event could be a government action: an S.E.C. investigation or a charge from the Justice Department. Sometimes a presentation by a well-respected short seller will suffice.<\/p>\n Yet Indago\u2019s hedge-fund clients had been largely unresponsive to the Herbalife proposal. They warned Richard that most multilevel-marketing outfits were nearly indestructible, like cockroaches. Although a few had been shut down or sanctioned in recent decades, many prospered, contorting themselves to comply with the law. Investors had tried shorting some of them\u2014notably Usana, another nutrition company, and Nu Skin, which settled deceptive-marketing charges with the F.T.C. in 1997, for $1.5 million\u2014but the companies endured, and their share prices held. What Indago heard from its hedge-fund clients was some version of: \u201cWe\u2019ve all looked at the companies, we all know they\u2019re frauds, but if you short them you get burned, guaranteed. What is the catalyst to put an end to them? If you can\u2019t tell me that\u2014next!\u201d<\/p>\n What\u2019s more, most hedge-fund investors were averse to publicity, which a campaign against Herbalife would surely entail; they saw little benefit in bringing attention to how much money they were making, and how they were making it. The prospect required a certain kind of self-assurance, possibly even narcissism\u2014it called for someone who thrived in the center of controversy. In other words, someone like Bill Ackman.<\/p>\n Even Ackman had misgivings, though. \u201cCollectively, we decided that we did not want to be the tip of the spear here,\u201d he recalled. \u201cWe just didn\u2019t think it was worth the brain damage. Getting attacked, and possibly sued.\u00a0.\u00a0.\u00a0. There\u2019s just not enough\u00a0in it<\/em>.\u201d Pershing Square would probably have to spend millions of dollars just on legal advice. Given the effort and the expense, was Herbalife big enough, with enough shares trading each day, for an adversary to craft a truly lucrative short?<\/p>\n He went on, \u201cIt\u2019s going to take a lot of time and distraction, and they\u2019re going to go after us in the press. And, unfortunately, the media generally hate short sellers.\u201d The research piled up, but Ackman held back. Then, on May 1, 2012, Herbalife\u2019s executives hosted a conference call for analysts and investors, and the calculus abruptly changed.<\/p>\n \u201cGood morning, everyone, and welcome to our first-quarter 2012 earnings conference call,\u201d Michael Johnson, Herbalife\u2019s C.E.O., said. \u201cOur financial and business trends continue to be strong.\u201d<\/p>\n Johnson, a former Disney president, had been recruited to be C.E.O. of Herbalife in 2003, and he had worked since then to establish an air of legitimacy. \u201cAs I approach my first decade at Herbalife, I\u2019ve been reflecting on how much our company and business have changed over the past decade,\u201d he said. \u201cWe are consistent in teaching the importance of integrity and ethics in everything we say and do.\u201d<\/p>\n After the call was opened up for questions, David Einhorn, the founder and president of the hedge fund Greenlight Capital, came on the line. Einhorn was a highly respected investor, known for his instincts as a short seller. At an investor conference in 2008, he had stood up and correctly predicted that Lehman Brothers was going to go bankrupt under the weight of its subprime-mortgage debt.<\/p>\n \u201cI got a couple of questions for you,\u201d Einhorn said to Des Walsh, Herbalife\u2019s president. \u201cFirst is, how much of the sales that you make in terms of final sales are sold outside the network and how much are consumed within the distributor base?\u201d<\/p>\n <\/a><\/p>\n It was the key question to be asked of a suspected pyramid scheme, and Herbalife\u2019s executives seemed alarmed. Einhorn was, as\u00a0Vanity Fair\u00a0<\/em>and\u00a0Fortune\u00a0<\/em>reported, a client of the Indago Group, and had received Christine Richard\u2019s Herbalife pitch.<\/p>\n Walsh didn\u2019t really answer the question. \u201cDavid, we have a seventy-per-cent customer rule, which effectively says that seventy per cent of all products are sold to consumers or actually consumed by distributors for their own personal use,\u201d he said. He spoke of the growth of Herbalife nutrition clubs: \u201cThat has given us visibility to the tremendous amount of products that are being sold directly through to consumers, and we see that as a growing trend in our business.\u201d<\/p>\n Einhorn returned to his question: \u201cWhat is the percentage that is actually sold to consumers that are not distributors?\u201d<\/p>\n \u201cWe don\u2019t have exact percentages, David,\u201d Walsh said, \u201cbecause we don\u2019t have visibility to that level of detail.\u201d<\/p>\n Seconds after Einhorn\u2019s questions, Herbalife\u2019s stock price started dropping, from around sixty-nine dollars to the mid-fifties. Dinneen was listening to the call, and ran into Ackman\u2019s office. \u201cWe missed it!\u201d Ackman recalls Dinneen telling him. \u201cWe should have been short already.\u201d<\/p>\n <\/a><\/p>\n Ackman saw things differently. \u201cI\u2019m, like, \u2018No no no no no!\u2019\u00a0\u201d Ackman told Dinneen. \u201c\u00a0\u2018This is really good!\u2019\u00a0\u201d Einhorn, he figured, must have had a short in place already, and was profiting from the decline. If Greenlight Capital was going to lead the campaign, though, Pershing Square could draft behind it.<\/p>\n Within the hour, Ackman started shorting Herbalife stock. He decided to commit ten per cent of Pershing Square\u2019s capital to the short\u2014around a billion dollars. He estimated that the most the stock could possibly go up, which would represent the fund\u2019s potential losses, was fifty per cent. On the other hand, once regulators and the public learned what was really going on at the company, he expected Herbalife stock to go to zero\u2014whereupon his fund would net a billion dollars in profit.<\/p>\n \u201cYou take a lot of opprobrium for going after a public company, particularly a company like this one,\u201d Ackman said. \u201cThey\u2019ve been prepared for battle. We assumed that Einhorn would be carrying the flag, and we could just ride his coattails.\u201d<\/p>\n But Ackman had misread the situation. He soon came to believe that Einhorn, after taking advantage of the sell-off he had prompted, then bought back his stock and completed the short, figuring that it would rise again. It looked as if Einhorn was playing a short-term game, and had no interest in convincing the world that Herbalife was going to collapse.<\/p>\n \u201cWe usually do all the work,\u201d Ackman went on, \u201cso I\u2019m, like, finally, we can let David do all the work, and we\u2019ll make a bunch of money, and everyone wins.\u201d He sighed. \u201cWell, it didn\u2019t work out that way.\u201d<\/p>\n Driving through some of the towns and neighborhoods where Herbalife has flourished is like taking a tour of vanished economic opportunity. You might find a high concentration of Dollar General outlets, interspersed with boarded-up Main Street businesses that went under after Walmart came to town, and then the Walmart itself, at the edge of the city, might have shut after incursions from Amazon. People are desperate for anything that seems like an escape from a life of working behind a cash register.<\/p>\n In the eyes of skeptics, the Herbalife \u201cbusiness opportunity\u201d bore some resemblance to the American economy as a whole: a triangle in which the top one per cent of distributors received almost ninety per cent of the financial rewards, while those below tried to claw their way up the chain, often to little avail. Government investigators have found that it was almost impossible to make money selling Herbalife products, and that more than half the company\u2019s sales came from purchases of products by its own distributors. Hundreds of thousands of new distributors joined the network each year; after losing money, or at least not making any, eighty-nine per cent of them ended up dropping out within the same year. (The company disputes these conclusions, and says that most of its sales go to actual customers using its products, although it also says that it doesn\u2019t know the precise breakdown.)<\/p>\n Strikingly, many of the themes and slogans that multilevel-marketing companies favor\u2014lots of gilt, and promises that \u201cwe are going to make you rich\u201d\u2014are the same ones employed by Donald Trump, whose pledge to solve Middle America\u2019s economic woes helped propel him to the Presidency. Trump honed his pitch during his own career in multilevel marketing, as a promoter of the short-lived Trump Network, which peddled \u201ccutting-edge health and wellness formulas,\u201d in Trump\u2019s words, and as a spokesman for the telecom outfit ACN, which has settled state fraud charges. \u201cThe economic meltdown, greed, and ineptitude in the financial industry have sabotaged the dreams of millions of people,\u201d Trump said in a 2009 video for the Trump Network. \u201cAmericans need a new plan. They need a new dream. The Trump Network wants to give millions of people renewed hope, and with an exciting plan to opt out of the recession.\u201d<\/p>\n Herbalife has been singularly effective at selling the dream. The company was founded, in 1980, by Mark Hughes, a high-school dropout with a talent for storytelling and salesmanship. Within Herbalife culture, Hughes is a figure of worship. He was twenty-four years old when he started selling weight-loss products out of his car. (According to the Los Angeles\u00a0Times Magazine<\/em>, he used as part of his pitch a fake story about his mother having died of obesity.) By the mid-nineteen-eighties, the company had annual sales of more than three hundred million dollars, and Hughes was living in a mansion in Beverly Hills.<\/p>\n That was when CNN broadcast a devastating series about the company, in which scientists and physicians debunked Herbalife\u2019s claims for its products and challenged the company\u2019s assertion that it employed medical experts and ran a research lab. California\u2019s attorney general launched an investigation, and Hughes was called to testify before the Senate. Herbalife settled with the government, agreeing to adjust its business practices. Hughes died in 2000, reportedly of an overdose of alcohol and antidepressants. In the company\u2019s thirty-seven years, it has gone through several transformations. But at its core is a sort of prosperity gospel with deep American roots.<\/p>\n Ackman\u2019s bet was that rational scrutiny would prevail over extravagant hope. He was now fully committed to the campaign, and, after shorting twenty million shares in several months\u2014borrowing them and selling them at the market price\u2014he was eager to go public with the case against Herbalife. The company, he would argue, was a pyramid scheme. It was ripping off vulnerable members of the Latino community. The government was duty-bound to sanction it. The stock was going to zero.<\/p>\n Shane Dinneen, Christine Richard, and a handful of others\u2014including David Klafter, Pershing Square\u2019s in-house counsel\u2014hunkered down. Richard had left Indago to work full time for Ackman, under contract as a dedicated Herbalife researcher. She had been travelling around the country, documenting Herbalife nutrition clubs that were sprouting up in communities dense with Spanish-speaking immigrants. Dinneen had helped to compile a dossier of court filings, and had been tracking some of Herbalife\u2019s top distributors. The Pershing Square team talked about how quickly they could get regulators and state attorneys general interested in investigating Herbalife. Dinneen put in long hours and sometimes slept under his desk as he and his colleagues worked furiously to condense everything they had learned into some three hundred PowerPoint slides.<\/p>\n \u201cWe went to war,\u201d Klafter said. \u201cAnd war is chaotic. You never quite know what\u2019s going to happen.\u201d<\/p>\n Pershing Square\u2019s first assault was launched on December 20, 2012, at the AXA Equitable Center, in midtown Manhattan, before a packed house. The presentation, called \u201cWho wants to be a Millionaire?,\u201d was meant to capture the attention of government regulators, the mainstream media, and Spanish-language news outlets that could help spread the word to the Latino community.<\/p>\n Ackman strode onstage in a stylish black suit, one hand in his pocket and the other holding a slide-clicker remote. He began by announcing that Pershing Square was shorting Herbalife stock: \u201cHerbalife stock goes down, we make money; Herbalife stock goes up, we lose money.\u201d He then argued that most of the company\u2019s sales came from distributors who bought products and then failed to make a successful business out of their investment, while those at the top raked in millions\u2014a classic pyramid scheme. He showed a clip of a testimonial from an Herbalife Chairman\u2019s Club member, one of the company\u2019s top earners. \u201cThis is a product that changes people\u2019s lives,\u201d the man onscreen said, as images of sports cars flashed by. \u201cIn ninety days, our income hit ten thousand dollars a month.\u201d The presentation contained dozens of pie charts and bar graphs, and went on for three and a half hours. Ackman pledged to donate his personal profits from the short to charity.<\/p>\n Given the depth of the research\u2014and the fact that he\u2019d been right about M.B.I.A.\u2014Ackman says he figured \u201cthat we\u2019d have a lot of credibility, and that it would cause the government to investigate.\u201d He added, \u201cAnd the facts were so damning\u2014I thought it could be a year?\u201d At first, the bombardment had its desired effect: Herbalife\u2019s stock price dropped from more than forty dollars, around where Pershing Square had shorted it, to twenty-six dollars right before Christmas.<\/p>\n But a week after the presentation, to Ackman\u2019s dismay, Herbalife\u2019s stock price started to creep up. He found out why in early January, in his Gulfstream G550 on the way to Myanmar for a scuba-diving trip. A prominent hedge-fund manager, Dan Loeb, of Third Point L.L.C., had bought a significant chunk of Herbalife stock. Apparently, at the newly depressed price of twenty-six dollars, it looked like a good short-term value.<\/p>\n Maybe the company wasn\u2019t especially virtuous, Herbalife\u2019s defenders reasoned, but this didn\u2019t mean that it was provably a pyramid scheme, or couldn\u2019t survive by adjusting its business practices. Even if Ackman\u2019s charges were vindicated, would the government really shut it down, all to the benefit of a hedge fund? The company seemed to be expanding successfully into other countries, with millions of new distributors flowing into the network in China, Mexico, and Venezuela. Other investors reached similar conclusions and started to buy shares as well. The stock price moved further upward.<\/p>\n <\/a><\/p>\n On January 10, 2013, Herbalife Webcast a hundred-and-five-slide rebuttal, denying Ackman\u2019s allegations, and insisting that most people bought its products because they loved them, not because they wanted to recruit other salespeople. Ackman listened to the presentation on the deck of \u201csome dive boat in Myanmar,\u201d rocking back and forth while clutching the satellite equipment he had brought along. He was neither surprised nor impressed. \u201cA completely fraudulent response,\u201d he told me. \u201cThey were\u00a0totally<\/em>\u00a0mischaracterizing our presentation. I thought it was a joke.\u201d<\/p>\n Ackman wasn\u2019t prepared for what came next, however. Two weeks later, the legendary investor Carl Icahn lashed out at Ackman and his Herbalife play on Bloomberg Television. \u201cIt\u2019s no secret I don\u2019t like Ackman,\u201d Icahn said. \u201cI think if you\u2019re short you go short, and, hey, if it goes down, you make money. You don\u2019t go out and get a roomful of people to bad-mouth the company. If you want to be in that business, why don\u2019t you go and join the S.E.C.?\u201d He went on, \u201cI don\u2019t respect him.\u00a0.\u00a0.\u00a0. Don\u2019t be holier than thou and say, \u2018Look, I\u2019m doing this for the good of the world, and I want to see sunshine on Herbalife.\u2019 I mean, that\u2019s bullshit.\u201d<\/p>\n <\/a><\/p>\n Icahn, who is eighty-one, made his career as a corporate raider\u2014he launched hostile takeovers of companies such as T.W.A., Texaco, and R.J.R. Nabisco\u2014and is estimated to have amassed a sixteen-billion-dollar fortune. (He is an economic adviser to the Trump Administration). Prickly and ready for a fight, he had a turbulent history with Ackman dating back a decade, when a joint investment led to a lawsuit that was resolved in Ackman\u2019s favor. A day after Icahn\u2019s attack, a CNBC anchor urged Ackman to respond. \u201cI\u2019m a little sensitive to the whole reputation thing,\u201d Ackman said, and so he agreed.<\/p>\n The interview was conducted over the phone. Ackman, inside his glass-walled office at Pershing Square, explained his history with Icahn, and then accused Icahn of being a hypocrite: Icahn himself had held very public short positions in the past. After a few minutes, the Pershing Square staff was stunned to see that Icahn had been patched in to the interview. The two men were now arguing on live television.<\/p>\n \u201cI\u2019ve really sort of had it with this guy Ackman,\u201d Icahn said. \u201cHe\u2019s like the crybaby in the schoolyard. I went to a tough school in Queens, and they used to beat up the little Jewish boys. He was like one of these little Jewish boys, crying that the world was taking advantage of him.\u201d<\/p>\n For most of the twenty-seven-minute exchange, Icahn hurled insults at Ackman. (CNBC had to bleep Icahn and remind him that he was on the air.) Ackman mostly maintained his composure as he attempted to counter Icahn\u2019s charges. Occasionally, hoots and howls could be heard coming from the floor of the New York Stock Exchange, where the CNBC interviewer was situated. \u201cI had dinner with him, and I gotta tell ya,\u201d Icahn said, \u201cI couldn\u2019t figure out if he was the most sanctimonious guy I ever met in my life, or the most arrogant.\u201d<\/p>\n Icahn revealed not long afterward that he had bought fourteen million shares of Herbalife stock\u2014thirteen per cent of the company. It wasn\u2019t clear whether Icahn simply saw a good profit opportunity or whether it was personal; there was no evidence that he had conducted the kind of in-depth research that Pershing Square had. Yet it was a public invitation for others to join him\u2014especially investors who recoiled at Ackman\u2019s slick self-presentation as a champion of oppressed immigrants. The spectacle further buoyed Herbalife\u2019s stock price.<\/p>\n \u201cIt was not a helpful thing,\u201d one Pershing Square investor told me. \u201cTo engage a tyrannical eighty-year-old with a twenty-billion-dollar net worth who wants to fight you? That was not a helpful thing.\u201d Now the focus of attention had shifted from the case against Herbalife. All anyone wanted to talk about was the feud between the two men.<\/p>\n \u201cUnfortunately, Wall Street for the most part is amoral,\u201d Ackman said when I asked him about it. \u201cSo, with Herbalife, people saw an opportunity for profit\u2014my friend Carl was going on TV once a week saying, \u2018This could be the mother of all short squeezes!\u2019 Which was kind of a call to arms for people to buy the stock and restrict the supply of the stock, to cause the stock price to go up\u2014figuring I would have to cover\u2014and laugh all the way to the bank.\u201d<\/p>\n The more vocal Ackman became about Herbalife, the more the stock price rose. The company hired more lobbyists and advisers, including Antonio Villaraigosa, the former mayor of Los Angeles, and the law firm of David Boies. Ackman had set up a Web site called Facts About Herbalife (\u201cHerbalife is a pyramid scheme that harms millions of people around the world\u201d); the company countered with a Web site called The Real Bill Ackman (\u201cBill Ackman\u2019s self-serving activism has cost investors millions of dollars\u201d). Herbalife benefitted from a widespread sense that Ackman was smug and patronizing. It wasn\u2019t that he was wrong, necessarily; it was that he took too much pleasure in believing he was right.<\/p>\n <\/a><\/p>\n Shane Dinneen and Christine Richard found themselves reviled by association. As the stock price rose toward eighty, financial bloggers predicted that Dinneen would be fired. Richard received taunting messages. \u201cYou are a racist\u2014and it will wind up costing you your reputation and your client billions of dollars,\u201d a rival hedge-fund manager wrote to her in an e-mail. \u201cWhen this is over I will say that publicly.\u00a0.\u00a0.\u00a0. You are a deeply offensive and morally reprehensible person.\u201d Dinneen decided to quit his job, telling his colleagues that he was burned out.<\/p>\n Ackman, meanwhile, redoubled his efforts to trigger an official investigation into his allegations. Pershing Square spent hundreds of thousands of dollars lobbying state senators; it also met with the S.E.C., and with activists in the Latino community. The\u00a0Times<\/em>\u00a0reported that Pershing Square even bankrolled civil-rights groups to help find victims of Herbalife whom they could present to regulatory agencies, making videos of their stories and posting them online. The hedge fund\u2019s consultants met more than a dozen members of Congress or their staff, as well as representatives of New York\u2019s and California\u2019s attorneys general. Ackman also began co\u00f6perating with a filmmaker on a documentary about the battle, called \u201cBetting on Zero.\u201d<\/p>\n \u201cThe company kept saying we\u2019re manipulating the stock price,\u201d David Klafter told me. \u201cThe joke around here was: We manipulated it\u00a0up!<\/em>\u00a0We promised the deathblow, and it goes up. The irony is, only we could afford to do the kind of campaign we did. And the only reason we could do it is that we\u2019re not just trying to do the right thing, we\u2019re also managers of capital. But, because we\u2019re managers of capital, everything we do is suspect. We were told that by regulators, too, by the way\u2014boosting is American, shorting is not.\u201d<\/p>\n <\/a><\/p>\n On March 12, 2014, Pershing Square\u2019s advisory board, which meets once a quarter, gathered in the company\u2019s largest conference room. The board members include corporate executives and old friends of Ackman\u2019s, such as Marty Peretz, who had been his undergraduate adviser at Harvard. Herbalife stock had reached sixty-one dollars, representing a loss for Pershing Square, on paper, of about seven hundred million dollars. The board meeting was a soul-searing discussion about how much the Herbalife crusade had cost the fund and whether it was wise to continue.<\/p>\n \u201cIs the reason the government is doing nothing that we are short the stock and we stand to make a profit,\u201d Ackman recalled one of the board members asking, \u201cand they just don\u2019t want to get in the middle of something and, in effect, pick sides between two rich people?\u201d<\/p>\n Ackman was sitting at his usual spot at the head of the table eating cashews, which were his preferred healthy snack until recently, when he became concerned that they might contain toxic amounts of mercury. He knew that the board member had a point. But he was convinced of his case, and the idea of backing down was painful.<\/p>\n \u201cIf he gets obsessed with something, he is really obsessed,\u201d Peretz recalled. Peretz had helped Ackman with his senior thesis, which concerned racial inequities in Ivy League admissions. \u201cI think other money managers would have long ago dropped Herbalife,\u201d Peretz went on. \u201cHe has a great sense of fairness, and that operated in his thesis, and it operates in his investing.\u201d<\/p>\n Still, Ackman says he was half-seriously considering surrender when the conference-room phone rang. It was Pershing Square\u2019s head trader, calling from his desk. \u201cHerbalife stock is halted,\u201d he told Ackman. \u201cNews pending.\u201d The Stock Exchange was not allowing the stock to trade, because information was about to come out that could affect the price.<\/p>\n Speculation ensued. Was Icahn going to make a takeover offer? \u201cCarl\u2019s never going to buy this company,\u201d Ackman said. It was something else. \u201cIf the F.T.C. launches an investigation of this company, there is a God!\u201d he said.<\/p>\n Fifteen minutes later, the news arrived: Ackman was right, and God was in his Heaven. The F.T.C. was investigating Herbalife.<\/p>\n Herbalife\u2019s stock went down. Then it went back up again. During the next two years, Pershing Square continued lobbying and putting out reports and videos as it waited for the F.T.C. to complete its investigation. Herbalife\u2019s stock price remained in the sixty-dollar range, well above the forties, where the fund had sold it.<\/p>\n <\/a><\/p>\n On July 15, 2016, Ackman was at home, getting ready for work, when, he says, he got a call from a\u00a0Wall Street Journal<\/em>\u00a0reporter. \u201cWe\u2019re hearing a two-hundred-million-dollar settlement with the F.T.C.,\u201d the reporter said. \u201cHerbalife has been determined not to be a pyramid scheme.\u201d Ackman was startled. \u201cTwo-hundred-million-dollar settlement\u2014yeah, sounds about right,\u201d he recalled. \u201cBut \u2018determined it\u2019s not a pyramid scheme\u2019? There\u2019s no way that\u2019s right.\u201d He told the reporter not to run with that story; it was wrong. \u201cAnd don\u2019t rely on Herbalife\u2019s characterization of this,\u201d he added.<\/p>\n Later that morning, after the F.T.C. released its report, Ackman learned that the agency had confirmed many of his allegations. The commission did not use the phrase \u201cpyramid scheme\u201d in the document, but it did accuse the company of engaging in \u201cdeceptive and unlawful acts,\u201d by luring people with misleading promises of how much money they could make. Herbalife, according to the F.T.C., was not offering its distributors a viable opportunity to sell products to actual retail customers, and the company was structured mainly to reward people for recruiting new distributors. Most people who started nutrition clubs lost money. A federal court ordered Herbalife to restructure its business so that people were paid based on their retail sales, not on recruiting new people\u2014a measure that, Ackman believed, could lead to its downfall. (The company says that the F.T.C. misunderstood the nature of its sales.) The two-hundred-million-dollar fine was meant to compensate members who had lost money. Many of the strictures will not go into effect until May of this year.<\/p>\n \u201cIt was amazing,\u201d Ackman said. \u201cConfirmed every one of our allegations.\u201d He went on, \u201cLook, when this whole thing is over? I\u2019m going to hold everyone accountable. Madeleine Albright, the Gibson Dunn firm\u201d\u2014one of several law firms working with Herbalife. \u201cAll the enablers. They are facilitating fraud, and they\u2019re collecting a huge amount of money doing it. I think they are culpable.\u201d<\/p>\n Once again, however, Ackman\u2019s expectations were confounded. Despite his urgings, the\u00a0Wall Street Journal\u00a0<\/em>ran the story with the headline \u201cackman dealt blow as herbalife settles with ftc<\/small>.\u201d The New York\u00a0Post<\/em>\u00a0went with \u201cherbalife no pyramid scheme: ftc<\/small>.\u201d Other news outlets followed suit. The commission\u2019s findings could have been interpreted as a major setback for Herbalife; instead, they were cast as a victory\u2014a validation of its business model. Icahn issued a statement saying that Herbalife offered many people the chance to \u201cstart their own business,\u201d and that Ackman had been proved wrong. Icahn increased his ownership stake to thirty-five per cent. Herbalife continued to insist that its business was healthy, and that its future would be unaffected. Its stock price, in turn, continued to reflect a reality vastly different from the one the F.T.C. had described.<\/p>\n Herbalife\u2019s corporate headquarters occupy two stories of a building in downtown Los Angeles. The lobby is bright and airy, with expansive terrazzo floors that bring to mind a European airport. Glass cases display pills and powders; one wall is covered with framed portraits of Herbalife\u2019s Founder\u2019s Circle and Chairman\u2019s Club members, the highest-earning distributors. In these precincts, the official message is that everything is fine and the settlement with the F.T.C. was the best thing that could have happened to the company.<\/p>\n <\/a><\/p>\n \u201cI\u2019m an operating person,\u201d Michael Johnson, Herbalife\u2019s C.E.O., told me, sipping from a purple protein shake and surrounded by sports equipment and trophies. \u201cI have pretty good financial chops. But I did not know about activist investors.\u201d Johnson is tan, square-jawed, and broad-shouldered. Like Ackman, he\u2019s a competitive athlete; he\u2019ll put in hours traversing a mountain range by road bike before showering and taking his place behind his desk in the morning. He recounted the battle with Ackman with a slight air of P.T.S.D.<\/p>\n After Ackman made his presentation at the AXA Equitable Center, Johnson said, Herbalife\u2019s top executives went into crisis mode. They divided into teams; one would continue running the business, while the other\u2014including the chief financial officer, the legal and communications departments, and Johnson himself\u2014formed a reaction unit. \u201cThat became, I don\u2019t want to say a holy war, but it became a process that engulfed some of us for a while,\u201d Johnson said. \u201cWe hired a ton of consultants. We were a full-employment act for every P.R. firm, law firm. We were spending a lot of money\u201d\u2014around eighty-five million dollars, Herbalife says. In 2014, the company brought in Alan Hoffman, Joe Biden\u2019s former deputy chief of staff, to help fight off Ackman. \u201cIt\u2019s horrible playing defense all the time, but with him we had to,\u201d Johnson went on. \u201cThen we went on the offense a bit. We said, \u2018We need the world to see what Bill Ackman is all about.\u2019 We\u2019ll see if his act is as wonderful as he thinks he is.\u201d A thousand-page dossier on Ackman was prepared, containing allegations of market manipulation, and Herbalife sought to generate news stories that reflected its point of view.<\/p>\n <\/a><\/p>\n The F.T.C. settlement places some onerous conditions on the company: in order to continue giving full commissions to its salespeople, it must prove, through documented receipts, that eighty per cent of its revenue comes from actual retail demand for its products. To qualify for commissions, individual distributors must show that sixty-six per cent of their sales comes from retail customers. Johnson says that the F.T.C. didn\u2019t understand how many consumers Herbalife had. At the same time, however, Herbalife executives maintain that they really didn\u2019t know who was buying the company\u2019s products before, and what their intentions were. Now, with the May deadline approaching, the company is rushing to implement technology that can track every sale, and is teaching its hundreds of thousands of distributors to use it, all in the hope of showing that people are buying Herbalife products for the right reasons.<\/p>\n Because the chair of the F.T.C. had stated that Herbalife needed to \u201cstart operating legitimately, making only truthful claims,\u201d the company hired a hundred and thirty people to comb through its distributors\u2019 social-media profiles, in order to remove pictures of their exotic cars and to curb exaggerated boasts about the money they were making. In January, Herbalife announced that two hundred thousand of its five hundred thousand U.S.-based distributors had agreed, in exchange for a twenty-five-dollar product coupon, to declare themselves to be Herbalife retail customers rather than distributors. (Previously, everyone in the network was known as a \u201cdistributor\u201d; the company is now trying to distinguish between distributors and \u201cmembers.\u201d) This, according to the company, is an indicator that its business is sound.<\/p>\n \u201cWe\u2019ve had lies thrown at us, we\u2019ve seen manipulations of the press, of media, at local, state, and federal levels,\u201d Johnson said. \u201cIt\u2019s been, frankly, a multifaceted, multi-front attack on us.\u201d After the F.T.C. settlement, he agreed to step down as the company\u2019s C.E.O. in May, as the new rules go into effect, though he will stay on as executive chairman.<\/p>\n When I asked Johnson how he felt about all the people who had lost money trying to get rich through Herbalife, he hesitated. \u201cI\u2019m sorry that it happened,\u201d he said. \u201cI\u2019m sorry people lost money at a racetrack and at the lottery. Today\u2019s Herbalife is about hard work and energy. I can\u2019t go and fix anything in the past.\u201d<\/p>\n A central question for Ackman is whether the company could simply become smaller in the United States and make up its business in China and other countries where the F.T.C. order doesn\u2019t apply. \u201cHerbalife is going to have to go from a D to a B-plus,\u201d Kevin Thompson, an attorney who works with multilevel-marketing companies, said. \u201cHerbalife will have to change its culture. But I don\u2019t think it\u2019ll have to change its culture so much that it\u2019ll go out of business.\u201d There is always the possibility that the F.T.C.\u2019s findings could translate internationally, though, which would be a blow to the company\u2019s prospects. Thompson added, \u201cIt boils down to: can Bill Ackman learn Chinese fast enough?\u201d<\/p>\n A few months after the F.T.C. settlement, Christine Richard travelled to Las Cruces, New Mexico, a flat, dusty city of about a hundred thousand people, an hour\u2019s drive from El Paso. In 2012, she had compiled a report on the town, because it seemed to have a particularly dense concentration of Herbalife nutrition clubs relative to its population. Now she wanted to see if anything had changed. I accompanied her as she drove past block after block of pawnshops, bail bondsmen, used-car dealerships, and Mexican restaurants. I learned to recognize Herbalife clubs in the little strip malls. They typically had green curtains covering the windows, in keeping with company policy, because they were meant to be invitation-only; attracting foot traffic would make them retail stores. They had names like The Good Life Nutrition, Living Healthy Nutrition, and Triple Threat Nutrition. Richard was trying to track down the club owners whom she had met on her last visit, but they were hard to find. There were dozens of the clubs. A few were open and busy; many others appeared to be abandoned.<\/p>\n <\/a><\/a><\/p>\n We wandered into one called The Nutrition HeadQuarters, next to a hair salon on a stretch of highway. A fit young man in jeans and a red T-shirt was there by himself; his club consisted of a tiled floor and, in a corner, a bar with a blender and a sink. Herbalife posters hung on the wall, and country music was playing. In order to pursue his new business, he said, he had dropped out of New Mexico State University and quit his job at Sam\u2019s Club.<\/p>\n \u201cI just fell in love with the Herbalife business opportunity,\u201d he told us.<\/p>\n In exchange for five dollars, he poured Richard some Herbalife aloe water, which was supposed to relieve indigestion. He said that he had taken over the club from someone who had left the business, and that he was there six days a week, trying to sell shakes and to recruit members.<\/p>\n When we asked him about the F.T.C. settlement, he said, \u201cIn my opinion, it\u2019s absolutely the best thing that could have happened to the company. To show the world that we are not a scam.\u201d He assured us that in five years he would have reached the company\u2019s President\u2019s Team level, where the average earnings are more than a hundred thousand dollars a year. In Michael Johnson\u2019s terms, these are the lottery winners. (According to Herbalife\u2019s own disclosures, the chance of a new recruit reaching this level is vanishingly small.) It was hard not to recall how Trump had pitched his version of Herbalife: \u201cThe Trump Network offers people the opportunity to achieve their American Dream.\u201d<\/p>\n Richard shook her head as we walked back to the car. \u201cI wonder if he\u2019s living with his parents,\u201d she said.<\/p>\n She seemed to be wearying of the bleak task of exposing Herbalife\u2019s lures; occasionally, she worried about what she would be qualified to do after researching one company for one hedge fund for so many years. \u201cBeing a hedge-fund researcher is sort of like being a journalist, without all the camaraderie,\u201d she said.<\/p>\n Over enchiladas that evening, Richard told me about an experience she had had when she was a college student home for Christmas break. Her parents were then living in Allentown, Pennsylvania, around the time that Bethlehem Steel, the major employer in the area\u2014and once the second-largest producer of steel in the United States\u2014was spiralling into bankruptcy. Looking to earn some extra money, she responded to a newspaper ad for a part-time job well suited to students and stay-at-home moms. The interview was to be held at a community college, and when she arrived there was already a small crowd of people.<\/p>\n As she and the others were led into a classroom, Richard realized that it wasn\u2019t a job interview but some sort of sales seminar. A man came out and started spouting clich\u00e9s about closing the deal, about having what it takes. He was there to introduce them to a multilevel-marketing outfit that sold Cutco knives. The man walked around the room, asking the attendees one-on-one questions: \u201cAre these knives going to sell themselves? Is the answer \u2018Yes,\u2019 because they\u2019re so good, or \u2018No,\u2019 because they need a good salesman?\u201d People started to become agitated. They had responded to the promise of a well-paying job, and here they were being pitched on a door-to-door sales gig. It became clear that they\u2019d all have to buy at least one set of knives in order to start selling them. As the sense of unrest grew, Richard recalled, the man suddenly paused.<\/p>\n \u201cSomeone here has a negative attitude and doesn\u2019t belong here,\u201d he told the group darkly. He turned to Richard. \u201cChristine, you need to leave.\u201d<\/p>\n She sensed her cheeks burning and her eyes welling up. Almost involuntarily, she found herself apologizing and begging to stay, to no avail. It was a clever tactic, she later reflected; everyone she left behind must have felt thankful that they got to stay.<\/p>\n This evening in Las Cruces, she saw a connection between that moment, when someone had tried to manipulate her desire to earn some money, and what she was doing now, trying to expose Herbalife, and disabuse all those recruits who believed that the company would grant them lives of financial security.<\/p>\n \u201cYou get so tired of stomping on people\u2019s dreams,\u201d Richard said. \u201cI don\u2019t want to be the one stomping on people\u2019s dreams anymore.\u201d\u00a0\u2666<\/span><\/p>\n Source:\u00a0http:\/\/www.newyorker.com\/magazine\/2017\/03\/06\/financiers-fight-over-the-american-dream<\/p>\n <\/p>","protected":false},"excerpt":{"rendered":" One day in the summer of 2011, Christine Richard arrived at the forty-second floor of a high-rise on Fifty-seventh Street in Manhattan to visit a hedge fund called Pershing Square Capital Management. Richard worked for a boutique research firm that identified \u201cshort\u201d opportunities\u2014companies that investors could profitably bet against\u2014and she was there to present an […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[17,16],"tags":[],"_links":{"self":[{"href":"https:\/\/wealinternational.com.br\/en\/wp-json\/wp\/v2\/posts\/25067"}],"collection":[{"href":"https:\/\/wealinternational.com.br\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wealinternational.com.br\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wealinternational.com.br\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/wealinternational.com.br\/en\/wp-json\/wp\/v2\/comments?post=25067"}],"version-history":[{"count":5,"href":"https:\/\/wealinternational.com.br\/en\/wp-json\/wp\/v2\/posts\/25067\/revisions"}],"predecessor-version":[{"id":25076,"href":"https:\/\/wealinternational.com.br\/en\/wp-json\/wp\/v2\/posts\/25067\/revisions\/25076"}],"wp:attachment":[{"href":"https:\/\/wealinternational.com.br\/en\/wp-json\/wp\/v2\/media?parent=25067"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wealinternational.com.br\/en\/wp-json\/wp\/v2\/categories?post=25067"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wealinternational.com.br\/en\/wp-json\/wp\/v2\/tags?post=25067"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Cartoon\"](\"http:\/\/www.newyorker.com\/wp-content\/uploads\/2017\/03\/a20700-3-690.jpg\")
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