LA Times columnist Michael Hiltzik’s column today highlights a connection between Herbalight – a food supplements firm – and the UCLA med school. Herbalight is in the midst of a tug-of-war between some Wall Street interests. One side claims that the firm is a Ponzi-type scheme whose stock will eventually come crashing down. Yes, the word “Ponzi” appears in such claims. Check out page 177 at this link:
The other side argues the company is legit and a good investment.
Excerpt: Herbalife International says it’s all about helping people “pursue healthy, active lives.” UCLA’s Geffen School of Medicine likes to think of itself as being in the forefront of medical research and modern healthcare. But the curious relationship between these two supposed champions of healthful living should turn your stomach. Herbalife is the Los Angeles nutritional supplement firm that has become the centerpiece of a ferocious Wall Street tug of war. The major player is hedge fund manager Bill Ackman, who contends that Herbalife is a scam to sell overpriced products by fooling people into becoming Herbalife “distributors” by implying the business will make them rich. He says he’s shorted $1 billion in Herbalife shares as a bet that the company is destined to collapse. On the other side are investors who either believe Herbalife will stay a highflier, or who just want to squeeze Ackman dry. (He’s not a popular chap.)
One of Ackman’s accusations against the company is that it exaggerates the scientific research behind its powders and pills. That’s where UCLA comes in, because Herbalife has exploited its “strong affiliation” with the medical school to give its products scientific credibility. Those words were uttered by Herbalife CEO Michael Johnson during a 2007 conference call. In fact, Johnson seldom lets an investor event pass without mentioning UCLA, specifically the Mark Hughes Cellular and Molecular Nutrition Lab at the medical school’s Center for Human Nutrition. Herbalife says it has contributed $1.5 million in cash, equipment and software to the lab since 2002. (The lab is named after Herbalife’s founder, who died in 2000 after a four-day drinking binge — not the greatest advertisement for healthful, active living.) …