Villaraigosa And His Campaigns Have Benefited From Groups That Critics Say Prey Upon The Poor, People Of Color

Published on

Villaraigosa And His Campaigns Have Benefited From Groups That Critics Say Prey Upon The Poor, People Of Color


March 19, 2018

Antonio Villaraigosa has staked his candidacy for governor on his roots, telling voters he “grew up in a home rich in love, but limited in opportunity” while positioning himself as a voice for low-income families and people of color left behind in California’s economic recovery.

His rivals, however, are trying to spin the narrative, arguing that the former Los Angeles mayor has benefited from the largesse of companies and industries that prey upon some of the state’s most vulnerable residents.

Over the course of his political career, Villaraigosa has received hundreds of thousands of dollars in pay and donations from Herbalife,the L.A.-based multilevel-marketing nutritional supplements company, where he once served as a senior advisor. Payday lenders are among his other contributors.

In the run-up to the June primary, Herbalife and its employees have contributed $38,650 to Villaraigosa. The company, which was fined $200 million by the federal government in 2016 for deceptive business practices, also donated $100,000 to charity at his request when he was mayor. Payday lenders — who advance short-term loans at high interest rates primarily in low-income communities — have donated $158,900 to the candidate over the years, as well as to officeholder and other political committees he controlled.

Villaraigosa did not respond to a request for comment about the donations. But his campaign, which started 2018 with $5.9 million in the bank, defended the decision to accept them.

“Like every other candidate, he must raise funds to be competitive,” spokesman Luis Vizcaino said. “Any assumption of connections between contributions and government action is baseless. Antonio Villaraigosa is, always has been and always will be focused on building an economy that works for everyone.”

Criticism over Villaraigosa’s ties to the contributors predate the gubernatorial campaign. But Vizcaino blamed chief rival Lt. Gov. Gavin Newsom for “driving this story.” Newsom mentioned the donors at the California Democratic Party convention last month.

“We took on … the predatory lenders and pyramid-schemers who prey on our most vulnerable,” Newsom told thousands of delegates in a veiled shot at Villaraigosa.

State Treasurer John Chiang’s campaign also recently criticized Villaraigosa’s work for Herbalife, chiding his proposed ballot designation of “public policy advisor.”

“Let’s be real, the only thing Antonio Villaraigosa can currently advise on is how to best target innocent Californians,” Chiang spokesman Fabien Levy said.

Garry South, a Democratic strategist who is not publicly backing a candidate, said that while the donations to Villaraigosa ought to be scrutinized, they should be put in perspective.

“I think it’s unfair to candidates who are of modest means and can’t finance their own campaigns to assert or insinuate that every single entity they take campaign contributions from they’re in debt to,” he said. “It just doesn’t work that way.”

Villaraigosa frequently recounts on the campaign trail that his mother took the bus to work as she struggled to make ends meet. He worked as a labor organizer and then spent 16 years in elected office: six years in the California Assembly; two years on the Los Angeles City Council, and eight years as mayor.

After leaving office in 2013, Villaraigosa signed on as a senior advisor to Herbalife, which he heralded as “a solid member of the Los Angeles business community and a strong presence within the Latino community since the company was founded here in 1980.”

Critics argue the company is behind a pyramid scheme that exploits the poor and people of color.

In July 2016, Herbalife agreed to pay the fines and change its business practices to settle federal regulators’ claims that the company falsely told people they could quickly get rich by selling its products. Herbalife said at the time that it disagreed with the Federal Trade Commission’s findings, but was settling to avoid a protracted legal battle.

In the final four months of 2013, Villaraigosa was paid $162,500 by Herbalife, according to his tax return for that year. He worked for the company until August 2016, shortly before he launched his gubernatorial bid. From 2014 to 2016, he earned nearly $3.5 million in consulting fees from multiple companies. Because he was compensated through a multi-member limited liability company and was not required to disclose how much each client paid for his services, it is not clear how much of that money came from Herbalife.

Follow California politics by signing up for our email newsletter »

The company, a major political donor in the state, has not contributed to Villaraigosa’s gubernatorial rivals.

Newsom accused Villaraigosa of “shilling” for the company when the matter was raised during a recent debate at UCLA. He said Villaraigosa cashed in after serving two terms as mayor by working for a company known for “predatory practices against communities of color.”

Villaraigosa forcefully defended the company, arguing that it offered opportunities to make ends meet for people in disadvantaged communities.

“… they give people a shot at building, if not a small business, at least a little extra income on a monthly basis,” Villaraigosa told La Opinión in November. “My mother sold Tupperware and Avon, I know why Latinos and blacks do it: They need a few extra bucks. It’s called a multiple-level marketing company. That’s what Tupperware is, what Avon is — they’ve been around for 30 years. Pyramid schemes aren’t around for 30 years.”

In a statement to The Times, Villaraigosa said his “focus at Herbalife was helping them organize communities — often ones with high rates of diabetes and obesity — and health fairs to encourage and educate communities about health and nutrition, and I stand by that work.”

Herbalife did not respond to a request for comment on Villaraigosa’s role.

Jamie Court, president of the nonprofit Consumer Watchdog, characterized Herbalife as “a house-of-mirrors scam that leads people to believe they’ll be millionaires if they get enough of their family members to use a product that many say is very detrimental to their health.”

He also had harsh words for payday lenders.

“Both industries pretend they are serving an unmet need in low-income communities, but my experience is they simply prey on these communities and the people in them and don’t give anything back except unconscionable financial burdens,” Court said.

In California, the maximum payday loan is $300 with a fee of 15%, an effective annual interest rate of 460% for a two-week loan. Critics argue that payday lending leads to an endless cycle of debt in low-income communities.

Payday lenders have donated $158,900 to Villaraigosa’s campaigns and other political committees he controlled. Newsom and Chiang, who is also running for governor, did not report any donations from payday lenders.

This is not the first time Villaraigosa has faced questions about his ties to the industry.

During the 2005 mayoral campaign, then-mayor and fellow Democrat James Hahn highlighted a 1996 bill Villaraigosa supported in the Assembly that Hahn said caused the proliferation of payday lenders in low-income communities, including more than 250 around Los Angeles.

“That’s not the kind of leadership we need in a mayor,” Hahn said at the time. “We expect someone who will stand up for the little guy, stand up for the person who’s going to be victimized, and not stand up for the businesses that are up there victimizing.”

Villaraigosa and his mayoral campaign argued that Hahn was taking the bill out of context and that the legislation had imposed new regulations on the industry.

Requests for comment on the donations were not answered by national and state payday lenders industry groups.

As politicians face scrutiny over their positions, examinations of their political donors is a given, South said.

“When they have to raise money, there’s going to be a lot of eyebrows raised about who they’re raising money from,” he said. “There always is.”

To read this article in Spanish click here

Times staff writers Phil Willon in Sacramento and Maloy Moore in Los Angeles contributed to this report.

[email protected]

For the latest on national and California politics, follow @LATSeema on Twitter.

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases