Harry Lee And Candyce Johnson


j1Dates of Herbalife Distributorship: 1996 – present
Status in Herbalife: President’s Team
Business Methods: Nutrition Clubs; Training Videos and Audio Clips; Recruiting Scripts; Online Recruiting Businesses

All statements in the report are made pursuant to Pershing Square’s disclaimer available at www.factsaboutherbalife.com.

Background on Herbalife-Related Businesses

  • Candyce and Harry Lee (or “Lee”) Johnson are affiliated with several businesses with ties to Herbalife.
    •    FTS Marketing, LLC,a business that provides members with Herbalife recruiting materials and leads, is registered in Arizona (Filing Number:  L-1109050-4, registration attached as Johnson Exhibit A).  The registration filing uses the address 1402 W. Rosal Pl., Chandler, AZ 85224.  The filing lists Candyce M. Johnson as a Member and the company’s sole Manager, and Harry L. Johnson as a Member.  The company is also referred to as the “Fast Track Group.”  See, e.g., Johnson Exhibit B (“The Media Ad Wheel is only available to Herbalife Distributors within Candyce and Lee Johnson’s organization.  You need to be a member of the Fast Track Group in order to use this wheel.”), available at http://web.archive.org/web/20070206142254/http://www.wheelslots.com/.
    •  Elkton Nutrition, Inc., the Johnsons’ Herbalife nutrition club business, is registered in Maryland (Filing Number:  D13789136, registration attached as Johnson Exhibit C).  The registration filing uses the address 24 Zachary Joseph Court, Port Deposit, MD 21904 and lists Candyce M. Johnson as the corporation’s agent.  The club’s website, www.elktonnutrition.com/ (domain registration attached as Johnson Exhibit D), redirects visitors to the Johnsons’ Work At Home Tycoon domain(see infra) (http://www.workathometycoon.com/elktonnutrition/).  The website is registered to Lee and Candyce Johnson, and the homepage lists the club’s address as 232 S. Bridge Street, Elkton, MD 21921.
  • The Johnsons principally use two websites:  Earn2Ez and Work At Home Tycoon.  Indeed, the bulk of Fast Track Group recruiting materials are hosted on those sites.  Both sites remain active.
    •  Earn2Ez (www.earn2ez.com) is registered to Harry Lee Johnson (domain registration attached as Johnson Exhibit E), and uses the address 232 S. Bridge St., Elkton, MD 21921—the same address listed on the Elktron Nutrition website.  The domain registration also lists Elkton Nutrition as the registrant organization.

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    •    Johnson (domain registration attached as Johnson Exhibit F), and uses the address 223 Holroyd Place, Woodbury, NJ 08096.  The domain registration also lists FTS Marketing as the registrant organization and earn2ez@msn.com as the “admin email.”

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  • Other Herbalife-related domains registered to the Johnsons include: [1]
    •    AZ Diet (www.azdiet.com), which provides an opportunity to sign up for a “Weight Loss Challenge”—a promotional activity commonly associated with recruiting through Herbalife nutrition clubs.

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Primary Source Data on Business Practices

Videos and Audio Recordings [2]

  • The Johnsons host Herbalife promotional videos on their Herbalife websites.  These videos can be found on Lee Johnson’s Earn2Ez YouTube channel, available at https://www.youtube.com/user/azhomebiz/videos.
    • In one such video,[3] available at https://vimeo.com/user24651359/review/100524405/f5f0ded498, many of Herbalife’s most senior distributors—including Founder’s Circle members Leslie Stanford and Susan Peterson, and Chairman’s Club members Dan Waldron and John Tartol—extol the virtues of the Herbalife business opportunity.  See also Elkton Nutrition website at http://www.workathometycoon.com/elktonnutrition/id10.html (the video is hosted under the “Open a Club” tab).  The video begins with testimonials regarding the financial difficulties faced by each of these distributors before they discovered Herbalife.  Then the video flashes to the “big houses” and “great cars,” as Stanford puts it (4:10), that these distributors have been able to purchase since starting their Herbalife businesses.  This visual is followed immediately by claims of substantial income earned by these distributors upon joining Herbalife, ranging from hundreds of dollars to tens of thousands of dollars per month.  As Peterson explains, “When I got started, I was definitely looking to make money, there’s no question.  I was not looking to change the world, I was looking to change my bank account.”  (4:44.)   Later, the featured distributors describe the purported simplicity and ease of the Herbalife opportunity, with its marketing plan and “very extensive training program.”  A distributor named “Clint” tells viewers that “there are still people that say, you know, that’s just too good to be true—but it’s true, I don’t know what else to tell you.”  (7:18.)  The video then discusses Herbalife’s “corporate dream team” of executives and scientists, as well as its products that are “backed by science.”  (8:55-10:26.)  Finally, the video touts the growing market for “wellness products,” with Waldron stating that “the timing is perfect right now because everyone is wanting products like what we have, and everyone wants an opportunity right now.  Last couple years haven’t been very promising economically up there, and we definitely got the answer.” (11:43.)  As the video’s narrator notes, “With [Herbalife’s] cutting edge marketing program, industry leading compensation structure, and phenomenal training, there’s never been a better opportunity—opportunity to be your own boss, to work from home, to realize your financial dreams.  And it’s simple to get started.”  (11:56.)
  • An abridged version of this video, available at https://vimeo.com/user24651359/review/100524112/e48a6816c9, is hosted on the Johnsons’ New Diet Challenge website at http://www.workathometycoon.com/newdietchallenge/id70.html.

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    • The Johnsons seek to promote their AZ Diet weight loss challenge website by hosting an Herbalife video, available at https://vimeo.com/user24651359/review/100528557/d3a9dd5077, which advertises the supposed nutritional benefits of Herbalife products.  The video features testimonials from successful distributors such as President’s Team members Caroline and Craig Tsutakawa (see 2:18-3:47).

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  • Lee Johnson takes part in phone calls and audio recordings aimed at introducing new distributors to the Herbalife business opportunity.
    • In one audio recording purporting to train new distributors how to open an Herbalife nutrition club, Lee Johnson discusses the economics of starting a club.  See https://soundcloud.com/#hlfaudio/saved-phone-recording.  Johnson explains, “As far as different partners, or you want to call wellness coaches—whatever you want to call it, but basically it’s people that work out of our club, our downline—we charge them $400 each to rent space or be a . . . wellness coach partner in our club.  (2:08-2:30.)  Johnson further explains that each “partner” is responsible for purchasing his/her own Herbalife products.  Describing the process of introducing the Herbalife business opportunity to a new club attendee, Johnson says, “this is the coolest thing.  The people that come in every single day and they kind of hang out in the club, you want to keep your eyes and your ears open ‘cause those are going to be your next distributors.  Those are going to be the ones that go out and then open clubs.  (7:07-7:42.)  Johnson also explains the process by which a new recruit “attaches” to an upline distributor:  if an attendee arrives at the club without an invite from a specific club “partner,” that attendee “attaches” to the partner who arrived at the club first that day, the second unattached attendee attaches to the partner who arrived at the club second that day, and so on.  (10:36-11:11.)  Johnson later explains that the “health survey” a new attendee is given upon arrival is really a “free” membership application.  (12:59-14:08).  Finally, encouraging distributors to open their own clubs, Johnson says, “you just gotta jump in.  Don’t think too much, don’t try to overanalyze it.”  (14:39.)
    • In another audio recording, Lee Johnson welcomes visitors to the Earn2Ez website.  See https://soundcloud.com/hlfaudio/wfhcappg (originally available to members on the Earn2Ez website, which can be viewed at  http://web.archive.org/web/20130226044806/http://earn2ez.com/audio/wfhcappg.mp3).  Johnson begins by explaining his dissatisfaction with his day job before recounting his tremendous financial success upon finding the Herbalife business opportunity.  “The very first month we made $1,481 part-time, which totally blew my mind.  The second month we more than doubled that and made $3,300, again part-time.  By the fifth month we were making enough where my wife was able to quit her job and come home, and she really got to work.  And by the eighth month, because of the income that was rolling in, I was able to quit my job too.  And it was like a dream come true. . . .  And within two years, our income—just the checks from [Herbalife]—were over $10,000 a month.  That was like a dream come true.  It totally changed our lives.  And now it’s been eleven years we’ve been doing this business, and, wow, we’re living a dream.  That’s us right there in our pool in Arizona [likely referencing a photograph on the website].  Two years into our business we were able to buy a custom home . . . with an incredible pool with a waterfall in the back.  And it was a dream come true.”  Johnson goes on to tell the listener that “[n]ow we just actually bought our dream home on the Chesapeake Bay in Maryland.  7.900 square foot home, seven bedrooms, five and a half bath.  It’s just like a dream come true.”  Attempting to induce the listener to join his downline, Johnson notes that “this is the lifestyle that we have, and we can show you how to enjoy a better lifestyle for you and your family.  Now be very careful, you do have a choice.  You can leave this site, or you can find out how ordinary people are taking control of their financial futures and earning an extra 1,000 to 6,000 per month part-time, working from their home.  And you’re probably saying, ‘This sounds too good to be true.’  Well, it is true.  We can show you how thousands of people are doing it and loving their lives. . . .  Our proven system works.”

Lead Generation Materials

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Recruiting Materials

  • The Johnsons’ Work At Home Tycoon website (www.workathometycoon.com) provides members with an array of recruiting tools, including scripts and training.
    • In one script, the Johnsons encourage their downline distributors to induce potential recruits to purchase a $199 “business kit,” which includes “training with our state of the art online training center, through telephone training, and conference call training.  As well as a set of manuals and videos so you can start earning money right away.  You also get approximately $100.00 worth of product so you can use the product and develop your story just like we did.”  Johnson Exhibit L at 1, available at http://www.workathometycoon.com/sitebuildercontent/sitebuilderfiles/199signupscript.doc.
  • In an alternative sign-up script for members of the Johnsons’ “Nutrition Club Network” (see website infra ), distributors are told to emphasize the income opportunities available to a new Herbalife recruit.  The script calls for distributors to first recount either their income story (or an income story about a member of their upline), then to note that “Candyce and Lee Johnson . . . were able to develop a $30,000 a month income in less than 12 months,” and later tell the recruit “about Residual Income.”  Johnson Exhibit M, available at http://www.workathometycoon.com/sitebuildercontent/sitebuilderfiles/new199signupscript.doc.
    • Another script “for Working Your Potential Leads” advises distributors not to answer specific questions about the Herbalife business opportunity on this first call, but rather to point the new recruit toward an “online presentation” and tell the recruit that only after they have gone through the presentation will they “have a 1 on 1 consultation.”  Johnson Exhibit N, available at http://www.workathometycoon.com/sitebuildercontent/sitebuilderfiles/PotLeadSrpt.doc.
    • The Johnsons also provide their distributors with three “set up” scripts, whereby the distributors can “mentor” their new recruits.
  • In the first such script, distributors are told to ask their recruits whether they have (a) set up a TouchFON account (further details in other reports TouchFON), (b) purchased Herbalife-related domain names, and (c) set up a merchant account “so they can start accepting payment from customers and new distributors,” among other questions.  Johnson Exhibit O, available at http://www.workathometycoon.com/sitebuildercontent/sitebuilderfiles/mentortc1.doc.
  • In the second script, distributors provide their new recruits with details about the different levels of the Herbalife marketing plan, from “Senior Consultant” to Supervisor.  After providing the recruit with information about the requisite product purchases and “forms of income” associated with each level, distributors are told to “3-way over to” (i.e., conference call) Herbalife with the new recruit to place their product order.  Johnson Exhibit P, available at http://www.workathometycoon.com/sitebuildercontent/sitebuilderfiles/mentortc2.doc.  Of course, each order placed by the new recruit increases the income earned by the members of that recruit’s upline.
  • Finally, in the third script, the distributor is told to confirm that the recruit has “[s]et up Touchfon Retail Voicemail” and has ordered business cards.  Johnson Exhibit Q, available at http://www.workathometycoon.com/sitebuildercontent/sitebuilderfiles/mentortc3.doc.  In addition, the distributor is told to help the recruit “package [product and income] stories[.]  No matter what, work with them to make their story as powerful as possible.”  Id.
    • The Johnsons also provide their downline distributors with email scripts to use on new recruits.
  • In one set of email scripts, distributors are told to send a series of emails, signed by “Candyce and Lee Johsnon,” to “everyone that orders a Decision Package.”  The emails urge new recruits to contact the Johnsons for business training.  Johnson Exhibit R, available at http://www.workathometycoon.com/sitebuildercontent/sitebuilderfiles/dpemails.doc.
  • In another set of emails, the Johnsons provide their distributors with “some examples of some emails that [they] can send to [their] potential recruiting leads.”  Each email mentions the “wonderful” or “strong” income that the given distributor earns while working at home.  Johnson Exhibit S, available at http://www.workathometycoon.com/sitebuildercontent/sitebuilderfiles/recruitemail.doc.
    • To assist their downline in building a “warm market”—i.e., a list of potential recruits that the distributor already knows—the Johnsons provide their distributors with a document they call the “Memory Jogger.”  First, the Johnsons remind their distributors that they “don’t have to be a movie star or author to get paid Residual Income.”  Johnson Exhibit T at 2, available at http://www.workathometycoon.com/sitebuildercontent/sitebuilderfiles/memoryjogger.doc.  Then the Johnsons outline a number of different characteristics and categories of people to remind their distributors of all the people they already know and can approach regarding the Herbalife business opportunity.  These categories range from relatives to mail carriers and physicians to store salesmen to neighbors.  Id. at 4-5.  The Johnsons also ask if the distributors know a person who is “dissatisfied; . . . is unable to advance in her job; . . . is going to college, business school [,] trade school etc.; . . . is concerned about his weight; . . . wants more time with the family.”  Id. at 3.
    • The Johnsons further offer their downline distributors tips on how to advertise the opportunity to join Herbalife in public and in traditional media.
  • The Johnsons’ list of recruiting methods instructs distributors to adopt some of the following approaches:  (a) “talk[] to people you know;” (b) “use, wear, talk”—Herbalife founder Mark Hughes’ celebrated directive to use the products, wear an Herbalife button, and talk to people about the Herbalife business opportunity; (c) host house parties;        (d) purchase internet leads from the Johnsons’ “Training Center;” and (e) purchase digital and print advertisements.  See Johnson Ex. J.
  • The “Recruiting Plan Tracking Sheet” provides distributors with a chart they can fill in each day to record the progress of their recruitment efforts.  Johnson Exhibit W, available at http://www.workathometycoon.com/sitebuildercontent/sitebuilderfiles/recruitingtrackingform.doc.
    • The Johnsons also offer their distributors an Herbalife “Product / Ailment Cross Reference Guide,” which lists the afflictions that Herbalife products purportedly treat.  While the guide features a disclaimer saying, “Herbalife products are not offered nor intended to cure any disease or ailment,” it proceeds to list five pages-worth of “ailments” for which Herbalife products have been allegedly “documented” to produce “amazing results.”  Johnson Exhibit X, available at http://www.workathometycoon.com/sitebuildercontent/sitebuilderfiles/prod_refer.pdf.  This list includes cancer, diabetes, epilepsy, heart disease, lupus, multiple sclerosis, Parkinson’s disease, and “smoking problems,” among many other diseases.  Id.
  • Lee Johnson published a blog, which was also called “Work At Home Tycoon,” from 2008 until 2012.  See http://www.workathometycoon.blogspot.com/.  The blog mainly discussed Johnson’s “Keys to Success.”  The final entry, dated January 6, 2012 and entitled “Work at Home or a Local Nutrition Club,” read:  “We are looking for people in MD, DE, PA, and NJ.  We have immediate openings for people who want to Work at home or in 1 of our many nutrition clubs.  Visit our website for all of the details.  http://www.earn2ez.com/.”

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  • The Earn2Ez website featured a “work at home” booklet that the Johnsons’ downline distributors could use in attempting to recruit new distributors.  While the original link is no longer active, the booklet is attached as Johnson Exhibit Y and can be viewed at http://web.archive.org/web/20070106212757/http://www.earn2ez.com/ebook.pdf.  The booklet opens with photos of a mansion, boat, sports car, pool, and a family enjoying the beach, and asks the reader, “Do you want to control your own hours?  Dou [sic] you want to spend more time with your family or friends?  Do you want to design your financial future?  We did and YOU COULD TOO!  SAY YES TO SUCCESS AND SUCCESS WILL SAY YES TO YOU!  CHOOSE SUCCESS.”  Id. at 2.  The booklet then features the Herbalife stories of President’s Team members Ron Rosenau and Debi and Michael Katz, among others.  Rosenau notes that “[l]ast [y]ear was my six-year anniversary in the business with an income over $650,000.  What a life I have created for myself.”  Id. at 6.  Similarly, the booklet tells readers that after Michael Katz was “$45,000 in debt” a few years earlier, the Katzes are now “debt free, purchased 4 acres and built an 8,500 square foot home, paid cash for their wedding and are working from home around their little girl.”  Id. at 7-8.  The booklet also notes that Chairman’s Club member Doran Andry “is now making over $500,00 a month.  He himself owns 2 homes, one in Japan and one in America.  He was able to buy his parents a million-dollar dream home.”  And Chairman’s Club member Tish Rochin “is making over a million dollars a year.”  The Johnsons further purport to quote the United States Department of Commerce as saying, “In mail-order work, anyone with imagination, determination, and willingness to study and experiment may have very little difficulty getting started.  A number of the most successful one man operations obtain an income as high as $40,000 to $100,000 a year.”  The Johnsons attribute no source for this quote, and an online search for any part of this quote only points to other internet work-from-home business advertisements.  The booklet concludes by telling prospective recruits to “[c]ontact the person that sent you this Booklet and request your Free Work at Home Decision Package Today‼‼!”

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  • The Johnsons operate Delaware STS (www.delawarests.com) (see supra), which hosts Herbalife training events for distributors.  According to the Delaware STS Facebook website—https://www.facebook.com/DelawareSTS#!/DelawareSTS/info—these training events take place monthly.  The site’s homepage currently advertises an event featuring Carol and Ron Rosenau on May 3, 2014.

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Nutrition Clubs

  • As mentioned above, the Johnsons operate Elkton Nutrition (www.elktonnutrition.com/; https://www.facebook.com/Elktonnutrition), an Herbalife nutrition club in Elkton, MD.
    • In the audio clip detailed supra, Lee Johnson makes clear that his nutrition club’s “wellness coaches” are merely downline distributors who pay to work out of the Johnsons’ nutrition club.
    • Elkton Nutrition hosts a weight loss challenge, called “Cecil’s Biggest Loser,” in order to induce potential recruits to join the club.  See http://www.workathometycoon.com/elktonnutrition/id7.html.
    • On the Elkton Nutrition website, the Johnsons list five “Nutrition Club Benefits:”         (1) “Low start-up cost with a proven business model;” (2) “Fast return on investment – high profit margin;” (3) “Booming Health and Nutrition Industry;” (4) “Industry leading solutions for Health & Vitality;” and (5) “Targeted Nutritional Products.”  http://www.workathometycoon.com/elktonnutrition/id10.html.

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https://www.facebook.com/HarryLeeJohnson#!/photo.php?fbid=10152236022643069&set=a.10150197177373069.331248.797678068.

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https://www.facebook.com/HarryLeeJohnson/photos#!/HarryLeeJohnson/media_set?set=a.10151325716478069.501166.797678068.

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https://www.facebook.com/HarryLeeJohnson/photos#!/HarryLeeJohnson/media_set?set=a.10151601894028069.1073741827.797678068.

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https://www.facebook.com/HarryLeeJohnson#!/HarryLeeJohnson/media_set?set=a.10151467467948069.1073741825.797678068.

Links to Other Senior Distributors

  • The Johnsons imply that President’s Team member Ron Rosenau is a member of their upline.  For example, in a sign-up script provided to their downline distributors, the Johnsons write:  “if you don’t have [an income testimony] yet give one in your up line…  Example—Ron Rosenau was a stockbroker making a 6-figure income but had no life.  He got started because he wanted more freedom.  Within 2 years he got his income up to 30,000 a month and he averages over $500,000 a year in income.”  Johnson Ex. M at 1.  In addition, Lee Johnson refers to Rosenau as his “business Mentor” on his Facebook website.

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https://www.facebook.com/HarryLeeJohnson#!/HarryLeeJohnson/posts/10152246140033069.

    • Like the Johnsons, Rosenau is known for making exaggerated recruiting pitches to potential Herbalife distributors.  For instance, in an audio recording for new recruits, Rosenau tells his listeners, “I was able to make $2,000 my first month [in Herbalife], by my fifth month over $5,000, and by my tenth month I was making over $9,500 a month.  Within two years, I had reached over $18,000 a month.  And at this point. I have earned over $4 million in checks from [Herbalife].  After two years, my wife and I had an income to support our dream lifestyle . . . .  What has made the whole journey possible is a residual income and the versatility to operate the business anywhere.  Now, let me ask you—how would you like to make money all day long?”  https://soundcloud.com/#hlfaudio/rr595 at 2:17-3:30.
  • President’s Team members Michael and Debi Katz are featured in a number of the Johnsons’ recruiting materials.  Before providing recruits with the Katzes income story, the Johnsons refer to their “good friends Michael and Debi” in their “work at home” booklet.  See Johnson Ex. Y at 7.   In addition, the Katzes are profiled on the Johnsons’ Earn2Ez website (http://www.earn2ez.com/future.asp?ID=5443).

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Links to Herbalife Corporate Leadership

  • The Johnsons have been featured multiple times in Herbalife Today, a magazine published by Herbalife.
    • In 1999, when the Johnsons qualified for the Millionaire Team, Herbalife published the following profile of the Johnsons (Johnson Exhibit Z at 22):

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https://assets.factsaboutherbalife.com/content/uploads/2016/01/22154811/62.pdf at 22.

 

[1] See Johnson Exhibit G for a compilation of domain registrations.

[2] To the extent that any of the videos in this report requires a password, the password is “johnson”.

[3] This video was copyrighted by Herbalife in 2005, but remains on the Johnsons’ active Herbalife websites today.

[4] These issues of Herbalife Today refer to “Harry Johnson.”