Rick and Carla Berg

Dates of Herbalife Distributorship:  1990s – present
Status in Herbalife:  President’s Team
Business Methods:  Training Videos, Calls and Presentations; Recruiting Scripts; Distributor Website Registrations

All statements in the report are made pursuant to Pershing Square’s disclaimer available at dev-facts-about-herbalife.pantheonsite.io.

Background on Herbalife-Related Businesses

• Richard (“Rick”) C. Berg and Carla M. Berg are affiliated with several businesses with ties to Herbalife.
  • e-Team Marketing, Inc., an online recruiting business for Herbalife distributors, is registered in Texas (Filing Number:  159399100, registration attached as Exhibit A). The registration filing uses the address 5713 Woodmont Court, Plano TX 75093-4003, and lists Richard C. Berg as President and Carla Berg as a director.  Rick’s LinkedIn website states that he joined e-Team Marketing as Chief Technology Officer in January 2000, and worked with the company until March 2010.  See Exhibit B at 2.
    • While the company was supposedly dissolved in February 2013, e-Team Marketing submitted an Information Report, attached as Exhibit C, to the Texas Comptroller as recently as June 2013.  Moreover, while the company’s main website, www.eteam2000.com, is no longer active, variations like www.eteam-ioffice.com are still active online.
• Berg Marketing, Inc., (BMI) is registered in Texas (Filing Number:  800470310, registration attached as Exhibit D).  The registration filing uses the address 5713 Woodmont Court, Plano TX 75093-4003—the same address listed on the e-Team Marketing registration filing—and lists Richard C. Berg as President.  The articles of incorporation, attached as Exhibit E, list Rick Berg and Carla Berg as the sole members of the company’s board of directors.
  • BMI filed an Information Report, attached as Exhibit F, with the Texas Secretary of State as recently as May 2013.
  • In recent months, the e-Team website was taken down and the BMI website was substantially revised.  Prior to these changes, however, the e-Team and BMI websites were identical, as shown in the screenshots below.

e-Team Website (May 2013)

http://web.archive.org/web/20130529204826/http://eteam2000.com/.

BMI Website (September 2010)

http://www.screenshots.com/berg-marketing.com/2010-09-30.

 

• In addition, the old BMI website provided an e-Team email address in the “Contact Us” section.

• Today, BMI appears to have transitioned into Rick Berg Digital Media Marketing (http://rickberg.com/).  Indeed, the URL www.berg-marketing.com now redirects the user to http://rickberg.com.  In addition, the name “Rick Berg Digital Marketing” is copyrighted by BMI.

• The website for Rick Berg Digital Media Marketing advertises lead generation services and features a series of articles by Rick Berg, including an article on how to make money working from home.

• Waldron Marketing, Inc., is registered in Texas (Filing Number:  145708200, registration attached as Exhibit G).  The registration filing uses the address 1116 W Parker Road, Suite 380B, Plano, TX 75075, and the articles of incorporation, attached as Exhibit H, list Carla Berg (then Waldron) and Chairman’s Club member Dan Waldron (then Carla’s husband) as the sole members of the company’s board of directors.  According to Waldron’s LinkedIn website, attached as Exhibit I, Waldron Marketing is directly related to his Herbalife distributorship.
• See the Waldron Report for additional information about Dan Waldron and his business practices.
• Carla Berg appears in videos sponsored by Herbalife in which she promotes the Herbalife business opportunity and purports to train Herbalife distributors on how to be successful.
  • In one such video from approximately 2004, bearing the logo of the Herbalife Broadcast Network (HBN) and available at https://vimeo.com/user24651359/review/85467861/5ea04ac515, Carla delivers a motivational speech to low-level Herbalife distributors.  Carla begins by recounting the “dark depression” she experienced during her college days, when she was “addicted to prescription diet pills.”  She continues, telling the audience that her discovery of Herbalife was akin to a religious miracle.  “I prayed one night when I was going to bed, and I just said, there has to be an answer, I can’t live my life like this. . . .  [T]he next day . . . [on] the car that was parked right next to mine was a flier, and it caught my attention . . . it said, ‘lose weight naturally, money back guaranteed, doctor recommended,’ and I was just like, maybe this will just help me get over this medication, and maybe this will just kind of get me back on track.  I needed some help. . . .  So I grabbed that flier . . . and I ran home . . . and I called the number, and Dan Waldron answered the phone, and I found out about Herbalife.”  Carla says, “because of Herbalife, because of [Herbalife founder] Mark [Hughes], my whole life changed.”
  • Later in the video, Carla describes the supposed ease with which she began earning a substantial income and progressing through the Herbalife marketing plan via retail sales.  Carla explains that “Dan [Waldron] told me I could sign up in the business and make this money myself. . . .  I got a distributor kit, moved to supervisor. . . .  I made $500 in two weeks, and I got to supervisor, moved my supervisor order within four weeks, made over $1,500 doing this all around my school schedule.  And then by my sixth month in the business, I was making right around $3,000 a month, strictly retailing.”
  • Carla then notes that this income materialized even before she understood that the main thrust of the Herbalife business opportunity was recruiting.  “I knew nothing about the marketing plan, nothing about recruiting.  And I just was so excited about Herbalife.”

  

Primary Source Data on Business Practices

Videos^[1]

• Another video from 2006, available at https://vimeo.com/user24651359/review/85609174/36072d5378, features Carla Berg speaking at an Herbalife Supervisor Workshop.  At the workshop, Carla makes a number of specious claims about the effectiveness of Herbalife products.  Carla begins, “I eventually started gaining weight . . . and I was 22, and I was on medication for asthma, and allergies, [and] an ulcer.  I was on massive amounts of medication and very depressed.”  Yet as soon as she began using Herbalife products, Carla claims that “immediately, I lost, I started losing weight.  Within two days, I mean, I felt like a different human.  I got off all that medication.  I got off my allergy medication, my asthma medication, my allergy shots.  I got off of my ulcer medication.  I had no more problems with my stomach . . . .”  (0:34 – 1:37.)
• Carla continues, noting that after Herbalife products cured her of her ailments, “then I found out about the business.”  She recalls that Dan Waldron told her, “‘you have to promise and commit to doing what I say.’ . . .  And then he said, ‘this is how you’re gonna make all your money’ [motioning with her hands as if she is placing an object down on a table].  And you know what it was? . . .  The [Herbalife] button.”  (1:44 – 2:14.)
• Later in the video, Carla tells her audience of distributors that it is critical for them to consume the products.  “As Herbalife distributors, there’s this thing that we do, it’s called ‘take the products.’ . . .  And we take almost all of them, and we love them.  And you find a way to get them down.  And if you don’t like to swallow tablets, chew ‘em. . . .  If you don’t like tea, go ahead and put it in your shake, and drink it anyway, right? . . .  That is your business.  That is your business!  Don’t drink Lipton tea, don’t talk about how you don’t drink tea, you can’t take tablets, I don’t care!  You wanna make money?  You wanna make money?  You find a way to get that down your throat and in your body.  I don’t care how.  Right?  Right, President’s Team?”  (46:01 – 47:14.)  As she is walking off stage at the conclusion of the presentation, Carla yells, “Get on all the products!”  (1:05:42.)  Consumption by distributors generates revenue for Herbalife and commissions for upline Supervisors, and creates an illusion of retail demand for Herbalife products.
• Carla also leads distributors to believe that they can earn substantial income working from home.  She claims that Herbalife distributors generated “over $2.5 billion in sales last year working from our homes.”  She describes the “lifestyle” that Herbalife has afforded her family, telling attendees, “We took our kids to Sea World, and we’re in San Antonio and having such a good time, and doing calls in between.”  She continues, “It offers us that opportunity to have that kind of lifestyle, and you teach your kids what it’s all about.  And it’s been awesome.”  (13:28 – 14:20.)

Lead Generation

• Rick and Carla Berg’s e-Team Marketing business markets to its members access to the iOffice platform, an online portal that provides access to leads, recruiting scripts, website hosting and other services designed to help Herbalife distributors recruit new distributors into the scheme.  Distributors are charged separately for e-Team membership and access to the iOffice platform.

• The iOffice website, www.eteam-ioffice.com, is password-protected, but the User Agreement, which is available on the login page, indicates that iOffice remains engaged in lead generation.  For example, the User Agreement says, “If you choose to work outside the Organization, your sites, if applicable, will be disabled and you will lose access to all e-Team Marketing Inc. training materials, lead sources (and leads generated for use within the e-Team Marketing Inc. system), tools, events, as well as promotions.”  See Exhibit J at ¶ 13.
• During her marriage to Dan Waldron, Carla Berg was involved in “Work From Home!”, a lead generation business, whose website (no longer active) may be viewed at http://web.archive.org/web/20000510160902/http://www.work-from-home.net/.  Please refer to the Waldron Report, p. 8, for a description of the business’s lead generation activities.

Recruiting Websites

• The e-Team website was replete with highly misleading testimonials and income claims, leading prospective recruits to believe they could make vast sums of money working part-time from home.

http://web.archive.org/web/20060104105706/http://www.eteam2000.com/chromium/index.htm?ID=320&CFID=127802&CFTOKEN=fa96a595a87fa4b6-FA73A160-1143-3591-71EBA3CDD12C0A26.

http://web.archive.org/web/20021203121654/http:/www.eteam2000.com/premium/index3.htm?ID=105.

• In addition, the Bergs have registered a vast array of domain names promoting work-from-home opportunities, such as clickstowealth.com (infra at 16), yourhome-ebusiness.com, and heatlh-wellnessproductsrecruiting.com (misspelled purposefully).  See Exhibit K for a list of what we believe to be Berg-registered domains.

Recruiting Scripts

• e-Team provides its members with comprehensive scripts to use when recruiting their own Herbalife distributor downline.  See http://web.archive.org/web/20061211040137/http://www.eteam2000.com/bizcenter2/AC/AC/ScriptsforWorkingYourRecruitingLeads.pdf; see also Exhibit L.
  • e-Team recruiting scripts direct members to tell prospective recruits that e-Team is “exploding” because of the success of its lead generation system.  See Exhibit L at 17.^[2]
  • The scripts also instruct members to use fake testimonials that include inflated and unrealistic income claims in order to encourage prospective recruits to sign up as Herbalife distributors.  Id.

• e-Team recruiting scripts also encourage members not to answer any questions from recruits about the Herbalife work from home opportunity, and show members how to dodge any such questions.  See id. at 9.

• e-Team recruiting scripts also encourage members to pressure recruits to spend thousands of dollars on Herbalife products in order to qualify as a Supervisor immediately upon becoming an Herbalife distributor.  See id. at 36.

• e-Team recruiting scripts encourage recruits to go into debt in order to “qualify” for higher levels of the Herbalife marketing plan.  See id. at 31.

• In addition, e-Team recruiting scripts suggest “financing options” to recruits who are wondering how they will pay for the requisite Herbalife inventory.  See id. at 36, 38.

Victims

• According to members of the Bergs’ downlines, the business tools provided by e-Team, including recruiting scripts and supplemental “coaching” from the Bergs, allow these members to persuade low-income, low-level distributors to order thousands of dollars of Herbalife products in order to qualify as a Supervisor.  See http://carlamberg.com/success-stories-take-a-look/business-testimonials/comment-page-1/#comments.
• One member celebrated that one of her recruits had “filed the paperwork to withdraw from her 401k to go supervisor!!!!”

• Another member cheered the fact that one of her recruits—an unemployed single mother—was ready to order thousands of dollars of Herbalife products in order to pursue the Herbalife business opportunity.

• Another member reported that a new recruiting script allowed her to convince a distributor to “figure out the $ for Supervisor.”

• Another member similarly reported that “using the language and coaching Carla has given us,” she was able to convince a brand new distributor to “go[] to the bank Monday to arrange the funds for Supervisor!”

• The Bergs’ business practices have inflicted serious harm on consumers.  One victim reports that the e-Team lead generation system caused him to lose tens of thousands of dollars and “ruined my life.”

“E Team Marketing Herbalife – Work At Home no information about advertising cost till it is to late,” July 18, 2009, Ripoff Report, Wilkerson from San Antonio, Texas, available at http://www.ripoffreport.com/r/E-Team-Marketing-Herbalife/Carrolton-Texas/E-Team-Marketing-Herbalife-Work-At-Home-no-information-about-advertising-cost-till-it-is-471017.

Links to Other Senior Distributors

• Carla Berg was married to Chairman’s Club member Dan Waldron from 1994 until their divorce in 2000.  According to Carla, the two met through Herbalife, when Carla called Waldron after finding his Herbalife flier on a car.  See, e.g., HBN video, supra at 4.

The couple’s wedding announcement appeared in the Daily Gazette on July 26, 1994. As mentioned above, through Waldron, Carla was connected to the Herbalife-related Waldron Marketing and Work From Home! businesses.  See supra at 3, 6. The Bergs have also worked with President’s Team member Anthony Powell.  In an older version of Powell’s Leadership Development Weekend website, www.ldwevent.com, available at http://web.archive.org/web/20090311025334/http:/www.ldwevent.com/, registrants are asked to select their “organization”, and the two options are “eHome” and “eTeam”—the latter of which may have been related to the Bergs.  See Exhibit M (LDWEvent domain registration).  In addition, Powell was a guest speaker at the same 2006 Herbalife Supervisor Workshop at which Carla Berg spoke (supra at 5).  At that Workshop, another guest speaker, President’s Team member Donte Andry, refers to “Carla and Anthony’s organization,” available at https://vimeo.com/user24651359/review/85609180/b8242acd55 at 6:16.  Moreover, Powell’s Herbalife recruiting company, eHome Business Network (registered in Nevada, Filing Number:  E0453712006-2, registration attached as Exhibit N), produced a DVD of the Supervisor Workshop, with a photograph of Carla Berg on the DVD’s back cover.

• The Bergs appear at Herbalife events with other senior Herbalife distributors.

Carla and Rick Berg (standing third and fourth from right) with President’s Team members Donte Andry (standing second from left), and Caroline and Craig Tsutakawa (standing third from left, sitting second from left), among others.

Links to Herbalife Corporate Leadership

• Rick Berg’s Facebook profile prominently features a photograph of Rick with Herbalife founder Mark Hughes.

https://www.facebook.com/photo.php?fbid=482494905149187&set=a.110657058999642.11721.100001660442081.

• Herbalife awarded the Bergs the Mark Hughes Bonus Award—a large, discretionary bonus that Herbalife awards to top distributors—in 2006, 2008, and 2009, and Herbalife has congratulated the Bergs on receiving those bonuses.

http://herbalifemail.com/Flyers/2009_Honors_Hrbl_Times_en.pdf.

http://herbalifemail.com/flyers/2010_PTSummit_Hrbl_Times_usen.pdf.

• Herbalife also sent a flyer to distributors congratulating the Bergs on becoming members of the Chairman’s Club in 2009.  See Exhibit O.  However, even though Herbalife celebrated the Bergs as Chairman’s Club members, the company never actually honored that qualification (it is unclear why not), and the Bergs appear to remain members of the President’s Team.

https://www.facebook.com/carlamberg, posted by Carla Berg on December 10, 2013.

https://www.facebook.com/photo.php?fbid=482494905149187&set=a.110657058999642.11721.100001660442081/richard.berg.169/about#!/richard.berg.169/about.

Other Businesses

These businesses may present additional avenues for investigation.

• Rick Berg co-owns TriFi Network LLC.  TriFi Network is registered in Texas (Filing Number:  801758421, Certificate of Formation attached as Exhibit P).  The Certificate of Formation uses the address 5713 Woodmont Court, Plano, TX 75093—the same address used by e-Team Marketing and Berg Marketing—and lists Richard Berg and Paul Lonsford as Managing Members.
  • Lonsford is currently and historically involved in lead generation, online marketing, payment processing, and real estate investment.  See Exhibit Q for Lonsford’s LinkedIn page.
  • TriFi powers the website www.clickstowealth.com (see bottom of webpage for “Powered by TriFi Systems, 2013”), a site that claims to provide increased business opportunities and “top tier traffic sources and performance based offers” for “network marketing entrepreneur[s].”  The domain registration for ClicksToWealth shares the same IP address—192.185.36.37—as both www.rickberg.com and www.carlamberg.com.  See Exhibit R (ClicksToWealth domain registration); Exhibit S (other domains registered under the IP address 192.185.36.37).

  

• Though no longer active, Rick Berg and Paul Lonsford co-owned Quantum Payments L.L.C. (Filing Number: 800615436, registration attached as Exhibit T).  The registration filing used the address 1614 Sidney Baker Street, Kerrville, TX 78028-2640, and listed Richard Berg and Paul Lonsford as Managing Members.  The company dissolved in February 2008.  See Exhibit U.