Capitol Alert

The truth behind Villaraigosa’s Herbalife gig and Newsom’s precious metals

Watch Villaraigosa, Newsom, spar over how they made money

At a debate sponsored by Univision on Jan. 25, 2018, California gubernatorial candidates Antonio Villaraigosa and Gavin Newsom traded shots over the sources of their income.
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At a debate sponsored by Univision on Jan. 25, 2018, California gubernatorial candidates Antonio Villaraigosa and Gavin Newsom traded shots over the sources of their income.

Thursday night’s gubernatorial forum in Los Angeles between six of the major candidates surfaced some of the sharpest critiques that the Gavin Newsom and Antonio Villaraigosa campaigns have leveled against each other.

Newsom and Villaraigosa, Democratic rivals and former mayors of San Francisco and Los Angeles, respectfully, clashed over how each of them obtained their wealth. The forum by the Latino Community Foundation in front of a live audience at the University of California, Los Angeles, was aired across much of the state by Univision.

The question: Herbalife settled for $200 million with the Federal Trade Commission for unfair and deceptive practices in 2016. Debate moderator Ilia Calderón asked Villaraigosa, who worked as a consultant for the health supplement company, whether he owed an apology to the firm’s customers, many of whom are Latino. Calderón also asked Villaraigosa if he would work for Herbalife again.

The answer: Villaraigosa said he would work for Herbalife again and that he doesn’t owe its customers an apology. He talked about his mother selling Tupperware and Avon to make ends meet. Herbalife, he contended, sells health and nutritional supplements, primarily to communities with disproportionate levels of obesity. Villaraigosa also noted that when he stepped out from the mayor’s office in 2013, a New York Times headline declared: “8 Years On, Los Angeles Mayor Is Leaving Without Car, Job or Regrets.” “Then I went to work for a California-based company that was selling vitamins,” he said at the Thursday debate.

The punch: Newsom criticized Villaraigosa: “You went to work for a company that was fined $200 million for predatory practices against communities of color, and you decided to do that because you wanted to monetize your public service ... And you just admitted it, because you didn’t have money, so you took the cheapest buck. It’s a question of values.” Newsom said he thinks Villaraigosa does owe the people of California an apology for “shilling” for Herbalife.

The counter punch: Villaraigosa countered that Newsom became a multi-millionaire while serving as a supervisor, mayor and the state’s lieutenant governor via his wine business. “He got rich in office!” Villaraigosa shot back. He also noted that Newsom sold off hundreds of thousands of dollars in precious metal investments. “You were selling silver bars! You know, most people don’t know anything about silver bars, except for people that might have some connection with the silver bar industry.”

The facts: It’s true Villaraigosa worked as a business consultant for Herbalife, from September 2013 to August 2016. A schedule of 2013 receipts Villaraigosa released to reporters showed he took in $162,500 from Herbalife International. However, he did not provide any further breakdown for what the company paid him the following years. A clip of him praising the company appears in the 2016 documentary “Betting on Zero.”

Newsom opened his first shop, PlumpJack Wines, in 1992 with the financial backing of family friend and oil fortune heir Gordon Getty. He was appointed to the San Francisco Parking and Traffic Commission in 1996; and the Board of Supervisors the following year. He was elected to the post in 1998, 2000 and 2002; and then elected mayor in 2003 and reelected in 2007. He became lieutenant governor in 2011. Over that time, PlumpJack grew into a line of restaurants, hotels and wineries managed by Newsom’s sister, Hilary.

Newsom’s tax returns show he and his wife, Jennifer Siebel Newsom, profited from selling hundreds of thousands more in investments in silver bars. In 2011, they earned nearly $500,000 trading in the precious metal.

The analysis: Villaraigosa’s point, which is that he needed the money, risks undercutting his forceful defense of Herbalife as a valued nutritional supplement. He failed to mention Newsom’s business ties to Getty oil fortunes though a family friendship. That left his impression – that Newsom’s entrepreneurial success is owed not to ingenuity and hard work, but to familial connections – lacking context.

Christopher Cadelago: 916-326-5538, @ccadelago

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