Dan Morain

By Dan Morain
dmorain@sacbee.com
Published: Sunday, Aug. 17, 2014 – 12:00 am

In a Capitol where contentious lobbying battles are de rigueur, the $14 billion hedge fund that goes by the name Pershing Square Capital Management has picked a most unusual fight.

Pershing Square hired the firm headed by former Speaker Fabian Núñez and filed a lobbying statement with the California Secretary of State in which it disclosed one goal: “ Educating state legislature on issues relating to enforcement of consumer protection laws and securities regulations relating to pyramid schemes.”

For that, Pershing Square reported paying $156,847 in the first six months of the year to Mercury Public Affairs, including $126,847 in the second quarter, though that’s only part of its cost of doing business here. Núñez is a rainmaker, not a lobbyist, and need not disclose his billings.

The fight is over, what else, money.

William A. Ackman is the New York billionaire who controls Pershing Square and has used his position to buy into J.C. Penney, a private prison operator, the fine firm that distills Jim Beam and Makers Mark, and many others.

More recently, the master of the universe is helping a Canadian firm, Valeant, seize control of the Orange County pharmaceutical firm, Allergan, which is known for producing Botox and breast implants.

Allergan answered Ackman’s unwelcome advances earlier this month by suing and, sadly, is laying off 1,500 people and closing facilities in Carlsbad and Santa Barbara in a defensive move to cut expenses. Thanks, Bill.

The focus of Ackman’s effort in Sacramento is Herbalife International, which has a Cayman Island address but keeps corporate offices in Los Angeles.

Herbalife is a purveyor of vitamins and potions that supposedly help people lose weight, and probably run faster and jump higher. The company is a multilevel marketer, meaning people buy its products and take cuts when friends and neighbors buy them, and who get their friends and neighbors to buy, and so on.

Ackman calls Herbalife a pyramid scheme that preys on uneducated people, especially Latinos.

Like so many hedge fund billionaires, Ackman cares deeply about working stiffs from south of the border. In 2009 and 2010, Pershing Square was the largest stock owner of Corrections Corporation of America, a prison company that incarcerates undocumented immigrants on behalf of the federal government.

Not coincidentally, Ackman started deriding Herbalife in 2012, when he bet $1 billion that Herbalife’s stock would tank. Pershing Square investors will score big if the stock slides. It hasn’t collapsed yet, but not for lack of Ackman’s effort.

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