Herbalife Founder's Circle member John Peterson died by suicide on November 11, 2013, at his Steamboat Springs, Colorado home. Routt County Undersheriff Ray Birch confirmed Peterson, 70, was found in a 2008 Ford pickup with a self-inflicted gunshot wound. His death followed significant policy changes at Herbalife earlier that year.
Herbalife CEO Michael Johnson initially announced Peterson's passing as a "tragic accident" in an email to distributors. Johnson described Peterson as an "inspirational leader" and one of the company's "original Founder's Circle members." Peterson had been a prominent figure in the multi-level marketing company for decades.
The suicide raises questions about the impact of Herbalife's recent ban on lead sales, a practice central to many top distributors' income. Herbalife announced in April 2013 it would no longer tolerate affiliates selling leads to other affiliates. This directly affected distributors who had built their businesses largely on recruitment rather than retail product sales.
Anthony Powell, another top Herbalife distributor, severed ties with the company before the June 30 deadline for the lead-selling ban. Powell then urged his extensive downline to join him at Vemma, a competing MLM. Herbalife spokeswoman Barb Henderson stated Powell's "stated focus is on creating 'explosive growth' fueled by lead purchases," which she noted was "not consistent with Herbalife's focus on building business through the daily consumption of our nutrition products."
Powell's departure cut Herbalife's US sales growth by nearly half. Herbalife downplayed the impact, stating the loss "won't have a material impact on Herbalife's 2013 guidance." This claim followed public allegations that Herbalife operated as a pyramid scheme, prompting the company to scrutinize recruitment-heavy business models.
Shawn Dahl, an elite Herbalife Chairman's Club member, also left the company after the lead-selling ban. Dahl and his sales recruits moved to Nutrie, another diet shake company. Dahl's status had been uncertain since Herbalife banned distributors from buying marketing materials from his Online Business Systems. Tanya McDowall, another top distributor, told a group of Herbalife distributors that the company had "handcuffed" them but promised they could continue their "Herbalife business" at Nutrie. This "Herbalife business" referred to recruitment of affiliates through lead sales. Herbalife again stated Dahl's business loss was "not material."
Like Powell and Dahl, John Peterson built his Herbalife fortune primarily through recruitment, not retail sales. A former Houston real estate agent, Peterson joined Herbalife in the early 1980s. He rose to the company's highest ranks, becoming one of a select few among Herbalife's 3.2 million distributors to reach the "Founder's Circle."