Herbalife is one of those brands that you see everywhere, but I bet most people have no idea what the company actually does. I had to Google it before writing this article. Put simply, Herbalife sells a variety of “health” products through a multi-level marketing sales model. Their main product is protein powder. They also sell tea, aloe, skincare products, and hydration powders. If you think that’s probably not a very big business, you are incorrect. Herbalife’s 2023 revenue was over $5 billion. Herbalife is a publicly traded company with a $1 billion market cap. In the middle of the pandemic, with much of the world stuck at home buying products, the company’s market cap briefly topped $5 billion.
As you may know, some have called the company a pyramid scheme. I’m not calling it a pyramid scheme. I’m saying that some people have made that accusation. Not me, though! And to be extra clear, Herbalife absolutely denies that it is a pyramid scheme. One of the most famous people who has made that accusation is billionaire hedge fund manager Bill Ackman. In late 2012, Ackman made a $1 billion short sale bet against Herbalife. Soon after, two rival billionaires made the opposite bet. The stock skyrocketed, and by the time Ackman tapped out, he had lost $500 million.
Herbalife is one of those brands that feels like it just has always existed. It was probably started a century ago by some long-forgotten businessman named something like John Herba. That’s not the case! Herbalife was founded in 1980 by a guy named Mark Hughes. Mark founded Herbalife at the age of 24 out of the back of his car. Over the next two decades he built the company into a global empire. Along the way, he earned a humongous personal fortune, acquired one of the most mind-boggling real estate portfolios a single human has ever controlled, and married four different beauty queens. His death was extraordinary as well. Mark died suddenly in 2000, leaving behind a giant financial mess that took over a decade to resolve. But we’re getting ahead of ourselves. Let’s start from the beginning…
Early Life
Mark Reynolds Hughes was born on January 1st, 1956, in La Mirada, California. Not much is known about Mark’s early life other than his family grew up in humble circumstances and that his mother, Jo Ann Hughes, died when he was 18. Her death was the result of an accidental overdose of prescription diet pills and alcohol, which (spoiler alert) would be eerily similar to how Mark himself would die many years later. His mother’s death had a huge impact on Mark’s future life. His mother had always been concerned about her weight, which is how she was tricked into taking the dangerous diet pills that led to her death.
Herbalife
Using his mother’s legacy as a genesis, Mark founded Herbalife in 1980 when he was just 24 years old. The company’s stated goal was to market healthy weight loss products and generally change the nutritional habits of the world.
Mark sold his very first product, a protein shake, from the trunk of his car. He soon developed a direct marketing plan that incentivized local salespeople to sell the products to their friends, family, and neighbors. In addition to selling the product, salespeople were encouraged to sign up their friends, family, and neighbors to become sales-people themselves. This sales model is known professionally as “multi-level-marketing,” but it is also sometimes called a “pyramid scheme.”
Herbalife’s multi-level marketing business model was outrageously successful. Pretty soon, thousands of salespeople were selling Herbalife products door-to-door around the country. The company’s slogan, “Lose Weight Now, Ask Me How!” became a pop-culture catchphrase that was plastered onto buttons, posters, billboards, flyers, etc… Herbalife conducted recruitment seminars that featured feel-good weight-loss testimonials and a keynote address from Mr. Hughes.
By 1982, just two years after launching the business from his trunk, Herbalife was generating over $2 million in annual revenues. And revenues pretty much exploded from that point on. By the early 90s, Herbalife’s annual revenues topped $1 billion. When the company went public on the NASDAQ in 1996, Mark’s 26% stake was worth $250 million.
(Photo by Axel Koester/Sygma/Sygma via Getty Images)
Real Estate Portfolio
Mark’s Herbalife stock wasn’t his only source of wealth. Over the years, Mark developed a passion for investing in real estate. By 2000, his real estate portfolio alone was worth north of $100 million. He owned a $25 million beachfront mansion in Malibu. He also owned a $30 million 22,000-square-foot castle in Beverly Hills called Grayhall that sat on 2.5 acres of the most expensive real estate in the world. The guest house alone at Grayhall is 4,000 square feet. Oh, and the guest house has its own guest house. You know, in case your guest has a guest.
But that’s not all. Mark’s real estate portfolio had two crown jewels:
#1) The Mountain of Beverly Hills
#2) A sprawling 10-acre oceanfront estate in Malibu.
The Mountain of Beverly Hills
In 1997, Mark acquired a 157-acre plot of land in Beverly Hills from Merv Griffin for $8.5 million. Let me repeat that. He bought 157 acres of property in BEVERLY HILLS. For some perspective, Disneyland is 85 acres. If you added the neighboring Disney-owned roller coaster park California Adventure, which is 72 acres, you’d be at exactly 157 acres. So in other words, Mark acquired a plot of land in BEVERLY HILLS the size of Disneyland + California Adventure.
It was the most expensive real estate transaction in Southern California history up to that point. Griffin had planned to develop what would have been the largest house in Los Angeles on the property, a 58,000-square-foot palace. Why 58,000 square feet? Because Merv found out that the largest estate in Los Angeles at the time was Aaron Spelling’s 56,000-square-foot house. Griffin dubbed his property “The Vineyard.” This property would later be known as Tower Grove and, more recently, as “The Mountain of Beverly Hills.”
When Mark owned the property, he wanted to build a 45,000-square-foot palace, complete with 25 bedrooms and stunningly beautiful 360-degree views of the world. The property would have tennis courts, a wildlife sanctuary, and a one-million-gallon pool. Mark budgeted $100 million to construct this dream estate.
In 2018, the property was renamed “The Mountain of Beverly Hills”. In July 2018, the Mountain was listed for sale for $1 billion. The property eventually sold for $100,000. But there’s a lot more to that sale, which we’ll describe in the last section of this article. Here is a video tour of the property when it was listed at a time when it was known as “The Vineyard”:
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10-Acre Malibu Estate
The second crown jewel in Mark’s real estate portfolio was a 10-are oceanfront estate in Malibu that he bought in the late 1990s for $25 million. He bought this property to please his fourth and final wife, a former Hawaiian Tropic model named Darcy LaPier, who did not like living at the Beverly Hills estate because it reminded her of Mark’s ex-wife Suzan. Here’s a drone video that shows the Malibu estate:
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Below is a photo of Suzan and Mark. We’ll come back to what happened to the Malibu estate at the end of this article:
Suzan and Mark in 1996 (Ron Galella Collection via Getty Images)
The Beauty Queens
Mark Hughes had somewhat of a penchant for beauty queens. During his life, he married four different beauty queens, including a former Hawaiian Tropic model and a former Miss Petite USA.
Mark had one child with wife #3, Suzan Schroder (the former Miss Petite USA). Mark’s son Alex Hughes was born in 1992. Alex and he will become very important to this story in a minute. Here are Suzan and Alex Hughes in 2004 at the premier of “The Polar Express” in Hollywood:
Suzan and Alex Hughes (Via Getty)
Wife #4, Darcy LaPiere (the Hawaiian Tropic model), had previously been married to action star Jean-Claude Van Damme.
After Mark and Darcy were married, she refused to live at his Beverly Hills estate (Tower Grove, aka The Vineyard, aka The Mountain Top) because it reminded her too much of Suzan. To please Darcy, Mark bought the 10-acre Malibu estate.
Tragically, it was at this house where Darcy found Mark dead in their bed on the morning of May 21, 2000. He was just 44 years old and had been suffering for several months from insomnia and a recurring case of pneumonia. The cause of death was a bad mixture of alcohol and anti-depressants.
Darcy LaPier (via Getty Images)
Legal Battles
Darcy was reportedly given an estimated $50 million worth of real estate and money from the estate, despite the fact that she had been married to Mark for less than a year. As part of his divorce agreement from a year earlier, Mark’s estate would also continue to pay ex-wife Suzan $10,000 a month in child support. He had already covered the purchase of a mansion for Suzan and Alex in Beverly Hills and would continue to pay for Alex’s private schools and vacations.
After the wives were paid off, Mark’s estate was still worth an estimated $300 million at the time of his death. Mark’s sole heir was his son Alexander Hughes, who was eight years old at the time.
In 2002, Herbalife was taken private by a group of investors for $685 million. The company then became publicly traded again in 2004 on the New York Stock Exchange, where it trades today under the ticker symbol HLF.
According to a court-ordered audit, in 2005, the value of 13-year-old Alex Hughes’ trust fund had grown to $400 million. Unfortunately for Alex, he wouldn’t be able to touch the money until he turned 35 in the year 2027. In the meantime, he would receive an estimated $250,000 stipend every year, which would someday grow to $2 million per year. It must have been painful for Alex to know he couldn’t touch the bulk of his fortune for a few decades, but to make matters worse, Alex and his mother, Suzan, became worried that the trustees were totally mismanaging the estate.
The prime example of their mismanagement was related to The Vineyard (aka Tower Grove, aka The Mountain). One of the trustees of Alex’s fortune allegedly sold The Vineyard for just $23 million to a man who had no money and no experience in developing real estate. As if that wasn’t bad enough, the trustees also reportedly turned down a higher offer from a much more qualified buyer. The unqualified purchaser eventually defaulted on his payments.
Meanwhile, Suzan (the former Miss Petite USA) also claimed that one of the trustees sexually harassed her on a number of occasions. Suzan once asked the trustees for $160,000 to rent a beach house in Malibu. According to court documents filed to get the trustees removed from the estate, the trustees responded to Suzan’s request by saying:
“You are one of the most beautiful, unattainable women in the world. Here’s my phone number. Call me when you’re ready to give me what I want“.
It gets worse. By total random coincidence, Suzan and Alex ran into that very same trustee later that night at an art exhibit. According to the same court documents, when the topic of the beach house was brought up again that night, the trustee allegedly made the following remark to Suzan (with Alex standing just a few feet away):
“I’ll get you on your knees eventually, Suzan. I’m going to fuck you one way or the other.“
The Result
In 2012, 20-year-old Alex Hughes finally had his day in court. The goal of the case was to get the trustees removed for mismanaging the estate. This would allow Alex to manage the money himself and potentially inherit a much larger portion much sooner than the age of 35. After all opinions and arguments were heard, on March 18, 2013, the judge finally came to a decision. The judge ruled in favor of Alex and removed the trustees from the estate forever.
On August 20, 2019, The Mountain of Beverly Hills sold at auction for $100,000. The buyer was… Alex Hughes. Alex, who was 29 at the time, essentially forced the property into foreclosure to kick out the no-money, no-experience characters, who by then had run up $200 million worth of debt with his trust. He then bought the property… from himself… for $100,000. Alex remains the owner of this property today.
As for the 10-acre Malibu estate, In 2002, the property was sold to a billionaire named Howard Marks for $31 million. Howard sold the property in 2013 to Oakley sunglasses founded Jim Jannard for $75 million. In June 2024, Jim Jannard sold the estate to a Delaware LLC for $210 million. The sale set the record for most expensive single family home sale in both California and America, breaking a record that had been set a year earlier by Jay-Z and Beyonce about a year earlier when they paid $200 million for a home located just a few minutes down the Pacific Coast Highway.
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