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One hedge fund billionaire’s quest to destroy a reputable company by deploying crony capitalism tactics has set a dangerous precedent for successful companies going forward.

Allow me to set the scene. On Dec. 13, 2012, Bill Ackman, founder of hedge fund Pershing Square Management, unveiled in a detailed three-and-a-half hour webcast lecture a massive “public short” bet of $1 billion against the nutrition company Herbalife. For those unfamiliar, a public short — also known as short selling — is a risky, fairly rare phenomenon in which an investor not only bets on a stock to go down, but publicly announces and explains that he has done so, according to Fortune.

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During Ackman’s pitch, he publicly denounced Herbalife’s business model, calling the company the “best-managed pyramid scheme in the history of the world.” With extremely low expectations, Ackman predicted that it was only a matter of time before the company failed, foreseeing the company’s stocks steadily declining until finally reaching zero.

At the time, it was a risky bet for Ackman to make and odd choice of target — Herbalife in 2012 was the one of the largest public multi-level marketing (MLM) companies by market capitalization and second largest in revenue, with seemingly no glaring flaws. Herbalife did not manufacture cigarettes, sell alcohol, manage casinos or emit pollutants, instead dedicating all its resources to focusing solely on nutrition.

Unwavering and resolute in his decision, Ackman plunged headfirst into determining the fate of Herbalife. When the public short was unsuccessful in convincing investors to put the company into bankruptcy, Ackman resorted to pressuring friends in the government to investigate Herbalife with the purpose of declaring the company an illegal business model.

Failure was not an option for Ackman. He next hired lobbyists, posted ads, set up websites, solicited nonprofits and successfully convinced a U.S. Senator, three House of Representatives and seven State Attorneys Generals to write to the Federal Trade Commission (FTC) reporting Herbalife. With the power of the government he now believed to be his side, Ackman was committed to destroying the company and make good on his billion-dollar bet.

In 2014, there were several allegations that Ackman went as far as paying a ‘whistleblower’ $3.6 million to provide damaging information to the government. If Ackman’s alleged plan succeeded, it would mean the death of Herbalife — a death that would be highly profitable for Ackman and his investors.

Since Ackman declared war on Herbalife, the nutrition company has spent over $90 million defending itself against his relentless attacks, including an FTC investigation spurred by Ackman. In spite of it all, in July 2016, the FTC exonerated Herbalife following a two-year investigation examining whether Herbalife’s business model, as a direct selling company, was illegal. While Herbalife settled the complaint and paid a fine, the company was not found to be an illegally organized company, a fact that went against Ackman’s very public allegations.

Regardless of one’s opinion on Herbalife’s innocence, there is a bigger issue at stake here. Ackman set a dangerous precedent going forward, a precedent that provides huge incentives for hedge fund managers and other investors to use government power to do their dirty work and destroy companies that they short.

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Trying to destroy a successful company for profit with government force goes against the very idea of free market capitalism. Hedge fund managers only make good regulators on public shorts when they freely allow market forces and valid information to punish companies with structural problems. Ackman demonstrated the exact opposite of this behavior; he instead demonized a business model and misused the power of government attempt to force a company out of business for profit.

Instead of conducting business with integrity, Ackman blatantly crossed the line with his crony capitalism tactics and unethical conduct, all to get ahead on a unsuccessful and misguided Wall Street short bet.

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