Hedge fund manager alleges Herbalife is 'pyramid scheme'

Herbalife Ltd. is girding for a fight against a Wall Street money man who's betting $1 billion that the company is nothing more than what he called a "pyramid scheme."

The Los Angeles maker of nutritional products rushed to defend itself Thursday against a hedge fund manager's accusation.

Hedge fund titan Bill Ackman accused Herbalife of paying its sales staff far more money to recruit new distributors than to actually sell its products.

That results in the roughly 2.6 million distributors at the bottom of the sales pyramid making little or no income, while a handful at the top hauls in millions, he said.

"This is the best-managed pyramid scheme in the history of the world," Ackman said.

The company denied the allegation and accused Ackman of trying to manipulate the stock. Herbalife shares slumped 10% on Thursday and are off 21% in the two days since Ackman announced that the company is in his sights.

"Today's presentation was a malicious attack on our business model based largely on outdated, distorted and inaccurate information," Herbalife said in a statement. "We are not an illegal pyramid scheme."

Herbalife, which bills itself as a so-called multilevel marketer, has beaten back similar accusations in the past. But the company has rarely faced a nemesis such as Ackman.

The 46-year-old billionaire has fashioned a career on high-stakes gambits in controversial companies. His fund firm, Pershing Square Capital Management, manages $12 billion.

Showdowns between companies and skeptical investors historically play out behind closed doors, especially in the normally sleepy pre-holiday period.

But in a measure of the aggressive tactics favored by an emerging breed of activist investors, Ackman launched a public blitzkrieg Thursday. He gave a flashy multimedia presentation to a packed conference room in New York that was streamed live on the Internet.

"I've never seen anything quite like it," said Timothy Ramey, an analyst at D.A. Davidson & Co. "I've never seen an investor spend 31/2 hours of time at a major venue being webcast and then make TV appearances to make his point. It's the largest orchestrated bull or bear case that I've ever seen."

The brawl has potential repercussions for both sides.

Ackman claimed to have spent one year doing intensive research on Herbalife's operations, an unusually extended period given Wall Street's thirst for immediate results.

Earlier this year, Ackman began betting that Herbalife's stock would fall sharply.

His fund is "shorting" more than 20 million shares of the company. In a short sale, an investor borrows stock and sells it immediately, hoping to later buy the shares at a reduced price and return them to their actual owner.

Ackman promised to donate all profit from his Herbalife bet to charity, and portrayed his public diatribe as intended for the public good.

"I'm very fortunate to have the means to pursue this," he said. "I am independently wealthy. When I believe in something, I can say what I want and do what is right."

For Herbalife, the fight threatens to damage its credibility among investors who have always been sensitive to claims that its business is illegitimate.

Herbalife, which was founded in 1980, sells a line of diet powders, bars, drinks and vitamins through a network of independent distributors in more than 80 countries. The company reported sales of $3.5 billion in 2011.

Its chief executive, Michael O. Johnson, was the highest paid executive in the United States last year, hauling in more than $89 million in salary, exercised stock options and other compensation, according to GMI Ratings, a corporate governance firm.

The company has fought criticism of its business model throughout its existence.

In 2008, for example, self-proclaimed fraud buster Barry Minkow shorted Herbalife's stock and then accused the company of a host of misdeeds. The company survived those accusations and Minkow ultimately went to prison on unrelated charges.

This was the second time this year that investors punished Herbalife because of questions about its business practices. Herbalife shares fell 20% in May after hedge fund operator David Einhorn asked pointed questions during an earnings call.

"We operate at the highest ethical and quality standards, and our management and our board are constantly reviewing our business practices and products," Herbalife said. "We also hire independent, outside experts to ensure our operations are in full compliance with laws and regulations."

Ackman and Herbalife engaged in a bitter and bizarre war of words, with Johnson saying the United States will "be better when Bill Ackman is gone."

Ackman interpreted the statement as a threat and said he has hired a security firm to protect him.

stuart.pfeifer@latimes.com

walter.hamilton@latimes.com

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Family, fans say goodbye to Jenni Rivera

Jenni Rivera was remembered in death the same way she was celebrated in life: on an illuminated stage, with thousands of fans chanting her name.

The singer, who was killed in a plane crash earlier this month, was honored Wednesday with what her family called a "celestial graduation," a musical memorial that packed the Gibson Amphitheatre with 6,100 people and drew hundreds more outside.

The more than two-hour farewell could have been mistaken for a concert, if not for the crowd's tears and the ruby-red casket on stage. In front of it was a cluster of white roses, the type of flower Rivera's family asked fans to bring. Behind it was a single microphone, left unused.

Family members — clad head-to-toe in white — praised Rivera as a "perfectly imperfect" mother and a guerrera, Spanish for "female warrior." Her father, Pedro Rivera, a noted singer of the Mexican ballads known as corridos, said goodbye by performing a song he wrote about her, "La Diva de la Banda."

Rivera's 11-year-old son, Johnny Lopez, addressed the sea of mourners in a white suit and red bow tie. His father died a few years ago.

"Mama, I've been crying so much these last few days. I miss you so much," he said, his voice breaking. "I hope you're taking care of my dad and I hope he's taking care of you, too."

He added: "I want to thank everyone for loving my mom."

Rivera, a Long Beach native, first gained fame via her banda music, a Mexican regional style heavy on machismo and brass instruments. A rare woman in the genre, Rivera often sang — in Spanish and English — about her chaotic personal life: three husbands, five children and struggles with her weight and domestic violence.

Rivera sold more than 20 million albums and, in recent years, had started to expand her business empire. She had a weekly radio program, clothing and cosmetics lines and a hand in several reality shows, including "I Love Jenni."

She and six others were killed Dec. 9 when a private jet that had departed Monterrey, Mexico, nose-dived 28,000 feet in 30 seconds and smashed into mountainous terrain. Rivera was 43.

"My sister, Jenni, died in a plane accident, but it was not an accident," Pedro Rivera Jr., a pastor and Rivera's brother, told the crowd in Spanish. "God has a purpose for all of us and God let us borrow her for 43 years and enjoy her."

It was clear how deeply Rivera had touched her legion of fans.

At the memorial, several well-known Latino singers performed, including Ana Gabriel, Olga Tanon and Joan Sebastian.

Outside, her fan base arrived early, blasting her music from cars decorated with tributes: "Jenni, we love you" and "We are going to miss you." They wore Jenni Rivera T-shirts and Jenni Rivera pins and waved handmade posters. One woman said Rivera was now performing "in a concert with God."

Lidia Farrias and her husband, Jose, drove three hours from Santa Maria. They didn't have tickets — the event sold out within minutes — so they shivered outside, eyes fixed on two jumbo screens streaming the memorial. Farrias said Rivera's frank lyrics had encouraged her to be a stronger woman.

"Whenever I listened to her songs, I felt like I could tackle anything," she said.

Denise Montalvo, 15, had left San Diego at 1 a.m. with her mother, aunt and two family friends. She admired Rivera for striving to obtain a better life, just like Denise's family. The teenager said Rivera wanted her funeral to be a celebration, reflecting her song "Cuando Muere una Dama" — "When a Lady Dies."

"We're trying not to be sad," she said.

That was hard for fans, particularly as the memorial wound down. One by one, each of Rivera's family members placed a white rose on her casket. Some whispered to it. Some kissed it. Then they walked away.

ruben.vives@latimes.com

adolfo.flores@latimes.com

Times staff writer Ashley Powers contributed to this report.

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Miss USA Olivia Culpo is crowned Miss Universe

LAS VEGAS (AP) — A 20-year-old Boston University sophomore and a self-described "cellist-nerd" brought the Miss Universe crown back to the United States for the first time in more than a decade when she won the televised contest Wednesday.

Olivia Culpo beat out 88 other beauty queens from six continents at the Planet Hollywood casino on the Las Vegas Strip to take the title from outgoing champion Leila Lopes of Angola.

Culpo wore a tight navy blue mini-dress with a sequined bodice as she walked on stage for the competition's opening number. Later in the night, she strutted in a purple and blue bikini, and donned a wintery red velvet gown with a plunging neckline.

Culpo's coronation ends a long losing spell for the U.S. in the competition co-owned by Donald Trump and NBC. An American had not won the Miss Universe title since Brook Lee won in 1997.

No one seemed more surprised than Culpo's family, who "looked at her like she had three heads" when told them she was entering the Miss Rhode Island contest last year, her father Peter recalled.

"We didn't know a thing about pageants," he said.

She won that contest in a rented $20 dress with a hole in it and then began working out, dieting, and studying current events on flashcards to compete for the Miss USA crown.

Culpo was good enough during preliminary Miss Universe contests to be chosen as one of 16 semifinalists who moved on to compete in the main show. Her bid lasted through swimsuit, evening wear, and interview competitions that saw cuts after each round.

She won over the judges even after tripping slightly during the evening gown competition. Telecasters pointed it out but also noted her poised recovery.

Moments before she won, Culpo was asked whether she had she had ever done something she regretted.

"I'd like to start off by saying that every experience no matter what it is, good or bad, you'll learn from it. That's just life," she said. "But something I've done I've regretted is probably picking on my siblings growing up, because you appreciate them so much more as you grow older."

One of those siblings, 17-year-old Gus, was cheering from the front row with his sister's glittering Miss Rhode Island sash wrapped around his shoulders

Miss Philippines, Janine Tugonon, came in second, while Miss Venezuela, Irene Sofia Esser Quintero, placed third. All the contestants spent the past two weeks in Sin City, where they posed in hardhats at a hotel groundbreaking, took a painting lesson, and pranked hotel guests by hiding in their rooms.

After the show, Culpo appeared wearing a white gold crown atop her long brown hair and told a group of reporters she hoped to bring the country some good news in the wake of the deadly school shooting in Connecticut.

"It's such an honor to be representing the USA in an international beauty contest in spite of all the tragedy that's happened in this country lately," she said. "I really hope that this this will raise everybody's spirits a little."

The daughter of two professional musicians, Culpo grew up in Cranston and spent her summers at band camp. She has played the cello alongside world-renowned classical musician Yo-Yo Ma, and followed in her parents' footsteps with performances at Carnegie Hall in New York City.

Her father called her the "nerdiest" of her siblings, and her brother recalled that she was "really chubby and sort of weird when she was younger."

They speculated that the same single-mindedness that helped her master the cello in second grade propelled her rapid rise through the beauty pageant ranks.

With her promotion, Miss Maryland Nana Meriwether becomes the new Miss USA.

The Miss Universe pageant was back in Las Vegas this year after being held in Sao Paulo in 2011. It aired live on NBC and was streamed to more than 100 countries.

The panel of 10 judges included singer Cee Lo Green, "Iron Chef" star Masaharu Morimoto and Pablo Sandoval of the San Francisco Giants.

Asked on the red carpet whether he found playing in the World Series or judging the beauty pageant to be more difficult, Sandoval said both were hard.

As Miss Universe, Culpo will receive an undisclosed salary, a wardrobe fit for a queen, a limitless supply of beauty products, and a luxury apartment in New York City.

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U.N. Suspends Polio Campaign in Pakistan After Killings of Workers

B.K. Bangash/Associated Press

A Pakistani woman administered polio vaccine to an infant on Wednesday in the slums of Islamabad. Militants have killed eight polio workers over three days.

LAHORE, Pakistan — The front-line heroes of Pakistan’s war on polio are its volunteers: young women who tread fearlessly from door to door, in slums and highland villages, administering precious drops of vaccine to children in places where their immunization campaign is often viewed with suspicion.

Now, those workers have become quarry. After militants stalked and killed eight of them over the course of a three-day, nationwide vaccination drive, the United Nations suspended its anti-polio work in Pakistan on Wednesday, and one of Pakistan’s most crucial public health campaigns has been plunged into crisis.

The World Health Organization and Unicef ordered their staff members off the streets, while government officials reported that some polio volunteers — especially women — were afraid to show up for work.

At the ground level, it is those female health workers who are essential, allowed privileged entrance into private homes to meet and help children in situations denied to men because of conservative rural culture. “They are on the front line; they are the backbone,” said Imtiaz Ali Shah, a polio coordinator in Peshawar.

The killings started in the port city of Karachi on Monday, the first day of a vaccination drive aimed at the worst affected areas, with the shooting of a male health worker. On Tuesday four female polio workers were killed, all gunned down by men on motorcycles in what appeared to be closely coordinated attacks.

The hit jobs then moved to Peshawar, the capital of Khyber-Pakhtunkhwa Province, which, along with the adjoining tribal belt, constitutes Pakistan’s main reservoir of new polio infections. The first victim there was one of two sisters who had volunteered as polio vaccinators. Men on motorcycles shadowed them as they walked from house to house. Once the sisters entered a quiet street, the gunmen opened fire. One of the sisters, Farzana, died instantly; the other was uninjured.

On Wednesday, a man working on the polio campaign was shot dead as he made a chalk mark on the door of a house in a suburb of Peshawar. Later, a female health supervisor in Charsadda, 15 miles to the north, was shot dead in a car she shared with her cousin.

Yet again, Pakistani militants are making a point of attacking women who stand for something larger. In October, it was Malala Yousafzai, a schoolgirl advocate for education who was gunned down by a Pakistani Taliban attacker in the Swat Valley. She was grievously wounded, and the militants vowed they would try again until they had killed her. The result was a tidal wave of public anger that clearly unsettled the Pakistani Taliban.

In singling out the core workers in one of Pakistan’s most crucial public health initiatives, militants seem to have resolved to harden their stance against immunization drives, and declared anew that they consider women to be legitimate targets. Until this week, vaccinators had never been targeted with such violence in such numbers.

Government officials in Peshawar said that they believe a Taliban faction in Mohmand, a tribal area near Peshawar, was behind at least some of the shootings. Still, the Pakistani Taliban have been uncharacteristically silent about the attacks, with no official claims of responsibility. In staying quiet, the militants may be trying to blunt any public backlash like the huge demonstrations over the attack on Ms. Yousafzai.

Female polio workers here make for easy targets. They wear no uniform but are readily recognizable, with clipboards and refrigerated vaccine boxes, walking door to door. They work in pairs — including at least one woman — and are paid just over $2.50 a day. Most days one team can vaccinate 150 to 200 children.

Faced with suspicious or recalcitrant parents, their only weapon is reassurance: a gentle pat on the hand, a shared cup of tea, an offer to seek religious assurances from a pro-vaccine cleric. “The whole program is dependent on them,” said Mr. Shah, in Peshawar. “If they do good work, and talk well to the parents, then they will vaccinate the children.”

That has happened with increasing frequency in Pakistan over the past year. A concerted immunization drive, involving up to 225,000 vaccination workers, drove the number of newly infected polio victims down to 52. Several high-profile groups shouldered the program forward — at the global level, donors like the Bill and Melinda Gates Foundation, the United Nations and Rotary International; and at the national level, President Asif Ali Zardari and his daughter Aseefa, who have made polio eradication a “personal mission.”

On a global scale, setbacks are not unusual in polio vaccination campaigns, which, by dint of their massive scale and need to reach deep inside conservative societies, end up grappling with more than just medical challenges. In other campaigns in Africa and South Asia, vaccinators have grappled with natural disaster, virulent opposition from conservative clerics and sudden outbreaks of mysterious strains of the disease.

Declan Walsh reported from Lahore, and Donald G. McNeil Jr. from New York. Ismail Khan contributed reporting from Peshawar, Pakistan.

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UBS to pay $1.5 billion to settle Libor charges

UBS has agreed to pay a fine of $1.5 billion to authorities and plead guilty to a felony count of wire fraud, the most recent developments in a far-reaching probe into how banks manipulated interest rates leading up to the financial crisis.

Two former traders were also charged with conspiracy in a complaint unsealed Wednesday, the first people charged criminally in the Libor scandal.

"We cannot and we will not tolerate misconduct on Wall Street of the kind admitted to by UBS today and by Barclays last June," said Assistant Atty. Gen. Lanny Breuer, head of the criminal division. In June, Barclays was the first bank to settle with authorities, paying $450 million.

The fine was one of the biggest leveled against a financial institution by American and British authorities, just short of the $1.9-billion fine HSBC agreed to pay last week over money laundering allegations.

The charges relate to the ways traders leaned on banks to manipulate the London interbank offered rate, or Libor, to benefit their own trading positions.

Officials said that from 2006 through 2009 UBS traders placed bets on the movement of Libor and manipulated the rate, which is used as a benchmark to set interest rates for many mortgages, credit cards and other consumer lending instruments. The traders profited by knowing which way the Libor would move.

In coming months, the probe probably will expand to include other banks that help determine the Libor, analysts say. But it's the criminal charges that turned some heads on Wall Street on Wednesday.

The plea agreement on wire fraud charges by a UBS subsidiary in Japan, which included a $100-million fine, marks the first time since 2005 that a major financial institution has pleaded guilty to criminal charges, the Justice Department said.

"For a bank to admit to criminality is kind of mind-blowing," said Peter Shapiro, managing director of Swap Financial Group in South Orange, N.J. "Obviously, they didn't do that easily — that was something that must have been a big priority of enforcement agencies."

Enforcement agencies have been feeling some pressure to level blame on financial institutions in the wake of the financial crisis, Shapiro said. No senior financial executives have served jail time for their roles in the financial crisis.

"Both the regulators and enforcement agencies feel somewhat beleaguered by the repeated assertions that they failed to deliver enough heads on a plate as a response to the financial crisis," he said.

U.S. officials also announced criminal charges against two former senior traders for UBS in connection with the scandal. Tom Alexander William Hayes, 33, of Britain, was charged with conspiracy and wire fraud, and Roger Darin, 41, of Switzerland, was charged with conspiracy. Both remain abroad, but the Justice Department will try to extradite them.

"The motivation here was nothing short of sheer greed, and the scheme was nothing short of a shell game, a Wall Street version of three-card monte," said Kevin Perkins, associate director of the FBI, which helped investigate the case.

More criminal charges at other banks could follow, said Anthony Sabino, professor of law at the Tobin College of Business at St. John's University.

"Once you start to round up some accused bad guys, that leads to more people being rounded up," he said. "This is a vast conspiracy among a multitude of banks, which therefore implicates a multitude of individuals."

Much of the activity took place at UBS Japan Securities Co., where Hayes was a senior trader. The Justice Department released internal UBS messages in which Hayes and others talked about their alleged manipulation.

In one from November 2006, Hayes told a UBS employee who submitted rate information for the Libor that he and Darin "skew the Libors a bit" and then said he needed the six-month rate to stay high for three days.

UBS traders were often colorful and emphatic in their pleadings, according to documents released by Britain's Financial Services Authority. One wrote, "I need you to keep it as low as possible.... If you do that, I'll pay you, you know, $50,000, $100,000, whatever you want."

The UBS fine was larger than that leveled on Barclays earlier in the year because UBS' misconduct was "considerably more serious than Barclays' because it was more widespread within the firm," the Financial Services Authority said. At least 45 individuals at UBS were involved in or aware of the rate-fixing practice.

UBS said that it had fully cooperated with authorities and that the interest-rate manipulations were the isolated actions of certain employees.

"Their misconduct does not reflect the values of UBS nor the high ethical standards to which we hold every employee," UBS CEO Sergio Ermotti said in a statement.

Analysts say that there's still potential for significant civil suits against UBS and other banks, which could be more damaging than the fines levied against them. Keefe, Bruyette & Woods, an equity research firm, estimated in July that potential industry damages could reach $35 billion.

Those estimates were validated Wednesday when the Inspector General for the Federal Housing Finance Agency estimated that government-owned Fannie Mae and Freddie Mac may have lost a combined $3 billion because of reduced interest payments on securities and other holdings. Officials at FHFA, which regulates Fannie and Freddie, have not confirmed the estimate but are evaluating potential issues involved with the Libor manipulation.

There are barriers to further lawsuits — the burden of proof will be high, analysts at Keefe, Bruyette & Woods said. To move forward with civil suits, plaintiffs would have to prove that traders were conspiring, said John C. Coffee, a Columbia Law School expert in corporate fraud.

"But that said, the size of the potential liability is mushrooming," he said.

Times reporter E. Scott Reckard contributed to this report. Semuels reported from Los Angeles and Puzzanghera from Washington.

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California parks officials improperly boosted pay, audit finds

SACRAMENTO — Managers at the California parks department circumvented payroll policies and boosted salaries improperly, the state controller said Tuesday.

Controller John Chiang said the payouts were made with "deliberate disregard for internal controls, along with little oversight and poorly trained staff. When security protocols and authorization requirements so easily can be overridden, it invites the abuse of public funds."

Chiang said that bad record keeping in the department made it impossible to determine a total for the amount of money improperly paid.

The payroll issues are coming to light months after revelations last summer that parks officials had a hidden $54-million surplus at a time when the department was cutting services and threatening to close parks. Disclosure of unused funds led to the ouster of department Director Ruth Coleman.

The payroll problems took many forms, the controller's office said. One involved "out of class" payments, which is extra money paid to employees for handling duties outside their regular responsibilities. Over a three-year period, 203 employees received a total of $520,000 for such work, but a lack of documentation prevented officials from determining how much of those payments were improper, the office said.

In another example, several temporary employees were allowed to exceed their annual ceiling of 1,500 hours of work.

The parks department conceded Tuesday that it had made errors.

"We acknowledge and it is widely known that some very unfortunate events occurred at the Department of Parks and Recreation, in particular with the mismanagement of payroll systems and data," spokesman Roy Stearns said. The department is using the controller's findings to "continue to improve and safeguard our payroll systems," he said.

Stearns said officials would try to have employees return any overpayments.

Last month, Gov. Jerry Brown appointed a retired Marine general, Anthony Jackson, to replace Coleman as director. Jackson is awaiting Senate approval.

"We see these audits and investigations as a catalyst for change," Jackson said in a statement. He said the department will "work diligently to earn back the trust of our fellow state agencies and the people of the state of California."

The state Department of Finance is conducting its own audit of the parks department. Spokesman H.D. Palmer said the findings could be released before the end of the year.

chris.megerian@latimes.com

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Leak reveals Polaroid’s Android-powered camera with interchangeable lenses

Samsung’s (005930) Galaxy Camera and Nikon’s (NINOY) Coolpix S800c are just the beginning of a swath of Android-powered cameras. Newly leaked images and specs point to Polaroid reviving its camera business with what could be the world’s first Android camera with interchangeable lenses. With no official name yet, the tentatively named IM1836 camera will reportedly feature a 18.1-megapixel sensor, 3.5-inch touchscreen, pop-up flash, Wi-Fi, HDMI and Android 4.0.

[More from BGR: A guide to all the insane predictions made by Google’s new engineering director]

The Galaxy Camera and Coolpix S800c do a fine job taking pictures that are considerably better than what you get from a smartphone, but they still can’t match a mirrorless camera with a good lens. At first glance, Polaroid’s camera looks to be a rebadged Nikon 1 J2, but the resemblance only runs skin deep, as PhotoRumors reports the camera only takes MicroSD cards.

[More from BGR: How not to fix Apple Maps]

Polaroid might not be a major player, but as more companies start incorporating Android into their cameras, there’s going to be a shift in the features consumers expect from them. In the next few years, novelty features such as Wi-Fi, cellular data and photo editing apps will be the norm and we’ll laugh at how we ever lived without them.

This article was originally published by BGR

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Cassadee Pope wins Season 3 of 'The Voice'

NEW YORK (AP) — Cassadee Pope, who was country singer Blake Shelton's protege on the third season of NBC's "The Voice," has won the show's competition.

The 23-year-old singer is stepping out into a solo career after performing with a band called Hey Monday. Her victory over Scottish native Terry McDermott and long-bearded Nicholas David was announced at the end of a two-hour show Tuesday.

"The Voice" has grown into a hit for NBC and was the key factor in the network's surprising success this fall.

The show's status was affirmed by the stream of hitmakers who performed on the finale. They included Rihanna, Bruno Mars, the Killers, Smokey Robinson and Peter Frampton.

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Attackers in Pakistan Kill Anti-Polio Workers

Athar Hussain/Reuters

Relatives of Nasima Bibi, a worker in a polio vaccination drive, at a hospital morgue in Karachi.

ISLAMABAD, Pakistan — Gunmen shot dead five female health workers who were immunizing children against polio on Tuesday, causing the Pakistani government to suspend vaccinations in two cities and dealing a fresh setback to an eradication campaign dogged by Taliban resistance in a country that is one of the disease’s last global strongholds.

“It is a blow, no doubt,” said Shahnaz Wazir Ali, an adviser on polio to Prime Minister Raja Pervez Ashraf. “Never before have female health workers been targeted like this in Pakistan. Clearly there will have to be more and better arrangements for security.”

No group claimed responsibility for the attacks, but most suspicion focused on the Pakistani Taliban, which has previously blocked polio vaccinators and complained that the United States is using the program as a cover for espionage.

The killings were a serious reversal for the multibillion-dollar global polio immunization effort, which over the past quarter century has reduced the number of endemic countries from 120 to just three: Pakistan, Afghanistan and Nigeria.

Nonetheless, United Nations officials insisted that the drive would be revived after a period for investigation and regrouping, as it had been after previous attacks on vaccinators here, in Afghanistan and elsewhere.

Pakistan has made solid gains against polio, with 56 new recorded cases of the diseases in 2012, compared with 192 at the same point last year, according to the government. Worldwide, cases of death and paralysis from polio have been reduced to less than 1,000 last year, from 350,000 worldwide in 1988.

But the campaign here has been deeply shaken by Taliban threats and intimidation, though several officials said Tuesday that they had never seen such a focused and deadly attack before.

Insurgents have long been suspicious of polio vaccinators, seeing them as potential spies. But that greatly intensified after the C.I.A. used a vaccination team headed by a local doctor, Shakil Afridi, to visit Osama bin Laden’s compound in Abbottabad, reportedly in an attempt to obtain DNA proof that the Bin Laden family was there before an American commando raid on it in May 2011.

In North Waziristan, one prominent warlord has banned polio vaccinations until the United States ceases drone strikes in the area.

Most new infections in Pakistan occur in the tribal belt and adjoining Khyber-Pakhtunkhwa Province — some of the most remote areas of the country, and also those with the strongest militant presence. People fleeing fighting in those areas have also spread the disease to Karachi, the country’s largest city, where the disease has been making a worrisome comeback in recent years.

After Tuesday’s attacks, witnesses described violence that was both disciplined and well coordinated. Five attacks occurred within an hour in different Karachi neighborhoods. In several cases, the killers traveled in pairs on motorcycle, opening fire on female health workers as they administered polio drops or moved between houses in crowded neighborhoods.

Of the five victims, three were teenagers, and some had been shot in the head, a senior government official said. Two male health workers were also wounded by gunfire; early reports incorrectly stated that one of them had died, the official said.

In Peshawar, the capital of Khyber-Pakhtunkhwa Province, gunmen opened fire on two sisters participating in the polio vaccination program, killing one of them. It was unclear whether that shooting was directly linked to the Karachi attacks.

In remote parts of the northwest, the Taliban threat is exacerbated by the government’s crumbling writ. In Bannu, on the edge of the tribal belt, one polio worker, Noor Khan, said he quit work on Tuesday once news of the attacks in Karachi and Peshawar filtered in.

“We were told to stop immediately,” he said by phone.

Still, the Pakistani government has engaged considerable political and financial capital in fighting polio. President Asif Ali Zardari and his daughter Aseefa have been at the forefront of immunization drives. With the help of international donors, including the Bill and Melinda Gates Foundation, they have mounted a huge vaccination campaign aimed at up to 35 million children younger than 5, usually in three-day bursts that can involve 225,000 health workers.

The plan seeks to have every child in Pakistan immunized at least four times per year, although in the hardest-hit areas one child could be reached as many as 12 times in a year.

Declan Walsh reported from Islamabad, and Donald G. McNeil Jr. from New York. Salman Masood contributed reporting from Islamabad, and Zia ur-Rehman from Karachi, Pakistan.

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Instagram draws ire over new user rules

SAN FRANCISCO — When it comes to policy changes, Instagram could have used a filter of its own.

Its usually devoted users threatened to delete their accounts en masse Tuesday if the popular photo-sharing app did not roll back new terms of service that appeared to give the company ownership of their images. Instagram users — about 100 million now — snap the photos on their smartphones, apply digital filters to enhance the photos and then instantly share them with friends.

"Dear @Instagram, why did you think we'd just be OK with your new terms? They are NOT COOL. Signed, The Entire Internet," Jason Pollock, a Los Angeles filmmaker and social media consultant, wrote on Twitter.

Instagram founder Kevin Systrom tried to calm the uproar and reassure users in a blog post Tuesday afternoon.

"Instagram does not claim any ownership rights over your photos," he wrote. "We respect that your photos are your photos. Period."

Instagram's new terms of service announced Monday included a clause stating that Instagram had the right to turn images into advertisements without any approval from or compensation for users starting Jan. 16. — part of Facebook's drive to make money from the service it bought this year for $715 million in cash and stock.

That angered amateur and professional photographers alike — even Facebook Chief Executive Mark Zuckerberg's wedding photographer.

"Pro or not if a company wants to use your photos for advertising they need to TELL you and PAY you," Noah Kalina said on Twitter.

The effort to make money from Instagram users struck a nerve. According to the Pew Research Center's Internet & American Life Project, nearly half of Internet users post photos and videos online that they have created themselves.

Kurt Opsahl, a senior staff attorney with the Electronic Frontier Foundation, said Instagram quickly realized it had "overplayed its hand." But its mea culpa blog post still contains plenty of loopholes, he said.

"They say they don't have any plans to put your photos in an advertisement, but nevertheless that is the permission they were seeking," Opsahl said. "We will have to see what the language of the terms of service looks like after they revise it."

Jeff Lawrence, a 29-year-old DJ, graphic designer and photographer from Seattle, said he'll decide if he's dumping Instagram after he sees what the company plans to do in black and white.

"Thankfully we are all Internet savvy enough to know that people can say one thing and do another," said Lawrence, an avid Instagram user. "I am going to wait and see if Instagram takes this criticism to heart and changes the terms of service."

The backlash underscored the rising tensions between users of free social media services and the companies that are trying to profit from them. More users are asking for more control over how these companies handle their information.

Clayton Cubitt, 40, a photographer and filmmaker from Brooklyn, N.Y., quickly dubbed the new terms of service a "suicide note" from Instagram.

He urged his fellow Instagram users to revolt against the current policies at social media companies that he described as "you have a free place to post content and in exchange the company sucks the soul out of your life."

"They look at users as a herd to milk," Cubitt said.

His rants may have angered Zuckerberg, but Zuckerberg's sister Arielle Zuckerberg publicly "liked" Cubitt's Instagram snapshot of the most controversial part of Instagram's terms of service.

It's unclear if the Instagram backlash will cause lasting damage to the service.

Hacker collective Anonymous had urged its more than 780,000 Twitter followers to ditch Instagram with the hashtag #BoycottInstagram and posted screen shots from followers who had. The servers of Instaport.me, which helps users download their photos from Instagram, were overloaded Tuesday as Instagram users deleted their accounts and switched to other options such as Hipstamatic and Twitter's new photo service that has filters similar to Instagram. Yahoo said it has seen "strong interest" in its new Flickr app for iPhones.

Many Instagram users said they would give Instagram the benefit of the doubt — for now.

"I am going to rage about it, and get people to rage about it, until we change their policy," Pollock, 31, said in an interview. "There is just something so personal and beautiful about Instagram. Hopefully they don't completely ruin it."

jessica.guynn@latimes.com

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