New Class Suit Claims Trump Lured Investors, Whose Loss Was His Gain
The unnamed plaintiffs claim Trump's touting of the business potential in products led them to get involved, even as he failed to say he was being compensated to endorse products that were unlikely to return on the investment.
October 29, 2018 at 03:53 PM
5 minute read
A new lawsuit in Manhattan federal court claims President Donald Trump and his children spent years knowingly promoting products and services to unsophisticated investors that they knew were unlikely to succeed, despite assurances to the contrary, all while secretly being financially compensated, according to a new class action suit filed in Manhattan federal court Monday.
The unnamed plaintiffs in the suit claim that for years the Trump family operated a racketeering operation through both aligned outside businesses and Trump-branded ventures, according to the suit brought in the U.S. District Court for the Southern District of New York.
The 163-page complaint outlines a number of businesses that Trump lent his name to in endorsements and beyond, which the plaintiffs claim was done with the fraudulent knowledge that there was little to no chance the money they and others paid to partake in the opportunities would ever be recouped.
“Many of the Trump Enterprise's victims were then and are now among the most economically marginalized and vulnerable Americans,” the complaint states. “Indeed, the victims were specifically targeted because they were not experienced in financial and commercial matters.”
At the center of the allegations was Trump's relationship with the multi-level marketing company ACN Inc. Prior media reports on Trump's involvement of the company highlighted his endorsement of ACN, which included appearances on his former reality television program. The complaint claims working-class investors relied on statements he made in promotional material created by ACN in deciding to sign up with the company.
According to the complaint, Trump claimed to have prior experience with the products ACN was pushing on investors, having done substantial research and that he wasn't being paid for his endorsement.
“Not a word of this was true,” the complaint states.
In reality, Trump and his company were paid millions to promote ACN. In media accounts, the then-candidate for president claimed to have no actual knowledge about ACN other than the people who run it. The complaint alleges that none of this was disclosed to investors ahead of time.
For example, the Jane Doe plaintiff, a California resident and hospice caregiver, claims that she attended an ACN recruitment meeting in 2014. She states she was skeptical and unpersuaded by the company's presentations but that changed when she saw a promotional video prominently featuring Trump. She claims that changed with Trump's endorsement of the company and its products as a great business opportunity. At no point did the video mention he was being paid for the endorsement, the complaint states.
The Doe plaintiff wrote a registration fee check for nearly $500, based largely on Trump's endorsement. Over the next two years of involvement with ACN, Doe claims she paid thousands of dollars in fees and expenses to attend ACN events and host ACN meetings in an effort to succeed at the business. In the end, she claims she earned a single check for $38 from her efforts. Realizing the business was not what Trump claimed it was, she says she did not renew her annual position.
Beyond the partnership between ACN and Trump, the complaint points to other Trump-related business ventures that it claims were part of network of fraudulent activities meant to induce investment based on Trump's personal endorsement. Among these is the now-defunct Trump Institute, which faced numerous legal actions against its claims of providing participants with entrepreneurial insights based on Trump's business success. The New York State Attorney General's Office sued the company in 2013, claiming illegal business practices and false claims.
Trump ultimately settled the allegations for $25 million shortly after being elected in November 2016.
The class complaint contends that the ACN promotions and Trump education institute were part of a constellation of products touted by the future president, earning his family and company millions from participants who were falsely led to believe in his assurances.
“Defendants were aware that the vast majority of consumers would lose whatever money they invested in the business opportunities and training programs the Endorsed Entities offered,” the complaint states. “It was, after all, the potential to profit from consumers' unrecouped investments that drew the Trump Enterprise to the endorsed entities in the first place.”
An attorney for the Trump Organization did not immediately respond to a request for comment on the lawsuit.
Kaplan Hecker & Fink name attorney Roberta Kaplan and Emery Celli Brinckerhoff & Abady name attorney Andrew Celli lead the plaintiffs' legal team in the matters. In a statement provided through a spokeswoman, the pair stated that the Trump family and their business have not previously been sued in connection with their promotion or endorsement of the business opportunities and training programs that are the subject of this complaint. Nor were they aware of any prior case against the Trumps alleging consumer fraud on this scale, Kaplan and Celli said.
“This case connects the dots at the Trump Organization and involves systematic fraud that spanned more than a decade, involved multiple Trump businesses, and caused tremendous harm to thousands of hard-working Americans,” they said. “We are doing this because those victims deserve their day in court.”
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllBen & Jerry’s Accuses Corporate Parent of ‘Silencing’ Support for Palestinian Rights
3 minute readTrending Stories
- 1Decision of the Day: School District's Probe Was a 'Sham'; Title IX Administrator Showed Sex-Based Bias
- 2US Magistrate Judge Embry Kidd Confirmed to 11th Circuit
- 3Shaq Signs $11 Million Settlement to Resolve Astrals Investor Claims
- 4McCormick Consolidates Two Tesla Chancery Cases
- 5Amazon, SpaceX Press Constitutional Challenges to NLRB at 5th Circuit
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250