Pedestrians pass in front of Trump Tower in New York City, headquarters of the Trump family business entities, Dec. 19, 2018. Photo: Allison Joyce/Bloomberg 

A Manhattan federal judge ruled Wednesday that the Trump Corp. will have to defend claims in a proposed class action that it had illegally profited from knowingly promoting doomed products and services to unsophisticated investors across the country.

The ruling, from U.S. Judge Lorna G. Schofield of the Southern District of New York, jettisoned federal racketeering claims from the suit, which alleged that members of President Donald Trump's family for years had operated a multilevel marketing scheme that cost consumers millions of dollars in investments.

The court, however, did have jurisdiction over state claims for negligent misrepresentations, common law fraud and unfair and deceptive trade practices, Schofield said in the 26-page order.

The case is captioned Jane Doe v. Trump Corp. Named as defendants in the case were Donald Trump, his children, Donald Trump Jr., Ivanka and Eric Trump, and the Trump Corp., one of their business entities.

In October, the four unnamed plaintiffs in the suit claimed that Donald Trump and his three children oversaw a racketeering operation through both aligned outside businesses and Trump-branded ventures.

According to the complaint, Donald Trump lent his name to promote the businesses, knowing that there was little to no chance that the money unsavvy investors and others paid to participate in seminars and training opportunities would ever be recouped.

At the center of the allegations was Donald Trump's relationship with the multilevel marketing company ACN Inc. Prior media reports on Donald Trump's involvement of the company highlighted his endorsement of ACN, which included appearances on his former reality television program. The complaint claimed that 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, Donald 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 alleged.

On Wednesday, Schofield said the connection between Donald Trump's alleged misconduct and that injury asserted in the lawsuit was not strong enough to support civil claims under the Racketeer Influenced and Corrupt Organizations Act.

According to the ruling, the plaintiff's lack of success in the program could have simply been the result of the inherent challenges that come along with multilevel marketing, their own limitations as salespeople or the local markets for ACN's products.

“The complaint fails to plead proximate causation because it does not allege a direct relation between defendants' conduct and plaintiffs' losses,” Schofield wrote.

As to the rest of the suit, however, Schofield said the plaintiffs had established a “reasonable probability” that the case met the minimum standards to confer federal jurisdiction over class actions alleging state law claims.

Specifically, she said, the suit claimed that the proposed class contained at least 100 members; that minimal diversity existed between the parties, and that the amount in controversy exceeded $500 million. The Trumps, on the other hand, had not demonstrated “to a legal certainty” that the plaintiffs would be not be able to recover the amount they sought.

Roberta Kaplan, who represents the plaintiffs, said in a statement that she was “pleased” the state law claims had survived the motion to dismiss.

“We now look forward to proceeding expeditiously with the case on the merits in order to obtain justice for the plaintiffs, and thousands of other working Americans just like them, who each lost hundreds or thousands of dollars as a result of the defendants' fraudulent scheme,” said Kaplan, founding partner of Kaplan Hecker & Fink.

Counsel for the Trump Corp. and other defendants, meanwhile, claimed victory with regard to the racketeering allegations. In a statement, Joanna C. Hendon, a partner with Spears & Imes, said the RICO claims were “baseless and should never have been brought” in the first place.

“We look forward to dispensing with the rest of the suit,” she said.

Read More:

New Class Suit Claims Trump Lured Investors, Whose Loss Was His Gain

9th Circuit Approves $25M Trump University Settlement

Donald Trump Made Millions From Multilevel Marketing Firm

This is a developing story.