Tag: pyramid scheme
Judge Allows Lawsuit Against Trump Family Pyramid Scheme

Judge Allows Lawsuit Against Trump Family Pyramid Scheme

One of the many lawsuits that the Trump Organization and members of the Trump family have faced allegations that they engaged in an illegal pyramid scheme. Attorneys for the company have tried to get the class action lawsuit placed on hold, but Judge Lorna G. Schofield — a federal judge in New York — has refused to stay the case.

In Law & Crime, reporters Matt Naham and Aaron Keller explain, "The class action plaintiffs allege that the Trump family business promoted a multi-level marketing or pyramid scheme known as ACN Opportunity, LLC. ACN, the plaintiffs said, was a 'get-rich-quick scheme' that relied on Trump and his family (conning) each of these victims into giving up hundreds or thousands of dollars,' in violation of various state laws."

Members of the Trump family named in the lawsuit include President Donald Trump and three of his children: Donald Trump, Jr., Eric Trump and White House Senior Adviser Ivanka Trump.

According to Naham and Keller, "The plaintiffs claimed that the Trump family falsely endorsed and promoted ACN by insisting that the enterprise 'offered a reasonable probability of commercial success' — even using 'The Celebrity Apprentice' to draw them in."

The plaintiffs first filed the lawsuit in October 2018, alleging "racketeering and conspiracy to racketeer." And in January 2019, attorneys for members of the Trump family requested that the case be thrown out altogether — which didn't happen, although the "racketeering and conspiracy to racketeer" claims were dismissed.Trump Organization lawyers were hoping that Schofield, who was appointed by former President Barack Obama, would put the case on hold. But the Southern District of New York judge ruled that the lawsuit would not be stayed.

The 64-year-old Schofield, Naham and Keller report, applied the "traditional standard" for determining whether or not to stay a case.

"The first factor is whether the parties applying for the stay — the Trumps and ACN — are likely to succeed on the merits," Naham and Keller note. "Here, Schofield ruled that they are not…. The second of the four factors for a stay, irreparable injury, did not outweigh the defendants' loss on the first factor, the judge ruled. The third factor, 'substantial injury' to the plaintiffs, factored 'lightly against a stay.' The fourth factor, 'public interest' weighed 'slightly in favor of a stay,' the judge ruled."

Schofield, in her ruling, asserted, "As a private business dispute, the action does not give rise to a public interest in the lawsuit. That one of the defendants has since assumed a position of national prominence does not create the type of public interest typically found to weigh against a stay."

Newly Revealed Documents Expose The Trump University Scam

Newly Revealed Documents Expose The Trump University Scam

Trump’s supporters tend to appreciate that “he tells it like it is,” but Trump’s record, obviously, tells a much different story.

Documents unsealed Tuesday confirmed a widely held belief about Trump University, the reality TV star’s real estate academy: “It was all about the sales,” instructors and mentors were “a joke,” and it “preyed upon the elderly and uneducated to separate them from their money.”

What did Trump actually promise students they would learn in his classes? How to “cash in on one of the greatest property liquidations in history!”

A 2007 internal memo to enrollment counselors alerted employees of the upcoming housing market crisis, telling them that about 1.5 million U.S. homeowners were about to face foreclosure and that they should advise students to seize “the tremendous opportunity” and buy majorly discounted properties in “hot markets” like Florida and Texas.

The roughly 400 pages of documents were released in conjunction with a federal lawsuit filed in California in 2010 by dissatisfied students. They include the testimonies of former Trump University employees, who claim that they were instructed to make high-pressure sales a priority, even if it meant lying by telling potential students that Mr. Trump would be an active presence in their education, and that he handpicked the instructors.

In reality, most employees testified to not ever having met him, and Trump himself admitted that he did not pick instructors in a deposition related to the lawsuit.

Employees also stated that they were encouraged to deceive vulnerable students who clearly could not afford the $35,000 course by encouraging them to raise their credit card limits “so that they could be ready to purchase real estate,” when in reality this was so that they could pay for the course by putting themselves in debt.

Corrine Sommer, an event manager, recounted how fellow employees would tell students to “just max out” their credit cards.

Salespeople were told to make clients believe that Trump University did not offer its services “to just anyone,” but rather that they only wanted to work with people who have “certain qualities.”

According to former employees, the truth is that they would take money from anyone willing to pay. In fact, employees were instructed to do whatever it took to get people to come up with the money pay for the course, encouraging them to raise their credit card limits, spread payments out over multiple cards, or “borrow it from an uncle or cousin.”

Ronald Schnackenberg, a former sales manager who resigned from his position because he believed that the so-called university — which was not ever an accredited academic institution — was “a fraudulent scheme,” recalled an April 2007 event in New York City where he was punished for not wanting to encourage a couple in a dire financial situation to sign up for the course. He then watched a fellow employee convince the couple to pay for the course even though it was obvious they could not afford it.

A Trump University sales playbook included in the unsealed documents serves as proof of employee claims. The document states that the university “teaches the technique of using OPM… Other People’s Money,” and “how to leverage your tuition using OPM.”

The playbook instructs employees to prey on students by using known psychological selling techniques like the “roller coaster of emotions.” They were also told to make sure that “room temperature is no more than 68 degrees” when making a sale, and to coax the student’s financial situation with questions like, “When it comes to major lines of credit cards like Visa, MasterCard, and those guys, who is it that you work with now?”

Trump lawyers denied employee claims, saying that these they were “completely discredited” in California depositions that they conveniently declined to release. “Trump University looks forward to using this evidence, along with much more, to win when the case is brought before a jury,” said Trump spokeswoman Hope Hicks.

Trump, who started the failed “university” in 2005 and owned 93 percent of it, has accused Judge Gonzalo Curiel — who is presiding over the lawsuit and who is of Mexican descent — of being a biased “hater of Donald Trump.”

Curiel, for his part, decided to release the documents after Trump went on a 10-minute rant about Curiel, saying he had been “railroaded” by the legal system, and that, “the judge… happens to be, we believe, Mexican.” Curiel said that Trump “has placed the integrity of these court proceedings at issue,” and has ordered more documents to be released by Thursday, June 2, in a response to a request from the Washington Post.
Photo: U.S. Republican presidential candidate Donald Trump addresses the media regarding donations to veterans foundations at Trump Tower in Manhattan, New York, U.S., May 31, 2016.  REUTERS/Lucas Jackson

There Is A Paid Speech Controversy The Press Should Cover: Trump’s

There Is A Paid Speech Controversy The Press Should Cover: Trump’s

Signaling long ago that it would never tire of writing about — and generally denouncing — the topic of paid speeches Hillary Clinton gave as a private citizen, the press keeps piling on. Just last week, The Washington Post added to its already mountainous Clinton speech coverage by publishing another long take, this one complete with charts and graphs.

Following the press’ lead, Republican operatives are reportedly scouring the political countryside in search of what are now often portrayed as Clinton’s near-mythical speech transcripts.

But note that this media spotlight only searches out one target: Hillary Clinton.

And that’s been among the most baffling elements of the media’s obsession with Clinton’s speaking fees: Why are her lecture circuit earnings the only ones that matter? When so many prominent Republican candidates previously cashed big checks making paid speeches (and some of them cashed the checks while running for president), why are only the Democratic front-runner’s speeches considered to be newsworthy and borderline controversial?

Those recent Republican candidates include Mike HuckabeeBen CarsonJeb BushCarly FiorinaMitt RomneyHerman CainNewt Gingrich, and Rudy Giuliani, who pocketed more than $11 million in the thirteen months prior to announcing his candidacy in 2007.

And yes, Donald Trump.

It turns out that a big chunk of Trump’s speaking fees revolve around ACN, a controversial multilevel marketing company that’s been accused of bilking people out of millions of dollars.

If presented in proper context by the press, Trump’s long-running and lucrative relationship with ACN would essentially eliminate questions about Clinton’s speeches. And if queries persisted, the press would have to demand Trump also release nearly a decade worth of transcripts.

In truth, there has been some good reporting on Trump’s questionable relationship with ACN. (Interestingly, some of it has been done by the conservative press.) But apart from the initial flurry of reports last summer, Trump’s ACN association — like so many scandals involving the presumptive Republican nominee — has largely faded from view. And virtually none of the coverage has focused on the issue of paid speeches, or suggested Trump release transcripts to his six-figure ACN pep rallies, the way the press has hounded Clinton over that issue.

Here’s the key point: Clinton’s paid speeches, whether to financial institutions, universities or trade associations, have never represented endorsements. On the other hand, Trump has spent years giving paid speeches and appearances specifically to ACN and quite clearly endorsing the company: “ACN has a reputation for success, success that’s really synonymous with the Trump name.”

In 2009 and 2011, ACN executives appeared on Trump’s NBC reality show, Celebrity Apprentice. And during one episode, Trump touted a “revolutionary” videophone that ACN was rolling out: “I simply can’t imagine anybody using this phone and not loving it.” (The product quickly flopped.)

ACN’s website once bragged how, “Trump is a fixture at ACN International Training Events, setting the record for the most appearances from the ACN stage by any ACN special guest speaker.” (The boasts have since been deleted.)

In fact, it seemed the whole point of his speeches and personal appearances were for Trump to boost ACN’s brand and convince more people to buy into its sales system. “To prop up its business, ACN relies heavily on Trump to recruit news salespeople into the fold,” The Daily Caller noted.

Being a multilayered marketing company means ACN relentlessly recruits people to sell its products.

As Slate explained:

Products sold through the multilevel marketing model aren’t sold in stores. Instead individuals purchase a startup kit (always encouraged, but not always required) and then contract with the company for the right to sell the merchandise to other individuals. They receive a commission on each sale but are not actually employed by the company. So far, so familiar. That’s the classic Avon Lady model.

But selling goods one by one to your neighbors and friends isn’t the way to riches, no matter how much you hound them or otherwise guilt-trip them into making purchases. So multilevel marketing companies incentivize their salespeople to recruit other salespeople, promising them a cut of all that person’s sales, as long as both the original seller and the new recruit remain active.

Becoming an ACN salesperson costs money. The company charges a $499 initiation fee, and then “ACN representatives are charged a $149 annual renewal fee, and they often pay $39.99 a month for a package of technology and marketing materials, plus extra fees to attend company meetings and conferences.”

Trump now seems to realize the political downside to his ACN cheerleading. When asked about his cozy, decade-long relationship with ACN, Trump last year told The Wall Street Journal he didn’t really know much about the company. (“I know nothing about the company other than the people who run the company.”) This is a company, as the Journal reported, that has paid Trump “millions of dollars” “over the past decade.”

Indeed, Trump once bragged that in 2006 the company paid him $2.5 million for a single speech. And last year when Trump filed a financial disclosure with the Federal Election Commission, three ACN speeches/appearances from 2014 and 2015 were listed among his income. Trump pocketed $450,000 for each one.

Why are Trump’s ACN six-figure paychecks a big deal? And why, if Hillary Clinton had spent years hyping a company as suspicious as ACN, would there probably already have been Republican-led congressional hearings into that relationship?

From the Journal [emphasis added]:

Mr. Trump’s endorsement helped entice people such as Donna Roberson, 47 years old, a disabled Army veteran near Tacoma, Wash., who signed up as an ACN independent business owner in 2011. In an interview, she recalled thinking at the time: “If he’s pushing it, it’s got to be a good company to get into. Yeah, we can make money at this.”

Ms. Roberson, a single mother of four, said she lost as much as $2,000 on ACN“I feel like it’s a big scam,” she said. “It was costing me more to stay in the company than what I was making.”

Here are some additional reasons why Trump likely wants his ACN past to disappear:

  • In 2010, Montana’s securities commissioner alleged ACN was an “illegal pyramid scheme” and sought to have it shut down, according to WSJ. State regulators dropped the charge after the company promised to better train its workers.
  • The Journal also laid out how Maryland regulators accused ACN affiliate Xoom Energy of jacking up energy rates for its customers and is seeking at least $1 million in payments for customers.
  • Xoom is also the subject of a class action lawsuit in North Carolina and is accused of making “false and misleading” sales pitches. “The lawsuit includes the text of almost three dozen online complaints alleging similar acts of fraud against ACN and/or Xoom,” National Review reported.
  • A former ACN salesman confessed to a local ABC affiliate in New York that he was unintentionally “robbing people” when he got them to sign up for Xoom Energy.

In other words, ACN is a mess and ACN is precisely the kind of questionable company a presidential candidate should stay away from, and certainly the type of company a candidate should not have spent years breathlessly endorsing in exchange for $450,000 paychecks.

Keep that in mind the next time reporters hover around Clinton speech transcripts.