RICO Class Action Alleges Trump Corp., Trump and Children Defrauded Investors in Multi-Level Marketing Scheme

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The Trump Corporation joins President of the United States Donald J. Trump and his three eldest children as defendants in a proposed class action lawsuit filed by four pseudonymous plaintiffs who allege the Trumps and the businesses deliberately defrauded thousands of working-class Americans through a multi-level marketing scheme disguised as a company called ACN. Filed in New York federal court, the 164-page, eight-count lawsuit alleges the defendants are liable for a years-long pattern of fraudulent conduct that violates the Racketeer Influenced and Corrupt Organization Act (RICO).

“‘Trust me,’ Trump often said in endorsing and promoting the Investments. Unfortunately, far too many victims did.”

The case charges that the defendants have for more than a decade run a complex enterprise with the singular goal of enriching themselves by “systematically defrauding economically marginalized” citizens looking to invest in their futures by way of education or small business ownership. At the center of the alleged scheme is a multi-level marketing outfit called ACN—American Communications Network—a company that the suit says from 2005 through at least 2015 paid the defendants millions in secret payments in exchange for promotion and endorsement. The case alleges the defendants supported ACN with paid pitches, including for its flagship videophone, that were disseminated on “Celebrity Apprentice” and at public events. What the defendants left out of their pitches, the suit says, is that they were effectively paid advertisements.

“[The defendants] willfully failed to disclose their financial ties to—and quid pro quo arrangements with—the Endorsed Entities,” the complaint reads. 

In return for the “large, secret payments,” the complaint says, Trump told prospective investors that they were looking at a great opportunity “without any of the risks most entrepreneurs have to take,” and that he had “experienced the opportunity,” “done a lot of research” and wasn’t promoting ACN for “any money.” All told, not a word of what ACN investors were told by the defendants was true, the lawsuit alleges. From the complaint:

“In the minds of many Americans, the Trump brand was once synonymous with entrepreneurial success. Indeed, Trump spent years cultivating a brand for himself based on the impression that he was a successful entrepreneur. [The defendants] conducted the affairs of their enterprise as a fraudulent scheme to leverage that brand, and use a series of false and misleading statements and omissions, to ensnare vulnerable consumers in certain so-called business opportunities and training programs like ACN.”

As for what, exactly, ACN is, the case says it’s a multi-level marketing company that offers business opportunities to “independent business owners,” who are required to pay certain fees “for the privilege of selling ACN’s products.” Between 2005 and 2015, the case says, the defendants fraudulently promoted so-called business opportunities offered by ACN and at least two other consumer-facing companies, namely TTN, LLC (the Trump Network) and Business Strategies Group, LLC, a live-seminar program purporting to sell “secrets to success” through exorbitantly priced seminars.

According to the lawsuit, the defendants were paid by these entities to deliberately mislead investors through three common messages, namely that: 

The above portrayals were patently false, the complaint alleges, with the defendants knowing full well that their message with regard to ACN served only to lure in investors such as the plaintiffs through “a veneer of legitimacy and impression of success.”

More from the suit:

“The Investments did not—and could not—offer a reasonable probability of success. Nor was Trump endorsing the Investments because he believed that would. Indeed, [the 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.”

Each plaintiff alleges he or she was saddled with initial $499 sign-up fees, renewal fees, expenses for traveling to meetings and conventions, and costs for business tools “in attempting to recruit customers and participants,” often forgoing other income in the process.

The full lawsuit can be read below.