Trump Fraudulent ACN MLM Endorsement RICO Class Action

The 164-page complaint for this class action examines two multi-level marketing (MLM) schemes and an “educational” entity which it claims were fraudulently promoted and operated by an “association-in-fact.” The allegations? Violations of the Racketeering Influenced and Corrupt Organizations (RICO) Act and common law fraud, among other things. The defendants? The Trump Corporation, Donald J. Trump, Donald Trump, Jr., Eric Trump, and Ivanka Trump.

The Nationwide Equitable Class for this action is all persons and entities who invested in, subscribed to, or made payments to ACN Opportunity, LLC or its affiliates. This class is for the RICO, negligent misrepresentation, and fraud claims. The complaint also proposes similar California, Maryland, and Pennsylvania classes or subclasses for claims under state law.

The case centers on an MLM called ACN, or American Communications Network, which the complaint claims paid the defendants millions of dollars in secret to promote and endorse ACN. Donald Trump did this on video, in ads, in personal appearances for the company, and on his own Celebrity Apprentice TV show.

For example, on a promotional videotape, Donald Trump said, “You have a great opportunity before at ACN without any of the risk most entrepreneurs have to take. You have the ability to market breakthrough technology before it hits the critical mass. I’ve experience the opportunity that exists when you’re able to jump ahead of the curve, and ACN gives you that opportunity.” He also claimed that ACN’s videophone was doing “half-a-billion dollars’ worth of sales a year” and that his endorsement was “not for any money.” 

All of this, the complaint says, was false.

First, the complaint says, “Investigations by regulatory agencies … show that the ACN business opportunity was high risk and that investors had a miniscule probability of commercial success.” Only 1% of participants were able to earn a reasonable income, and for most participants, the costs of membership in the organization exceeded their earnings.

Second, the complaint alleges that the products were not commercially viable. The videophone, it says, was a desktop, wired telephone with a camera and screen that required an Internet connection to work and that could only make calls to other ACN videophones. 

Third, the complaint alleges that, while Trump implied he had done due diligence on the company, he had not. The complaint claims that he was speaking for the company only because he was paid to do so.

The Federal Trade Commission (FTC) says that paid endorsers must disclose that they are paid and that endorsements “must reflect the honest opinions, findings, beliefs, or experience of the endorser.” Even an endorser reading from a script may have “an obligation to make a reasonable inquiries of the advertiser that there is an adequate basis for assertions that the script has them making”.

According to the complaint, the plaintiffs in this case all relied on Trump’s word, seeing him as a reliable spokesperson and judge of opportunity, and they all lost money.

Article Type: Lawsuit
Topic: Consumer
Tags: Fraud, Paid Endorsement, RICO