Trump Heads Into Final Mid-Term Push
Video phones no one wanted, dubious vitamins and plagiarized real estate tips. In the years before Donald Trump successfully pitched his presidency, that’s what he was pitching to working-class investors who would lose hundreds of thousands of dollars each, a new lawsuit claims.
Trump and his three eldest children spent more than a decade operating a large and complex enterprise designed to cheat needy people seeking to invest in their education or start a business, according to the suit, which was filed Monday in Manhattan federal court and proposes class action status. The complaint seeks unspecified money damages for alleged fraud and racketeering violations.
In all three alleged schemes, Trump stamped his well-known name on a product he didn’t research or understand, solicited investments from average Americans and then walked away as the products fizzled, all while keeping the cash he got for his pitches, the suit claims. The scam caused "devastating and life-altering" losses, it says.
Neither Amanda Miller, a Trump Organization spokeswoman, nor Alan Garten, the company’s chief legal officer, responded to requests for comment.
The Tesseract Research Center, a Washington-based nonprofit group, is funding the lawsuit, according to Tim Miller, a spokesman for the effort. Tesseract’s chair is Morris Pearl, a former executive at BlackRock Inc., the world’s largest asset manager. Pearl has donated nearly US$151,000 to Democratic candidates and affiliated groups since the start of last year, according to an online database maintained by the Federal Election Commission.
The Trump Organization said the plaintiffs and “their political activist attorneys” timed the filing of the 164-page complaint for partisan advantage. “The motivations here are as plain as day,” the Trump Organization said in a statement to the New York Times, which first reported the suit. The company called the allegations “completely meritless.”
The suit, by two men and two women identified only by pseudonyms, comes just eight days before midterm elections that could cost the Republican Party control of at least one house of Congress. With detailed allegations of wrongdoing, it could refocus voter attention on the president’s private businesses.
Trump University US$25 Million Deal Heads Off Fraud Trial
In the complaint, the Trumps are accused of helping to lure investors to a multi-level marketing company called ACN Inc., which allegedly promised business opportunities with little risk and was widely promoted on Trump’s "Celebrity Apprentice."
ACN’s flagship product was a “doomed” desktop video phone that could connect calls only between two ACN customers and was quickly eclipsed by services like Skype and the advent of smartphones, according to the complaint.
From 2005 to 2015, Trump endorsed ACN in exchange for millions of dollars in "secret payments," despite telling prospective investors that his endorsement was "not for any money," the suit claims. Trump said in promotions that participants have a "great opportunity" without "any of the risks most entrepreneurs have to take," according to the complaint.
US$1.35 Million Payment
ACN was "massively boosted" after being featured on Trump’s reality-TV show, while the company made it "crystal clear" that Trump’s endorsement helped attract investors and customers alike, according to the suit. ACN paid Trump US$1.35 million for three separate speeches in May and June of 2014 and February of the following year, according to his 2015 federal financial disclosure form.
Trump sought to distance himself from ACN during his presidential campaign in 2015, after the Wall Street Journal reported the company had slashed its workforce and canceled orders from its suppliers, according to the suit. ACN deleted all references to Trump from its website and later liquidated in federal bankruptcy court, the complaint says.
"I do not know the company," Trump said of ACN, according to the complaint. "I know nothing about the company other than the people who run the company ... I am not familiar with what they do, or how they go about doing that, and I make that clear in my speeches."
ACN sponsored a hole at the annual Eric Trump Foundation golf tournament in September 2017.
Ideal Health Inc.
The plaintiffs also target Trump’s involvement in a multi-level marketing company called Ideal Health Inc. that sold dietary supplements via the company’s network of participant-investors, who paid nearly US$500 for starter kits and far more to obtain "FastStart Gold" status or attend expensive seminars, the suit says.
Even before Trump’s involvement, at least 20 complaints were filed against the company by salespeople and customers who claimed they received no returns from Ideal Health despite investing thousands of dollars each, according to the suit. Some customers said the products made them sick.
A 2008 proposal offered the Trump Organization a US$1 million licensing fee and a 17 per cent stake in Ideal Health to invest, according to the complaint. In a 2009 infomercial, Trump "specifically targeted vulnerable individuals" suffering from the economic downturn, the suit claims, promoting the network -- now rebranded the Trump Network -- as a way to "give millions of people renewed hope" so they can "opt out of the recession."
"The company is not a long shot," Trump said in a 2010 press release, according to the suit. "I see unbelievable enthusiasm for the company’s products and business model."
Trump’s licensing deal with Ideal Health expired in 2011 and wasn’t renewed. The next year, according to the suit, the vitamin seller was sold and renamed, while "people who had bought into Trump’s promises of success lost everything."
Ultimately, facing claims that the Trump Network’s products were ineffective and based on flawed or nonexistent science, Trump representatives allegedly said Trump "was never personally involved."
‘Secrets to Success’
Around 2005 or 2006, Trump’s failed Trump University struck a licensing deal with Business Strategies Group LLC to form the Trump Institute, the third and final alleged scheme in the complaint. The live-seminar program purported to tell Trump’s "secrets to success" in the real estate industry in "several extravagantly priced seminars," the suit says.
Trump’s image was plastered on marketing materials boasting "The Trump Institute’s Way to Wealth" seminar series, according to the complaint. Trump "emphatically" stated that participants would learn his "secret recipe for success" and "the Trump way to get cash back when you buy a property," it says.
"But these statements were plainly false," the suit claims.
"Trump had no actual involvement in the creation of course material," the complaint says. "No matter how much people paid to attend the seminars, they would never actually be able to learn what Trump had to teach, because he never spent any time reviewing the course materials or drafting the contents."
Much of the material was plagiarized, the suit says, citing a 2016 article by the New York Times. The newspaper said the editor of the Trump Institute manual was hired off a Craigslist ad and never met Trump, but had read his books.
Shortly after his election, Trump agreed to pay US$25 million to settle claims that Trump University had cheated more than 6,000 students with false promises of teaching them his real estate secrets.
The lawsuit is Doe et al. v. Trump Corp. et al., 18-cv-9936, U.S. District Court, Southern District of New York (Manhattan).