Trump Can’t Escape Fraudulent Business Deal Class Action

A federal judge has decided that President Donald Trump and three of his children should face some charges by a putative Class who say that they were bilked out of money when they invested in what turned out to be a fraudulent marketing scheme.

U.S. District Judge Lorna Schofield threw out the Racketeer Influenced and Corrupt Organizations (RICO) class action claims against the Trumps because “the Complaint does not sufficiently plead that Defendants’ conduct was the proximate cause of Plaintiffs’ losses.” But the judge allowed numerous state law allegations to stay intact.

The Trump class action complaint was filed in October 2018, accusing the family of the endorsing fraudulent deals and the defendants filed a motion to dismiss in January of this year.

Donald Trump Jr., Eric Trump and Ivanka Trump claimed in their motion to dismiss that the plaintiffs were unable to show that they were injured and President Trump himself claimed that he has nothing to do with the American Communications Network (ACN), the business the plaintiffs say duped them out of money.

The judge’s opinion states that “For over a decade, Defendants operated a complex enterprise through which they promoted third-party companies offering consumer-facing business opportunities and training programs.”

One plaintiff, named Doe, alleges that she paid $499 to become an Independent Business Owner (IBO) and attended a convention where she was told that she would meet Trump. While he was prominently featured at the convention, Trump himself did not appear. The plaintiff claims that she spent $1,500 to attend the convention.

She also attended meeting and a national convention in order to meet Trump, but he never showed up, according to the judge’s order. She spent another $2,000 at this convention, according to the judge’s order.

The judge’s order reads, “Trump’s support for ACN — including specific statements touting ACN — had encouraged Doe to join and persevere with ACN. But eventually, during her second year as an IBO, Doe came to the realization that ACN did not provide average IBOs a realistic chance of making a profit. Doe cut her losses and ceased to participate in ACN. She had earned only $38.”

Another plaintiff, named Loe, alleges that he attended an ACN meeting in Los Angeles, which began with speeches by ACN representatives and followed by a video which featured Trump. The judge’s order states that, “Trump’s endorsement ‘was the key factor’ that induced Loe to join ACN. When he joined and while he was associated with ACN, Loe heard and relied on specific statements from Trump.”

This plaintiff did not have much success with the program, recruiting only one other person to join ACN, according to the judge’s order. In addition, Loe spent $10 to $20 every time he attended an ACN meeting. He says that he made it to 25-30 meetings. In addition, Loe states that he attended three large events and borrowed money from other team members to pay for them.

The judge’s opinion reads, “The Complaint fails to plead proximate causation because it does not allege a direct relation between Defendants’ conduct and Plaintiffs’ losses.”

The plaintiffs are represented by Roberta A. Kaplan, Emily C. Cole, John C. Quinn, Matthew J. Craig, Alexander J. Rodney and Joshua Matz of Kaplan Hecker & Fink LLP, and Andrew G. Celli of Emery Celli Brinckerhoff & Abady LLP.

The Trump Fraudulent Business Deal Class Action Lawsuit is Jane Doe, et al. v. The Trump Corporation, et al., Case No. 1:18-cv-09936, in the U.S. District Court for the Southern District of New York.

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