“Trump” card of American Ponzi scheme

In India, we have seen many politicians, particularly from West Bengal and Tripura being accused of floating fraudulent Ponzi schemes thereby cheating thousands of innocent and gullible people for thousands of crores of rupees. Enforcement Directorate has launched prosecution against the fraudsters under the Prevention of Money Laundering Act (PMLA) and IPC. Fortunately, no politician occupying the highest post like President or the PM has ever been accused for floating or supporting/endorsing such Ponzi schemes in his personal capacity.

In India, MLM, Multi Level Marketing is just another Ponzi scheme. I have seen many persons roping in new recruits in this MLM chain. No one knows how many of them have made any money or they have simply resigned to their fate after incurring losses as invariably none of them would be in position to take on the MLM entity legally.

However, in USA, four persons, Jane Doe, Luke Loe, Richard Roe and Mary Moe, have filed class action suit against Donald J Trump in his personal capacity, his family and his Trump Corporation in US District Court, Southern District of New York, case 1:18-CV-09936 on October 29, 2018.

It is alleged that between 2005-2015, the Trump Enterprise fraudulently promoted and endorsed business opportunities and training programs (what is collectively called as “Investments”) offered by at least three consumer-facing companies:

1. ACN Opportunity, LLC (“ACN”), a MLM.
2. TTN, LLC (d/b/a “The Trump Network”), another MLM, and
3. Business Strategy Group, LLC (d/b/a “The Trump Institute”), a live seminar program that purported to sell Trump’s “Secret to Success” in extravagantly priced seminars.

The Plaintiffs have stated that in exchange of large, secret payments from these companies, i.e. the Endorsed Entities, the Trump Enterprise deliberately misled the Consumers by delivering a common and consistent message:

1. That the prospective Investors would have a reasonable probability of commercial success if they bought into the Investments.
2. That Trump was endorsing and promoting the Investments because he believed that they offered reasonable opportunity of commercial success (rather than because the Trump Enterprise was being paid for the endorsements).
3. That Trump’s endorsement was predicated on Trump’s extensive due diligence, inside information and personal experience with the “Investments”.

This was the Message repeatedly given by Trump. The Message was delivered primarily by Donald J Trump himself in person, who made false and misleading statements about the nature of “Investments”, as well as about his own incentives, diligence and experience, at the Endorsed Entities events and in numerous written publications and videos.

Like in India, many of the victims are among the most economically marginalized and vulnerable Americans. The victims were specifically targeted because they were not experienced in financial and commercial matters, much less than fighting back legally.

ACN was allegedly at the center of this Ponzi scheme. The plaint states that from 2005 to at least till 2015, the Trump Enterprise received millions of dollars in secret payments to promote and endorse ACN. The payments took the form of speaking fees for Trump’s appearances in ACN Videos, publications and events, payments for ACN’s appearances on The Celebrity Apprentice, fees for ACN’s golf tournaments held at Trump Golf Club, etc. etc.

The Plaint states that in exchange for these undisclosed payments, Trump, acting in concert with and through the members of Trump Enterprise that he and his family controlled, repeatedly, explicitly and bombastically endorsed ACN in myriad formats and forums. Trump and his Corporation made and disseminated numerous knowingly false and misleading statements concerning the value of ACN’s technology, the soundness of its business model and the level of risk the participants would face in pursuing the ACN business opportunity.

As expected, no one made any dime. The whole scheme was reportedly a scam. An American version of Indian Ponzi schemes or vice versa.

These four victims have filed a class action complaint against the Trump Corporation, Donald J Trump in his personal capacity, Donald Trump Jr., Eric Trump and Ivanka Trump.

The accusations are made as follows:

1. Racketeering in violation of the Racketeering and Influenced Corrupt Organizations Act (RICO Act), 18 U.S.C. s. 1962(c)
2. Conspiracy to conduct the affairs of a Racketeering Enterprise, 18 U.S.C. s. 1962(d)
3. Dissemination of misleading and Untrue public statements in violation of California Business and Professions Code,
4. Unfair Competition in violation of California Business and Professions Code.
5. Unfair and Deceptive Trade Practices in violation of Maryland Consumer Protection Act
6. Unfair and Deceptive Acts or Practices in Violation of Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL)
7. Common Law Fraud
8. Common Law Negligent Misrepresentation.

The complaint is quite exhaustive and runs into 160 pages. The Plaintiffs have demanded trial by Jury.

It is said that this case has the potentiality of being converted into a criminal case.

Donald J Trump seems to have played a Trump Card in ACN’s mega ponzi scheme.