Trump Organization Loses Major Court Battle In Racketeering Lawsuit
President Donald Trump and his family just suffered a major defeat in federal court, reports Law & Crime. The family had a lawsuit leveled against them for endorsing a get-rich scheme called ACN Opportunity, LLC. The pyramid scheme allegedly conned it’s victims “into giving up hundreds or thousands of dollars.” The Trump family and organization tried to settle the matter via secret arbitration, but that was shot down. They will more than likely have to litigate the claim publicly.
The lawsuit was originally filed in October of 2018 after the plaintiffs saw that their business venture, which was sold to them as having “offered a reasonable probability of commercial success” did not work out. Filing notes give more detail:
Between 2005 and at least 2015, Defendants promoted and endorsed ACN through videos, print and online media, at ACN events, and during episodes of The Celebrity Apprentice, a television program hosted by Trump and featuring Ivanka Trump and Donald Trump, Jr. Defendants’ endorsement of ACN was crucial to Plaintiffs’ decisions to become [Independent Business Owners (IBOS)] for at least two related reasons. First, Plaintiffs considered Trump and his family highly successful in business. Second, Plaintiffs believed that the endorsement was independent of ACN.
It turns out that ACN was paying the Trumps for the exposure and it was not publicly known.
“Defendants and ACN did not disclose that ACN was paying [the Trump family] to promote and endorse the company,” the Wednesday ruling in the Southern District of New York (SDNY) notes.
Federal charges for “racketeering and conspiracy to racketeer” were put forth by a Jane Doe, and were dismissed. The Trumps moved in for a broad dismissal of the remaining charges in January 2019. When the Trumps tried to force arbitration for the remaining state claims, they were denied.
Defendants seek to compel arbitration of the dispute in this case based on the arbitration agreements between Plaintiffs and ACN, to which Defendants are not a party. At issue on this motion is whether Plaintiffs agreed to arbitrate with Defendants, on a theory of either equitable estoppel or agency. The Court finds that Plaintiffs did not agree to arbitrate with Defendants. A second issue in the alternative is, if there was such an agreement, did Defendants waive their right to compel arbitration of these claims. The Court finds that they did. The motion to compel arbitration is therefore denied on each ground independently.
The ruling was made by U.S. District Judge Lorna G. Schofield. In denying the Trumps’ forced arbitration, she had some harsh words. She denigrated them for using the Federal Arbitration Act (FAA) as a “vehicle to manipulate the rules of procedure to Defendants’ benefit and Plaintiffs’ harm.”
It seems that whatever sordid details that the Trumps are trying to keep quiet will see the light of day as this lawsuit moves forward. This is just another example of the Trumps’ unethical conduct and shady business practices.
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