Trump Organization Grift Coming To Light

Ken AshfordTrump & AdministrationLeave a Comment

There are many reasons why Donald Trump is panicking as he faces the election but the disintegration of the Trump Organization grift has to be a big one. It’s possible that he’ll attempt to build a new media empire but I would bet money that it will implode in about a tenth of the time Glenn Beck’s did. If Trump’s post-presidency follows previous wingnut celebrity cults it will disintegrate once he’s no longer prominent. I have a feeling his support is totally tribal and once he’s no longer relevant to the tribe, they’ll run in the opposite direction.

And all of this will be waiting for him:

A federal judge sitting in the Southern District of New York has refused to stay a lawsuit alleging that Donald Trump, Donald Trump, Jr., Eric Trump, Ivanka Trump, and the Trump Corporation committed “various business torts,” including engaging in an illegal pyramid scheme.

The complicated and anonymous class action lawsuit, filed by a Jane Doe and others, resulted in motions to stay the proceedings and interlocutory appeals by the Trumps, the Trump Corporation, and a third party called ACN Opportunity, LLC. ACN was ordered to produce documents relevant to the claims. Interlocutory appeals are appeals to higher courts filed in the midst, rather than at the conclusion, of lower court litigation.

The judge, Lorna G. Schofield, a Barack Obama appointee, said the lawsuit would not be put on hold.

The lawsuit, originally filed in Oct. 2018 as an anti-“racketeering enterprise” action, was later streamlined. The class sued on various state and federal charges–including “racketeering and conspiracy to racketeer” claims. The two federal claims were dismissed by the court after the Trump family filed for a broad dismissal in January 2019. But the case is yet living.

The class action plaintiffs allege that the Trump family business promoted a multi-level marketing, or pyramid, scheme known as ACN Opportunity, LLC. ACN, the plaintiffs said, was a “get-rich-quick scheme” that relied on Trump and his family “conn[ing] each of these victims into giving up hundreds or thousands of dollars,” in violation of various state laws. […]

The plaintiffs claimed that the Trump family falsely endorsed and promoted ACN by insisting that the enterprise “offered a reasonable probability of commercial success”—even using The Celebrity Apprentice to draw them in:

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.

According to the lawsuit, ACN was paying the Trumps for the above-described exposure but this was not public knowledge.

Schofield walked the case through the “traditional standard” for determining whether to stay litigation. The first factor is whether the parties applying for the stay — the Trumps and ACN — are likely to succeed on the merits.  Here, Schofield ruled that they are not, and for several reasons.

The first reason the Trumps and ACN are not likely to succeed — here, in an interlocutory appeal — is because they attempted to force the case into arbitration “despite the absence of any written agreement between” the parties which required arbitration. “The fundamental rule of arbitration is that arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit,” the judge said (internal quotations and citations omitted).  The judge also said that a narrow exception to that rule did not apply in this case because the “Plaintiffs were duped about the nature of the relationship between ACN and Defendants.” Second, the defendants — the Trumps and ACN — “waived their right to arbitrate by delaying their motion to compel arbitration.” 

In other words, the Trumps, their business, and ACN botched the case, and the likelihood that they will succeed in an interlocutory appeal is low.

There is more at the link about why the Trumps are unlikely to prevail. Let’s hope that’s true. But I would imagine that they are going to be inundated with similar lawsuits for the foreseeable future (just as they were before) but their properties are going to be huge money losers and his brand is destroyed. After all, his rich supporters are only spending at his holdings to curry favor with the powerful and there will be social costs to continuing to do that if he’s out of office. (Anyway, why bother? There are much better properties.) And whatever is left of the true believers can’t afford his golf resorts and hotels.

They’ll carry on for a while with the dregs of MAGA and, as I said, they’ll almost assuredly try to start a media empire, probably based on OAN. But I suspect they are going to end up bankrupt in the end and their followers won’t really care much.

He and his family of grifters will be outcasts even among the former true believers. Right-wingers don’t like “losers.” Trump may be a moron but he understands that much.