Class action pyramid scheme lawsuit against Trump family set to play out in public after judge refuses to stay the case

Class action pyramid scheme lawsuit against Trump family set to play out in public after judge refuses to stay the case

One of the many lawsuits that the Trump Organization and members of the Trump family have faced alleges that they engaged in an illegal pyramid scheme. Attorneys for the company have tried to get the class action lawsuit placed on hold, but Judge Lorna G. Schofield — a federal judge in New York — has refused to stay the case.


In Law & Crime, reporters Matt Naham and Aaron Keller explain, “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 (conning) each of these victims into giving up hundreds or thousands of dollars,’ in violation of various state laws.”

Members of the Trump family named in the lawsuit include President Donald Trump and three of his children: Donald Trump, Jr., Eric Trump and White House Senior Adviser Ivanka Trump.

According to Naham and Keller, “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.”

The plaintiffs first filed the lawsuit in October 2018, alleging “racketeering and conspiracy to racketeer.” And in January 2019, attorneys for members of the Trump family requested that the case be thrown out altogether — which didn’t happen, although the “racketeering and conspiracy to racketeer” claims were dismissed.

Trump Organization lawyers were hoping that Schofield, who was appointed by former President Barack Obama, would put the case on hold. But the Southern District of New York judge ruled that the lawsuit would not be stayed.

The 64-year-old Schofield, Naham and Keller report, applied the “traditional standard” for determining whether or not to stay a case.

“The first factor is whether the parties applying for the stay — the Trumps and ACN — are likely to succeed on the merits,” Naham and Keller note. “Here, Schofield ruled that they are not…. The second of the four factors for a stay, irreparable injury, did not outweigh the defendants’ loss on the first factor, the judge ruled. The third factor, ‘substantial injury’ to the plaintiffs, factored ‘lightly against a stay.’ The fourth factor, ‘public interest’ weighed ‘slightly in favor of a stay,’ the judge ruled.”

Schofield, in her ruling, asserted, “As a private business dispute, the action does not give rise to a public interest in the lawsuit. That one of the defendants has since assumed a position of national prominence does not create the type of public interest typically found to weigh against a stay.”

Enjoy this piece?

… then let us make a small request. AlterNet’s journalists work tirelessly to counter the traditional corporate media narrative. We’re here seven days a week, 365 days a year. And we’re proud to say that we’ve been bringing you the real, unfiltered news for 20 years—longer than any other progressive news site on the Internet.

It’s through the generosity of our supporters that we’re able to share with you all the underreported news you need to know. Independent journalism is increasingly imperiled; ads alone can’t pay our bills. AlterNet counts on readers like you to support our coverage. Did you enjoy content from David Cay Johnston, Common Dreams, Raw Story and Robert Reich? Opinion from Salon and Jim Hightower? Analysis by The Conversation? Then join the hundreds of readers who have supported AlterNet this year.

Every reader contribution, whatever the amount, makes a tremendous difference. Help ensure AlterNet remains independent long into the future. Support progressive journalism with a one-time contribution to AlterNet, or click here to become a subscriber. Thank you. Click here to donate by check.

Close