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Verdicts & Settlements

Trump Family Can’t Move Pyramid Scheme Lawsuit to Arbitration

— April 10, 2020

U.S. District Judge Lorna Schofield also demanded that MGM Entities give defense hitherto unseen–and potentially scandalous–behind-the-scenes footage of Trump from The Apprentice.

A federal judge rejected efforts by President Donald Trump and his family to send a lawsuit which accuses them of running a pyramid scheme to arbitration.

U.S. District Judge Lorna Schofield announced the decision late Wednesday. Her ruling, writes Reuters, accused the Trump family of seeking arbitration after obtaining “the benefits of litigating in federal court.”

In other words, the Trumps hoped to move the suit back into arbitration after pushing the lawsuit toward the judiciary.

“This conduct is both substantively prejudicial towards Plaintiffs and seek to use the [Federal Arbitration Act] as a vehicle to manipulate the rules of procedure to Defendants’ benefit and Plaintiffs’ harm,” Schofield wrote.

The defendants, says Reuters, include President Trump along with three of his adult children: Donald, Jr., Eric Trump, and Ivanka Trump. Named alongside the Trumps was an affiliate of the family business, the Trump Organization.

Gavel resting on open book; image by verkeorg, via Flickr, CC BY-SA 2.0, no changes.
Gavel resting on open book; image by verkeorg, via Flickr, CC BY-SA 2.0, no changes.

Joanna Hendon, an attorney for the Trumps, told Reuters they plan to appeal Schofield’s decision.

“The court erred, and while we were disappointed, we will take an immediate appeal,” Hendon wrote in an e-mail.

The lawsuit, filed in October 2018, centers on the Trump-run American Communications Network. The complaint claims that the Trump family “misled” prospective entrepreneurs into becoming salespeople for the ACN.

But in order to become affiliated with the ACN, which sold “videophones and other goods,” applicants had to pay close to $500.

The lawsuit suggests that many of the plaintiffs believed the American Communications Network and its business platform were wholly endorsed by Donald Trump—and that not only was Trump in charge of the operation, but that he believed in the ability of his salespeople to recoup their investment and succeed long-term.

In reality, the suit alleges, the Trump family cooked up the ACN as a way to enrich themselves. Reuters claims that, altogether, the Trumps made “millions of dollars in secret payments from 2005 to 2015.”

While the plaintiffs had signed non-arbitration agreements with the American Communications Network, Schofield found there was no reason why such agreements would protect the Trump family from targeted litigation.

Perhaps more tantalizingly, Schofield also ordered MGM Entities to hand over behind-the-scenes footage from The Apprentice. notes that, between 2005 and 2015, Donald Trump is alleged to have used the show as a means to promote investment into the ACN.

However, the Trump family—along with MGM Entities, which produced The Apprentice—have long resisted the tapes’ release.

The footage is rumored to contain scandalous content, including clips of Donald Trump using racial slurs and derogatory language.


Donald Trump & MGM Strike Out Blocking Release Of ‘Apprentice’ Tapes; Ordered By Judge In Scam Suit

MGM Ordered to Deliver Unaired ‘Apprentice’ Footage in Marketing Scam Lawsuit Against Trumps

Trump family loses bid to move marketing scam lawsuit to arbitration

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