FTC lawsuit leads to $16.7 million judgment against managers and celebrities endorsing real estate investment training program
As a result of the lawsuit filed by the Federal Trade Commission and the Utah Department of Consumer Protection (DCP), the principals of the Utah-based real estate investment training company will pay $15 million and will be prohibited from selling money-making opportunities under the law. The court order they agreed to. In addition, two real estate celebrities who supported the training agreed to orders requiring them to pay $1.7 million.
According to the complaint filed by the FTC and DCP of Utah against Response Marketing Group, LLC and its principals, Response Marketing used false promises to sell a series of expensive real estate investment training programs to consumers. The complaint also names two real estate celebrities as defendants — Scott Yancey, who was the star of the house flipping show Flipping Vegas On A&E, Brigadier R. Graziosi Millionaire success habits. Yancey and Graziosi promoted training programs and participated in efforts to bury online customer complaints that Response Marketing failed to deliver on its promises or was a scam.
“Today’s order against Response Marketing and its owners permanently prohibits them from engaging in the business of wealth creation and returns $15 million to consumers, in addition to the $1.7 million already secured through this lawsuit,” said Samuel Levin, Director of the FTC’s Bureau of Consumer Protection. “. “We are grateful to the Utah Division of Consumer Protection for their partnership in obtaining this strong relief, and we will continue to crack down on deceptive money-making opportunities and illegal endorsement practices.”
“This is the largest CPD settlement in Utah history and holds Nudge and its affiliates accountable for the serious financial harm caused to consumers across the country,” said Margaret Buss, Executive Director of the Utah Department of Commerce. “Businesses seeking to take advantage of Utah consumers should be put on notice.”
Busse also thanks the FTC and the Utah Attorney General’s Office for the strong partnership that led to this successful consumer protection settlement. “This partnership gave us the ability to go after these bad actors who thought they could circumvent Utah laws.”
Response marketing attracted consumers to free events across the country with infomercials and social media ads in which real estate celebrities promised to share their investing techniques. At these events, response marketing enticed consumers to purchase three-day workshops for approximately $1,000 by falsely representing that it would provide consumers with access to special tools that would enable them to become successful real estate investors. At the three-day workshops, Response Marketing deceptively offered additional training programs costing tens of thousands of dollars, according to the complaint.
Response Marketing then upstaged consumers by promoting a purported training program through telemarketing that could cost up to an additional $30,000. The program was marketed as an exclusive “Inner Circle” training that would supposedly have limited spaces and would allow consumers to work one-on-one with a purported real estate expert. The complaint alleged that the vast majority of consumers who purchased Response Marketing’s products and services did not become successful real estate investors and did not even recover the money they spent on Response Marketing’s training programs.
In a June 2022 opinion, which partially granted the FTC’s motion for summary judgment, the district court judge hearing the case found that many of Response Marketing’s claims were false or misleading, including Response Marketing’s claims that its customers were given special access To the alleged financing. network to allow them to conduct real estate deals without any money of their own; Students will have access to messages that should allow them to make cash offers for properties and thus obtain them at a discounted price; That response marketing had buyers lining up to buy the homes the students wanted to flip; There were limited places in Response Marketing’s “Inner Circle” program.
Response Marketing has sold its training programs under a variety of names, including Affluence Edu, Cash Flow Edu, Flip for Life, OnWealth, Renovate to Rent, and Visionary Events. The former company began selling real estate investment training packages in early 2010. In December 2019, Response Marketing agreed to stop selling these packages after the initial complaint in this case was filed by the FTC and Utah’s DCP.
Two of Response Marketing’s subsidiaries – Nudge, LLC and BuyPD, LLC – are also part of the settlement, along with the four individuals who the complaint alleges are the actual owners of Response Marketing: Brandon B. Lewis, Ryan C. Poelman, Phillip W. Smith, and Sean L. Finnegan. Under the settlement, these three companies, the four owners, and Response Marketing President Clint R. Sanderson, selling “wealth building” products and services anywhere in the country. They must also pay $15 million, which will be used to provide compensation to consumers. If these payments are not made, these parties will be liable for an additional $15 million in civil penalties that will be paid to the Utah DCP.
Settlements with Graziosi and Jance These are the FTC’s first cash settlements with celebrity endorsers. Under the settlements, Graziosi will pay $1.25 million, and Yancey will pay $450,000.
The settlements announced today resolve all claims against all defendants in the complaint filed by the FTC and DCP of Utah, which allege violations of the FTC Act, the Telemarketing Sales Rule, and various Utah state laws.
The committee’s vote to approve the stipulated final orders was 3-0. The U.S. District Court for the District of Utah approved the Graziosi and Yancey settlements on April 24, 2023, and the settlement with the other parties was approved on May 18, 2023.
