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ase 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageertlGlN1-\°C1 

Colleen Robbins (New York Bar No. 2882710) FILED 

Christopher E. Brown (Virginia Bar No. 72765) 

Federal Trade Commission Aug 08 2023 

600 Pennsylvania Ave., NW, CC-8528 

Washington, DC 20580 

(202) 326-2548; crobbins@ftc.gov 

(202) 326-2825; cbrown3@ftc.gov 

(202) 326-3395 (fax) 

Attorneysfor Plaintiff 

CLERK, U.S. DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

BY si JciieOlsen DEPUTY 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

FEDERAL TRADE COMMISSION, 

Plaintiff, 

V . 

AUTOMATORS LLC, also d/b/a 

AUTOMATORS AI and ECOM SKOOL, 

a Nevada limited liability company, 

EMPIRE ECOMMERCE LLC, a 

California limited liability company, 

ONYX DISTRIBUTION LLC, a 

California limited liability company, 

STRYDER HOLDINGS LLC, a 

California limited liability company, 

PELENEA VENTURES LLC, a 

Tennessee limited liability company, 

ROMAN CRESTO, individually and as 

officer and/or owner of AUTO MA TORS 

LLC, EMPIRE ECOMMERCE LLC, 

ONYX DISTRIBUTION LLC, and 

STRYDER HOLDINGS LLC, 

ORDERED UNSEALED on 08/21/2023 s/ J. Olsen 

COMPLAINT FOR PERMANENT 

INJUNCTION, MONETARY 

RELIEF, AND OTHER RELIEF 
 

 

 

 

 

 

 

 

 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2176 Page 2 of 31

JOHN CRESTO, individually and as 

officer and/or owner of AUTOMATORS 

LLC, EMPIRE ECOMMERCE LLC, 

ONYX DISTRIBUTION LLC, and 

STRYDER HOLDINGS LLC, and 

ANDREW CHAPMAN, individually and 

as officer and/or owner of 

AUTOMATORS LLC, EMPIRE 

ECOMMERCE LLC, ONYX 

DISTRIBUTION LLC, and PELENA 

VENTURES LLC, 

Defendants, 

PEREGRINE WORLDWIDE, LLC, a 

Delaware limited liability company, 

Relief Defendant. 

Plaintiff, the Federal Trade Commission (“FTC”), for its Complaint alleges: 

The FTC brings this action under Sections 5(a), 13(b), and 19 of the Federal Trade 

Commission Act (“FTC Act”), 15 U.S.C. §§ 45(a), 53(b), and 57b, which authorize the 

FTC to seek, and the Court to order, temporary, preliminary, and permanent injunctive 

relief, monetary relief, and other relief for Defendants’ acts or practices in violation of 

Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), the FTC’s Trade Regulation Rule entitled 

“Disclosure Requirements and Prohibitions Concerning Business Opportunities” 

(“Business Opportunity Rule” or “Rule”), 16 C.F.R. Part 437, as amended, and the 

Consumer Review Fairness Act of 2016 (“CRFA”), 15 U.S.C. § 45b. The amended 

Business Opportunity Rule became effective on March 1, 2012, and has since that date 

remained in full force and effect. 

SUMMARY OF THE CASE 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2177 Page 3 of 31

1. This case is about the illegal sale of business opportunities and coaching 

programs that have caused consumers across the country over $22 million in harm. 

2. Roman Cresto (“Roman”), John Cresto (“John”), and Andrew Chapman 

(“Chapman”) spearhead the operation of this California-based scheme, falsely promoting 

themselves as ecommerce experts and self-made millionaires who have helped thousands 

of consumers generate tens of millions of dollars. 

3. Beginning in early 2020, through Empire Ecommerce LLC (“Empire LLC”) 

and Onyx Distribution LLC (“Onyx”), Roman, John, and Chapman (collectively, 

“Individual Defendants”) deceived consumers into purchasing a “venture capital-backed” 

and “artificial intelligence-integrated” ecommerce business opportunity to become a 

“silent partner” in a profitable operation run by Empire LLC and Onyx. 

4. The Individual Defendants promised to expertly manage the operations of 

automated online stores on behalf of their “silent partners,” including identifying 

products, fulfilling orders, and handling customer service. 

5. Empire LLC offered consumers various “automated” packages of 

ecommerce stores that typically cost between $10,000 to $125,000 for the initial 

investment, and an additional $15,000 to $80,000 for working capital. It falsely claimed 

that purchasers were likely to make monthly profit margins between 8 to 20 percent and 

claimed to use “AI machine learning” to maximize revenues. 

6. In truth, virtually all purchasers did not earn the advertised income. Most 

lost their entire investment and got saddled with hefty credit card debts. Moreover, nearly 

all the online stores that Empire LLC established and managed for its clients on 

Amazon.com and Walmart.com got suspended, and ultimately terminated, by those 

platforms for policy violations, leaving many clients banned from selling on those 

platforms. 

7. In January 2023, after their Empire LLC business ultimately imploded and 

they sold it to a third party, the Individual Defendants restarted their deceptive scheme 

under the name Automators AI, which claims to teach consumers how to use AI to find 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2178 Page 4 of 31

top-selling products and become successful online sellers making “over $10,000 per 

month in sales.” They also claim to coach consumers to use Chatgpt to create customer 

service scripts. The scheme is ongoing, defrauding consumers of tens of thousands of 

dollars each in violation of the FTC Act, the Business Opportunity Rule, and the 

Consumer Review Fairness Act. 

JURISDICTION AND VENUE 

8. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 

1337(a), and 1345. This action arises under 15 U.S.C. §§ 45(a) and 53(b). 

9. Venue is proper in this district under 28 U.S.C. § 1391(b)(2), (b)(3), (c)(1), 

(c)(2), and (d), and 15 U.S.C. § 53(b). 

PLAINTIFF 

10. The FTC is an independent agency of the United States government created 

by the FTC Act, which authorizes the FTC to commence this district court civil action by 

its own attorneys. 15 U.S.C. §§ 41-58. The FTC enforces Section 5(a) of the FTC Act, 15 

U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting 

commerce. The Commission also enforces the Business Opportunity Rule, 16 C.F.R. Part 

437, as amended, which requires specific disclosures and prohibits certain 

misrepresentations in connection with the sale of a business opportunity, and the 

Consumer Review Fairness Act, 15 U.S.C. § 45b, which limits provisions in form 

contracts that restrict a consumers’ ability to communicate reviews about a business’ 

products or services. 

DEFENDANTS 

11. Led by the Individual Defendants, the five Corporate Defendants that have 

run the deceptive scheme have marketed and sold the business opportunities and 

coaching services at issue, and/or funneled consumer payments to the Individual 

Defendants. 

Corporate Defendants 

12. Automators LLC (“Automators”), also doing business as Automators AI 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2179 Page 5 of 31

and Ecom Skool, is a Nevada limited liability company with its principal place of 

business at 2300 W. Sahara Ave, Suite 800, Las Vegas, Nevada 89102. Automators, in 

connection with the matters alleged herein, offers automation and coaching services 

under the name Automators AI, and receives payments in its corporate account for 

consumers’ purchases. In connection with the matters alleged herein, Automators 

transacts or has transacted business in this district and throughout the United States. At 

all times relevant to this Complaint, acting alone or in concert with others, Automators 

has advertised, marketed, distributed, or sold business opportunities throughout the 

United States. 

13. Empire Ecommerce LLC (“Empire LLC”) is or was a California limited 

liability company with its previous principal place of business at 8605 Santa Monica 

Blvd, #51976, West Hollywood, California 90069. Empire LLC, in connection with the 

matters alleged herein, entered into contracts with and received payments from 

consumers for automated ecommerce business opportunities. In connection with the 

matters alleged herein, Empire LLC transacts or has transacted business in this district 

and throughout the United States. At all times relevant to this Complaint, acting alone or 

in concert with others, Empire LLC has advertised, marketed, distributed, or sold 

business opportunities throughout the United States. 

14. Onyx Distribution LLC (“Onyx”) is or was a California limited liability 

company with its principal place of business at 16518 Newcomb Street, San Diego, 

California 92127. Onyx is a wholly-owned subsidiary of Empire LLC. Onyx, in 

connection with the matters alleged herein, entered into contracts with and received 

payments from consumers for automated ecommerce business opportunities. In 

connection with the matters alleged herein, Onyx transacts or has transacted business in 

this district and throughout the United States. At all times relevant to this Complaint, 

acting alone or in concert with others, Onyx has advertised, marketed, distributed, or sold 

business opportunities throughout the United States. 

15. Stryder Holdings LLC (“Stryder”) is a California limited liability company 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2180 Page 6 of 31

with its principal place of business at 1150 Garden View Road, Suite 230367, Encinitas, 

California 92024. Stryder is 100 percent owner of both Empire LLC and Onyx. Stryder, 

in connection with the matters alleged herein, received consumer payments for automated 

ecommerce business opportunities from Empire LLC and Onyx, and subsequently 

transferred the consumer payments to the Individual Defendants. Stryder, in connection 

with the matters alleged herein, transacts or has transacted business in this district and 

throughout the United States. 

16. Pelenea Ventures LLC (“Pelenea”) is or was a Tennessee limited liability 

company with its principal place of business located at 5006 University Dr. W. Unit 1743 

Collegedale, Tennessee 37315. Pelenea, in connection with the matters alleged herein, 

was marketed as the venture capital company that funded Empire LLC, but in truth and in 

fact, was used to pay Empire LLC’s employees and transfer consumer payments to the 

Individual Defendants. Pelenea, in connection with the matters alleged herein, transacts 

or has transacted business in this district and throughout the United States. 

Individual Defendants 

17. Roman Cresto (“Roman”) was CEO of Empire LLC and Onyx and is a coowner of Automators and Stryder. He is a signatory on the bank accounts for Automators, 

Empire LLC, Onyx, and Stryder. Roman narrates marketing videos for Defendants’ 

business opportunities using false and unsubstantiated earnings claims, and executes 

consumer contracts and termination agreements on behalf of Defendants. He is aware of 

consumer complaints, routine suspensions of Defendants’managed online stores for 

policy violations, and requests for refunds from deceived consumers. Roman has also 

routinely asked consumers to sign agreements including a non-disparagement clause. He 

resides in San Diego, California, and in connection with the matters alleged herein, 

transacts or has transacted business in this district and throughout the United States. At 

all times relevant to this Complaint, acting alone or in concert with others, Roman has 

formulated, directed, controlled, had the authority to control, or participated in the acts 

and practices of Automators, Empire LLC, Onyx and Stryder, including the acts or 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2181 Page 7 of 31

practices set forth in this Complaint. Through his direct participation in, and control over, 

Automators, Empire LLC, Onyx and Stryder, Roman has had knowledge of the acts and 

practices constituting the violations alleged herein. 

18. John Cresto (“John”) was the Chief Growth Officer of Empire LLC and 

Onyx and is a co-owner of Automators and Stryder. He is a signatory on the bank 

accounts for Automators, Empire LLC, Onyx and Stryder. John narrates marketing 

advertisements for Defendants’ business opportunities and coaching programs using false 

and unsubstantiated earnings claims, and speaks with potential purchasers one-on-one to 

close the sales deals. He is aware of consumer complaints, routine suspensions of 

Defendants’-managed online stores for policy violations, and requests for refunds from 

deceived consumers. John resides in Encinitas, California, and in connection with the 

matters alleged herein, transacts or has transacted business in this district and throughout 

the United States. At all times relevant to this Complaint, acting alone or in concert with 

others, John has formulated, directed, controlled, had the authority to control, or 

participated in the acts and practices of Automators, Empire LLC, Onyx and Stryder, 

including the acts or practices set forth in this Complaint. Through his direct 

participation in, and control over, Automators, Empire LLC, Onyx and Stryder, John has 

had knowledge of the acts and practices constituting the violations alleged herein. 

19. Andrew Chapman (“Chapman”) was the Chief Financial Officer of Empire 

LLC and Onyx, is a managing member of Automators and sole owner of 

Pelenea. Chapman has managed employees of the scheme, and has been aware of 

consumer complaints, routine suspensions of Defendants’ managed online stores for 

policy violations, and requests for refunds from deceived consumers. Chapman is also a 

signatory on the corporate accounts for each of the Corporate Defendants Automators, 

Empire LLC, Onyx, Stryder and Pelenea. Chapman resides in Rancho Santa Fe, 

California, and in connection with the matters alleged herein, transacts or has transacted 

business in this district and throughout the United States. At all times relevant to this 

Complaint, acting alone or in concert with others, Chapman has formulated, directed, 

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controlled, had the authority to control, or participated in the acts and practices of 

Automators, Empire LLC, Onyx, Stryder and Pelenea, including the acts or practices set 

forth in this Complaint. Through his direct participation in, and control over, 

Automators, Empire LLC, Onyx, Stryder and Pelenea, Chapman has had knowledge of 

the acts and practices constituting the violations alleged herein. 

Relief Defendant 

20. Peregrine Worldwide LLC (“Peregrine”) is a Delaware limited liability 

company with its principal place of business at 4560 Via Gaviota, Rancho Santa Fe, 

California 92067. Peregrine has received funds from Pelenea in the amount of 

$7,466,474.94 that can be traced directly to Defendants’ unlawful acts or practices 

alleged in this Complaint, and it has no legitimate claim to those funds. These funds were 

used to buy a personal residence that is titled in the name of Peregrine. 

COMMON ENTERPRISE 

21. The Corporate Defendants, Automators, Empire LLC, Onyx, Stryder, and 

Pelenea, have operated as a common enterprise while engaging in the unfair or deceptive 

acts or practices alleged herein. Empire LLC and its sister company, Onyx, started 

operating their ecommerce business opportunity scheme through their parent company, 

Stryder, in early 2020. In November 2022, Roman and John sold Empire LLC and Onyx 

to a third party, but the sale did not include any financial assets of Empire LLC or Onyx. 

In January 2023, the Individual Defendants restarted their scheme, using funds from 

Empire LLC and Onyx, under the name Automators AI, using advertising and marketing 

materials they previously used to promote Empire LLC and Onyx. 

22. Corporate funds from Empire LLC were transferred to Automators and 

consumer payments flowed in succession through the bank accounts of Empire LLC and 

Onyx to Stryder and Pelenea to Roman, John and Chapman. For example, Stryder 

received over $7 million in consumer payments from Empire LLC and Onyx. Stryder 

also transferred over $7.7 million to Pelenea and the Individual Defendants. 

23. The Corporate Defendants have conducted the business practices described 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2183 Page 9 of 31

herein through an interrelated network of companies, which have common ownership, 

officers, employees, business locations, and business functions; and that marketed and 

sold common services, shared revenues, and comingled funds. 

24. Because the Corporate Defendants have operated as a common enterprise, 

each of them is jointly and severally liable for the acts and practices alleged below. At all 

times relevant to this Complaint, the Individual Defendants have formulated, directed, 

controlled, had the authority to control, or participated in the acts and practices of the 

Corporate Defendants. 

COMMERCE 

25. At all times relevant to this Complaint, Defendants have maintained a 

substantial course of trade in or affecting commerce, as “commerce” is defined in Section 

4 of the FTC Act, 15 U.S.C. § 44. 

DEFENDANTS’ BUSINESS ACTIVITIES 

The Empire Business Opportunity Scheme 

Deceptive Marketing Rife with Lavish Earnings Claims 

26. Beginning in February 2020, Roman and John Cresto and Chapman 

deceptively advertised, marketed, distributed, promoted, and sold ecommerce business 

opportunities to consumers throughout the United States through Empire LLC and Onyx 

(collectively, “Empire”), which they advertised primarily through social media, such as 

Instagram and Twitter. 

27. Roman, John, and Chapman promoted themselves as ecommerce experts and 

self-made millionaires who have experience scaling hundreds of third-party seller stores 

on Amazon.com, Walmart.com and Facebook marketplaces, and have helped thousands 

of consumers generate millions of dollars. 

28. Empire’s website claimed it was the “only automation company fully 

audited and backed by an experienced Venture Capital firm” and “integrates AI machinelearning into the automation process, resulting in increased revenue and margins.” 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2184 Page 10 of 31

29. The website also contained enticing purported purchaser testimonials, such 

as “I have been able to leverage my credit lines to make more passive income in a few 

months than most people make in 1 year at their everyday jobs” and “my store has been 

able to do $1 million dollars in revenue in the past 4 months alone.” 

30. Empire also paid affiliate marketers to promote Empire’s business 

opportunity on social media by posting sales results and touting their purported success 

with Empire’s expert assistance. For example, Roman recruited Daniel Baldus-Strauss as 

an affiliate. As Roman was well-aware, the Amazon store that Empire opened and 

managed for Baldus-Strauss was unprofitable and ultimately suspended by Amazon for 

policy violations. Nevertheless, as an affiliate, Baldus-Strauss promoted falsely on social 

media how he made significant passive income through his automated ecommerce stores 

with Empire, referred over 60 clients to Empire, and received over $1.5 million in 

commission fees from the scheme. 

31. Empire’s marketing videos, websites, and emails featured lavish claims 

about the amount of money or profit Empire clients are likely to make, such as: 

• “$4k-$6k consistently monthly net profit.” 

• “$50k in sales in his 2nd month on a new Walmart store.” 

• “Automation client makes $8500 profit in 1 month.” 

• “Automation and coaching client makes $597k in 8 months.” 

• “Client makes $260k profit in one year from 2 stores.” 

• “$200k in one month and 100% ROI in 8 months.” 

32. After watching the advertisements, website, or speaking with an Empire 

affiliate, prospective purchasers typically spoke with John or Chapman. In numerous 

instances, John or Chapman explained to prospective purchasers the various “automated” 

packages Empire offered, which typically cost between $10,000 to $125,000 for the 

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-----------------------------------------------------------

< 6 

Sa I es Projections for New Stores 

Month Gross Sales Profit Total ROI Percentage 

Monlh 1 $1 ,000 to $10,000 $100 to $2,000 8-20% 

Month 2 to 4 $5,000 to $20.000 $500 to $4.000 S.20% 

Month4 to 8 $20,000 to $55,000 $1 ,500 to $11,000 8,20% 

Month 8 to 12 $60,000 to $80,000 $4,500 lo S 16,000 8-20% 

Month 12 $75,000 lo $110,000 $6,000 to $22,000 8-20% 

Monlh 15+ $110,000-200,000+ $8,500 t.o S40,000 8-20% 

tTI-.H 411ri Iii~~, •9rgn5 llll<t profit ,i;tl~tion!I, No 8plil~tle, :&,illH Oil •ilmln,gt, jlr') g1,41f{lnl_Md , E9c:h ,toriii'lii growth I~ unh~ll.,. 

E!mpil'CI Ernmmarce is In no-~ ;iffill:itnd, :is:sD<iiatcni, 11uthorlznd, 11niloB,ed by, or in im~ vny officl~ connectcicl with Amucn INC. 

• A,w lt'IOll•thb (ltl!mir'l!it, Ff'llt"u•. °' pror.t diseuN1EtdJ8J'iOW(I B'l 11\ie doc:un,.wil le i!'l no 'W-8y' .. !)Illy' ~W8flll"li:.tid 81'dl it j..,,u for txplar.ation pu,P0,(18-, 

C:011.fidantbl .and Pro:pri~. CoP'flight by ~m~ ~com1111C1 rca-. LLC.. 21>21. All RL,ghb. A:Hiarvacl. 

> c:::J Google Slides 

Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2185 Page 11 of 31

initial investment. They also represented that Empire-managed stores were running 

profitably with monthly profit margins between 8 to 20 percent, and claimed to use “AI 

machine learning” to maximize revenues. 

33. In many instances, John also emailed prospective purchasers links to 

positive reviews from purported clients and a slide deck posted on Empire’s website 

describing Empire’s business opportunity. The deck stated that Empire managed 257 

Amazon Marketplace stores with net monthly profit on all sales at approximately 8 to 20 

percent. A screenshot from one such slide deck, captured from Archive.org for May 25, 

2022, and which Empire also emailed to a prospective purchaser, is depicted below. 

34. Empire offered prospective purchasers both new and “aged” stores. The 

aged stores purportedly already had a positive profitability history. Empire’s slide deck 

also included sales projections and case studies that presented purported levels of sales 

and profits that purchasers could expect to make. A screenshot of sales projections for 

“aged” Amazon stores, captured from Archive.org for May 25, 2022, and which Empire 

also emailed to a prospective purchaser, is depicted below. 

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-------------------------------------------------------

< 

Aged Amazon Stores: Sales Projections 

Month Gross Sales Profit Total Net Profit Margin 

Month 1 $10 ,000 to $30,000 $800 lo $6,000 8-20% 

Month 2 $30,000 to $60.000 $2,500 to S 12,000 8-20% 

Month 3 $40,000 to $80,000 $3,500 to $16,000 8-20% 

Month 4 $60,000 lo $120,000 $5,500 lo $24,000 &20% 

Month 5+ $80,000 lo $300,000 $7,200 to $60,000 &20% 

(These are sa les 1arge1$ aM prom esllmallons. No speelfle sales or eamlngs are guarant~d. Eaeh store's growth Is unique.) 

Empi.-e Ecommerce is in no way aftrliated, associated, authorized, endorsed by, or in any way officially connected with Amazon INC. 

111Any mo.nthly earnings, reve nuo, or profit discussadJshown in this doc.ument is in no way leg,ally guaranteed and is just for explanation purpo.sos. 

Confidential and Proprietary. Copyright by Empire Ecommerc,,, LLC. 2021- All Rights Reserved. 

13 > C Google Slides 

Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2186 Page 12 of 31 

35. Beginning in February 2020, consumers signed initial store contracts 

predominantly with Empire LLC, but later switched to contracts mainly with Onyx in 

2021. 

36. Consumers were lured in by Empire’s earnings claims and promises that 

their Empire-managed stores would be profitable in short order. However, once they 

completed the initial purchase, it took several months until the stores were operational. 

37. During these ensuing months, Empire employees typically helped consumers 

with the “onboarding process,” which involved registering for an LLC and business 

address, creating email addresses and logins for their store accounts, and establishing 

various supplier accounts. In addition to the initial fee paid to Empire, Empire had 

purchasers open business credit cards or loans allowing access to between $15,000-

$80,000 to charge the inventory purchased to fulfill store customers’ orders. 

38. Empire represented to its prospective purchasers that it would run the dayto-day operations of the stores, allowing purchasers to generate significant passive 

income. Purchasers were obligated to give Empire 35% of their profits. 

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Suspensions and Terminations of Empire-Managed Stores by Marketplaces 

39. Empire used the Fulfilled by Merchant (“FBM”) model to sell on 

Amazon.com. Empire combined a method of product sourcing known as online sales 

arbitrage with a “dropshipping” method of order fulfillment. In practice, when a customer 

ordered an item sold by an Empire-managed store on Amazon.com, Empire purchased 

the item on behalf of the store owner at a lower price from another retailer, then sold the 

item for a small profit taking advantage of the price difference. Further, Empire directed 

that other retailer to directly ship the item to the customer. 

40. While Amazon allows dropshipping, a third-party store using this method of 

order fulfillment is required to follow Amazon’s stated policies and procedures. For 

example, Amazon requires store owners that purchase products from a third-party retailer 

and have them shipped directly to customers to identify the store owner, not the thirdparty retailer, as the seller of record. The Empire-managed stores routinely violated that 

policy. 

41. In many instances, Empire told prospective purchasers that its expertise in 

managing stores included how to avoid suspensions, and that John and Roman had an 

“insider” to streamline getting stores approved and reinstated should suspension occur. 

42. In truth, Amazon suspended the majority of the Empire-managed stores 

within months of operation due mostly to dropshipping policy and intellectual property 

violations. 

43. By June 2022, less than 10 percent of the stores that Empire managed for its 

clients were active and generating sales, and by October 2022, most of those stores were 

suspended or terminated. Amazon’s records show that it ultimately blocked, suspended, 

or terminated most of Empire’s managed stores it was aware of for policy violations. 

44. Moreover, the majority of the Walmart.com stores that Empire attempted to 

open and manage for purchasers—often after the Empire-managed Amazon stores for 

those purchasers got suspended—were never activated or terminated for various policy 

violations. 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2188 Page 14 of 31

45. A suspension of a store by Amazon or Walmart locked any earnings that 

store might have generated. Because Empire typically had its clients pay for inventory on 

credit cards, many clients were left with high credit card debt that they were unable to 

repay with earnings. 

46. Empire’s attempts to appeal suspensions often took several months and most 

of its clients ended up with blocked, suspended or terminated accounts. 

Empire’s Earnings Claims were False and Unsubstantiated 

47. For over two years, Empire advertised and marketed its business 

opportunities to consumers by making earnings claims as described above, even though 

virtually none of its purchasers had Empire-managed stores that operated without 

interruption for the duration of time advertised in the claims. 

48. Empire failed to disclose to prospective purchasers that Empire-managed 

stores were routinely suspended and terminated. Instead, it consistently and falsely 

claimed that it had hundreds of clients generating over $150 million in revenue. In truth, 

most of Empire’s clients lost money and virtually none made the advertised amounts. 

49. Several former employees of Empire stated to the FTC that Empire’s profit 

projections, discussed above, were completely fabricated. 

50. Despite having gross sales in their stores during the brief times their stores 

were opened, numerous Empire clients overall lost significant sums of money after 

subtracting the initial fee, Amazon or Walmart fees, inventory payments, store customer 

refunds, loan fees and interest, and onboarding and operating costs. 

51. According to Empire’s head of customers service, Empire routinely received 

numerous calls, texts, and emails from clients complaining about their stores not 

performing as advertised, losing money, stores getting terminated, and not getting 

promised services. He estimates that 70 to 80 percent of customer support calls were 

complaints, and reports that John, Roman and Andrew were part of weekly meetings to 

discuss such complaints. 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2189 Page 15 of 31

Non-Disparagement Clauses and Failed Attempt to Switch Store Model 

52. Many dissatisfied Empire clients who spent tens of thousands of dollars for 

stores that were ultimately suspended or terminated have requested refunds. In most 

instances, Empire has denied such requests. 

53. Rather than issue refunds, Empire typically offered purchasers a “remedy” in 

the form of another ecommerce store in a different marketplace. Since approximately 

August 2020, for purchasers to obtain a new store, Empire first required them to sign a 

termination agreement that included the following non-disparagement clause: 

Non-disparagement. Customer may not engage in any form of conduct, 

or make any statements or representations, that disparage or otherwise 

harm the other Party's reputation, goodwill, or commercial interests. Any 

form of public or private, oral, or written defamation, slander, 

traducement, malicious misinterpretation of facts and events by the 

Customer regarding the Company made after the Termination Date, shall 

be treated as grounds of breach of this Release and may result in legal 

action subjection to Section 5 below. If, prior to the Termination Date 

Customer has made any statements or comments, whether verbally or in 

writing, that would tend to disparage or harm Company, Customer will 

remove, retract and/or otherwise make such statements unavailable to 

any person or Party that is not subject to this Release. 

54. Empire included threats of “legal action” in the clause to intimidate and 

dissuade dissatisfied customers from filing complaints. 

55. Numerous Empire clients signed such termination agreements; many signing 

multiple agreements. Roman routinely signed these termination agreements as CEO on 

behalf of Empire. 

56. Many such Empire clients felt trapped because if they did not agree to 

switch stores, they would lose their entire investments. 

57. In late 2022, Empire attempted to switch clients whose stores were 

terminated to new Amazon stores using the Fulfilled By Amazon (“FBA”) model. Under 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2190 Page 16 of 31

this model, the third-party store owner must pre-purchase inventory wholesale, store it, 

and then send it to Amazon for processing and shipping once a purchase is made for 

fulfillment. 

58. Amazon, however, does not allow suspended or terminated store owners to 

open additional stores. In many instances, Empire instructed consumers to open these 

new stores under someone else’s name and photo identification to circumvent that policy. 

59. Ultimately, none of the contemplated Empire FBA stores ever opened. 

Empire Failed to Provide Required Disclosures and Earnings Claim Statements 

60. Empire did not provide prospective purchasers with disclosure documents 

required under the Business Opportunity Rule. Although Empire routinely made claims 

to prospective purchasers about likely earnings, it failed to provide prospective 

purchasers with an Earnings Claim Statement required by the Rule, which includes the 

beginning and ending dates when the represented earnings were achieved, and the 

number and percentage of all persons who purchased the business opportunity and 

achieved the stated level of earnings. 

61. Empire also failed to comply with the Rule’s requirements that it provide 

prospective purchasers with written substantiation of its earnings claims, and with a list 

of purchasers and contact information of individuals who purchased the business 

opportunity within the last three years. 

The Sale of Empire/Onyx 

62. In November 2022, Empire’s employees temporarily lost access to the 

company’s computer-based software systems and once access was restored, all of 

Empire’s data, information, and email history were gone. John and Roman told the 

employees that they were behind the deletion of Empire’s records. 

63. Soon thereafter, John and Roman announced to the employees that they had 

sold Empire to third-party purchaser, LCC Enterprises LLC, a Delaware limited liability 

company, owned by an individual named Daniel Cohen (“Cohen”). The sale, with a 

$100,000 price tag, included Empire’s client list, but not its financial assets. 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2191 Page 17 of 31

64. Immediately after the sale, Cohen was flooded with numerous complaints 

from angry Empire clients. 

65. In December 2022, Cohen filed a lawsuit against Roman, John, and Stryder 

in this district, LCC Enterprises LLC v. Roman Cresto, et al., No. 3:22-cv-01944-DMS -

BGS (S.D. Cal. Mar. 28, 2023) for breach of contract and fraud, and he hired a 

bankruptcy attorney in Florida to file a Petition Commencing Assignment for the Benefit 

of Creditors. 

The Deceptive Automators Scheme 

66. In January 2023, Roman, John, and Chapman restarted their scheme using 

the company Automators LLC and the brand names Automators AI and Ecom Skool, 

reusing much of the marketing materials and deceptive claims previously used to lure 

consumers to Empire, while promoting themselves as successful entrepreneurs who 

started and scaled a recently acquired “8 figure” “tech company” that managed “over 

1000 profitable” ecommerce stores for their clients. 

Automators’ Business Opportunities Scheme 

67. Like Empire, Automators uses social media ads. A screenshot from 

Automators’ Instagram page, captured on June 26, 2023, is shown below, and is typical 

of the social media that the company uses. 

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~ Automators Al 

..... Sponsored 

If you're an investor, you know most investment 

avenues are currently down. 

If you have at least 30k m cash s,ttmg ma bank waiting 

to be deployed, here's how we can help you turn that 

mto a cash flow machine. 

It's called E-commerce Automation. 

Our partners run an entI1e store for you, while you 

collect a passive check every month 

Yes, completely passive, you just pay a one time upfront 

cost and get mailbox money. 

Our partners manage the store. the customer service. 

and ship the products for you. 

Click ' learn more• to see how you can get started In as 

little as 30 days. 

https://partners.automators.ai/apply 

~ Automators Al 

~1 Sponsored 

If you're an investor, you know most investment 

avenues are currently down. 

If you have at least 30k m cash sIttmg in a bank waiting 

to be deployed, here's how we can help you turn that 

into a cash flow machine. 

It's called E-commerce Automation. 

Our partnas run an entire store for you, while you 

collect a pass ive check every month. 

Yes, completely passive, you just pay a one time upfront 

cost and get mailbox money 

Our partnecs manage the sto,e, the custome, service. 

and ship the products for you 

Click "learn more' to see how you can get started in as 

little as 30 days. 

https://partnas.automators.a1/ apply 

Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2192 Page 18 of 31 

68. Automators promotes its automation business opportunity as a “Done For 

You” service, through which purchasers can generate risk-free passive cash flow every 

month without lifting a finger. 

69. Automators claims that it acts as a middleman to connect purchasers with 

fully vetted partner Amazon automation fulfillment companies. 

70. In many instances, however, John and other salespeople tell prospective 

purchasers that Automators will set up the online store, manage it, assist with opening 

business credit cards to use for inventory purchases, and “hold your hand every step of 

the process.” In some instances, John even tells prospective purchasers that he personally 

oversees the onboarding process to ensure a smooth process. 

71. Automators has connected purchasers with Amazon automation fulfillment 

companies, such as Next Level Digital Agency, Activ8, and Ascend Ecom. Ascend 

Ecom, which advertises that it uses both the FBA and FBM fulfillment models, appears 

to be Automators latest partnership. 

72. Automators’ marketing includes a website, videos and webinars narrated by 

John and Roman that include depictions of a lavish lifestyle, enticing client testimonials, 

and case examples showing purported success stories. 

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OUR AMAZON MANAGEMENT 

FINANCIAL PROJECTION BREAKDOWN 

Month Monthly Gross Soles Monthly Profit Totals ROI Percentages 

1-2 (worm Up Period) up to $10,000 up to $3,000 10 - 25% 

3-4 $3,000 - $20,000 $300 - $6,000 10 - 25% 

5-8 $10,000 - $40,000 $1,000 - $12,000 10 - 25% 

9-12 $20,000 - $80,000 $2,000 - $24,000 10 - 25% 

.. . 12- 16 $60,000 - $110,000 $6,000 - $33,000 10 - 25% 

16- 20 $100,000 - $135,000 $10,000 - $40,500 10 - 25% 

20-24 + $135,000 - $185,000+ $13,500 - $55,500+ 10 - 25% 

•Please note these numbers are before our profit splits 

,. 

Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2193 Page 19 of 31

73. Roman claims he is a “leading 8-figure Amazon entrepreneur and creator of 

industry leading wealth-generation systems.” He states in his videos that he is a college 

dropout who, at 20 years old, was able to purchase a McLaren Spider sportscar for 

himself and a Tesla for his mother and travel the world. 

74. Automators’ marketing includes numerous testimonials and case studies 

showcasing the purported successes of its clients. While often undisclosed, some of those 

purported success stories are from Empire employees. 

75. Automators’ ads present graphs and sales projections that depict projected 

earnings claims. A screenshot of a “Financial Projection Breakdown” showing Return on 

Investment (“ROI”) percentages between 10 and 25 percent, captured on January 22, 

2023, is depicted below. Also depicted below are additional screenshots of Automators 

ads with express earnings claims, including lavish revenue and profits projections, taken 

on January 11, 2023. 

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t' ... • ◄ AUTOMATORS ..... 

GET A 100% DONE-FOR-YOU, PASSIVE INCOME MACHINE, WITH 

AMAZON AUTOMATION. 

,o er k the video t ~ dtu net 

Compounding Earnings 

How monthly working capital spend can increase your earning potential 

Example: 20% ROI on ~apital spend per month 

• Month 1: Inventory Spend $1 Ok, $2k Net Profit on your store 

• Month 2: (Reinvest your profits from month 1) Inventory Spend $12k, $2,400 Net Profit 

• Month 3: Inventory Spend $14.4k, $2,880 Net Profit 

• Month 4: Inventory Spend $17k, $3,400 Net Profit 

• Month 5: Inventory Spend $20.4k, $4k Net Profit 

• Month 6: Inventory Spend $25k, $5k Net Profit 

--U.Cilo_,.. ______ .,__..,, ___ llr,-••-1~ 

....-------·--- -••-----C• .. ....... --"',._ .....U.C. ........ m~•,.- 111 .... -.... .,.. .. __ 

Amazon FBA \Vholesale 

$ 50,000.00 

AVG Sales Pro"ections 121% 135% 

Year l Ye ar2 

Gross Revenue $ 560,370.87 $ 1;065,587 .32 $ 

Management Fee $ 29, ~13.29 $ 38,452.54 $ 

Client'~ Profit $ 68,864.33 $ 206,38926 $ 

139% 

Year3 

1,933,021-27 

16' ,955,84 

377,896:95 

Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2194 Page 20 of 31 

76. Automators sells several packages that allow a purchaser to become a 

passive “capital partner.” They cost between $35,000 and $65,000. Purchasers commit to 

give Automators’ Amazon automation company partners 30 percent of their store’s 

profit. 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2195 Page 21 of 31

77. Automators’ videos, including those narrated by Roman, describe 

Automators’ alleged use of artificial intelligence to find top-selling products to sell and 

list popular brands that Automators’ clients have purportedly sold in their stores. 

78. Automators receives commission payments from its Amazon automation 

company partners for every consumer it signs up with them. 

79. Like Empire’s earnings claims, Automators’ earnings claims regarding its 

business opportunities are false and unsubstantiated. Most purchasers do not recoup their 

investment, let alone make the advertised amounts. 

80. As with Empire, Automators does not provide purchasers of its business 

opportunities with the documents and disclosures required by the Business Opportunity 

Rule. 

Automators’ Business Coaching Scheme 

81. Automators also offers coaching services on selling on Amazon.com 

through a program called Ecom Automation Accelerator, sometimes offered under the 

brand name Ecom Skool. 

82. This “Done With you” program typically costs $5,000 and is marketed as a 

“comprehensive Amazon coaching program and community to help entrepreneurs build 

their digital ecommerce business.” The program also claims to coach consumers to use 

Chatgpt to write customer service scripts. Its ads feature statements such as: 

• “We’ve recently discovered how to use AI tools for our 1 on 1 Amazon coaching 

program, helping students achieve over $10,000/month in sales!” 

• “use AI or chatgpt tools like chatgpt to scale an Amazon store to 10k a month and 

beyond” 

• “That is how you make $6000 net profit and that is how you find a product in 5 

minutes using AI, Grabbly, Priceblink.” 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2196 Page 22 of 31

• “Here is an interview with one of our past students who made over $200k in sales 

in a single month.” 

• “Check out this video to see how one of our students made $150k in 4 months on 

his Amazon store.” 

83. The coaching program offered by Automators teaches purchasers the 

dropshipping fulfillment method, previously used by Empire. Automators claims that this 

method is risk-free because inventory is purchased on an as-needed basis. 

84. Especially considering Empire’s history of routine store suspensions and 

terminations, Automators’ “risk-free” claim is deceptive. 

85. Automators’ earnings claims regarding its coaching services are false or 

unsubstantiated. The testimonials and case studies, often from former Empire employees, 

are atypical and are nowhere near what the average purchaser can expect. Moreover, 

Automators does not track the results of its coaching clients, and virtually none of them 

make the advertised amounts and most do not recoup their investments. 

Defendants’ Inadequate Disclaimers Do Not Cure Their Misrepresentations 

86. Defendants, during both the Empire and Automator schemes, have often 

included written disclaimers on their websites and in their marketing materials. However, 

as shown by the examples discussed below, these disclaimers have been neither clear nor 

conspicuous, and they have not cured Defendants’ widespread misrepresentations 

regarding the earnings that purchasers are likely to realize. 

87. For example, after consumers watch an Automators marketing video for the 

Amazon business opportunities on Facebook, they are encouraged to click on a link that 

takes them to the automators.ai website. There, consumers watch a slideshow describing 

the business opportunities. 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2197 Page 23 of 31

88. At the very bottom of each slide, in small typeface, Automators states, “Any 

monthly earnings, revenue, or profits discussed/shown in this document is in no way 

legally guaranteed and is just for explanation purposes.” 

89. After watching the slideshow, typically narrated by Roman, consumers can 

scroll to the bottom of the automators.ai website and find another disclaimer, below the 

fold, in small typeface that states, “No client’s success, earnings, or production results 

should be viewed as typical, average, or expected.” 

90. There are also links at the bottom of the website, below the fold, that say, 

“Privacy Policy,” “Terms of Service,” and “Earnings Disclaimer.” These links, however, 

are typically non-functional and merely take the consumers back to the top of the main 

webpage. 

91. From Instagram, a consumer can access the automators.ai website that 

contains another nearly illegible disclaimer stating in convoluted language, “Automator’s 

experiences with online business are not typical: he is an experienced eCommerce seller 

and marketer. The program demonstrates how Roman, and his team of experts use 

proprietary technology, experience and expertise to identify potentially successful 

products to sell on online. We do not track the typical results of our customers or verify 

the accuracy of publicly available student testimonials.” 

92. These disclaimers contradict the numerous repeated lavish and express 

earnings claims posted in color and in large font above the fine print disclaimers and 

included in the social media ads and the marketing videos. 

VIOLATIONS OF THE FTC ACT 

93. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or 

deceptive acts or practices in or affecting commerce.” 

94. Misrepresentations or deceptive omissions of material fact constitute 

deceptive acts or practices prohibited by Section 5(a) of the FTC Act. 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2198 Page 24 of 31

95. As set forth below, Defendants have engaged and continue to engage in 

violations of Section 5(a) of the FTC Act in connection with the advertising, marketing, 

and sale of their business opportunities and training programs/services. 

COUNT ONE 

False or Unsubstantiated Earnings Claims 

96. In numerous instances, in connection with the advertising, marketing, 

promotion, offering for sale, or sale of Defendants’ business opportunities and training 

programs, Defendants have represented, directly or indirectly, expressly or by 

implication, that purchasers of Defendants’ business opportunities and Defendants’ 

automation and coaching services are likely to earn substantial income. 

97. The representations set forth in Paragraph 96 above, are false, misleading, or 

were not substantiated at the time the representations were made. 

98. Therefore, the representations of Defendants as set forth in Paragraph 96 

above, are false, misleading or unsubstantiated, and constitute a deceptive act or practice 

in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). 

VIOLATIONS OF THE BUSINESS OPPORTUNITY RULE 

99. The amended Business Opportunity Rule, 16 C.F.R. Part 437, which was 

extended in scope to cover certain work-at-home opportunities, became effective on 

March 1, 2012, and has since that date remained in full force and effect. 

100. Defendants are “sellers” who, as described in Paragraphs 26 to 85, have sold 

or offered to sell “business opportunities” as defined by the Business Opportunity Rule, 

16 C.F.R. § 437.1(c) and (q). Under the Business Opportunity Rule, a “seller” is a person 

who offers for sale or sells a business opportunity. 16 C.F.R. § 437.1(q). Under the Rule, 

a “business opportunity” means a “commercial arrangement” in which a “seller solicits a 

prospective purchaser to enter into a new business;” the “prospective purchaser makes a 

required payment;” and the “seller, expressly or by implication, orally or in writing, 

represents that the seller or one or more designated persons will . . .[p]rovide outlets, 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2199 Page 25 of 31

accounts, or customers, including, but not limited to, Internet outlets, accounts, or 

customers, for the purchaser’s goods or services[.]” 16 C.F.R. § 437.1(c). 

101. Among other things, the Business Opportunity Rule requires sellers to 

provide prospective purchasers with a disclosure document in the form and using the 

language set forth in the Business Opportunity Rule and its Appendix A, and any 

required attachments. In the disclosure document, the seller must disclose to prospective 

purchasers five categories of information, including: basic identifying information about 

the seller, any earnings claims the seller makes, the seller’s litigation history, any 

cancellation and refund policy the seller offers, and contact information of prior 

purchasers. 16 C.F.R. § 437.3(a)(1)-(5). Furthermore, this information must be disclosed 

at least seven (7) days before the prospective purchaser signs a contract or makes a 

payment. 16 C.F.R. § 437.2. The pre-sale disclosure of this information enables a 

prospective purchaser to contact prior purchasers and take other steps to assess the 

potential risks involved in the purchase of the business opportunity. 

102. Defendants, as described in Paragraphs 31 to 34, 67, 74 to 75, and 82, have 

made earnings claims in connection with the sale of their business opportunities, as 

defined by the Business Opportunity Rule, 16 C.F.R. § 437.1(f). Under the Business 

Opportunity Rule, an “earnings claim” means “any oral, written, or visual representation 

to a prospective purchaser that conveys, expressly or by implication, a specific level or 

range of actual potential sales, or gross or net income or profits.” 16 C.F.R. § 437.1(f). 

103. The Business Opportunity Rule prohibits sellers from making earnings 

claims unless the seller: (1) has a reasonable basis for the claim at the time it is made; (2) 

has in its possession written materials to substantiate the claim at the time it is made; (3) 

furnishes an Earnings Claim statement to prospective purchasers in conjunction with the 

disclosure document, containing, among other things, information regarding the time 

frame captured by the earnings claim, the characteristics of the purchasers, and the 

number and percentage of all persons who purchased the business opportunity within the 

time frame who achieved at least the stated level of earnings; and (4) makes written 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2200 Page 26 of 31

substantiation of the earnings claim available to any prospective purchaser who requests 

it. 16 C.F.R. § 437.4(a). 

104. Defendants have also made earnings claims in connection with the sale of 

their business opportunities in the general media, as defined by the Business Opportunity 

Rule, 16 C.F.R. § 437.1(h). Under the Business Opportunity Rule, “general media” 

means “any instrumentality through which a person may communicate with the public, 

including, but not limited to, television, radio, print, Internet, billboard, Web site, 

commercial bulk email, and mobile communications.” 16 C.F.R. § 437.1(h). 

105. The Business Opportunity Rule prohibits sellers from making earnings 

claims in the general media unless the seller has a reasonable basis for and written 

substantiation of any earnings claims and states in immediate conjunction with those 

claims the beginning and ending dates when the represented earnings were achieved, and 

the number and percentage of all persons who purchased Defendants’ business 

opportunity prior to that ending date who achieved at least the stated level of earnings. 16 

C.F.R. § 437.4(b). 

106. Defendants, as described in Paragraphs 31 to 34, 67, 74 to 75, and 82, have 

disseminated industry financial, earnings, or performance information in connection with 

the offering for sale, sale, or promotion of a business opportunity. 

107. The Business Opportunity Rule prohibits sellers from disseminating industry 

financial, earnings, or performance information unless the seller has written 

substantiation demonstrating that the information reflects, or does not exceed, the typical 

or ordinary financial earnings, or performance experience of purchasers of the business 

opportunity being offered for sale. 16 C.F.R. § 437.4(c). 

108. Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), a 

violation of the Business Opportunity Rule constitutes an unfair or deceptive act or 

practice in or affecting commerce in violation of Section 5(a) of the FTC Act, 15 U.S.C. 

§ 45(a). 

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Case 3:23-cv-01444-BAS-KSC Document 1 Filed 08/08/23 PageID.2201 Page 27 of 31

COUNT TWO 

Misrepresentations Regarding Income or Profits 

109. In numerous instances in connection with the offer for sale, sale, or 

promotion of business opportunities, Defendants have misrepresented the amount of 

sales, or gross or net income or profits, a prospective purchaser may earn or that prior 

purchasers have earned. 

110. Therefore, Defendants’ acts and practices, as described in Paragraph 109, 

violate the Business Opportunity Rule, 16 C.F.R. § 437.6(d) and Section 5(a) of the FTC 

Act, 15 U.S.C. § 45(a). 

COUNT THREE 

Disclosure Document Violations 

111. In numerous instances in connection with the offer for sale, sale, or 

promotion of business opportunities, Defendants have failed to furnish prospective 

purchasers with a disclosure document and any required attachments, within the time 

period prescribed by the Business Opportunity Rule. 

112. Therefore, Defendants’ acts and practices, as described in Paragraph 111 

above, violate the Business Opportunity Rule, 16 C.F.R. §§ 437.2 and 437.3(a), and 

Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). 

COUNT FOUR 

Earnings Claims to Prospective Purchasers Violations 

113. In numerous instances, Defendants have made earnings claims to 

prospective purchasers in connection with the offering for sale, sale, or promotion of a 

business opportunity while, among other things: (1) lacking a reasonable basis for the 

earnings claim at the time it was made; (2) lacking written substantiation for the earnings 

claim at the time it was made; or (3) failing to provide an earnings claim statement to the 

prospective purchasers, as required by the Business Opportunity Rule. 

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114. Therefore, Defendants’ acts and practice, as described in Paragraph 113 

above, violate the Business Opportunity Rule, 16 C.F.R. § 437.4(a) and Section 5(a) of 

the FTC Act, 15 U.S.C. § 45(a). 

COUNT FIVE 

General Media Earnings Claims Violations 

115. In numerous instances, Defendants have made earnings claims in the general 

media in connection with the offering for sale, sale, or promotion of a business 

opportunity while failing to state in immediate conjunction with those claims the 

beginning and ending dates when the represented earnings were achieved, and the 

number and percentage of all persons who purchased Defendants’ business opportunity 

prior to that ending date who achieved at least the stated level of earnings. 

116. Therefore, Defendants’ acts and practice, as described in Paragraph 115 

above, violate the Business Opportunity Rule, 16 C.F.R. § 437.4(b) and Section 5(a) of 

the FTC Act, 15 U.S.C. § 45(a). 

COUNT SIX 

Industry Financial, Earnings, or Performance Information Violations 

117. In numerous instances, Defendants have disseminated industry financial, 

earnings, or performance information in connection with the offering for sale, sale, or 

promotion of a business opportunity while lacking written substantiation demonstrating 

that the information reflects, or does not exceed, the typical or ordinary financial 

earnings, or performance experience, of purchasers of the business opportunity being 

offered for sale. 

118. Therefore, Defendants’ acts and practice, as described in Paragraph 117 

above, violate the Business Opportunity Rule, 16 C.F.R. § 437.4(c) and Section 5(a) of 

the FTC Act, 15 U.S.C. § 45(a). 

VIOLATIONS OF THE CONSUMER REVIEW FAIRNESS ACT 

119. The CRFA defines “covered communication” as “a written, oral, or pictorial 

review, performance assessment of, or other similar analysis of, including by electronic 

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means, the goods, services, or conduct of a person by an individual who is party to a form 

contract with respect to which such person is also a party.” 15 U.S.C. § 45b(a)(2). 

120. The CRFA defines “form contract” to mean “a contract with standardized 

terms (i) used by a person in the course of selling or leasing the person’s goods or 

services; and (ii) imposed on an individual without a meaningful opportunity for such 

individual to negotiate the standardized terms.” 15 U.S.C. § 45b(a)(3). 

121. The CRFA renders void any provision of a form contract if such provision 

prohibits or restricts the ability of an individual who is a party to the form contract to 

engage in a covered communication. 15 U.S.C. § 45b(b)(l). 

122. The CRFA prohibits any person from offering a form contract containing a 

provision described as void in sub-section (b) of the CRFA. 15 U.S.C. § 45b(c). 

123. Pursuant to the CRFA, a violation of sub-section (c) of the CRFA shall be 

treated as a violation of a rule defining an unfair or deceptive act or practice prescribed 

under Section 18(a)(1)(B) of the FTC Act, 15 U.S.C. § 57a(a)(l)(b), and the FTC shall 

enforce the CRFA in the same manner, by the same means, and with the same 

jurisdiction, powers, and duties as the FTC Act. 15 U.S.C. § 45b(d). 

124. Defendants have offered “form contract[s],” as that term is defined in the 

CRFA. 15 U.S.C. § 45b(a)(3). 

COUNT SEVEN 

Violations of the CRFA 

125. In numerous instances, including as described in Paragraphs 52 to 55, 

Defendants have offered, in the course of selling their business opportunities, “form 

contracts,” containing provisions that prohibit or restrict the ability of an individual who 

is a party to the form contract to engage in a covered communication. 

126. Defendants have thereby violated the CRFA, 15 U.S.C. § 45b(c). 

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COUNT EIGHT 

Relief Defendant 

127. Relief Defendant Peregrine Worldwide LLC has received, directly or 

indirectly, funds or other assets from Defendants that are traceable to funds obtained from 

Defendants’ purchasers through unfair or deceptive acts or practices described herein. 

128. Relief Defendant Peregrine Worldwide LLC is not a bona fide purchaser 

with legal and equitable title to Defendants’ purchasers’ funds or other assets, and Relief 

Defendant will be unjustly enriched if it is not required to disgorge the funds or the value 

of the benefit it received as a result of Defendants’ unfair or deceptive acts or practices. 

129. By reason of the foregoing, Relief Defendant holds funds and assets in 

constructive trust for the benefit of Defendants’ purchasers. 

CONSUMER INJURY 

Consumers are suffering, have suffered, and will continue to suffer 

substantial injury as a result of Defendants’ violations of the FTC Act, the Business 

Opportunity Rule, and the Consumer Review Fairness Act. Absent injunctive relief by 

this Court, Defendants are likely to continue to injure consumers and harm the public 

interest. 

PRAYER FOR RELIEF 

WHEREFORE, Plaintiff requests that this Court: 

A. Enter a permanent injunction to prevent future violations of the FTC Act, the 

Business Opportunity Rule, and the Consumer Review Fairness Act by Defendants in 

accordance with Section 13(b) of the FTC Act, 15 U.S.C. § 53(b); 

B. Grant preliminary injunctive and ancillary relief; 

C. Award monetary and other relief within the Court’s power to grant in 

accordance with Section 19 of the FTC Act, 15 U.S.C. § 57b; 

D. Enter an order against Relief Defendant awarding monetary and other relief, 

but not injunctive relief; and 

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E. A ward Plaintiff such other and additional relief the Court may determine to 

be just and proper. 

Respectfully submitted, 

Dated: August 8, 2023 

Colleen Robbins 

Christopher E. Brown 

Federal Trade Commission 

600 Pennsylvania Ave., NW, CC-8528 

Washington, DC 20580 

(202) 326-2548; crobbins@ftc.gov 

(202) 326-2825; cbrown3@ftc.gov 

(202) 326-3395 (fax) 

Attorneys for Plaintiff 

FEDERAL TRADE COMMISSION 

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