Inside Trump's relationship with a multi-level marketing company that helped give him a financial lifeline

• President Donald Trump took $8.8 million from a multi-level marketing company called ACN between 2005 and 2015, part of a larger "Apprentice"-tied lifeline that helped save him from financial ruin, according to a New York Times analysis of his tax records.
• Four anonymous MLM sellers are suing Trump, his company, and his family members, saying their endorsement of ACN led to them losing thousands of dollars.
• The Trump Organization and ACN's co-founders told Business Insider they believe the lawsuit is no more than a politically motivated attack on Trump.
• ACN's reputation is defined largely by the intense scrutiny it's faced over the years, with regulators saying sellers are unlikely to make a financial return.
• Though Trump has tried to distance himself from ACN, he's featured the company in two episodes of "The Apprentice" and has done numerous live events and promotional interviews with them.

For over a year, Jane Doe held out hope that her involvement with ACN would yield a profit.

She had sunk at least $4,600 into the marketing company, known as American Communications Network, over the course of a year.

She made just $38 to show for it.

But she remained optimistic: Donald Trump, the New York real estate tycoon and star of "The Apprentice," was publicly backing the company.

"I work with a lot of companies and I can say with 100% confidence that you've made the right decision choosing ACN," Trump said in one video shown to recruits.

Doe is now one of four pseudonymous plaintiffs involved in a class-action lawsuit against Trump. Starting in 2014, she paid thousands of dollars for registration fees, trainings, and conventions — all of which she believed would enhance her marketing skills and earn her money down the line, according to the lawsuit.

A hospice caregiver from California who put in 12-hour shifts daily, Doe was "eager to invest" in herself, the lawsuit says. Her mom was a fan of Trump's shows, "The Apprentice" and "The Celebrity Apprentice" on NBC. That, along with his video enticing newcomers to join ACN, was enough to get her started.

But Doe struggled to turn a profit. Her $38 in revenue came after selling ACN products and services to her three cousins, leaving her investment into ACN thousands of dollars in the red.

Still, Doe continued to work for ACN, believing she just needed to try harder. ACN, her lawyers argue, gave every indication that her investment would grow.

After all, Trump endorsed it.

Trump was paid millions to praise ACN in front of potential recruits

Here's how ACN works: The company is made up of a pool of investors, called "independent business owners," or IBOs. Those IBOs pay an initial registration fee to sell ACN products and services like internet, gas, electricity, and phone plans, off which they make a commission.

They can also earn money by recruiting others to join. A portion of the sales made by new recruits becomes commission for the IBOs who initially recruited them. ACN, which has operated for 28 years in 27 countries, encourages IBOs to recruit within small circles made up of family and friends, according to the lawsuit.

The lawsuit suggests ACN is a pyramid scheme, a description the company rejects. ACN classifies itself as a multi-level marketing company, an operation that entails selling services directly from person to person, according to the Federal Trade Commission.

Photographs, videos, and anecdotal evidence help paint a close-knit relationship between the Trumps, his organization, and the men behind ACN. Trump, along with his children Ivanka and Eric, have often been photographed standing by ACN co-founders, the lawsuit says. Speaking at an ACN function in 2009, Trump referred to himself as a "friend" of the company's co-founders, according to the lawsuit.

The relationship began in 2005 and continued for about a decade. Trump made $8.8 million from the company overall, according to a New York Times investigation of his tax records.

Those profits were a slice of the roughly $400 million Trump made stemming from his involvement in "The Apprentice."

Prior to landing the lead role in his flagship show in 2004, Trump's finances were crumbling into ruin. He had reported annual net losses for over a decade, according to the Times. By the end of 2002, he had reported a loss of over $350 million.

"The Apprentice," over the course of its years-long run, became Trump's savior, earning hundreds of millions of dollars from it over 16 years, the Times reported. When he got involved with ACN, the company became one of Trump's most lucrative and dependable streams of income.

At the time, Trump was running the Trump Organization along with his children. He and his family members appeared frequently in ACN's videos and magazines, shown to existing IBOs and potential recruits like the four plaintiffs. In these, Trump made "materially false and misleading statements" that made ACN seem like a solid investment, the lawsuit says.

"It's my absolute pleasure to speak to you on behalf of ACN." Trump said in the video where he claimed "100% confidence" in the company, according to the lawsuit.

"ACN has a reputation for success," Trump said in another. "Success that is really synonymous with the Trump name, and you can be a part of it."

Trump's support for ACN extended to its live events. At a 2015 conference, Trump walked out onstage to a cheering audience, the Wall Street Journal reported, to the tune of the O'Jays song "For the Love of Money," — part of which also doubled as the theme song for "The Apprentice."

The plaintiffs, believing Trump to be a successful and powerful businessman, assumed he had done his research on the company and backed it because it had a proven business model run by people he trusted.

But neither ACN nor Trump plainly disclosed that the former reality TV star was receiving large sums of money in exchange for a full-fledged endorsement, the lawsuit says.

ACN co-founder Robert Stevanovski disagrees. He said the company told its independent business owners that Trump was getting paid for the praise.

"That's not true," he told Business Insider. "We made it very clear for everybody."

Two plaintiffs, who first became aware of Trump's endorsement of ACN in videos played for them and other marketing material in which he appeared, said in the lawsuit they didn't see any such disclosure.

The Trump Organization pushed back against the notion that IBOs were guaranteed to make money at all.

"Before enrolling with ACN, every participant acknowledged in writing that they are 'not guaranteed any income' nor 'assured any profits or success' and that no one associated with ACN has made any 'claims of guaranteed profits or representations of expected earnings,'" a spokesperson for the Trump Organization told Business Insider.

In a five-page FAQ sheet sent to Business Insider by one of ACN's co-founders, the company emphasized that there's no guarantee of success by becoming an IBO, and said it "discloses to IBOs that they may lose money, including in written disclaimers."

There is no mention of any written disclaimers in the lawsuit.

In that same sheet, ACN also gives links to multiple videos of Trump appearing to mention to IBOs that he was being compensated for his appearances. The IBOs are not visible in any of the videos, and each clip has been edited out of context to include only a single quote from Trump.

Trump has tried to distance himself from ACN, but there's plenty of video where he praises the company

Shortly after he announced his presidential run, Trump began to distance himself from ACN.

"I do not know the company," Trump told the Wall Street Journal in August 2015. "I know nothing about the company other than the people who run the company. I'm not familiar with what they do or how they go about doing that, and I make that clear in my speeches."

But Trump has previously said he's done research into ACN, and expressed familiarity with its technology and business model.

In a 2005 interview with ACN co-founder Greg Provenzano, Trump said he picked ACN over other potential opportunities.

"I am asked to do this, what you're doing with me, many, many times. And I turn down many, many different proposals," he said in the interview, adding: "We do a lot of research on companies before we agree to do something like I'm doing for you, and ACN is a great company."

ACN's website previously included a section dedicated to Trump that prominently featured his positive comments about the company, along with photos of him and the founders, according to the Journal. One promotional video from ACN refers to him as a "partner-in-success."

The impression of strong ties between ACN and Trump made some former investors believe the company was a safe bet, according to the lawsuit.

The lawsuit argues that Trump "told investors that he had 'experienced the opportunity' and 'done a lot of research,' and that his endorsement was 'not for any money.'" In the interview with Provenzano, he described ACN as an outstanding company.

"I've been able to determine after some research is that you guys have stayed ahead of the pack," he said. "You've stayed ahead of them from a technological standpoint, from a knowledge standpoint."

Stevanovski played down the relationship.

"First of all, it wasn't a partnership," ACN's co-founder said. "He was just a paid spokesperson."

Trump showcased his familiarity with ACN products on an episode of season 8 of "The Apprentice" in 2009, then called "The Celebrity Apprentice," and again in season 11 in 2011. On the show, teams competed to promote ACN's video phone, which received bad reviews in part because users could only video call people who had the same type of phone.

Trump did not mention the product's shortfalls. Instead, he praised it. "I think the ACN video phone is amazing," Trump said in a 2011 video, according to Wall Street Journal. "I simply can't imagine anybody using this phone and not loving it." The iPhone was released in 2007.

Doe, upon watching a video from ACN featuring Trump, "believed that, like any businessman promoting a business opportunity, he had researched ACN extensively and that his statements were supported by his own research and experience," according to the lawsuit.

In a statement to Business Insider, the Trump Organization disputed claims that Trump had not warned about any potential risks of working with ACN.

"When speaking at ACN events, Mr. Trump similarly reminded participants that there are inherent risks associated with every new business ('look, not everything is going to work out'), that those interested should make sure that the ACN opportunity is right for them ('guard against the downside … if things didn't work out, you're still at your job') and that it is important that everyone do their research ('[m]y advice about network marketing is to do your research'; 'research every aspect of your endeavor')," a spokesperson for the organization said.

The lawsuit does not say that Trump instructed all IBOs to conduct their own research about ACN or that he said anything about a risk.

ACN provided Business Insider links to videos of Trump telling people they will "have to work" to succeed.

Trump defrauded 'economically marginalized people,' the lawsuit claims

Luke Loe, one of the plaintiffs in the case, was homeless when he heard of ACN.

Like Doe, he had believed in the vision espoused by Trump. In 2014, he borrowed money from an ACN leader to pay the $499 registration fee. For months, he attended dozens of meetings, each costing from $10 to $20, the lawsuit says.

He also borrowed money from other colleagues to be able to fly out to multi-day conventions and large events that seemed to promise growth opportunities for ACN leaders. After months of trying to earn money, Loe gave up, concluding that ACN did not offer "a path to making any money in the future."

Another plaintiff, Richard Roe, worked in fast food and was only able to pay the registration fee after a streak of lucky casino and lottery wins that awarded him just the right amount of money to cover the expense. Roe also paid for conventions and trainings and didn't see a return on his investment. The final plaintiff mentioned in the lawsuit is a mother referred to as Mary Moe who lost hundreds of dollars and time with her family attending meetings, workshops, and trainings.

Trump made a lot of money piggybacking off the efforts of "working-class Americans" like these, the lawsuit says.

Unlike Trump, the four plaintiffs "were then and are now among the most economically marginalized and vulnerable Americans," according to the lawsuit. They were "targeted" specifically "because they were not experienced in financial and commercial matters," the lawsuit says.

Joanna Hendon, the lawyer representing Trump, his children, and the Trump Organization in this case, did not reply to multiple requests for comment.

Of the $8.8 million Trump received from ACN, $1 million came in 2009, at the height of the Great Recession, according to the Times.

And in 2008, Trump told the Wall Street Journal ACN gave him $2.5 million for a single speech. ACN declined to confirm how much Trump was paid for his speeches.

ACN has a history of complaints

Despite its A+ rating on the Better Business Bureau website, the company's reputation is mired in complaints.

Regulatory agencies in the United States and abroad have investigated the company and found that ACN's business opportunities were high-risk and offered little chance of success, according to the lawsuit.

An investigation from the Montana Commissioner of Securities and Insurance, for example, concluded that, on average, a Montana ACN investor paid about $752 to the company. In return, they got back just about $53 in compensation, a negligible amount compared to the sum they originally invested.

In France, investigators arrived at a similar conclusion, saying "only 1 percent of people recruited could claim a satisfactory income, while 99 percent either lose money or at best earn a monthly income" of about $35, according to the lawsuit.

And in Maryland, regulators mandated that Xoom Energy LLC, an ACN-controlled entity that provides various services for sale, issue $510,361.89 in refunds to 1,374 customers in the state, according to records from the Maryland Public Service Commission.

ACN in a FAQ sheet to Business Insider said these cases were "favorably resolved." The company has settled some cases but has not admitted fault.

ACN leadership says the lawsuit is politically motivated

The company would have settled this time around, too, ACN co-founder Stevanovski told Business Insider.

"If we harmed you, you should sue us, and we'll be happy to [take the matter to] arbitration," he said. "And by the way, we'd be happy to settle with [the plaintiffs] and give them their $800 back, or $1,200 back, whatever they say they lost."

The complaint does not list ACN as a defendant, which Stevanovski believes indicates the case is politically motivated.

"If they really were harmed in the ACN business, then why not go after ACN?" he asked.

"Donald Trump was never a part of ACN, he added. "He was just a paid speaker so I think it's politically motivated that they're going to sue him and the family and not us."

The Trump Organization also says the lawsuit is politically motivated. "We believe that these claims will ultimately fail," a spokesperson told Business Insider.

In court documents, Trump's lawyers have asked the judge to consider other points of contention.

Joshua Matz, a partner with Kaplan Heckler & Fink LLP, one of the two firms representing the plaintiffs, withdrew last year. In 2018, Matz co-wrote a book called "To End a Presidency: The Power of Impeachment," a point highlighted by the defense in its motion to dismiss the original complaint. Matz did not return a request for comment.

The motion to dismiss also says the attorney fees for the plaintiffs are paid by the Tesseract Research Center, a nonprofit whose chair has a history of donating to Democratic groups and candidates, according to FEC records.

The other attorneys representing the plaintiffs either declined to comment or didn't respond to Business Insider's multiple requests.

The complaint is seeking eight counts against Trump and his family members, also listed as defendants. Among the counts, the lawsuit alleges that Trump and his children are guilty of committing fraud along with unfair and deceptive trade practices.

Despite multiple attempts by the defendants for dismissal, the lawsuit remains ongoing.

The Trump campaign did not respond to a request for comment asking whether the lawsuit is a concern, with just weeks to go before the presidential election.

This lawsuit is just one of several cases stacked up against the president. If he loses the election in November, he will once again become a private citizen and will likely have to face this lawsuit, along with multiple others.

When asked if ACN would again pay Trump to be a spokesperson for the company, Stevanovski said no. "The whole idea is to unite our salespeople, to get them excited," he said.

"It's obvious that the president has, probably half the country that loves him and half the country that hates him," he continued. "That would not be good for our business."

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