The Trump Network Lawsuit – Going Down Fast?

by Ted Nuyten on February 1, 2012

The Trump Network Lawsuit

The Trump Network (TTN),  the founders of The Trump Network are Todd and Scott Stanwood and Lou DeCaprio.

In March of 1997, Ideal Health started and is renamed  in 2009 as The Trump Network when Donald Trump came in. Estimated revenue in 2010 $20 million, active 21,000 distributors.

2/3 of the company has left to find other opportunities after the marketer compensation stopped.

Over 20 diamond directors left the company in January.  There are several lawsuits, a bankruptcy filed and one of the founders has left the company and the two others have stepped down.

A review about the Trump Network including 60 leading distributors can be found here

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IN THE FOURTH JUDICIAL DISTRICT COURT IN AND FOR UTAH COUNTY, STATE OF UTAH THOMAS E. MOWER Plaintiff, vs. IDEAL HEALTH, INC., a Nevada corporation; TTN, LCC dba THE TRUMP NETWORK, a Massachusetts limited liability company;

TODD STANWOOD; SCOTT STANWOOD; and LOUIS DeCAPRIO, Defendants.


Plaintiff THOMAS E. MOWER alleges and complains of Defendants IDEAL HEALTH, INC., TTN, LLC dba THE TRUMP NETWORK, TODD STANWOOD, SCOTT STANWOOD and LOUIS DeCAPRIO (collectively “Defendants”) as follows:

PARTIES AND JURISDICTION

1. Plaintiff THOMAS E. MOWER (“Plaintiff”) is, and at all times relevant hereto was, an individual residing in Utah County, Utah.

2. Defendant IDEAL HEALTH, INC. (“Ideal Health”) is, and at all times relevant hereto was, a Nevada corporation, doing business throughout the United States and has held itself out as an owner of THE TRUMP NETWORK.

3. Defendant TTN, LLC (“TTN”) is, and at all times relevant hereto was, a Massachusetts limited liability company, doing business as THE TRUMP NETWORK throughout the United States. Plaintiff is informed and believes, and on that basis alleges, that at all times alleged herein TTN and Ideal Health were the alter ego of the other.

4. Defendant TODD STANWOOD (“T. Stanwood”) is, and at all times relevant hereto was, an individual residing in the State of Massachusetts.

5. Defendant SCOTT STANWOOD (“S. Stanwood”) is, and at all times relevant hereto was, an individual residing in the State of Massachusetts.

6. Defendant LOUIS DeCAPRIO (“DeCaprio”) is, and at all times relevant hereto was, an individual residing in the State of Massachusetts.

7. Plaintiff is informed and believes, and on that basis alleges, that at all times herein mentioned each of the Defendants was the agent, representative and/or employee of each of the other defendants, and, in doing the acts hereinafter alleged, was acting within the course and scope of such relationship and with the permission and consent of their co-defendants and, further, that the Defendants, and each of them, have authorized, ratified, and approved the acts of each of the other Defendants with full knowledge of those acts.

8. This Court has jurisdiction over the present matter pursuant to UTAH CODE ANN. § 78A-5-102(1) because this is a civil matter arising out of the parties’ transaction of business within the State of Utah. Defendants and each of them through the transaction hereinafter alleged have established sufficient minimum contacts with the State of Utah justifying this Court’s assertion of jurisdiction over them.

9. This Court is the proper venue for the present matter under UTAH CODE ANN. § 78B-3-304(2) and/or § 78B-3-307.

BACKGROUND ALLEGATIONS

10. In the fall of 2011, Plaintiff became interested in the possibility of acquiring Ideal Health and/or TTN dba THE TRUMP NETWORK.

11. In exploring the possibility of acquiring Ideal Health and/or TTN dba THE TRUMP NETWORK, Plaintiff learned that Ideal Health/TTN was in need of financing to pay current commissions due to its distributors.

12. To assist Ideal Health/TTN and to further explore the possibility of acquiring Ideal Health and/or TTN dba THE TRUMP NETWORK, Plaintiff and Defendants entered into an Agreement on October 31, 2011, whereby Plaintiff agreed to lend Ideal Health/TTN $270,000 as “bridge financing” upon the following terms:

a. Ideal Health/TTN would only use the loaned funds to pay current commissions due to distributors based on Ideal Health/TTN’s commission plan;

b. Ideal Health/TTN would repay the $270,000 including 8% interest compounded annually from funds flowing through Ideal Health/TTN’s Discover and American Express accounts. These payments were to be immediately transferred to Plaintiff’s account upon receipt of funds in the Discover and American Express accounts (at least three times a week).

c. Ideal Health/TTN would establish a joint bank account with Plaintiff into which all of the funds from the Discover and American Express accounts would be deposited.

d. Ideal Health/TTN’s CFO would then disburse 25% of the funds deposited into the joint account over to Plaintiff’s account (three times a week) and also provide Plaintiff with a complete accounting and reconciliation of the account with each disbursement.

e. Ideal Health/TTN also agreed to provide Plaintiff a daily reconciliation through its CFO to account for the funds flowing into the business and the portion forwarded to Plaintiff pursuant to the terms of the agreement.

f. For 90 days following the execution of the Agreement and or whatever additional period beyond the 90 days was required for Ideal Health/TTN to repay the bridge financing, Ideal Health/TTN agreed not to promote or pursue sale of its business or any stock in the business to any other party, which included Ideal Health/TTN’s agreement not to engage in any conversation of a potential sale with any other parties.

g. Ideal Health/TTN agreed to pay Plaintiff any outstanding amounts due under the agreement by November 30, 2011. (A true and correct copy of the parties’ October 31, 2011 Agreement is attached as Exhibit “A.”)

13. As part of the Agreement, T. Stanwood, S. Stanwood and Louis DeCaprio personally guaranteed the repayment of the bridge financing out of their personal assets.

14. On or about November 1, 2011, pursuant to the Agreement, Plaintiff transferred $270,000 to Ideal Health/TTN. (A true and correct copy of the Plaintiff’s November 1, 2011 Wire Transfer Form is attached as Exhibit “B.”)

15. Despite Plaintiff’s full performance under the terms of the Agreement, Defendants and each of them have failed to pay the amounts due and owing to Plaintiff.

16. As of the date of this Complaint, Defendants owe Plaintiff the principal amount of $260,478.75, plus interest at the rate of 8% per annum.

FIRST CAUSE OF ACTION (Breach of Contract – Ideal Health/TTN)

17. Plaintiff incorporates herein all other allegations contained in this Complaint.

18. Plaintiff and Ideal Health/TTN are parties to a binding and enforceable Agreement, whereby Plaintiff agreed to lend Ideal Health/TTN $270,000 in exchange for repayment and other promises as outlined in Paragraph 12, above. (See Exhibit “A.”)

19. Plaintiff has fully performed under the terms of the Agreement by transferring the $270,000 it agreed to lend to Ideal Health/TTN. (See Exhibit “B.”)

20. Ideal Health/TTN have nevertheless breached the Agreement by failing to pay Plaintiff the amounts due under the Agreement.

21. Upon information and belief, Ideal Health/TTN have further breached the Agreement by, without limitation, using the bridge financing for purposes other than to pay the current commissions due to distributors based on Ideal Health/TTN’s commission plan, by failing to establish a joint bank account with Plaintiff into which all of the funds from the Discover and American Express accounts would be deposited, by failing to provide Plaintiff a daily reconciliation through its CFO to account for the funds flowing into the business and the portion forwarded to Plaintiff pursuant to the terms of the Agreement, by failing to enter into good faith negotiations with Plaintiff for the potential purchase of Ideal Health/TTN by Plaintiff, and by promoting or discussing the sale of its business or stock in the business to other parties.

22. As a result, Plaintiff has been damaged in an amount to be determined at trial but not less than $260,476.75, plus interest accruing at the rate of 8% from November 1, 2011 until the entry of Judgment.

SECOND CAUSE OF ACTION (Unjust Enrichment – Ideal Health/TTN)

23. Plaintiff incorporates herein all other allegations contained in this Complaint.

24. Ideal Health/TTN received $270,000 loan from Plaintiff without paying for the loan.

25. Ideal Health/TTN fully appreciated and had actual knowledge of the benefit it received by way of the $270,000 loan.

26. It would be inequitable to allow Ideal Health/TTN to accept and retain the $270,000 loan without paying Plaintiff for its value.

27. Accordingly, Ideal Health/TTN has been enriched—and Plaintiff damaged—in an amount to be determined at trial, but not less than $260,476.75, plus interest.

THIRD CAUSE OF ACTION (Breach of Contract – T. Stanwood, S. Stanwood and DeCaprio)

28. Plaintiff incorporates herein all other allegations contained in this Complaint.

29. T. Stanwood, S. Stanwood and DeCaprio (collectively the “Guarantors”) executed a written guarantee, each personally guaranteeing the repayment of the bridge financing to Ideal Health/TTN.

30. Plaintiff has properly performed under the terms of the Agreement, providing the consideration and value evidenced by the November 1, 2011 Outgoing Wire Transfer to Ideal Health/TTN. (See Exhibit “B.”)

31. As alleged above, Ideal Health/TTN have failed to pay the amounts due and owing under the terms of the Agreement.

32. The Guarantors have also defaulted on their guarantee obligations, whereby they also agreed to repay the bridge financing paid to Ideal Health/TTN.

33. As a result, the Guarantors have damaged Plaintiff in an amount to be determined at trial, but not less than $260,476.75, plus interest accruing at the rate of 8% from November 1, 2011 until the entry of Judgment.

FOURTH CAUSE OF ACTION (Fraud – Defendants)

34. Plaintiff incorporates herein all other allegations contained in this Complaint.

35. Defendants and each of them, represented to Plaintiff that Ideal Health/TTN would, among other things, repay the amounts owed to Plaintiff from funds flowing through Ideal Health’s Discover and American Express accounts according to the payment terms of the  Agreement, enter into negotiations with Plaintiff for the potential purchase of Ideal Health/TTN, and not promote or pursue the sale of the business or of any stock in the business to any other party for a period of 90 days from the execution of the Agreement or whatever additional period beyond the 90 days was required for Ideal Health/TTN to repay the bridge loan.

36. However, Defendants’ representations were false.

37. Upon information and belief, Defendants had no intent to fully repay Plaintiff from the funds flowing through Ideal Health/TTN’s Discover and American Express accounts.

38. Nor did the Defendants intend to refrain from promoting or pursuing the sale of the business or of any stock in the business to any other party for a period of 90 days from the execution of the Agreement or whatever additional period beyond the 90 days was required for Ideal Health/TTN to repay the bridge loan.

39. Instead, Defendants had the secret intention to keep all of the funds flowing through Ideal Health/TTN’s Discover and American Express accounts for Ideal Health/TTN’s own purposes while continuing to to promote or pursue the sale of the business and/or their stock in the business to parties other than Plaintiff.

40. Defendants did not disclose their true intentions to Plaintiff in order to induce Plaintiff to enter into the Agreement and provide Ideal Health/TTN with a $270,000 loan.

41. Defendants understood that each of the false promises alleged herein were material to Plaintiff.

42. In reliance on Defendant’s promises as alleged herein, Plaintiff entered into the Agreement and lent Ideal Health/TTN $270,000.

43. As a result of the foregoing, Plaintiff has been injured in an amount to be determined at trial, but not less than $260,476.75, which represents, without limitation, the amounts Defendants wrongly induced Plaintiff to lend to Ideal Health/TTN and Plaintiff’s lost business opportunities arising from Defendants’ promotion of the sale of the business and/or their stock in the business to parties other than Plaintiff.

FIFTH CAUSE OF ACTION (Negligent Misrepresentation – Defendants)

44. Plaintiff incorporates herein all other allegations contained in this Complaint.

45. Defendants and each of them, represented to Plaintiff that Ideal Health/TTN would, among other things, repay the amounts owed to Plaintiff from funds flowing through Ideal Health/TTN’s Discover and American Express accounts according to the payment terms of the Agreement, enter into negotiations with Plaintiff for the potential purchase of Ideal Health/TTN, and not promote or pursue the sale of the business or of any stock in the business to any other party for a period of 90 days from the execution of the Agreement or whatever additional period beyond the 90 days was required for Ideal Health/TTN to repay the bridge loan.

46. However, Defendants’ representations were false.

47. Upon information and belief, Defendants had no reasonable grounds for believing that Ideal Health/TTN would fully repay Plaintiff from the funds flowing through Ideal Health/TTN’s Discover and American Express accounts.

48. Nor did the Defendants have any reasonable grounds for believing that they would refrain from promoting or pursuing the sale of the business or of any stock in the business to any other party for a period of 90 days from the execution of the Agreement or whatever additional period beyond the 90 days was required for Ideal Health/TTN to repay the bridge loan.

49. Instead, Ideal Health/TTN kept all of the funds flowing through Ideal Health’s Discover and American Express accounts for Ideal Health/TTN’s own purposes and promoted or pursued the sale of the business and/or their stock in the business to parties other than Plaintiff.

50. Defendants fully appreciated the importance of the foregoing promises to Plaintiff.

51. In reliance on Defendant’s promises as alleged herein, Plaintiff entered into the Agreement and lent Ideal Health/TTN $270,000. As a result of the foregoing, Plaintiff has been injured in an amount to be determined at trial, but not less than $260,476.75, which represents, without limitation, the amounts Defendants wrongly induced Plaintiff to lend to Ideal Health/TTN and Plaintiff’s lost business opportunities arising from Defendants’ promotion of the sale of the business and/or their stock in the business to parties other than Plaintiff.

PRAYER FOR RELIEF  WHEREFORE, Plaintiff requests relief as follows:

A. Under the First Claim for Relief: a judgment in favor of Plaintiff, and against Ideal Health/TTN, in an amount to be determined at trial, but not less than $260,476.75, plus interest, costs and attorney’s fees;

B. Under the Second Claim for Relief: a judgment in favor of Plaintiff, and against Ideal Health/TTN, in an amount to be determined at trial, but not less than $260,476.75, plus interest, costs and attorney’s fees;

C. Under the Third Claim for Relief: a judgment in favor of Plaintiff, and against the Guarantors, in an amount to be determined at trial, but not less than $260,476.75, plus interest, costs and attorney’s fees;

D. Under the Fourth Claim for Relief: a judgment in favor of Plaintiff, and against each of the Defendants, in an amount to be determined at trial, but not less than $781,430.25 (which represents treble and punitive damages to which Plaintiff is entitled due to Defendants’ fraud), plus interest, costs and attorney’s fees;

E. Under the Fifth Claim for Relief: a judgment in favor of Plaintiff, and against each of the Defendants, in an amount to be determined at trial, but not less than $781,430.25 (which represents treble and punitive damages to which Plaintiff is entitled due to Defendants’ misrepresentation), plus interest, costs and attorney’s fees;

F. Any other relief the Court deems equitable and just.

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