Case 8:20-cv-00287-JVS-KES Document 1 Filed 02/12/20 Page 1 of 40 Page ID #:1
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`Thomas M. Biesty, NY Bar No. 4172896
`(seeking admission pro hac vice)
`(202) 326-3043 / tbiesty@ftc.gov
`Rhonda Perkins, VA Bar No. 75300
`(seeking admission pro hac vice)
`(202) 326-3222 / rperkins@ftc.gov
`Andrew Hudson, DC Bar No. 469817
`(seeking admission pro hac vice)
`(202) 326-2213 / ahudson@ftc.gov
`600 Pennsylvania Ave., NW, CC-8528
`Washington, DC 20580
`
`Local Counsel
`John Jacobs, CA Bar No. 134154
`(310) 824-4300 / jjacobs@ftc.gov
`Federal Trade Commission
`10990 Wilshire Blvd., Suite 400
`Los Angeles, CA 90024
`(310) 824-4380 (fax)
`
`Attorneys for Plaintiff
`Federal Trade Commission
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`No. 8:20−cv−287
`
`COMPLAINT FOR PERMANENT
`INJUNCTION AND OTHER
`EQUITABLE RELIEF
`
`Federal Trade Commission,
`
`Plaintiff,
`
`
`
`vs.
`
`OTA Franchise Corporation, a
`Nevada Corporation,
`
`Newport Exchange Holdings, Inc., a
`California corporation,
`
`NEH Services, Inc., a California
`corporation,
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`Case 8:20-cv-00287-JVS-KES Document 1 Filed 02/12/20 Page 2 of 40 Page ID #:2
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`Eyal Shachar, also known as Eyal
`Shahar, individually and as an officer of
`OTA Franchise Corporation, Newport
`Exchange Holdings, Inc., and NEH
`Services, Inc.
`
`Samuel R. Seiden, individually and as
`an officer of OTA Franchise
`Corporation, and
`
`Darren Kimoto, individually,
`
`Defendants.
`
`Plaintiff, the Federal Trade Commission (“FTC”), for its Complaint alleges:
`The FTC brings this action under Sections 13(b) and 19 of the Federal
`1.
`Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b) and 57b, and the
`Consumer Review Fairness Act of 2016 (“CRFA”), 15 U.S.C. § 45b, to obtain
`temporary, preliminary, and permanent injunctive relief, rescission or reformation
`of contracts, restitution, the refund of monies paid, disgorgement of ill-gotten
`monies, and other equitable relief for Defendants’ acts or practices in violation of
`Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the CRFA, 15 U.S.C. § 45b, in
`connection with the sale and marketing of training programs, including seminars,
`courses, and instructional materials on trading and investing.
`SUMMARY OF THE CASE
`Operating under the name “Online Trading Academy” (“OTA”
`2.
`(alternatively meaning the “Corporate Defendants” collectively)) and led by Eyal
`Shachar, Defendants purport to teach consumers how to “invest like the pros on
`Wall Street.” Defendants claim to show their “students” how to find “low-risk,
`high-potential investing opportunities” by applying a “patented strategy to any
`asset class including stocks, options, futures and currencies.”
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`Case 8:20-cv-00287-JVS-KES Document 1 Filed 02/12/20 Page 3 of 40 Page ID #:3
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`Defendants target older consumers “with visibility to retirement age,
`3.
`near retirement or retired.” To convince consumers to pay thousands and often
`tens of thousands of dollars for OTA’s training and related services, Defendants
`routinely represent, directly or by implication, that purchasers are likely to generate
`substantial income with OTA’s trading strategy. Typical examples include:
` A letter from OTA’s CEO and owner, Eyal Shachar, promising that
`OTA “students” will “be introduced to Online Trading Academy’s
`patented supply and demand trading and investing strategy which
`allows us to anticipate market moves with a high degree of accuracy.”
` A promotional video featuring a retiree who purportedly used OTA’s
`trading strategy to create “a retirement income that was bigger than
`his income while he was working,” including “$40,000 in a single
`trade.”
` A testimonial from a purported OTA customer stating, “It took me 18
`years to develop a decent salary. After three months here at OTA, I’m
`making almost as much money as my business.”
` The story of Jasmine Wang, an OTA employee, who purportedly grew
`a $12,000 trading account to $128,000 in nine months.
`Defendants have routinely claimed that consumers who purchase OTA
`4.
`training programs can quickly attain proficiency in OTA’s strategy and deploy it to
`earn substantial income, regardless of their background and prior experience.
`5.
`Defendants’ earnings claims are false or unsubstantiated. OTA’s
`strategy does not work as advertised, Defendants do not track the trading
`performance of their customers, and Defendants have no data that would allow
`them to predict the trading performance of their customers.
`6.
`Many dissatisfied customers have requested refunds of the monies
`they paid for OTA’s training. In numerous instances, when Defendants agree to
`honor a refund request, they condition the refund on the consumer signing an
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`Case 8:20-cv-00287-JVS-KES Document 1 Filed 02/12/20 Page 4 of 40 Page ID #:4
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`agreement barring the consumer from posting negative reviews about OTA and its
`services, and from providing negative information about OTA and its employees,
`including potential law violations, to law enforcement agencies.
`7.
`Defendants have collected hundreds of millions of dollars from
`numerous consumers across the country. In perpetrating their scheme, they have
`violated the FTC Act and the Consumer Review Fairness Act.
`JURISDICTION AND VENUE
`This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§
`8.
`1331, 1337(a), and 1345, and 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)(2), and (d), and 15 U.S.C. § 53(b).
`PLAINTIFF
`The FTC is an independent agency of the United States Government
`10.
`created by statute. 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 FTC also enforces the CRFA, 15 U.S.C. § 45b.
`11.
`The FTC is authorized to initiate federal district court proceedings, by
`its own attorneys, to enjoin violations of the FTC Act and the CRFA and to secure
`such equitable relief as may be appropriate in each case, including rescission or
`reformation of contracts, restitution, the refund of monies paid, and the
`disgorgement of ill-gotten monies. 15 U.S.C. §§ 45b(d)(2)(A), 53(b), 57b, and
`56(a)(2)(A).
`
`DEFENDANTS
`12. Defendant OTA Franchise Corporation (“OTA Corp.”), also doing
`business as Online Trading Academy, is a Nevada corporation with its principal
`place of business at 17780 Fitch Avenue, Irvine, California 92614. OTA Corp.
`transacts or has transacted business in this district and throughout the United
`States. At all times material to this Complaint, acting alone or in concert with
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`others, OTA Corp. has advertised, marketed, distributed, or sold training programs
`and related goods and services to consumers throughout the United States.
`13. Defendant Newport Exchange Holdings, Inc. (“NE Holdings”), also
`doing business as Online Trading Academy, is a California corporation with its
`principal place of business at 17780 Fitch Avenue, Irvine, California 92614. NE
`Holdings transacts or has transacted business in this district and throughout the
`United States. At all times material to this Complaint, acting alone or in concert
`with others, NE Holdings has advertised, marketed, distributed, or sold training
`programs and related goods and services to consumers throughout the United
`States.
`14. Defendant NEH Services, Inc. (“NE Services”), also doing business as
`Online Trading Academy, is a California corporation with its principal place of
`business at 17780 Fitch Avenue, Irvine, California 92614. NE Services transacts or
`has transacted business in this district and throughout the United States. At all
`times material to this Complaint, acting alone or in concert with others, NE
`Services has advertised, marketed, distributed, or sold training programs and
`related goods and services to consumers throughout the United States.
`15. Defendant Eyal Shachar, also known as Eyal Shahar (“Shachar”), is
`the chief executive officer, sole director, and former president of OTA Corp. He is
`also the founder and president of NE Holdings, and the CEO of NE Services.
`Shachar resides in California, and is the owner, directly or indirectly, of all of the
`Corporate Defendants. At all times material to this Complaint, acting alone or in
`concert with others, he has formulated, directed, controlled, had the authority to
`control, or participated in the acts and practices set forth in this Complaint.
`Shachar, in connection with the matters alleged herein, transacts or has transacted
`business in this district and throughout the United States. Shachar is responsible
`for the direction of Defendants’ global expansion and he is involved in Defendants’
`day-to-day operations in marketing, finance, and sales.
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`Case 8:20-cv-00287-JVS-KES Document 1 Filed 02/12/20 Page 6 of 40 Page ID #:6
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`16. Defendant Samuel R. Seiden (“Seiden”) is OTA’s Chief Trading
`Strategist, and has previously served in a number of other executive roles at OTA.
`He is the creator and most visible exponent of Defendants’ proprietary trading
`strategy to consumers and the investing public, whose benefits and income
`generation potential are the main reason offered for consumers to purchase OTA
`training programs. Defendant Seiden has featured prominently in OTA’s
`marketing, and has been held out to consumers at OTA’s live events as the creator
`of OTA’s patent and “an impeccable master” of OTA’s trading strategy. Seiden
`curated OTA’s Market Timing Orientation (“MTO”) slide presentation from 2014-
`2017. He has also participated in managing the MTO sales process more generally,
`including addressing issues with individual salespeoples’ compensation or
`performance, and disseminating an “MTO Master Document” outlining the content
`to be delivered at each phase of the MTO sales pitch. Seiden resides in Illinois. At
`all times material to this Complaint, acting alone or in concert with others, he has
`formulated, directed, controlled, had the authority to control, or participated in the
`acts and practices set forth in this Complaint. Seiden, in connection with the
`matters alleged herein, transacts or has transacted business in this district and
`throughout the United States.
`17. Defendant Darren Kimoto (“Kimoto”) is one of OTA’s chief
`salespeople, and the head of the sales force that presents OTA’s three-day MTO
`sales event, discussed in Paragraphs 81 to 116. Kimoto resides in Utah. At all
`times material to this Complaint, acting alone or in concert with others, he has
`formulated, directed, controlled, had the authority to control, or participated in the
`acts and practices set forth in this Complaint. Kimoto, in connection with the
`matters alleged herein, transacts or has transacted business in this district and
`throughout the United States.
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`Common Enterprise
`18. Defendants OTA Corp., NE Holdings, and NE Services (collectively,
`“Corporate Defendants” or “OTA”) have operated as a common enterprise while
`engaging in the deceptive acts and practices alleged below. Defendants have
`conducted the business practices described below through an interrelated network
`of companies that have unified advertising, common ownership, officers,
`managers, business functions, employees, and office locations. Because these
`Corporate Defendants have operated as a common enterprise, each of them is
`jointly and severally liable for the acts and practices alleged below. Shachar and
`Seiden formulated, directed, controlled, had the authority to control, or participated
`in the acts and practices of the Corporate Defendants that constitute the common
`enterprise.
`
`COMMERCE
`19. At all times material 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
`20. Defendants market investment-training programs under the name
`“Online Trading Academy.”
`21. Defendants represent to consumers that purchasers of OTA training
`programs and related services (collectively, “OTA Training”) are likely to earn
`substantial income by applying Defendants’ patented trading “strategy.”
`22. Since at least 2004, Defendants have advertised, marketed,
`distributed, promoted, and sold training programs, including seminars, courses, and
`instructional materials on trading and investing, to consumers throughout the
`United States and internationally.
`23. Defendants offer OTA Training for sale at live events held in hotel
`conference rooms and over 40 brick-and-mortar training centers throughout the
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`Case 8:20-cv-00287-JVS-KES Document 1 Filed 02/12/20 Page 8 of 40 Page ID #:8
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`United States and internationally, as well as online. Defendants own and operate
`some of these centers, while others are owned and operated by franchisees of
`Defendants.
`24. NE Holdings owns and operates an Online Trading Academy center
`located in Irvine, California.
`25. As of December 31, 2017, OTA owned and operated ten Online
`Trading Academy training centers in Westwood Los Angeles, California; Woodland
`Hills Los Angeles, California; Sacramento, California; Long Island, New York;
`New York City, New York; Boston, Massachusetts; Cincinnati, Ohio; Austin,
`Texas; Vancouver, Canada; and London, England.
`26.
`In 2017, Defendants generated $44.1 million in revenue from the
`Online Trading Academy training centers they own and operate.
`27. Within the last five years, consumers have paid hundreds of millions
`of dollars for OTA Training.
`Online Trading Academy Franchisees
`28. Defendants began offering Online Trading Academy franchises on
`April 20, 2004.
`29. As of December 31, 2017, thirty-one Online Trading Academy outlets
`were owned and operated by franchisees, including franchised locations in
`Arizona, California, Canada, Colorado, Connecticut, Florida, Georgia, Illinois,
`India, Indonesia, Kansas, Maryland, Michigan, Minnesota, New Jersey, North
`Carolina, Pennsylvania, Singapore, Texas, United Arab Emirates, United Kingdom,
`Washington DC, and Wisconsin.
`30. To acquire an Online Trading Academy outlet, franchisees must sign a
`franchise agreement with OTA Corp., pay an initial franchise fee, and a monthly
`royalty fee in the amount of 10% of gross revenue.
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`Case 8:20-cv-00287-JVS-KES Document 1 Filed 02/12/20 Page 9 of 40 Page ID #:9
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`31. Franchisees are also required to pay additional fees, including various
`marketing and advertising fees. OTA Corp. established a marketing fund to pool
`the marketing and advertising fees it receives from franchises.
`32. OTA Corp. has sole discretion over all matters, including operational
`and marketing matters, relating to the marketing fund. OTA Corp. uses the
`marketing fund to promote the Online Trading Academy brand and the Online
`Trading Academy training centers.
`Online Trading Academy’s Sales Process
`33. Defendants advertise OTA Training to consumers through a variety of
`marketing mediums including television, radio, direct mail, search engine
`advertising, Internet banner advertisements, email, websites, online videos,
`telemarketing, webinars, social media, and live events.
`34. Defendants widely disseminate their advertising for Online Trading
`Academy throughout the United States.
`35. Defendants’ advertising targets older consumers “with visibility to
`retirement age, near retirement or retired.”
`36. Defendants also target consumers “who are dissatisfied with the state
`of their financial affairs, worry about the sufficiency of their portfolios and seek
`more control over their financial future.”
`37. Defendants rely on a multi-step sales process to attract consumers.
`38. First, Defendants engage in mass marketing to drive consumers to
`register and attend a free three-hour seminar Defendants call “Market Timing
`Preview” or “Power Trading Workshop” (“Preview Event”).
`39. Second, Defendants use the Preview Event to entice consumers to
`enroll in a three-day seminar called “Market Timing Orientation.”
`40. Defendants typically offer the Market Timing Orientation for $299.
`Some consumers are offered attendance at a Market Timing Orientation for free.
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`41. Third, Defendants use the Market Timing Orientation seminar to
`convince consumers to enroll in courses and seminars that cost thousands to tens of
`thousands of dollars.
`42. To entice consumers to purchase OTA Training, Defendants make
`false or unsubstantiated earnings claims throughout their sales process.
`43. Defendants routinely offer to finance part or all of the cost of the OTA
`Training. OTA Corp. often offers loans with interest rates at or around 18%, with
`forgiveness of all interest if the loan is paid in full within the first six months.
`44.
`In some instances, Defendants’ representations, express or implied,
`have led consumers to the belief that they would be able to quickly pay off their
`loans with earnings from trading using Defendants’ strategy.
`Defendants’ Mass Marketing Campaign
`45. Defendants promote the Preview Events through numerous venues,
`including television, radio, websites, Internet banner ads, search engine
`advertising, YouTube videos, and direct mail.
`46. For example, Defendants aired an infomercial nationally in 2019 that
`included the following representations about OTA Training, among others:
` It will show consumers how “to create daily, weekly, and monthly
`income.”
` It “can help you learn to make the right buy and sell decisions.”
` The strategy is “designed to make money in any market, whether it’s
`going up or down.”
` The strategy can “help you to generate daily or monthly income, while
`also protecting and growing wealth.”
` The strategy is “proven.”
` “No matter your experience and goals, Online Trading Academy can
`teach you how to apply strategies to create an additional source of
`income.”
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` A testimonial from a purchaser stating –“in three hours I made
`$12,000” in a single trade.
` A testimonial from a purchaser stating – “I made $32,000 in less than
`seven trading days.”
` A testimonial from a purchaser stating that, prior to purchasing and
`using the OTA Training, she was a dentist, but now “I don’t have to
`work for anybody.”
`47. Defendants’ radio advertisements make similar claims. For example,
`on February 25, 2019, Kevin Young of OTA Minneapolis joined “The Need To
`Know Morning Show” with radio host Steve Hallstrom on AM 1100 The Flag to
`promote a Preview Event in Fargo, North Dakota. Young claimed that OTA
`“teach[es] people … to generate income” and that consumers should not think
`trading in the market is not for them, because “80% of the individuals that come
`through our doors don’t know a stock from a rock.” Young opined that many
`people need a new source of income to supplement their salary, or so that they can
`quit their job entirely, and suggested that OTA Training can provide that income.
`48. OTA radio spots aired frequently throughout 2018 and 2019 in the
`New York City metro area and represented that consumers who purchased OTA
`Training would likely earn substantial income, using phrases such as “generate
`monthly cash flow,” “generate income,” and “make money in the market.”
`49. One such New York City area radio ad dramatizes an alleged
`encounter between two friends. The one who has recently purchased OTA Training
`says, “It’s almost like having a second paycheck without having a second job,”
`leading the other friend to later say, “Now I don’t have to ask my boss for a raise,
`I’ll just give myself one!”
`50.
`In another New York City area radio ad, a purported OTA instructor
`who lost his job at age 60 before finding OTA, is held up as a “success story”; he
`explains that he came to OTA with the goals to “never to work for anyone again, to
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`make money wherever I was in the world, ‘cause I got people I love all over the
`place, and generate income and wealth for the rest of my life and then teach my
`kids how to do this.”
`51. The New York City area radio ads claim that using OTA Training,
`consumers will earn enough income to alter their lifestyle. One ad claims, “Do
`you wish you could have more income to live the lifestyle you want? What about
`retirement? Are you relying on your job as your sole source of income? We’d like
`to show you a plan to generate active income from the market, and create passive
`income to build your retirement.”
`52. Another such ad boasts, “At Online Trading Academy, we help people
`develop the skills necessary to generate monthly cash flow, so you can spend time
`on the things that matter the most. Taking care of your family. Retiring
`comfortably. Or just making it easier to pay off those bills.” Yet another, which
`aired as recently as August 30, 2019, asks, “Wouldn’t it be nice to have enough
`money to vacation whenever you want, for life? You COULD! Larry Mullins
`here, with a program I signed up for that could unlock that potential.”
`53. A number of radio advertisements represent that, by simply attending
`OTA’s free Preview Event, consumers will learn how to use OTA’s strategy to earn
`income. For example, an ad played in the New York City area in 2018 or 2019
`stated: “attend one of [OTA’s] free classes where you can learn how to earn income
`in the market and achieve a life of financial freedom. In this free class Online
`Trading Academy will show you how to generate income by identifying low-risk,
`high-reward opportunities.”
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`54. OTA’s websites make similar claims. For example, on March 5, 2019,
`the website tradingacademy.com, a screenshot of which is depicted below, stated,
`“You don’t have to work on Wall Street to make money like Wall Street.”
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`55. Defendants also use earnings claims in promotional videos on the
`Internet. For example, a video published on OTA’s YouTube channel, screenshots
`of which are depicted below, features Bill Avery, a purported OTA Training
`purchaser who purportedly created “a retirement income that was bigger than his
`income while he was working.” During the video, Mr. Avery proclaims: “Online
`Trading Academy teaches you how to make money and how to avoid losing it.”
`He also claims he was able to make “$40,000 in a single trade.”
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`Case 8:20-cv-00287-JVS-KES Document 1 Filed 02/12/20 Page 15 of 40 Page ID #:15
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`Defendants’ Free Preview Events
`56. Defendants typically invite consumers to enroll in a Preview Event by
`registering online through OTA’s website or calling a toll-free number.
`57. During their telephone interactions with consumers, OTA’s
`telemarketers reinforce the notion that consumers are likely to earn substantial
`income through deploying OTA’s trading strategy.
`58. Attempting to convince consumers to enroll in OTA’s Market Timing
`Orientation workshop, OTA presenters make earnings claims throughout the
`Preview Event, including via testimonials of purported OTA “students.”
`59. For example, at a Preview Event held at OTA’s Irvine headquarters on
`December 13, 2018, OTA presenter Dawn Landry claimed that:
`consumers “could potentially make $50,000 of annual income
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`with an account size as low as $5,000.”
`OTA “ha[s] a patent on the fact that you can time the markets,”
`which “gives us the ability to know when to get in and when to
`get out, long-term and short-term.”
`OTA has “strategies … that you can actually use the trading to
`create a secondary income and then also the potential of making
`it a full-time career.”
`60. At a Preview Event held in OTA’s offices in New York City on June
`12, 2019, an OTA presenter who introduced himself as “Tarantino” claimed that:
`Consumers could potentially make $50,000 of annual income
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`with an account size as low as $5,000.
`OTA can help consumers make “trading … [your] primary
`source of … income,” calling it “fire [your] boss level” income.
`Consumers come to OTA to make income that allows them to
`work less, “so you can spend more time with the family.”
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`Case 8:20-cv-00287-JVS-KES Document 1 Filed 02/12/20 Page 16 of 40 Page ID #:16
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` With OTA’s strategy, “you can be wrong 60 percent of the time
`and still end up on top.”
`61. At the Preview event, Defendants typically offer the Market Timing
`Orientation workshop at $299, or a similar price, while claiming that this is a
`“special discount,” and that the “retail” price is $600 or considerably higher.
`62. After they enroll in the Market Timing Orientation workshop,
`consumers typically receive a letter from Shachar, welcoming them to the “Online
`Trading Academy Family.” The letter states that during the Market Timing
`Orientation, the consumer will “start to define [her] strategy for generating short-
`term income and building long-term wealth” and “be introduced to Online Trading
`Academy’s patented supply and demand trading and investing strategy which
`allows us to anticipate market moves with a high degree of accuracy.”
`63. Shachar’s letter also claims that “[o]ver 35,000 of our graduates have
`the opportunity to live more comfortable and satisfied lives as a result of the skills
`they’ve learned here at the Academy.”
`Defendants’ “Education Counselors”
`64. OTA typically assigns an “Education Counselor” to enrollees in a
`Market Timing Orientation workshop.
`65. OTA’s Education Counselors are salespersons hired by OTA or its
`franchisees to sell OTA Training. They earn commissions based on the payment
`collected from their gross sales of OTA Training.
`66. Education Counselors typically do not reveal to consumers that they
`are commission-based salespersons.
`67. Education Counselors often have little to no experience with
`education or counseling.
`68. Education Counselors typically make contact with consumers in
`preparation for the Market Timing Orientation workshop. OTA often refers to
`these contacts as “Touch Points” or TPs.”
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`Case 8:20-cv-00287-JVS-KES Document 1 Filed 02/12/20 Page 17 of 40 Page ID #:17
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`69. Education Counselors typically conduct the Touch Points by
`telephone and email before the classes begin and then conduct in-person Touch
`Points during the event.
`70. Defendants use the Touch Points to reinforce the notion that
`consumers are likely to profit substantially if they purchase OTA Training.
`71. For example, during a Touch Point telephone call on March 19, 2019,
`Online Trading Academy Education Counselor Erik Leoni made the following
`representation to an FTC investigator who attended a Preview Event undercover:
`“[W]hen we talk about wealth management we call it [P]roactive [I]nvestor.
`Basically what we do is we teach our students how to move it around once a
`month. You know, we’re not active in there, but we’re making our 1 to 2 percent a
`month and, you know, we’re protecting if a crash and, you know, compounding
`that so that -- you know, that adds up pretty quick.”
`72. During a Touch Point meeting on June 27, 2019, an OTA Education
`Counselor Adam Sande told an FTC investigator, who attended a Market Timing
`Orientation workshop undercover, that with OTA’s strategy, “you can make a profit
`on your trade if [the market] goes up, down, or it just stays sideways,” and that “a
`lot of students” who finance their OTA purchase use trading profits to pay off their
`loans. Mr. Sande also claimed that some consumers simply copy OTA instructors’
`trades, “[a]nd they’re happy – and that’s their trading income. …. they’re happy
`with that.”
`73. Defendants train their Education Counselors not to “look like, act like
`or sound like, a traditional salesperson,” but instead to take on a “role” and lead
`consumers through “The Pain Funnel,” a set of questions designed to elicit and
`overcome consumers’ problems and fears, to induce them to purchase.
`74. During the sales process, Education Counselors give consumers the
`impression that admission into the Online Trading Academy is selective and based
`on admissions criteria designed to determine whether it is suitable for them.
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`Case 8:20-cv-00287-JVS-KES Document 1 Filed 02/12/20 Page 18 of 40 Page ID #:18
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`75.
`In truth and in fact, Defendants will enroll anyone who has the money
`to pay for their courses and seminars or who is eligible for financing. OTA Corp.
`instructs their Education Counselors to turn someone away only if he or she will
`“poison” the “room.” That is, that the consumer’s skepticism might dissuade other
`consumers from purchasing.
`76. During the Touch Points, Education Counselors typically ask each
`consumer to complete a questionnaire known as an Income and Wealth Education
`Planner (“IWEP”). The IWEP asks consumers to disclose all of their assets,
`including real estate and tax-protected retirement accounts.
`77. Education Counselors typically tell consumers that they will use the
`IWEP to prepare a customized “Education Plan” for each of them. Education
`Counselors typically present consumers with their Education Plan during the
`Market Timing Orientation workshop.
`78. The Education Plans presented to consumers are typically based on
`predetermined templates.
`79. Education Counselors typically use the Education Plan as a sales tool
`to upsell packages of courses and seminars to consumers during the Market Timing
`Orientation workshop.
`80. Education Counselors also can, and sometimes do, directly leverage
`the asset disclosures in their sales pitch. For example, by suggesting higher-priced
`products to wealthier consumers, and identifying specific assets, such as retirement
`accounts, that they suggest the consumer liquidate or borrow from to fund the
`purchase of OTA Training.
`Defendants’ Three-Day “Market Timing Orientation” Workshops
`81. Defendants hold three-day Market Timing Orientation workshops at
`OTA centers worldwide and online.
`82. During the Market Timing Orientation workshops, OTA presenters
`attempt to convince consumers to enroll in courses that are more expensive and
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`Case 8:20-cv-00287-JVS-KES Document 1 Filed 02/12/20 Page 1