Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 1 of 48
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`UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF FLORIDA
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`Case No. 1:22-cv-23760
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`Plaintiff,
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`v.
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`FEDERAL TRADE COMMISSION,
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`DK AUTOMATION LLC, a limited liability
`company,
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`AMZ AUTOMATION LLC, a limited liability
`company,
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`THATLIFESTYLENINJA LLC, a limited liability
`company,
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`PROFICIENT SUPPLY LLC, a limited liability
`company,
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`DIGITAL NINJAZ LLC, a limited liability
`company,
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`ZONBASE, INC., a Delaware corporation,
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`KEVIN DAVID HULSE, a/k/a Kevin David,
`individually and as an officer of DK
`AUTOMATION LLC, AMZ AUTOMATION
`LLC, THATLIFESTYLENINJA LLC,
`DIGITAL NINJAZ LLC, and ZONBASE, INC.,
`and
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`DAVID SHAWN ARNETT, individually and as
`an officer of DK AUTOMATION LLC, AMZ
`AUTOMATION LLC, and PROFICIENT
`SUPPLY LLC,
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`
`
`
`Defendants.
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`1
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`Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 2 of 48
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`COMPLAINT FOR PERMANENT INJUNCTION,
`MONETARY RELIEF, CIVIL PENALTIES, AND OTHER RELIEF
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`Plaintiff, the Federal Trade Commission (“FTC”), for its Complaint alleges:
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` The FTC brings this action under Sections 5(a), (m)(1)(A)-(B), 13(b), and 19 of the Federal
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`Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 45(a), 45(m)(1)(A)-(B), 53(b) and 57b, which
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`authorize the FTC to seek, and the Court to order, temporary, preliminary, and permanent
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`injunctive relief, monetary relief, civil penalties, and other relief for Defendants’ acts or practices
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`in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), the FTC’s Trade Regulation Rule
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`entitled “Disclosure Requirements and Prohibitions Concerning Business Opportunities”
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`(“Business Opportunity Rule” or “Rule”), 16 C.F.R. Part 437, as amended, the Consumer
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`Review Fairness Act of 2016 (“CRFA”), 15 U.S.C. § 45b, and prior Commission determinations
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`concerning unfair and deceptive acts or practices in commerce. The amended Business
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`Opportunity Rule became effective on March 1, 2012, and has since that date remained in full
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`force and effect.
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`SUMMARY OF CASE
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`1.
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`Since at least February 2020, Defendants Kevin David Hulse (“Hulse”) and David
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`Arnett (“Arnett”) have lured consumers into purchasing business opportunities, promising to
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`build purchasers a “100% Turnkey Amazon Empire” that “generates passive income on
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`autopilot.”
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`2.
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`Hulse, who appears prominently in marketing videos as Kevin David, holds
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`himself out as an Amazon expert, an “eight-figure online business expert,” and a “mentor and
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`coach to hundreds of thousands of entrepreneurs and students around the world.”
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`2
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`Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 3 of 48
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`3.
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`Hulse and Arnett promote themselves as experts with years of experience working
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`with Amazon, offering to build consumers profitable online Amazon businesses under a variety
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`of program names, including Amazon Autopilot, AMZ Autopilot, AMZDFY, Amazon
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`Automation, Amazon Done For You, and Amazon Done With You. These programs range from
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`$5,000 to $100,000, purportedly providing varying levels of service and access to products.
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`4.
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`Defendants promise to help set up an Amazon store for purchasers of these
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`Amazon programs, identify proven “home run products,” negotiate with suppliers, and order,
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`process, and ship inventory to Amazon. They further promise to expertly manage the Amazon
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`storefront on behalf of purchasers, while Amazon will provide customers for the store.
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`Purchasers need only sit back and receive “passive income.”
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`5.
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`Defendants advertise that the Amazon Done For You program typically generates
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`50% to 80% in annual returns, generally outperforms the stock market, and that purchasers can
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`eventually sell their Amazon business for six-figures.
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`6.
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`Defendants claim that their Amazon Done With You program is best for people
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`looking to supplement or replace their 9 to 5 income. They promise to teach purchasers how to
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`open and run a successful Amazon store, while Amazon will provide the customers.
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`7.
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`Defendants’ earnings claims are false or unsubstantiated. Most purchasers are
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`unlikely to earn the advertised income, and many, if not most, lose money.
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`8.
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`In addition, since at least 2017, Defendant Hulse, under the name
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`THATLifestyleNinja LLC, has offered several less expensive “training” programs on a variety of
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`subjects, including how to become a successful seller on Amazon, Facebook, and Shopify, and
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`how to create and sell digital course content online, with costs ranging from $37 to $1,997.
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`3
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`Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 4 of 48
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`Defendants Hulse and THATLifeStyleNinja represent that purchasers are likely to earn hundreds
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`of thousands of dollars per month and could become millionaires using these online training
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`programs. These claims too are false or unsubstantiated. Purchasers of Hulse and
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`THATLifeStyleNinjas’ training programs are unlikely to earn the advertised income. Instead,
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`they are likely to lose money.
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`9.
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`Purchasers of Defendants’ programs must agree not to post negative reviews
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`about the programs. Defendants have threatened or harassed some purchasers for posting
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`negative reviews. In addition, it appears that at least some of the positive reviews about
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`Defendants on popular review websites, such as Trustpilot.com, are falsified.
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`10.
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`From 2017 to 2021, Defendants have taken at least $52 million from program
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`purchasers.
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`11.
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`On April 26, 2022, the FTC sent DK Automation LLC, Hulse, and Arnett a
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`Notice of Penalty Offenses Concerning Money-Making Opportunities (the “Notice”), noting that
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`Defendants could be subject to civil penalties for violations of the FTC Act in connection with
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`their marketing claims, pursuant to 15 U.S.C. § 45(m)(1)(B); 16 C.F.R. § 1.98(e). The Notice
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`stated that it is an unfair or deceptive trade practice to make false, misleading, or deceptive
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`representations concerning the profits or earnings a participant in a money-making opportunity
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`can expect or to engage in certain acts or practices related to consumer testimonials. Defendants
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`have continued to use deceptive or unsubstantiated earnings claims in their marketing even after
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`receiving the Notice.
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`4
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`Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 5 of 48
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`JURISDICTION AND VENUE
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`12.
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`This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C.
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`§§ 1331, 1337(a) and 1345.
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`13.
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`Venue is proper in the United States District Court for the Southern District of
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`Florida pursuant to 28 U.S.C. §§ 1391(b)(1) and 15 U.S.C. § 53(b).
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`PLAINTIFF
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`14.
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`The FTC is an independent agency of the United States government created by
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`the FTC Act, which authorizes the FTC to commence this district court civil action by its own
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`attorneys. 15 U.S.C. §§ 41– 58. The FTC enforces Section 5(a) of the FTC Act, 15 U.S.C. §
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`45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The
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`Commission also enforces the Business Opportunity Rule, 16 C.F.R. Part 437, as amended,
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`which requires specific disclosures and prohibits certain misrepresentations in connection with
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`the sale of a business opportunity, and the Consumer Review Fairness Act, 15 U.S.C. § 45b,
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`which limits provisions in form contracts that restrict a consumers’ ability to communicate
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`reviews about a business’ products or services.
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`DEFENDANTS
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`15.
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`Defendant DK Automation LLC (“DK”) is a Nevada limited liability company
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`with its principal place of business at 1111 S. Roop St., #100, Carson City, Nevada, 89702. DK
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`transacts or has transacted business in this District and throughout the United States. At times
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`relevant to this Complaint, acting alone or in concert with others, DK has advertised, marketed,
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`distributed, or sold business opportunities to consumers throughout the United States.
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`5
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`16.
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`Defendant Amz Automation LLC (“Amz”) is a Wyoming limited liability
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`company with its principal place of business at 30 N. Gould St., Suite R, Sheridan, Wyoming
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`82801. Amz transacts or has transacted business in this District and throughout the United States.
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`At times relevant to this Complaint, acting alone or in concert with others, Amz has advertised,
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`marketed, distributed, or sold business opportunities to consumers throughout the United States.
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`17.
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`Defendant THATLifeStyleNinja LLC (“THATLifeStyleNinja”) is a Wyoming
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`limited liability company with its principal place of business at 30 N. Gould St., Suite R,
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`Sheridan, Wyoming 82801. THATLifestyleNinja transacts or has transacted business in this
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`District and throughout the United States. At times relevant to this Complaint, acting alone or in
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`concert with others, THATLifestyleNinja has advertised, marketed, distributed, or sold business
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`coaching services to consumers throughout the United States.
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`18.
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`Defendant Proficient Supply LLC (“Proficient Supply”) is a Wyoming limited
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`liability company with its principal place of business at 207 20th St. SE, Suite 102, Hickory, NC
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`28602. Proficient Supply receives consumer payments, pays employees, and stores products
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`related to Defendants’ business opportunities. Proficient Supply transacts or has transacted
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`business in this District and throughout the United States. At times relevant to this Complaint,
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`acting alone or in concert with others, Proficient Supply has advertised, marketed, distributed, or
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`sold business opportunities to consumers throughout the United States.
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`19.
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`Defendant Digital Ninjaz LLC (“Digital Ninjaz”) is a Wyoming limited liability
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`company with its principal place of business at 30 N. Gould St., Suite R, Sheridan, Wyoming
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`82801. Digital Ninjaz transacts or has transacted business in this District and throughout the
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`United States. At times relevant to this Complaint, acting alone or in concert with others, Digital
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`Ninjaz has advertised, marketed, distributed, or sold business opportunities to consumers
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`throughout the United States.
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`20.
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`Defendant Zonbase, Inc. (“Zonbase”) is a Delaware corporation with its principal
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`place of business at 16192 Coastal Hwy, Lewes, DE 19958. Zonbase transacts or has transacted
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`business in this District and throughout the United States. At times relevant to this Complaint,
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`acting alone or in concert with others, Zonbase has advertised, marketed, distributed, or sold
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`business opportunities to consumers throughout the United States.
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`21.
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`Defendant Kevin David Hulse, also known as Kevin David, is the CEO and
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`founder of DK, Managing Member and owner of Amz, CEO, President and Managing Member
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`of THATLifeStyleNinja, President of Digital Ninjaz, and owner of Zonbase. He resides in
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`Miami, Florida. Hulse narrates and appears in Defendants’ marketing videos and other marketing
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`materials, and signs business documents on behalf of DK, Amz, THATLifeStyleNinja, Zonbase
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`and Digital Ninjaz.
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`22.
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`As the sole shareholder of THATLifeStyleNinja, Hulse receives all distributions
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`and profits from the company. At all times relevant to this Complaint, acting alone or in concert
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`with others, Hulse has formulated, directed, controlled, had the authority to control, or
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`participated in the acts and practices of DK, Amz, THATLifeStyleNinja, Digital Ninjaz, and
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`Zonbase, including the acts and practices set forth in this Complaint. In connection with the
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`matters alleged herein, Hulse has transacted business in this District and throughout the United
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`States.
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`23.
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`Defendant David Shawn Arnett is the President and COO of DK, , co-owner of
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`Proficient Supply, and co-owner of AMZ. He resides in Miami, Florida. Arnett appears in Amz
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`7
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`Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 8 of 48
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`marketing videos, other marketing materials for Amz and DK, and signs business documents on
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`behalf of Amz, DK and Digital Ninjaz. Arnett is the signatory on Proficient Supply’s corporate
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`accounts where consumer payments are deposited. At all times relevant to this Complaint, acting
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`alone or in concert with others, Arnett has formulated, directed, controlled, had the authority to
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`control, or participated in the acts and practices of DK, Amz,and Proficient Supply, including the
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`acts and practices set forth in this Complaint. In connection with the matters alleged herein,
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`Arnett has transacted business in this District and throughout the United States.
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`COMMON ENTERPRISE
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`24.
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`Defendants DK, Amz, THATLifeStyle Ninja, Digital Ninjaz, Zonbase, and
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`Proficient Supply (collectively, the “Corporate Defendants”) have operated as a common
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`enterprise while engaging in the deceptive acts and practices and other violations of law alleged
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`below in this Complaint. Corporate Defendants have conducted the business practices described
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`below through an interrelated network of companies that have common ownership, officers,
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`managers, employees, business functions, products and office locations, and that commingled
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`funds. For example:
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`• Hulse and Arnett are officers or managers of DK, Amz, Digital Ninjaz, and
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`Zonbase;
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`• Amz, THATLifeStyleNinja, and Digital Ninjaz share the same corporate address;
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`• DK, Amz, Digital Ninjaz and Zonbase offer the same business opportunities;
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`• Corporate bank accounts for Amz and Proficient Supply were used to accept
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`consumer payments for DK and Digital Ninjaz;
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`Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 9 of 48
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`• THATLifeStyleNinja’s programs are often bundled together with the business
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`opportunities, and DK, Amz, THATLifeStyleNinja, Digital Ninjaz, Zonbase, and
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`Proficient Supply share employees; and
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`• Corporate bank accounts for Amz, THATLifeStyleNinja, and Digital Ninjaz are
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`in Hulse’s name, Amz transferred millions of dollars to THATLifeStyleNinja, and
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`THATLifeStyleNinja and Digital Ninjaz have commingled funds.
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`Because the Corporate Defendants have operated as a common enterprise, each of them is liable
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`for the acts and practices alleged below.
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`COMMERCE
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`25.
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`At all times relevant to this Complaint, Defendants have maintained a substantial
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`course of trade in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act,
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`15 U.S.C. § 44.
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`DEFENDANTS’ BUSINESS ACTIVITIES
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`Defendants’ Business Opportunities
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`26.
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`Since at least February 2020, Defendants Hulse, Arnett, DK, Amz, Digital Ninjaz,
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`ZonBase and Proficient Supply have deceptively advertised, marketed, distributed, promoted,
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`and sold business opportunities to consumers throughout the United States.
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`27.
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`Defendants post video advertisements on the Internet and social media –
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`including on Google, Facebook, Instagram and YouTube – pitching a “100% turnkey Amazon
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`Empire Built By Us For You.” A screenshot from one of Defendants’ video ads on Facebook
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`featuring Hulse and Arnett, taken in October 2021, is depicted below.
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`Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 10 of 48
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`28. Many of Defendants’ ads emphasize Hulse’s purported success. Hulse presents
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`himself as a self-made multimillionaire with the “biggest community [or family] in the world of
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`Amazon business owners,” and “a million followers worldwide [on YouTube].” He claims that,
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`before he became a successful entrepreneur, he was an accountant working 9 to 5 in a cubicle.
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`Defendants’ ads feature luxury cars and mansions, purportedly financed by Hulse’s successful
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`Amazon businesses. They also state that Hulse is featured in well-known business publications,
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`including Forbes, Entrepreneur, Business Insider, Nasdaq, Yahoo Finance, and the Wall Street
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`Journal.
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`29.
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`Defendants’ ads present Hulse and Arnett as Amazon experts who have helped
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`“tens of thousands of people just like you.” They show purported examples of Hulse’s and
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`Arnett’s Amazon accounts, “pulled directly from Amazon’s API [Application Programming
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`Interface],” with average monthly revenues of $165,000, and “conservative” profit margins of
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`Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 11 of 48
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`25% for just one of the many purportedly profitable products they sell. The ads promise that
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`Defendants will choose similar “homerun” products for program purchasers to sell on Amazon.
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`A screenshot from one such video advertisement, taken in September 2021, is depicted below.
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`30.
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`Defendants market their business opportunities as an “exclusive partnership” with
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`“one of the best, if not the best, partnership in the world at creating Amazon businesses” and an
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`easy way to make “passive income.” For example, Defendants’ advertisements feature
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`statements such as: “What if I told you that if you qualify, we will do 100% of the work while
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`you sit back and relax and watch us build you an Amazon empire?” or “WE DO 99% OF THE
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`HEAVY LIFTING FOR YOU.”
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`31.
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`In numerous instances, Defendants’ ads tell consumers to take advantage of their
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`offer quickly because this may be the last time this deal will be offered.
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`32.
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`Defendants’ ads invite consumers to click on a link that redirects them to
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`Defendants’ website, amzdfy.com, where consumers are instructed to enter their email address
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`and request a “case study.” A screenshot of the sign-up link, taken in September 2021, is
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`depicted below.
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`33.
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`Underneath the sign-up link, in small font, are links to a privacy policy, terms of
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`service, and disclaimer (see infra), but it is not necessary to click on any of those links to receive
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`the case study. The purported disclaimer states:
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`David and Kevin do not track the typical results of our customers or verify the accuracy
`of publicly available student testimonials . . . Where income figures are mentioned (if
`any), those income figures are anecdotal information passed on to us concerning the
`results achieved by the individual sharing the information. We have performed no
`independent verification of the statements made by those individuals. Please do not
`assume that you will make those same income figures.
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`34.
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`In many instances, Defendants’ website, amzdfy.com, indicates there are over one
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`thousand positive reviews of Defendants’ programs on the popular consumer review website
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`Trustpilot.com, and contains hundreds of purported client testimonials, such as the testimonials
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`depicted below (captured in December 2021):
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`In numerous instances, on Defendants’ website, consumers view another, longer
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`35.
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`video, typically narrated by Hulse, that explains the business opportunities in more detail. The
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`video highlights several products Hulse purportedly sells on Amazon that generate between
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`$60,000 and $165,000 monthly each, with a “conservative profit margin” of 25%.
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`36.
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`In the video, Hulse explains that purchasers do not need any experience or time to
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`devote to this opportunity because he and his team will pick “homerun” products for them, pick
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`the top supplier in the world to make those products, and create optimized product listings to sell
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`those products. He emphasizes his team does “99% of the heavy lifting,” while Amazon handles
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`the purchaser’s website, getting the customers, shipping, packaging, and everything else for the
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`purchaser.
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`37.
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`Towards the end, the video states: “EXTREMELY LIMITED SPACES
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`AVAILABLE” and “TIME IS RUNNING OUT.” At the end of the video is a link to click to
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`become a “partner” and consumers are prompted to provide their name, email address, and phone
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`Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 15 of 48
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`number, and answer questions about their net worth. They can also sign up for a free sales
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`strategy session with an “Amazon Success Manager.”
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`38.
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`In numerous instances, before consumers meet with the Amazon Success
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`Manager, Defendants bombard them with additional marketing videos and emails touting the
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`exponential returns of the business opportunities. For example, emails are titled “How This
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`Former English Teacher Makes 30k/Month” and “What would you do with a blank check?” Text
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`messages provide testimonials such as: “This product is in the fitness niche and can do $20k to
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`$40k in revenue in one month alone! . . . I was able to retire my mother, buy her a house, quit my
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`9 to 5 job, support my sisters through nursing school and so much more.”
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`39.
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`Earnings claims Defendants use throughout the sales process include statements
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`about the amount of money or profit consumers can make and purported testimonials from
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`successful clients, such as:
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`• “Our students inside of our Amazon Automation Program are earning 50 to 80% annual
`returns and when you compare that to the stock market, which is 5-7%--that’s more than
`10 times as much.”
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`• “I ENDED UP MAKING $50,000 IN ONE MONTH SELLING ON AMAZON . . .”
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`• “Earn 10x More Than What You Earn Annually From The Stock Market!”
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`• “We Made $50,000-$100,000 Per Month in Revenue in Just 6 to 12 Months or Sooner in
`Our Stores!”
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`• “Gert literally borrowed money to get started . . . He made more on Amazon this past
`year than he had ever made before in his entire life combined.”
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`• “In that short time, you can see right here on the right, [Matt] made over $150,000 in
`revenue in just a single month . . . He made more in one month than he would make in
`years in the marines.”
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`40.
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`In addition, Defendants make earnings claims regarding the success of Hulse’s
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`and Arnett’s Amazon accounts. For example, in marketing videos posted online, Arnett shows
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`two of his and Hulse’s accounts that purportedly made approximately $400,000 in the last 30
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`days, and Hulse shows three of their accounts that made over $510,000 in the first 21 days of the
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`month. Hulse also shares a “Case Study of Kevin and David’s Past Account Performance” that
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`shows an estimated total return on investment including potential sale of the business of 273%.
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`41.
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`Defendants also provide consumers with a Case Study titled “How the Amazon
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`Wholesale Model Works – The Numbers!,” a screenshot of which (taken in January 2021) is
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`depicted below, and presents purported levels of sales and profits that purchasers of the Amazon
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`Done For You Program can expect to earn with the Amazon business opportunities. The chart
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`shows that a consumer who invests $50,000 of “working capital” in this opportunity can expect
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`$140,458.01 in store revenue after 13 months, $10,913.59 in profit and potentially over $200,000
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`from the sale of the business.
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`42.
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`After reviewing the videos, marketing materials and case study, consumers speak
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`with an “Amazon Success Manager,” a representative of Defendants. The Amazon Success
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`Manager typically explains the various Amazon Automation Programs offered to consumers –
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`Amazon Done For You (frequently called Diamond, Platinum, and Standard packages) or
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`Amazon Done With You (frequently called Silver, Gold, and Emerald packages). Defendants
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`also offer variations on the Platinum package, including Platinum Pro, Platinum Max, and
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`Platinum Pro Max. These additional packages combine the Amazon business opportunities with
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`a cryptocurrency service.
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`43.
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`The Diamond package typically costs $100,000 for the initial set up fee, requires
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`an additional $50,000 in working capital, and purportedly includes access to Defendants’ most
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`exclusive products and exclusive relationships with multimillion dollar brands so that consumers
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`become “the SOLE seller” of those exclusive products. Defendants tell consumers that the “year
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`1 revenue goal” for this package is $2,000,000.
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`44.
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`The Platinum package typically costs $40,000 and requires an additional $15,000
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`in working capital. It includes similar benefits to the Diamond package. The “year 1 revenue
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`goal” for the Platinum package is $670,000.
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`45.
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`The Standard package typically costs $25,000 and an additional $7,500 in
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`working capital. It includes an Amazon seller account and a shared virtual assistant. The revenue
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`target is $350,000 for the Standard package.
`
`46.
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`Despite Defendants’ representations to the contrary, consumers who purchase the
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`Done For You packages are typically provided with products that are also sold by other Amazon
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`
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`17
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`Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 18 of 48
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`sellers, including other clients of Defendants, and they typically do not earn the advertised
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`revenue and profit.
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`47.
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`The Done With You packages typically range in cost from $5,000 to $20,000 for
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`the initial investment and $5,000 to $15,000 for working capital. Defendants advertise the Gold,
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`Silver, and Emerald packages to consumers who are looking to “create a new stream of online
`
`passive income” and “subsidize or replace a 9-5 income” and for “beginners on a budget.”
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`Defendants promise different levels of service for each package, including product exclusivity,
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`“two handpicked home-run potential products” for consumers to choose one from, a “proven
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`blueprint” for finding home run Amazon products consistently, and finding world class
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`manufacturers.
`
`48.
`
`Defendants typically require purchasers of their Amazon business opportunities to
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`sign an Account Management Service Agreement with DK or Digital Ninjaz (the “Account
`
`Agreement”). The Account Agreement for the Done For You programs provides that DK will
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`receive 30% of the net profits of the purchaser’s Amazon store on a monthly basis.
`
`49.
`
`After purchasers sign the Account Agreement and pay the fees to Defendants,
`
`including the initial fee and working capital, they are required to pay additional fees, including
`
`fees for opening an LLC, state licensing, and Amazon storage. Once consumers’ Amazon stores
`
`are set up, Defendants label them “onboarded.”
`
`50.
`
`As of at least May 23, 2022, Defendants also offer business opportunities that
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`function as a hybrid between the Amazon Done For You and Amazon Done With You programs,
`
`called the ZonBase Program. Defendants advertise on Facebook using sponsored ads under the
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`name Zonbase. The terms and conditions on zonbase.com tell consumers that Zonbase is a trade
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`Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 19 of 48
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`name for Digital Ninjaz. Defendants represent that they will “do 75% of the heavy lifting” in
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`creating a successful Amazon business for purchasers.
`
`51.
`
`The ZonBase Program includes ZonBase Pro and ZonBase Elite, both of which
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`offer “1 or 3 Exclusive Picked for you[] products,” “help with listing your products,” “live
`
`Q&A’s twice per week,” Kevin David’s FBA Masterclass, access to the ZonBase platform, a
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`software suite that allows purchasers to research “hot” Amazon products, access to a private
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`Facebook group and “24/7 extensive support.” The ZonBase packages typically cost from $4,800
`
`to $24,500. Defendants claim this program will allow a purchaser to quit their 9 to 5 job, earn a
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`net profit of 41% on a typical product, and build a successful Amazon business.
`
`52.
`
`Defendants’ earnings claims regarding the business opportunities are false or
`
`unsubstantiated. Few, if any, purchasers earn the income Defendants advertise and many, if not
`
`most, lose money. Many purchasers experience long shipping delays, inactive products, low
`
`revenues, and a loss of their initial investment.
`
`
`
`Defendants Fail To Provide Disclosure and Earnings Claim Statements
`
`53.
`
`Defendants do not provide prospective purchasers who sign their Account
`
`Agreements with disclosure documents required under the Business Opportunity Rule at least
`
`seven calendar days before signing a business opportunity contract or making a payment for the
`
`business opportunity.
`
`54.
`
`Defendants have failed to disclose in writing:
`
`a.
`
`b.
`
`c.
`d.
`
`the seller’s identifying information, including name, business address, and
`telephone number;
`whether the seller makes earnings claims, along with an “Earnings Claims
`Statement” required by the Rule;
`a list of civil, criminal, and FTC actions within the last 10 years;
`the seller’s cancellation or refund policy; and
`
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`19
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`Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 20 of 48
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`e.
`
`a list of purchasers and contact information of individuals who purchased
`the business opportunity within the last 3 years.
`
`Although Defendants and their representatives have routinely made claims to
`
`55.
`
`prospective purchasers about likely earnings, they have failed to provide prospective purchasers
`
`with an Earnings Claim statement, as required by the Business Opportunity 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. Defendants have also failed to disclose written substantiation of their earnings
`
`claims as required under the Business Opportunity Rule.
`
`56.
`
`Defendants admitted in a Q and A session and in phone calls during the sales
`
`process that they do not maintain or provide a written disclosure document or Earnings Claim
`
`statement to consumers.
`
`Defendants’ Cryptocurrency Program
`
`57.
`
`In January 2022, Defendants launched a cryptocurrency program that, in many
`
`instances, is bundled with a business opportunity, the Platinum Amazon Automation program.
`
`Hulse narrates the videos and offers consumers a “Crypto Automation” package, which is “[b]est
`
`for people who want to build CRYPTO WEALTH but don’t want to look at charts all day.” The
`
`videos include statements such as: “How To Make a Full Time Passive Income On Autopilot”
`
`and “Automated Crypto Passive Income.”
`
`58.
`
`Defendants offer consumers use of Defendants’ “#1 secret passive income crypto
`
`trading bot,” an automated trading program, in which Defendants promise “[o]ver 80% of [their]
`
`Trades Are Profitable.” Hulse states that the crypto trading bot allowed him to profit every single
`
`
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`20
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`Case 1:22-cv-23760-PCH Document 1 Entered on FLSD Docket 11/16/2022 Page 21 of 48
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`day and “make absolute insane returns,” even during the crypto crash in January 2022 and that
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`consumers do not need any technical skills or experience with cryptocurrency to make a profit.
`
`59.
`
`As of at least May 23, 2022, Defendants started offering their automated crypto
`
`trading bot to purchasers under their Autocoinbot Tier 1 and Autocoinbot Tier 2 Programs.
`
`Defendants market their trading bot as “a fully automated, fully-automatic algorithm” attached to
`
`a purchaser’s trading account that “will trade for you 24-7 so you will generate your profits even
`
`while you sleep.” Defendants claim that purchasers should expect “65% to 84% [in returns] per
`
`year as profit,” and state that returns may be as high as 125%. The Autocoinbot Tier 1 Program
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`typically costs $9,800 plus a fee of $297/month, and the Autocoinbot Tier 2 Program costs
`
`$19,800. In some instances, Defendants charge between $20,000 to $85,000 to access their
`
`crypto trading bot. Defendants claim that purchasers who buy both the ZonBase and Autocoinbot
`
`programs will be able to replace their 9 to 5 jobs immediately with earnings from these
`
`programs.
`
`60.
`
`Hulse narrates videos on YouTube where he purports to teach consumers how to
`
`trade cryptocurrency. For example, Hulse narrates videos titled, “Easy Way to Make $1,000
`
`PROFIT DAILY Using Crypto Trading Bots,” “Easy $500 A Day Crypto Day Trading for
`
`Beginners (Step by Step Guide),” “How to Make $5k Per Month Staking Crypto,” My 100x
`
`Gains Playlist,” and “Simple