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Government Actions

FTC and UDCP vs Zurixx et al 2:19-cv-00713-DAK-EJF

UPDATE.  As of February 16, 2022

The operators of a massive real estate investment coaching scheme face permanent bans and will pay approximately $12 million for consumer redress as part of a settlement in a lawsuit filed by the Federal Trade Commission and the Utah Department of Commerce Division of Consumer Protection (UDCP).

The FTC and UDCP alleged that Zurixx, LLC, its owners Cristopher Cannon, James Carlson, and Jeffrey Spangler, and a number of associated companies operated a real estate investment coaching scheme that sold live seminars and telephone coaching using false earnings claims that convinced tens of thousands of consumers to pay them thousands or tens of thousands of dollars.

The defendants bolstered sales by partnering with home-improvement and flipping television celebrities. The FTC and UDCP alleged that defendants used hard-sell telemarketing tactics promoting the idea that consumers could make tens or hundreds of thousands of dollars in a relatively short amount of time by “flipping” or wholesaling real estate using Zurixx’s system. The celebrities who helped drive Zurixx’s sales included, among others, Tarek and Christina El Moussa, Hilary Farr, Peter Souhleris, and Dave Seymour.

Zurixx and its celebrities invited consumers to free “seminars” that, the FTC and UDCP allege, were in fact high-pressure sales events for paid seminars that cost $1,997. Thereafter, the defendants pushed more expensive seminars and coaching that could cost tens of thousands of dollars. According to the FTC and UDCP, presenters at the seminars encouraged consumers to open new credit cards to pay for the training, promising that the profits from flipping or wholesaling homes would quickly pay off the new debt.

FTC and UDCP also alleged that Zurixx required consumers who received refunds to sign agreements barring them from speaking with the FTC, state attorneys general, and other regulators; submitting complaints to the Better Business Bureau; or posting negative reviews about Zurixx.

Under the terms of the settlement, the defendants are permanently banned from marketing or selling any real estate or business coaching programs. They are also barred from further violations of the FTC’s Telemarketing Sales Rule and Utah’s Business Opportunity Disclosure and Telephone Fraud Prevention Acts. In addition, they are barred from making misleading earnings claims and from using contract terms to restrict consumers’ ability to review their products or speak to law enforcement agencies.

The settlement includes monetary judgments totaling more than $111 million comprised of:

• $104.7 million against the corporate defendants in the case (Zurixx, LLC; Brand Management Holdings, LLC; CJ Seminar Holdings, LLC; Dorado Marketing and Management, LLC; Zurixx Financial, LLCUtah; and Zurixx Financial, LLC-Puerto Rico). These corporations are now defunct and under receivership with remaining assets totaling approximately $5 million, which will be used for partial satisfaction of the judgment against them.
• $2.33 million against Cristopher Cannon and entities associated with him (CAC Investment Ventures, LLCUtah, and CAC Investment Ventures, LLC-Puerto Rico).
• $2.33 million against James M. Carlson and entities associated with him (Carlson Development Group, LLCUtah, and Carlson Development Group, LLC-Puerto Rico).
• $2.33 million against Jeffery D. Spangler and entities associated with him (JSS Investment Ventures, LLC and the JSS Trust).

LINK: https://www.ftc.gov/news-events/press-releases/2022/02/operators-investment-coaching-scheme-banned-industry-ordered-pay

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As of May 12, 2020, Federal Trade Commission Civil Action No. 2:19-cv-00713-DAK-EJF:

The Federal Trade Commission and the state of Utah have amended their complaint against the operators of the Zurixx real estate seminar scheme, adding new charges that the defendants violated the Telemarketing Sales Rule on top of previous charges that they violated the FTC Act and Utah law.

Zurixx used celebrity endorsements and promises of big profits to lure consumers into real estate seminars costing thousands of dollars. The amended complaint alleges that, in addition to using false, deceptive, and unfounded claims at its live events, Zurixx also used such claims in telemarketing expensive coaching packages to consumers.

The amended complaint further alleges that Zurixx officers Christopher A. Cannon, James D. Carlson, and Jeffrey D. Spangler were responsible for key aspects of the scheme, and were aware of and involved in the company's unlawful activity. These allegations could make the individual defendants personally liable for the monetary harm caused by the scheme.

The amended complaint also adds the following eight defendants to the case: Brand Management Holdings, LLC; CAC Investment Ventures, LLC; Carlson Development Group, LLC (Puerto Rico); Dorado Marketing and Management, LLC (formerly known as Zurixx); JSS Investment Ventures, LLC; JSS Trust; Zurixx Financial, LLC (Puerto Rico); and Gerald D. Spangler, in his capacity as trustee for the JSS Trust.

The case against Zurixx was originally filed in October 2019, and the Court has since issued a stipulated preliminary injunction against all defendants. The receiver in the case has created a website with information for consumers who may have been affected at www.zurixx.com. Consumers may also share their experience with Zurixx at ftc.gov/complaint.

The Commission vote authorizing the staff to file the amended complaint was 5-0. The complaint was filed in the U.S. District Court for the District of Utah.

NOTE: The Commission files a complaint when it has "reason to believe" that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

For further assistance please contact

Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
Telephone: (202) 326-2222
https://www.ftc.gov

LINK: https://mail.google.com/mail/u/0/#search/ZURIXX%2C+LLC