The suit, filed Monday in federal court in the Central District of California, alleges that NTG, which has initiated hundreds of class action suits against dietary supplement companies and companies in other industries in recent years, has made it a practice to pay individuals to pose as injured parties for the purpose of initiating baseless suits.
“For at least the past five years, the Defendants have acted in concert and conspired to file state and federal lawsuits against corporate defendants across the country on false pretenses, seeking to extort large payouts in the form of legal fees, damage awards, legal costs, and/or settlements from those defendants. The Defendant Newport Trial Group (NTG) and its above-named attorneys and agents worked in concert to operate an unlawful enterprise by paying individuals to assume the role of plaintiffs, who in fact had no bona fide basis for suit, and to initiate and maintain fabricated class action suits in order to extort money from those defendants,” the lawsuit alleges.
The lawsuit alleges that NTG’s actions over the years amount to a massive fraud. Newport Trial Group could not be reached for comment on this story.
“On information and belief, Defendants NTG have unlawfully obtained more than three hundred million dollars through their lawsuits, much of which can be linked to NTG’s scheme to fabricate lawsuits identified in this Complaint. That fraudulent scheme violates federal and state laws. . . .The facts underlying this suit define one of the largest frauds perpetrated by lawyers on the courts in American history,” the suit says.
The suit, which was filed by Peter Arhangelsky, a lawyer in Emord’s firm, was filed on behalf of Natural Immunogenics Corp., a Sarasota, FL-based firm that makes supplements based on colloidal silver and that was sued by NTG. The current lawsuit alleges that NTG paid one Andrew Nilon $900 to pose as the sponsor of the suit and to find some associates to act as fellow plaintiffs, a scheme that is alleged to violate federal and state laws. NTG’s class action suit further was fraudulent, something that Nilon knew beforehand, Emord’s suit alleges.
“Mr. Nilon has admitted in written communications that his legal claims were fraudulent, that he was paid by NTG to support fraudulent allegations, and that NTG coerced him into signing false affidavits solely for NTG’s illicit purposes,” the lawsuit alleges.
Vulnerable potential plaintiffs
According to Emord’s suit, NTG made a practice of identifying young people in need of cash to act as plaintiffs. Nilon and his associates were classmates at Arizona State University, and when approached by NTG in 2012 while they were living in San Diego they were in debt with student loans and without job prospects. According to the lawsuit, Nilon was told by a friend that NTG was a “law firm that paid cash for easy work.”
Companies making consumer products aren’t the only target of NTG’s activities, Emord’s lawsuit alleges. The suit details what are claimed to be fraudulent suits filed by NTG using similar tactics against organizations such as American Breast Cancer Foundation, the National Veterans Services Fund and the International Union of Police Associations.
In the NTG suit against Natural Immunogenics, a man named Giovanni Sandoval (who replaced Nilon as lead plaintiff) posed as a California resident when he was not. He also claimed to have purchased the products of Natural Immunogenics when he hadn’t. The suit was dismissed with prejudice on May 22, 2015.
A key facet of the Natural Immunogenics lawsuit is its allegation that NTG’s practices amount to a violation of the federal Racketeer Influenced Corrupt Organizations Act (RICO). RICO was signed into law in 1970 and was first intended as a tool to go after high ranking organized crime figures. It has since been used in other applications, such as prosecutions in some jurisdictions of the wide-ranging sex abuse scandal within the Catholic Church, the prosecution of prominent financier Michael Milken (once known as the “Junk Bond King”) and an attempt to prevent the move of the Montreal Expos baseball team to Washington, D.C.
“When making threats of litigation and when filing suit, NTG operated not as a law firm, representing the interests and defending the rights of bona fide plaintiffs in accordance with the law, but instead as an unlawful and corrupt enterprise, extorting money by targeting defendants and concocting charges against them through fabricated suits, building legal allegations through fraudulent plaintiffs, and concealing its fraudulent conduct through claims of legal privilege,” the Natural Immunogenics lawsuit alleges.
According to one observer, using the RICO statute in this application is a novel approach to dealing with NTG, which has been a thorn in the side of the supplement industry.
“I hadn’t really thought about using this approach,” said Justin Prochnow, a shareholder in the law firm Greenberg Traurig who counts a number of supplement companies among his clients. “Those of us who work on these kinds of cases know that they are not consumer-driven cases.”
“NTG is one of the top filing entities in the industry,” Prochnow told NutraIngredients-USA. “If you ask these kinds of law firms, they will tell you they are providing a public service. But there is not a line of people seeking to bring these kind of lawsuits.”
Natural Immunogenics is seeking punitive damages in its suit against NTG, and is seeking an injunction preventing NTG from similar actions in the future. It is also seeking damages under RICO, which by statute are tripled.