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ACN Inc.

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ACN, Inc. [ACN]
Company typePrivate
IndustryMulti-level marketing / Telecommunications
FoundedIncorporated 1993
Headquarters
Concord, North Carolina
,
US
Key people
Robert Stevanovski, Co-founder
Gregory Provenzano, Co-founder
Anthony Cupisz, Co-founder
Michael Cupisz, Co-founder [1][2]
Products
RevenueUS$ 750 million (2016) [3][4]
Number of employees
180 (1998) Edit this on Wikidata
Websiteacn.com

ACN, Inc. is a North-American based multi-level marketing (MLM) company[5] which provides telecommunications, energy, merchant services and other services, depending on the country, through a network of independent sellers who also can recruit other sellers. Based in Concord, North Carolina, United States, ACN began operations in the United States in 1993,[2] it is now made up of ACN Opportunity, LLC and ACN Communications Services, Inc.[6] As of 2019, the company reports that it operates in 24 countries.[7]

In 2018, a class action lawsuit was filed against Donald Trump and three of his children alleging fraud, false advertising, unfair competition, and a now-dismissed allegation of racketeering for their involvement with ACN.[8][9] The lawsuit is ongoing as of April 2020.

Business model

The company is based in Concord, North Carolina, United States. ACN has international offices located in Montreal, Canada; Amsterdam, the Netherlands; Sydney, Australia; Wrocław, Poland; Umeå, Sweden; Seoul, South Korea and Mexico.

ACN's income disclosure statement bears the warning that "not all ACN independent representatives make a profit and no one can be guaranteed success as an ACN independent representative."[10]

History

In 1993, Robert Stevanovski, Greg Provenzano, and twin brothers Tony and Mike Cupisz, founded the American Communications Network, Inc. ACN opened for business in January 1993 with twenty initial "independent representatives". ACN's initial business was as a marketing arm for a long-distance reseller called LCI Communications. This relationship lasted for five years until LCI was acquired by Qwest Communications.[2] By 1998, ACN was listed in Inc. Magazine's "Inc. 500" list as No. 22 in this annual list of the 500 fastest growing private companies in America.[11]

Previously ACN, through the subsidiaries ACN Energy and ACN Utility Services, operated as a gas and electricity retailer. ACN's energy assets were acquired by Commerce Energy Group in 2006.[12] In 2008, ACN moved its headquarters from Farmington Hills, Michigan to Concord, North Carolina.[13][14] In 2014, ACN expanded operations to Latin America, beginning first with Mexico. In 2016, ACN expanded operations in Japan. By 2019, ACN was operating in 26 countries and five continents.

From 2006 until he announced his presidential candidacy in 2015, ACN had a business relationship with former The Apprentice executive producer Donald Trump. Trump spoke at ACN events, featured their products on an episode of The Apprentice, and took part in ACN promotional videos.[15][16][17][18] Following the official beginning of his 2016 presidential candidacy, all references to Donald Trump were removed from the ACN website, and Trump distanced himself from the company in an interview with the Wall Street Journal. "I know nothing about the company other than the people who run the company," Trump told them. "I’m not familiar with what they do or how they go about doing it, and I make that clear in my speeches."[19] 

   Slate, Oct 11, 2015“The Get-Rich-Quick Schemers Who Love the GOP, By Helen Olen,” – “Donald Trump, Ben Carson, and Job Bush have something in common: ‘multilevel marketing’ companies that prey upon the desperate and broke… Then there was ?  Trump Network, Trump’s own multilevel marketing concern, which the Donald bought and renamed after himself in 2009 and sold off for an undisclosed sum in 2012… The Direct Selling Association, the lobbying arm of the multilevel marketing industry, claims 18.2 million Americans—about 5 percent of the population—were “involved” in direct selling last year, generating $34.5 billion in sales. That number sounds terrifically impressive until you realize it equals less than $2,000 per person…” </ref> Slate, Oct 11, 2015“The Get-Rich-Quick Schemers Who Love the GOP, By Helen Olen,” </ref> 
   Bloomberg, By Zachary Mider, ‎October‎ ‎15‎, ‎2016‎, - “Donald Trump has been spending heavily on direct-mail lmarketing to win the millions of small donations supporting his presidential campaign, new disclosures show.  Trump groups spent 28 cents of each dollar on fundraising.  Raised $155 million in three months.  It spent 37 cents of each dollar on expenses such as postage and printing…” </ref>Bloomberg, By Zachary Mider, ‎October‎ ‎15‎, ‎2016‎ </ref> 
   Washington Post, Nov 17, 2016 - Here's how Trump used marketing tactics in his campaign. ... “Trump had a very direct and consistent message and paired it with change,” Calkins said. ... to Russ Klein, chief executive of the American Marketing Association…”
   Slate, Feb 21, 2017, “Trump’s Great Pyramid,” – “Multilevel marketing companies promise prosperity to the desperate.  They’re thrilled about the new administration… During the depths of the Great Recession, Donald Trump counted among his many income sources a side gig as a pitchman for CAN Inc., a company whose ‘members’ sold newfangled videophones and other products… ‘Believe me, it’s ultimately a dream come true,’ said Trump, who also featured ACN on episodes of the Celebrity Apprentice…” </ref> Slate, Feb 21, 2017, “Trump’s Great Pyramid,” </ref> 
   UnitedMail, Nov 17, 2017, - “According to the FEC filings, Donald Trump spent 37 cents of every dollar on direct mail, whereas Hillary Clinton spent 20 cents. Unless you’re living under a rock, you know that Trump won the election. Trump was notoriously frugal during the campaign but spent $29 million on printing and postage. This contributed to him raising money from rural voters (62% of rural voters voted for Trump), as well as mobilizing them to vote… Where else did they differ in terms of spending?  As of October 21st, Trump has spent $40 million on weekly TV ads, vs. Clinton, who has spent $140 million. Even though Clinton far outspent Trump on TV ads, she still didn’t win. People are tired of being inundated with political commercials.
   Jay Sekulow, one of President Donald Trump’s lead attorneys during the impeachment trial, is being paid for his legal work through a rented $80-a-month mailbox a block away from the White HouseThe Associated Press reviewed 10 years of tax returns for the American Center for Law and Justice, (ACLJ) and other charities tied to Sekulow, which are released to the public under federal law. The records from 2008 to 2017, the most recent year available, show that more than $65 million in charitable funds were paid to Sekulow, his wife, his sons, his brother, his sister-in-law, his nephew and corporations they own.
   Trump agreed to pay $2 million as part of a settlement with the state of New York in which he was forced to admit he misused charitable funds from the Donald J. Trump Foundation to promote his 2016 presidential campaign, pay off business debts and buy a $10,000 portrait of himself hung at one of his Florida resorts. Trump’s charity also cut an illegal $25,000 check to support the reelection of then-Florida Attorney General Pam Bondi, who now works with Sekulow as a member of the president’s defense team. </ref> UnitedMail, Nov 17, 2017, </ref>

Services

ACN offers landline telephone service (local and long distance), Voice over Internet Protocol (VoIP), high-speed Internet, satellite television, cellular phone through the company's own mobile virtual network operator (MVNO), Flash Wireless, and home security services, primarily to consumers, and secondarily to small businesses. Beginning in 2011, ACN also began offering an ACN-branded international calling smartphone app available for iPhone, Android and Symbian, reselling WiMAX wireless Internet, and technical support service for personal and business computers, as well as getting back into the energy reselling market through partner XOOM Energy.[20]

With variations depending upon the country of operation, provision of ACN's services follows three models:

  1. The reselling of ACN-branded services ultimately originating in an incumbent provider. This is exemplified by local and long-distance telephone, where ACN buys local telephone service from an incumbent provider such as Qwest or AT&T, and bills customers in its own name. This model was made possible by telephone industry deregulation beginning in 1996; prior to this, ACN was involved solely in reselling long-distance telephone service. It was the expansion of deregulation internationally that made it possible for ACN to begin to operate outside the United States.
  2. Acting as a sales agent for the service provider, where an ACN representative sells the service, but order fulfillment, billing, and servicing is performed by the branded provider. In the US, ACN resells Internet service through AT&T. ACN offers wireless services through its own MVNO called Flash Wireless on Sprint and Verizon's networks. Television services are provided through DIRECTV and Dish Network. Home security and automation is offered through Vivint.[21] ACN now also resells energy (electricity and natural gas) through Planet Energy and Xoom Energy.
  3. The selling of ACN-branded and provided services. These are Voice over Internet Protocol[22] in which ACN owns and maintains its own network of servers. Starting in January 2011, ACN has also added an ACN-branded computer technical support service to its service offerings.[23]

On June 13, 2002, ACN settled a case with the Bureau of Consumer Services in Pennsylvania wherein it was alleged that IBOs were "slamming", or switching consumer services without authorization. ACN disputed the allegations and the exact details of the settlement are under court seal. However, the suit alleged that approximately 135 informal complaints were filed with the Bureau of Consumer Services (BCS) between June 2000 and November 2001, consisting of 22 consumers alleging that their generation service was switched without authorization ("slamming"), 81 alleged instances of overcharging ("cramming"), and 32 complaints with allegations of various violations of the Commission's regulations contained in Chapter 54, 56, and 57 of Title 52 of the Pennsylvania Code.[24]

In August 2010, the Montana Commissioner of Securities and Insurance Monica Lindeen announced the issuance of a Cease and Desist Order and Notice of Proposed Agency Action against ACN, Inc. and several of its founders for allegedly operating a pyramid scheme. In September 2010, the Commissioner moved to vacate the Cease and Desist Order in full settlement of the case.[25] In the course of the Commissioner's investigation, the Commissioner determined that the actions giving rise to the initial concerns were not part of the ACN business model, but instead were isolated instances taking place by certain ACN's independent representatives in Montana. The Commissioner and ACN agreed that ACN would implement additional training with its independent representatives to assist them in better understanding their responsibilities as ACN independent representatives and that ACN would contact its Montana video phone customers to assist them with the installation of their service.[26]

In July 2019, a SDNY District Judge permitted state-level charges of fraud, false advertising, and unfair competition against Donald Trump and his children Donald Jr., Ivanka, and Eric related to their involvement with ACN. (The judge, however, dismissed racketeering (RICO) allegations against the family.)[8][9][27] The Trumps are accused of not having disclosed that they were being paid by ACN when they recommended ACN as a good investment. As part of the discovery process, the Trumps were ordered in March 2020 to provide information from Trump Organization business records for 15 years back to 2005.[28] The Trumps sought to take the case to private arbitration, but the SDNY District Judge denied their request on April 8, 2020.[29] On May 18,2020, the District Court ruled against ACN and Donald Trump's motion for a Stay in the case. Trump had sought a stay during his term as President of the United States.[30]

References

  1. ^ "ACN COMMUNICATION SERVICES, INC. Company Information from Hoover's". Hoover's. Archived from the original on July 13, 2007. Retrieved July 9, 2015.
  2. ^ a b c Seale, Barbara. "Company Spotlight: ACN". Direct Selling News. Archived from the original on May 2, 2007. Retrieved September 20, 2007.
  3. ^ "Top 100 Direct selling companies by revenue". Retrieved March 7, 2015.
  4. ^ "ACN: Business Is Booming". Direct Selling News. Archived from the original on December 5, 2010.
  5. ^ Campbell, David; Edgar, David; Stonehouse, George (April 1, 2011). Business Strategy: An Introduction. Macmillan International Higher Education. p. 11. ISBN 978-0-230-21858-1. Retrieved April 15, 2018.
  6. ^ "Privacy Policy". acn.com. 2019. Retrieved October 9, 2019.
  7. ^ "ACN Korea: Company: About ACN". acnkr.co.kr. Retrieved October 8, 2019.
  8. ^ a b "Docket for Doe v. The Trump Corporation, 1:18-cv-09936". CourtListener.com. May 9, 2019. Retrieved October 8, 2019.
  9. ^ a b "Complaint (final for filing) 4818-9714-0089 v.1 - gov.uscourts.nysd.503637.1.0 - Case 1:18-cv-09936 - Document 1" (PDF). CourtListener.com. October 29, 2018. Retrieved October 8, 2019.
  10. ^ ACN Inc. (2010). "ACN Income Potential - Compensation Plan". Archived from the original on May 23, 2010. Retrieved May 20, 2010.
  11. ^ Inc. Magazine. "The Inc 500". Retrieved September 20, 2007.[dead link‍]
  12. ^ "Commerce Energy Group Inc, Form 8-K, Current Report, Item 2.01. Completion of Acquisition or Disposition of Assets, Filing Date Feb 10, 2005". secdatabase.com. Retrieved May 14, 2018.
  13. ^ "Telecom company ACN moves to Concord". Charlotte Business Journal. February 26, 2008. Retrieved October 10, 2010.
  14. ^ "ACN Contact Information". ACN. Retrieved October 10, 2010.
  15. ^ Tuttle, Ian (March 14, 2016). "Trump's Multi-Level Marketing Telecom Endorsement Is Another Example of His Terrible Judgement". National Review. Retrieved April 20, 2018.
  16. ^ Celarier, Michelle (February 21, 2018). "Trump's Great Pyramid". Slate Magazine. Retrieved April 20, 2018.
  17. ^ "ACN & Donald J. Trump". ACN Inc. Archived from the original on January 14, 2013. Retrieved July 26, 2015.
  18. ^ "Donald J. Trump on ACN's Home Based Business". Archived from the original on August 2, 2012. Retrieved July 20, 2012.
  19. ^ "Report: Donald Trump made millions from Concord company ACN". Charlotte Observer. August 13, 2015. Retrieved September 18, 2015.
  20. ^ "ACN Products". ACN. Archived from the original on April 29, 2011. Retrieved April 9, 2011.
  21. ^ "ACN High Speed Internet". Retrieved July 20, 2012.
  22. ^ "ACN Digital Phone". ACN. Retrieved July 12, 2009.
  23. ^ "ACN Premium Technical Support". ACN. Retrieved January 19, 2011.
  24. ^ "Pennsylvania Public Utility Commission v. ACN Energy, Inc". Pennsylvania Public Utility Commission. June 12, 2002. Retrieved December 24, 2008.
  25. ^ Motion to Vacate Temporary Cease and Desist Order
  26. ^ "MT regulators, ACN settle Pyramid Scheme Investigation". KXLH. October 12, 2010. Archived from the original on February 23, 2014. Retrieved February 17, 2014.
  27. ^ Stempel, Jonathan (July 24, 2019). "Trump must face marketing scam lawsuit, escapes racketeering claims: NY judge". Reuters. Retrieved October 8, 2019.
  28. ^ Jacobs, Shayna (March 14, 2020). "Trump ordered to expand document search in suit alleging he endorsed pyramid scam". The Washington Post. Retrieved March 14, 2020.
  29. ^ U.S. District Court, Southern District of New York (April 8, 2020). "Jane Doe et al vs. The Trump Corporation et al (PDF)" (PDF). DocumentCloud.org. Retrieved April 9, 2020.{{cite web}}: CS1 maint: url-status (link)
  30. ^ "Jane Doe v Trump Lawsuit Discovery (Law)". Scribd. Retrieved May 19, 2020.
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