Anonymous Investors Can Seek Documents From Trump in Fraud Suit

(Bloomberg) -- A group of anonymous investors who claim that Donald Trump defrauded them by endorsing a marketing company that went bust will get to seek evidence in the case, even as Trump tries to have the lawsuit heard by an arbitrator.

U.S. District Judge Lorna Schofield on Thursday allowed the four plaintiffs to seek documents and testimony of witnesses while they fight Trumps’s bid to have them resolve their claims directly with the company, ACN Inc. The investors have said that while they agreed to arbitration with the company, they didn’t consent to such an arrangement with Trump.

Trump and his three oldest children were sued for their role in promoting ACN for a decade through comments, pitches on “Celebrity Appearance” and live company events. The company’s flagship product was a desktop video phone that could only connect calls between two ACN customers and which was quickly eclipsed by services like Skype and the advent of smartphones, according to the complaint, which alleges the plaintiffs lost hundreds of thousands of dollars by putting their faith in the Trumps.

Joanna Hendon, an attorney for the Trumps, told Schofield that there were “strong and sound reasons” for the judge to suspend discovery while deciding whether the case should be heard in arbitration, noting that the plaintiffs began requesting documents and issuing subpoenas in July. Schofield, who denied a bid to throw out the case in January, seemed skeptical of the arbitration bid but allowed both sides to file papers explaining their arguments.

“We look forward to gathering the evidence we need to hold the Trumps accountable and deliver justice for our clients and thousands of others just like them who were injured by the Trumps’ fraudulent scheme,” Roberta Kaplan, an attorney for the plaintiffs, said in a statement.

The case is Doe v Trump Corp., 18-cv-9936, U.S. District Court, Southern District of New York.

--With assistance from Erik Larson.

To contact the reporter on this story: Chris Dolmetsch in Federal Court in Manhattan at cdolmetsch@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Steve Stroth

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