Federal Trade Commission (FTC) procured a temporary restraining order and asset freeze against three young entrepreneurs—Andrew Chapman and brothers John Cresto and Roman Cresto who allegedly ran off with up to $22 million from clients seeking to expand their online retail enterprises through platforms such as Amazon and Walmart. One of their entities was headquartered in West Hollywood.
FTC legal representatives say that Chapman and the Cresto brothers established multiple entities under names like Automators AI, Empire Ecommerce, and Onyx Distribution, enticing clients with promises of monthly profit margins ranging from 8 to 20%. While Empire was headquartered in West Hollywood, the other establishments were listed as being in Las Vegas, San Diego, Encinitas, and Tennessee.
Through both Automators AI and the previous companies, the defendants promoted themselves as ecommerce experts and self-made millionaires who have helped thousands of consumers make big bucks by running third-party stores on platforms like Amazon, Walmart, and Facebook. Through websites, videos, email, and social media, the defendants have made eye-popping claims about what their clients have made and what others can expect to make – for example, “$4k-$6k consistently monthly net profit” and “597k in 8 months.”
The FTC says the defendants bolster those representations by touting their purported use of artificial intelligence, claiming the company “integrates AI machine learning into the automation process, resulting in increased revenue and margins.” The defendants also allegedly lured people in with testimonials from supposedly satisfied customers. According to one endorser, “[M]y store has been able to do $1 million dollars in revenue in the past 4 months alone.”
In a federal court complaint, FTC attorneys disclosed that “Empire LLC offered consumers various ‘automated’ packages of e-commerce stores that typically cost between $10,000 to $125,000 for the initial investment, and an additional $15,000 to $80,000 for working capital. It falsely claimed that purchasers were likely to make monthly profit margins between 8 to 20 percent and claimed to use ‘AI machine learning’ to maximize revenues.”
The entrepreneurs also purportedly provided coaching to consumers on utilizing ChatGPT for crafting customer service scripts.
The entrepreneurs also upped their social media status with their claims. Roman Cresto currently has 406K followers on Instagram, while John Cresto amassed 14.8K followers, both are verified accounts and both accounts are set to private. They furthered their public image through press releases and appearances in business podcasts.
According to the FTC, nearly all investors lost their entire investment and incurred substantial credit card debts. Additionally, almost all online stores established and managed by Empire LLC on behalf of its clients on Amazon.com and Walmart.com were suspended and ultimately terminated due to policy violations, resulting in many clients being banned from these platforms.
