A Utah-based real estate investment company and two celebrities associated with the company will pay $16.7 million in what officials say is the largest consumer protection settlement in state history.

Response Marketing, which according to state records is registered in Lindon, Utah, was named in a Federal Trade Commission lawsuit in 2019, accusing it and affiliated company Nudge LLC of making “empty promises about earning money by ‘flipping’ houses, to convince consumers to buy real estate training packages that cost thousands of dollars.”

The scheme cost customers over $400 million, the suit alleged, and involved two well-known TV real estate and investment celebrities, Dean Graziosi and Scott Yancey.

FTC seeks to shut down Utah-based real estate investment training program

According to the complaint, Response Marketing used infomercials, social media and free events, where real estate celebrities “promised to share their investing techniques,” all in an effort to draw in customers.

Response Marketing would then promote a $1,000, three-day workshop, claiming “it would provide consumers with access to special tools that would enable them to become successful real estate investors,” according to the FTC.

The complaint states Response Marketing would try to up-sell customers at these workshops, pitching other training programs that would cost “tens of thousands of dollars.”

That includes a coaching program called the “Inner Circle,” which the Utah Division of Consumer Protection says could cost upwards of $30,000.

In a statement, Nudge said the FTC started investigating the company in 2017 related to “unsubstantiated earnings claims related to its real estate training” and sought over $1 billion in “relief and a worldwide asset freeze,” which was denied.

After the lawsuit was filed, the company says 500 employees or agents were let go.

“After approximately four years of litigation, plaintiffs dropped the bulk of their allegations, the Plaintiffs then settled for a $5 million payment now, certain future payments up to $15M, and limited injunctive relief,” the statement reads.

“The Plaintiffs alleged widespread fraud and harm but couldn’t produce more than a few customers willing to testify at trial regarding their experience with the company. The company received over 2,800 declarations after the lawsuit was filed from satisfied customers and was prepared to have many of those people testify at trial. On the eve of trial, the Plaintiffs settled after one day in Court arguing evidentiary motions,” the company says.

Yancey did not respond to a request for comment Monday. In an emailed statement sent to the Deseret News on Tuesday, Graziosi’s attorney Greg Christiansen said his client “voluntarily reached a mutual settlement with the Federal Trade Commission in late March.”

“Mr. Graziosi did not admit to any wrongdoing. This was simply a business decision he made in good faith to resolve the commission’s concerns,” the statement reads, noting that Graziosi is not subject to the ban on wealth creation business because he was not an owner or executive with Response Marketing.

In 2020, the FTC named Graziosi and Yancey in the suit. They agreed to pay $1.7 million for their involvement in the case — Graziosi will pay $1.25 million, and Yancey will pay $450,000.

Between 2011 and 2014, Yancey starred in an A&E show “Flipping Vegas” and, according to his website, has development projects in Park City and parts of California.

Graziosi is a self-help and investment author who has penned several books, most recently “Millionaire Success Habits.” He has a popular podcast and over 130,000 YouTube subscribers.

Both Graziosi and Yancey are described by the FTC as “the primary celebrities that Nudge used to draw consumers into attending training seminars that falsely promised to teach consumers a proven formula to make money by investing in real estate.” Graziosi is pictured on mailers sent by Nudge promoting a “VIP reservation” to investment workshops, according to a 2020 news release from the FTC.

The commission states that both men were paid a percentage of the money spent by customers, and that they were aware of the many complaints.

The court found Response Marketing made numerous false or misleading claims — customers were told they would have special access to a funding network for real estate deals “without using their own money” and given letters that the company said would allow them to make discounted cash offers, according to a statement from the division. Response Marketing would also have “buyers for houses they wanted to flip for flipped homes.”

“Most consumers who purchased Response Marketing’s products and services did not become successful real estate investors and did not recoup the money they spent on the training programs,” the division’s statement reads.

Nudge, Response Marketing and BuyPD LLC executives Brandon B. Lewis, Ryan C. Poelman, Phillip W. Smith, Shawn L. Finnegan and Clint R. Sanderson were all named as defendants. As part of the settlement, they are prohibited from selling “wealth creation” products and services, and could face an additional $15 million in penalties if they fail to make the original settlement.

“This is the largest consumer protection division settlement in Utah’s history and holds Nudge and its affiliates accountable for the serious financial harm to consumers across the country,” said Utah Department of Commerce Executive Director Margaret Busse in a statement. “Utah businesses that seek to take advantage of consumers should be put on notice.”