Latest news with #Cerritos-based
Yahoo
15-04-2025
- Business
- Yahoo
Revolve faces $50-million lawsuit alleging influencers hid paid brand partnerships
Popular Gen Z retailer Revolve is facing a $50-million lawsuit alleging that the brand's social media marketing tactics deceived at least a million consumers. A class-action lawsuit, filed Friday in California Central District Court, accuses the Cerritos-based online retailer of violating federal trade law by operating an advertising 'scheme' in which influencers disguised paid product endorsements as genuine recommendations in order to boost Revolve's sales. Read more: How two friends built Revolve into a fashion empire with Instagram influencers 'For many years, Revolve used its position, payments and free merchandise to entice influencers to endorse and promote its products while failing to disclose any material relationship with the brand,' the lawsuit said. Representatives for Revolve did not immediately respond to a request for comment. Lead plaintiff Ligia Negreanu said in the lawsuit that had she known the influencers' posts were sponsored, she would not have purchased Revolve's products at the prices she paid, which at times were 10% to 40% higher than those of other retailers selling the same items. The lawsuit is seeking $50 million in damages. Revolve's affiliate companies, as well as three influencers, were listed as co-defendants. Read more: Firms turn to online 'influencers' to spread the word on social media FTC-mandated disclosures should be "difficult to miss," like the 'paid partnership' label advised by Meta or the #ad hashtag, the lawsuit states. Instead, Revolve's paid influencers often merely tagged the fashion brand's Instagram account in their posts, according to the complaint. 'The problem comes when you don't disclose,' said Bogdan Enica, one of Negreanu's attorneys. He added that guidelines established by the Federal Trade Commission require influencers endorsing a product on social media to disclose any 'material connection' with the brand. In its 2023 annual report, Revolve warned about the risk of litigation should its thousands of social media influencer-partners fail to follow FTC guidelines. The National Advertising Division of the Better Business Bureau recommended earlier this year that Revolve "modify influencer posts to clearly and conspicuously disclose the material connections between Revolve and influencers in its product gifting program." Read more: Social media platforms engaged in 'vast surveillance' and failed to protect young people, FTC finds The lawsuit alleges that Revolve violated the Florida Deceptive Trade Practices Act, the Consumers Legal Remedy Act and the Unlawful Business Practices Act as well as consumer protection laws in more than 20 states. Revolve Group's business has been growing. The company reported net sales of $1.1 billion in 2024, up 6% from a year earlier. Profits rose 73% to $48.8 million during the same period. Shares in the online fashion retailer on Monday rose nearly 4% to close at $20.71, but have plummeted 38% this year. Sign up for our Wide Shot newsletter to get the latest entertainment business news, analysis and insights. This story originally appeared in Los Angeles Times. Sign in to access your portfolio
Los Angeles Times
15-04-2025
- Business
- Los Angeles Times
Revolve faces $50-million lawsuit alleging influencers hid paid brand partnerships
Popular Gen Z retailer Revolve is facing a $50-million lawsuit alleging that the brand's social media marketing tactics deceived at least a million consumers. A class-action lawsuit, filed Friday in California Central District Court, accuses the Cerritos-based online retailer of violating federal trade law by operating an advertising 'scheme' in which influencers disguised paid product endorsements as genuine recommendations in order to boost Revolve's sales. 'For many years, Revolve used its position, payments and free merchandise to entice influencers to endorse and promote its products while failing to disclose any material relationship with the brand,' the lawsuit said. Representatives for Revolve did not immediately respond to a request for comment. Lead plaintiff Ligia Negreanu said in the lawsuit that had she known the influencers' posts were sponsored, she would not have purchased Revolve's products at the prices she paid, which at times were 10% to 40% higher than those of other retailers selling the same items. The lawsuit is seeking $50 million in damages. Revolve's affiliate companies, as well as three influencers, were listed as co-defendants. FTC-mandated disclosures should be 'difficult to miss,' like the 'paid partnership' label advised by Meta or the #ad hashtag, the lawsuit states. Instead, Revolve's paid influencers often merely tagged the fashion brand's Instagram account in their posts, according to the complaint. 'The problem comes when you don't disclose,' said Bogdan Enica, one of Negreanu's attorneys. He added that guidelines established by the Federal Trade Commission require influencers endorsing a product on social media to disclose any 'material connection' with the brand. In its 2023 annual report, Revolve warned about the risk of litigation should its thousands of social media influencer-partners fail to follow FTC guidelines. The National Advertising Division of the Better Business Bureau recommended earlier this year that Revolve 'modify influencer posts to clearly and conspicuously disclose the material connections between Revolve and influencers in its product gifting program.' The lawsuit alleges that Revolve violated the Florida Deceptive Trade Practices Act, the Consumers Legal Remedy Act and the Unlawful Business Practices Act as well as consumer protection laws in more than 20 states. Revolve Group's business has been growing. The company reported net sales of $1.1 billion in 2024, up 6% from a year earlier. Profits rose 73% to $48.8 million during the same period. Shares in the online fashion retailer on Monday rose nearly 4% to close at $20.71, but have plummeted 38% this year.
Los Angeles Times
22-03-2025
- Business
- Los Angeles Times
Rancho Santiago stakeholders take forensic audit findings to O.C., L.A. investigators
As Rancho Santiago Community College District officials determine their response to a forensic audit showing conflicts and state education code violations regarding the maintenance of an off-books insurance rebate fund, some are seeking the involvement of a higher authority. Two individuals with ties to the district, one of them a member of its board of trustees, have reached out to district attorney's offices in Orange and Los Angeles counties with the audit's findings and complaints about the Cerritos-based risk pool operator that held the funds, Alliance of Schools for Cooperative Insurance Programs (ASCIP). Findings from the audit were delivered during a March 10 regular board meeting by Travis Casner, a certified fraud examiner with Houston-based firm Weaver. Casner found current and former Rancho Santiago administrators violated sections of California education code and state budget accounting guidelines when they withheld the risk management fund balances and statements from elected officials as well as their own external auditors. The report also described conflicts of interest surrounding two now-retired vice chancellors, John Didion and Peter Hardash, who did not fully disclose they served on the board for ASCIP, a joint powers authority, and a subsidiary created by the agency to handle bond construction insurance, even as they recommended policies to the district through the two entities. ASCIP's practices were also examined by auditors and called into question during Casner's presentation. He showed what appeared to be a practice of intentionally obscuring the amount of excess premiums, or rebates, returned to individual member school districts as officials with the agency reported only one grand total on annual audits. RSCCD Board President Daisy Tong assured constituents at the meeting the board would discuss the ramifications of the audit. But her one of her board colleagues, Phil Yarbrough, is taking things one step further. The trustee Tuesday forwarded the report to the Orange County district attorney's major fraud unit, in hopes investigators might follow up on possible violations of law identified in the forensic audit. 'It's not handled by us. We don't call the Santa Ana Police Department,' Yarbrough said in an interview Thursday. '[But] I have a responsibility as an elected official to make sure this is being looked at seriously.' Yarbrough said there are two avenues for prosecutors at multiple levels to explore — violations at the district level and the wider implications of ASCIP's practices involving the 140 public school district members it serves, from San Francisco to San Diego counties. While he and fellow board members were primarily focused on the former, investigators may want to look into the joint powers authority that provided a context for RSCCD administrators' actions, Yarbrough said. 'All of this is pointing to financial fraud, and that's at the state level. There needs to be an investigation for there to be complete transparency and accountability,' he added. A similar complaint has been brought to the attention of prosecutors in Los Angeles County, where ASCIP is headquartered, by Barry Resnick, a retired RSCCD professor and former faculty union president from 2012 to 2016. Resnick on Tuesday forwarded the recent audit report to the L.A. County district attorney's public integrity division, which reviews complaints alleging criminal misconduct, prosecutes crimes committed by public officials in the course of their official duties, according to its website. In January 2023, the retiree reached out to the Daily Pilot with concerns about Didion and Hardash's ties to ASCIP and a Hawaii-based subsidiary it created in 2005 to handle bond-construction related insurance—Captive Insurance for Public Agencies, Ltd. (CIPA). When he discovered last year ASCIP was holding tens of millions of dollars in public school funds, Resnick worked with others to uncover the $8.1 million being held on behalf of Rancho Santiago. Using records obtained from the organization that were also reviewed by the Pilot, he learned other public school and community college districts reportedly had insurance rebates banked by the agency and contacted them to see what their administrators knew. 'I wanted to know, is what occurred within the Rancho Santiago District an anomaly, or is this a pattern involving other districts?' Resnick said Friday. 'And I found out there are other districts that are unaware they have funds being held by ASCIP.' Resnick is hopeful that, armed with the Rancho Santiago audit and his own findings, prosecutors might take up the case. 'This is not the way taxpayer funds should be handled,' he said.
Los Angeles Times
20-03-2025
- Business
- Los Angeles Times
Community college district's audit of secret $8M insurance rebate fund exposes violations
A forensic audit summoned by a Santa Ana community college district that last year chanced upon $8.1 million in insurance rebates secreted away in a fund held by a third-party vendor returned troubling findings about administrators' actions across decades. Accountants contracted by the Rancho Santiago Community College District Board of Trustees reported current and former district employees violated California's education code, state budgetary guidelines and the board's own policies by failing to publicly disclose the fund's balance, including in annual district audits. (The district oversees Santa Ana and Santiago Canyon colleges, along with two educational centers). Meanwhile, district administrators made $3.6 million in withdrawals from a member risk management fund (RMDF) — paying off budgetary shortfalls and at least one legal settlement — without disclosing the source to board members or advising them the money was being held outside the district, according to the auditors. Released during a March 10 board meeting, the audit's findings call into question not only the motives of the public school employees who recommended and managed $287 million in insurance premiums, but the practices of the Cerritos-based joint powers authority that held the banked dividends, the nonprofit Alliance of Schools for Cooperative Insurance Programs (ASCIP). Travis Casner, a certified fraud examiner and partner overseeing forensics and litigation for Houston-based firm Weaver, said the nonprofit agency failed to provide statements to school districts enumerating their individual holdings within the risk management deposit fund, reporting only the total, non-delineated fund balance in its own audits. ASCIP further enshrined two now-retired Rancho Santiago cabinet members — John Didion, former vice chancellor of human resources, and former Vice Chancellor of Fiscal Services Peter Hardash — along with current Assistant Vice Chancellor of Fiscal Services Adam O' Connor, in governance roles with the organization from 1998 through 2021. In a joint powers authority like ASCIP, representatives from members served by the entity make up an agency's board. But the two RSCCD administrators' executive positions at ASCIP granted them the authority to decide when rebates, or excess premiums, were returned to more than 100 public school members statewide in the self-funded insurance risk pool and how much each district, including their own, received. Under their leadership, Rancho Santiago took in more than $12 million in rebates — at one point receiving up to one-third of all the dividends paid out by ASCIP that year, even though the district's premiums amounted to just 10% to 12% of the money paid into the pool. 'When the fund balance for the district was $7.2 million at the end of December 2023, that represented 33% of ASCIP's entire [RMDF] balance across all participants, which is disproportionately high,' Casner told Rancho Santiago trustees. 'The district was leaving more funds in that fund, compared to other districts.' Casner tracked activity in and out of the account from 1997, interviewed multiple officials, read emails between district administrators and leaders of ASCIP and waded through governance committee meeting minutes to glean how and when the agency authorized rebates among its 140-district membership. Hardash and Didion did not reply to the auditors' requests for interviews, he noted. The auditor found modest rebates, amounting to less than $300,000 per year, were returned to Rancho Santiago between 1997 and 2018, when premiums paid for workers' compensation and property and liability coverage exceeded the amount of claims paid out. That changed, however, after Rancho Santiago switched its employee medical and health coverage to ASCIP in 2015, a move proposed by Didion, the district's former vice chancellor, whose ties to the JPA date back to at least 1994 and continue to this day. The district annually put from $23.8 million up to $30 million into the healthcare risk pool and, in the nine years that followed, spent more than $241 million to retain health coverage. 'When the district became a member of the health benefits program in 2015, at that point the premiums paid by the district represented about 10% of ASCIP's total membership — all the other 20 community college districts and school districts, all 140 of those collectively ' Casner told trustees. 'That changed the dynamic of the rebates, as far as the dollars.' Rancho Santiago's rebates, or returned excess premiums, climbed from the less than $300,000 collected from workers' compensation and liability each year to as high as $2.2 million in 2021, according to a table included in Weaver's 46-page report. Yet under Didion and Hardash, and the administrators who succeeded them, the unreported funds continued to grow. In multiple emails obtained by Weaver, O'Connor and Rancho Santiago's risk manager, Don Maus, made references to rolling over rebate after rebate, as 'Peter' had done. 'This fund kind of started as a rainy day fund for small, unbudgeted purchases, then evolved into an emergency fund that was not on the district's financial record,' Casner said. Conflicting loyalties Many of the withdrawals were made by Didion, who served on various ASCIP governance committees dating back to 1994, according to records obtained by the Daily Pilot from the agency, including the executive committee, from 1998 to 2016, when he was an officer for eight years. Upon retiring from Rancho Santiago in 2016, Didion accepted a paid contracting position earning $96,000 per year as the managing director of Captive Insurance for Public Agencies (CIPA), a Hawaii-based wholly owned subsidiary he personally helped ASCIP form in 2005 to handle bond construction-related insurance and on which he served as a board member until his retirement from the district. When Didion retired, Hardash took over, serving as a member or alternate member on ASCIP's board until his retirement in 2021. The following year, O'Connor joined as an alternate with potential voting power. Hardash also assumed Didion's seat on the Hawaii-based CIPA in 2017, after being nominated by his former Rancho Santiago colleague, email records obtained by Weaver indicate. Didion transitioned back to serving on the captive's board in 2024, and the pair of retirees continue to broker in public school insurance business through the agency today. '[Didion] and Mr. Hardash were both making decisions about whether to defer rebates or have them paid back to the district while, at the same time, being more involved in ASCIP's executive committee, including as president, vice president and treasurer, which creates the inherent conflict of interest,' Casner determined. Kept in the dark The auditor also shared bylaws created by the joint powers authority to govern the holding and return of insurance dividends to individual member districts. Those rules stipulate ASCIP is to provide quarterly statements to member districts, including balances and interest accrued, and report those individualized amounts annually to its executive committee. 'At no point did the ASCIP financial statements ever include individual member balances,' Casner said. Keeping districts in the dark appeared to be intentional, according to the auditor, who shared a Nov. 22, 2016 email from ASCIP's then-Chief Financial Officer Lynn Truong to Hardash and other board members, following a meeting of the agency's finance committee. 'Since some concerns were raised after the meeting regarding the disclosure of the individual member balance this year, we have decided to hold off on including the list of districts with their balance until next year,' Truong wrote. 'By then the members would have had a couple of years to reduce their balance, which is consistent with what we communicated to the Board.' One exhibit included in Weaver's final report is an email correspondence between Rancho Santiago's risk manager, Don Maus, and Truong about channeling rebates into the off-books fund. 'We would like to deposit our rebate into our RMDF, but the instructions say that we must have Board approval. I don't believe we've needed that before. Is this something new?' Maus asked. 'Actually, you can just have Peter Hardash sign the form and send it to us,' Truong replied. 'My apologies. There was an error on that instruction. It should have said 'ASCIP's Board approval required' not District's.' Auditors are seeking more information from the agency about those correspondences. Casner also said the auditors' questions regarding the agency's creation of CIPA and Didion and Hardash's service on that board were shut down by ASCIP's legal team, which stated the captive was an entity separate from the joint powers authority. ASCIP attorney Robert J. Feldhake, who also sits on CIPA's board of directors, did not respond to a request for comment. Violations and 'next steps' The forensic audit determined the district's failure to disclose risk management fund balances in financial statements and audits, and keeping the account's existence a secret from board members, conflicted with portions of California's education code describing how community college districts are to audit and report assets held outside their budgets. State and Rancho Santiago's own administrative regulations regarding public inspection of a district's receipts and balances, and how and where such assets should be held and invested, also appear to have been violated, Casner maintained. Rancho Santiago Trustee Phil Yarbrough heads the board's fiscal and audit review committee. Last June, upon learning of the $8 million that had been kept secret from the board, he immediately demanded the funds be remitted to the district and placed in reserves, in accordance with administrative procedures. The veteran board member, following the March 10 meeting, said he and his colleagues were shocked to learn of the breadth and extent of the violations of law. To his way of thinking, 'The next step is a lot of next steps.' 'I remain committed to the discipline and accountability of those responsible,' he said at the meeting. 'And I want to assure the public and the Rancho community that all necessary steps will be taken to rectify the situation and prevent this from ever happening again.' Board President Daisy Tong echoed Yarbrough's assertions. 'This was a lot of information to process in a quick timeframe,' she said after Casner's presentation. 'I'm sure we're going to have discussions on this item again — this is not a one time and we're done [situation].'
Yahoo
08-02-2025
- Business
- Yahoo
Southern California business owner defrauded millions from clients, evaded taxes
A Southern California man pleaded guilty to defrauding over $5 million from clients and evading more than $1 million in taxes. Frank Seung Noah, 64, of Corona, is a customs broker who works with businesses to ship their goods into the U.S. from other countries, according to the U.S. Attorney's Office. Noah owned and operated Comis International Inc., a Cerritos-based logistics and supply-chain company offering customs import brokerage services, court documents said. From 2007 to 2019, Noah's company was a customs import broker for Daiso, a Japan-based discount chain without locations throughout the U.S. During that time, prosecutors said Noah provided Daiso with false customs duty forms and invoices to collect false reimbursement for duty fees. The forms he provided to Daiso were different from the ones provided to U.S. Customs and Border Protection (CBP). Through this method, Daiso had overpaid Noah nearly $3.4 million, prosecutors said. He was indicted for defrauding Daiso in 2022, but he continued scamming other clients out of more than $2 million using a different scheme. He collected money from two client companies and instead of paying their customs fees, he pocketed the funds instead. CBP notified the companies of their unpaid taxes. They asked Noah for an explanation and he sent over false bank statements to show he had paid the fees. Prosecutors said Noah also evaded paying federal taxes, resulting in a loss to the IRS of around $2.4 million, with penalties and interest continuing to accrue. 'After agreeing with the IRS that he owed more than $1 million in taxes in 2014, Noah actively avoided IRS attempts to collect the amount owed,' court documents said. 'This included paying for two homes in his former girlfriend's name, using check cashing businesses to avoid IRS levies of his bank accounts, lying to IRS collection agents, and spending thousands of dollars on country club memberships, travel, and golf purchases.' On Feb. 7, Noah pleaded guilty to one count of tax evasion and two counts of wire fraud. A sentencing hearing is scheduled for May 8 where he faces up to 20 years in prison for each wire fraud count and up to five years in federal prison for the tax evasion count. The case was investigated by IRS Criminal Investigation and Homeland Security Investigations with the assistance of United States Customs and Border Protection. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
