Eight former distributors have sued Financial Education Services for wrongful termination and unpaid commissions.

Plaintiffs Michelle Cofer, Keedic Cofer, Cortez Jenkins, Tameisha Jenkins, Geraldine Andre, Djivenino Andre, Marlon Hester Sr. and Monika Griffin filed a proposed class-action in Michigan on November 14th, 2022.

An Amended Complaint was filed on March 27th, 2023, which this article quotes from.

FES operates in Michigan under the trade name United Wealth Education (UWE).

Back in June 2022 the FTC sued FES. The federal regulator alleged FES was running a ~$467 million dollar pyramid scheme.

In the immediate aftermath of the FTC’s case, a Temporary Restraining Order was granted, temporarily halting FES’ business operations.

Plaintiffs allege, as result of the granted TRO, FES (Defendants)

informed their higher-ranking agents, including some of Plaintiffs, that they did not expect Defendants would be permitted to recommence their business operations and encouraged the agents to seek work elsewhere, including with competing companies.

Lower ranked FES agents were not given the same consideration.

As a result of the TRO, the Defendants’ statements, and the cessation of Defendants’ operations, virtually all of Defendants’ sales agents sought employment elsewhere.

Many went to work for companies directly competing with Defendants, such as MWR Financial, Novae, Real Rise, Credit Repair Cloud, and Credit Cleanse.

Those who had teams of sales agents beneath them, such as Plaintiffs, often took those teams with them to their new company.

This was done with Defendants’ full knowledge and blessing.

In a decision even FES wasn’t expecting, the FTC was denied a preliminary injunction in July 2022. This saw the granted TRO expire.

FES was given permission to restart business operations, under supervision of a court-appointed monitor.

Plaintiffs recount their individual experiences after FES was allowed to resume business operations in the Amended Complaint.

Michelle Cofer was a FES Executive Ambassador who earned $169,000 in 2021.

Cofer left FES for MWR Financial “with many agents from her (FES) team” in May 2022.

Cofer returned to FES in August 2022. She also maintained a Debt Cleanse business.

The Amended Complaint cites Debt Cleanse as “a licensed legal referral plan that focuses on assisting consumers with credit and consumer law problems.”

In September 2022, when she sought to enroll a new member in UWE, she learned that her access to Defendants’ computer systems had been terminated, preventing her from the entire business platform on which Defendants’ business operated.

When M. Cofer confronted management about the termination of her access, she was informed that her arrangement with Debt Cleanse violated a company policy.

However, many other agents still working with Defendants had similar business arrangements with other companies that
compete directly with Defendants, and none of these agents have been terminated by Defendants.

Cofer claims “many” of her FES downline (both agents and customers) were kept by the company.

M. Cofer has not been paid the commissions and bonuses attributable by those customers and/or agents.

Cofer explains her termination was wrongful because it

was arbitrary and capricious in that Defendants claimed to be enforcing a contract provision which they did not apply uniformly to all agents.

Further, Defendants selectively enforced such provisions against M. Cofer for the purpose of avoiding paying fees and commissions rightfully owed to her.

Cofer cites FES’ agent agreement, which states

upon her wrongful termination by Defendants, (she’s) entitled to liquidated damages equal to her gross compensation from Defendants for the prior 24 months.

  • Keedic Cofer left FES in May 2022, returned in August 2022, maintained a Debt Cleanse business and was terminated by FES in September 2022 (claims to have earned $100,000 with FES as a Vice President in 2021)
  • Cortez Jenkins left FES in May 2022, returned in August 2022, maintained a Debt Cleanse business and was terminated by FES in October 2022 (claims to have earned $50,000 with FES as a Vice President in 2021)
  • Tameisha Jenkins left FES in May 2022, returned in August 2022, maintained a Debt Cleanse business and was terminated by FES in October 2022 (claims to have earned $20,000 with FES as a Sales Director in 2021)
  • Marlon Hester Sr. left FES in May 2022, returned in August 2022, maintained a Debt Cleanse business and was terminated by FES in September 2022 (claims to have earned $200,000 with FES as a Senior Vice President in 2021)

  • Geraldine Andre left FES in May 2022, returned in August 2022, maintained a Debt Cleanse business and was terminated by FES in October 2022 (claims to have earned $40,000 with FES as an Executive Sales Director in 2021)
  • Djivenino Andre left FES in May 2022, returned in August 2022, maintained a Debt Cleanse business and was terminated by FES in October 2022 (claims to have earned $10,000 with FES as a Sales Director in 2021)
  • Monika Griffin left FES in May 2022, returned in August 2022, maintained a Debt Cleanse business and was terminated by FES in October 2022 (claims to have earned $42,000 with FES as a Vice President in 2021)

Marlon Hester Sr.’s communication with FES following his termination is of particular interest;

(Hester Sr.) was informed by one of Defendants’ founders, Parimal Naik, that because he had joined Debt Cleanse, he was being terminated.

When Hester told Naik that many of Defendants’ agents were working with other companies, Naik responded that working with other companies was allowed, just not Debt Cleanse.

Naik also stated the reason for the termination “is personal now.”

Assuming Hester Sr. has preserved these communications with Naik, that alone makes for a pretty compelling case against FES.

In filing their lawsuit, Plaintiffs seek to represent a class of FES agents who were

terminated by Defendants because of their association with Debt Cleanse and who were owed monies upon their termination and thereafter.

The exact number of affected FES agents that would fall under the class is estimated to “exceed 40”.

If certified, the proposed class-action seeks a declaratory judgment against FES, alleging violations of Michigan’s Consumer Protection Act, breach of contract and tortious interference with business relationship.

Given the Amended Complaint was only just filed, there aren’t any significant further developments to report on yet. I’ve added the case to BehindMLM’s calendar so we’ll keep you posted on updates.

In the meantime, it’ll be interesting to see if any of the alleged conduct makes its way into the court-appointed Monitor’s reports.

Terminating agents alone isn’t report worthy but might speak towards unethical running of FES since it was handed back over.

There’s also a potential issue if the FTC prevails. If the FTC wins its case, FES will have legally be found to be an illegal pyramid scheme. In that case I imagine this proposed class-action is thus rendered moot.

Claiming lost income from legally verified fraudulent business conduct makes no sense.

As of April 2023, the FTC’s case against FES continues. On March 27th Gayle Toloff, wife of FES co-founder Mike Toloff, was added as a relief defendant.

 

Update 16th February 2024 – Marlon Hester Sr. has reached a settlement with Financial Education Services.

A February 9th stipulated order dismisses Hester Sr.’s claims against FES. Details of the reached settlement are confidential.

Separately, on February 14th, FES moved for sanctions against the remaining Plaintiffs. A court order on the motion remains pending.

 

Update 14th April 2024 – On March 21st the court dismissed Plaintiff’s class-action against FES. Any further disputes are to be resolved through arbitration.

A decision on FES’ motion for sanctions remains pending.

 

Update 13th November 2024 – I’m a bit confused but here’s what’s happened since our last update;

The arbitration order from March 2024 (referenced in the last update) appears to be how this case will be settled. That is, out of court.

This is based on the court denying Financial Education Services’ motion for sanctions against the Plaintiffs, filed on February 14th, 2024.

Defendants argue that Plaintiffs should be sanctioned under Rule 11 for filing a frivolous complaint.

The court DENIES Defendants’ motion for Rule 11 sanctions. This is a final order and closes the case.

I don’t have access to the outcome of ordered arbitration so with court proceedings ordered closed, this brings BehindMLM’s coverage of the FES class-action to a close.