Branden Lathan considered himself a savvy businessman. He'd invested in real estate and free xmas eve sex videosecommerce side businesses. By day, he works as a cybersecurity professional.
Recently, however, Lathan lost $56,000 to an ecommerce scheme that allegedly defrauded its customers of at least $25 million, according to a lawsuit filed in Septemberby the Federal Trade Commission. The action was part of a broader crackdownon companies claiming a competitive edge thanks to artificial intelligence.
The FTC lawsuit refers to the company as Ascend CapVentures Inc., but during a period when many clients say they were defrauded, it operated as Ascend CapVentures Inc. and more recently rebranded as ACV.
You May Also Like
The FTC alleges that Ascend CapVentures Inc. founders lined their pockets with their customers' money, rather than spend it on their stores.
SEE ALSO: One thing to know before you buy a gift cardAscend CapVentures attorney Jonathan D. Herpy, of the firm Hart David Carson, previously provided a statement on the FTC suit to Law.com.
"Our opinion, from a corporate counsel standpoint, is that Ascend takes all of these regulatory matters very seriously and is committed to full compliance with the FTC guidelines," Herpy told Law.com.
Mashable contacted the company's legal representatives multiple times by phone and email for a response to the allegations but didn't receive one. In October, the company's lawyers submitted a response to the FTC lawsuit in a federal district court, denying all of the agency's charges.
Lathan became ensnared in the alleged scam because he'd hoped to reap profits from the pandemic-era surge in ecommerce. In 2022, he borrowed against his home equity and paid a company, called Ascend CapVentures Inc. at the time, to open and manage an Amazonstore on his behalf. That was $40,000.
Then, over the period of his contract, Lathan paid Ascend CapVentures Inc. $18,968 to stock his store, using a business credit card and his home equity loan. The company struggled to notch any meaningful sales or produce profit for Lathan's store, and it didn't deliver on its ambitious sales projections, which were supposed to reach six figures within a year.
It couldn't even properly sell merchandise, according to the FTC complaint, which alleges that the company purchased counterfeit goods to sell in its clients' stores.
Lathan, who spoke to the FTC under penalty of perjury, told investigators that Ascend CapVentures Inc. stocked his store with counterfeit products, which led to its deactivation. The meager profit Lathan says he made, which reduced his losses from nearly $59,000 to $56,000, were from items later identified as counterfeit.
Lathan has a warning for anyone considering opening their own ecommerce store on platforms like Amazon, Walmart, and TikTok, in partnership with a management firm.
"I would saythe most important thing is that this space is so overcrowded," Lathan says. "There's too much saturation in the market…then you have people trying to capitalize on that, like all these scammers."
Learn the warning signs of an ecommerce store scam by reading this story.
How it started: a passive income business opportunity
Lathan first learned about Ascend CapVentures Inc. in 2022, when he was searching for opportunities to generate passive income. These offers are all over social media, peddled by influencers who often flaunt luxury purchases they've allegedly made with their passive income. Their promises are often empty or purposely deceptive, particularly when their pitch involves making a lot of money with little to no work.
Lathan learned about Ascend CapVentures Inc. while listening to Business with Beers, a podcast that he trusted. The company's co-founder, Will Basta, talked persuasively about it successful operation.
The part of the interview that hooked Lathan was when the podcast host said he bought his own store. Mashable confirmed this account with host, Brian Beers, who acknowledged he'd become a victim, too. Beers removed the episode in the fall of 2022, when he "felt something wasn't right."
Lathan researched Ascend CapVentures Inc. by checking its website and social media accounts. He even found one former Ascend CapVentures Inc. customer on Reddit, who described his experience as neither terrible nor great—but noted that he made back his original $40,000 investment.
Lathan reviewed the company's contract with his girlfriend at the time, who was a lawyer. It had a buyback clause, which reassured Lathan. If an owner didn't recoup their expenses within two years, Ascend CapVentures Inc. would purchase the store back from them, for the difference between the initial investment and the customer's profits. Lathan knew opening a store wasn't risk-free, but he put "faith" in the contract.
"As long as I keep my end of the bargain, which I plan to do and I did do, I'm pretty safe with this investment," Lathan thought at the time.
Before signing his contract, Lathan also spoke to Basta and the company's director of partnerships. He watched glowing testimonial videos of purported Ascend CapVentures Inc. clients, provided to him by Basta. Lathan thought he'd done everything in his power to rule out the possibility of a scam.
How it went: deceived into selling counterfeit goods
In May 2022, Lathan signed a contract to open a Fulfilled by Amazon store, and wired Ascend CapVentures Inc. the $40,000 fee. Under this model, Ascend CapVentures Inc. would purchase products to be stored in its own warehouse, then send them in bulk to Amazon for shipping. The agreement gave Ascend CapVentures Inc. 30 percent of his store's monthly net profits.
Within weeks, Lathan was concerned. Ascend CapVentures Inc. switched its model to "Fulfilled by Merchant," putting the company directly in charge of shipping to customers, and began drop shipping, or using third parties to send customers their orders, a practice that's permitted on Amazon only if certain guidelines are followed.
Ascend CapVentures Inc. also failed to meet timelines for stocking the store, and its representatives were slow to respond or unresponsive, according to Lathan. Basta told Lathan to stay patient and give his team space to work, according to Lathan's FTC declaration.
After several months of poor sales, and back and forth with Basta and other company employees, Lathan learned from Amazon in December 2022 that his store had violated the company's shipping policies. He received similar notices in May and August of 2023.
Related Stories
- Social Security recipients get a raise soon. Scammers are on notice.
- 'Nobody is immune': Don't fall for a Bitcoin ATM scam
- Watch out for these common tax scams
- One thing to know before you buy a gift card
- Somehow crypto scams grew by nearly 50 percent last year
In the spring of the same year, Lathan got more bad news: a major vitamin company sent him cease and desist letters for selling their products without authorization.
Lathan told FTC investigators that when he notified Ascend CapVentures Inc., the company liquidated those products from his store, offering them for extremely low prices. They sold quickly, but made Lathan no money. He believes Ascend disobeyed the cease and desist, and that the vitamin brand didn't realize the products had been sold.
In June 2023, Lathan tried to hold Ascend CapVentures Inc. accountable by posting a critical review of the company to Trustpilot. Lathan told FTC investigators that Ascend CapVentures Inc.'s legal and compliance team found the review and said that he'd violated his terms of service by writing it, and that he could be held liable for defamation as a result.
Honest reviews are protected by federal law, which Lathan knew. But under legal threat, and feeling pressure to modify what he'd written, he made changes to the review, noting that he'd edited certain statements to comply with the company's terms of service. Ascend CapVentures Inc. told him that admission again violated those terms.
The company also offered to make things right if he removed the review altogether. Lathan hoped the arrangement would turn his store around, so he removed the review. Ascend CapVentures Inc. soon told Lathan they could buy him inventory for which they'd projected a return of at least 20 percent.
What happened next doomed his store. After an initial round of robust sales, he got more letters from Amazon, this time concerning makeup and moisturizing products from major brands that appeared to be inauthentic. Then Amazon told him merchandise from a notable skincare brand in his store might be fake, too. By September, Amazon deactivated his store because of concerns about authenticity. It never reopened.
The fallout of an alleged ecommerce store scam
Lathan requested a full refund in October, which Ascend CapVentures Inc. rejected. Lathan, along with other Ascend victims who'd convened in a private Facebook groupthat he'd created, decided to hire a lawyer.
When that lawyer contacted Ascend CapVentures Inc. earlier this year, Lathan says he discovered he was no longer able to communicate with the company via Slack. The group's lawyer dropped their mass arbitration claim once it became clear that the FTC was investigating Ascend CapVentures Inc.
Lathan is still grappling with the financial fallout of working with Ascend CapVentures Inc. He used most of his savings to pay off the $35,000 balance on his home equity loan, because the interest rate jumped to 10 percent. That money had been earmarked for home repairs, like fixing cracked and leaking bathroom tile. But the loss has also affected Lathan's mental health. He's felt sad and angry.
"I'm someone who's worked very hard my whole life to get everything I have," he says.
While Lathan doesn't expect to get all of his money back, the FTC investigation has given him hope that Ascend CapVentures Inc. won't be able to escape accountability.
He's committed to seeing the case through: "Personally I'm not stopping until I feel like I'm whole in one way or another."
Topics Social Good Money