Group Files $178M Suit Against Entrepreneur

A group of investors has filed suit against Entrepreneur, alleging the magazine misled them about a company featured on its “Hot 100” list.

Entrepreneur says it was not their intent, and called the lawsuit "unwarranted."

The company, Agape, was ranked number 73 among Entrepreneur’s “Hot 100” fast-growth businesses. The issue was published in May 2008.

In January 2009, Nicholas Cosmo, founder and owner of Agape World, was arrested and charged with a $370 million mail fraud. According to Time.com, it appeared Cosmo was running an alleged Ponzi scheme, similar to Bernie Madoff's.

According to the suit, filed in Nassau County (New York) earlier this month, Entrepreneur “deliberately, willfully and recklessly failed to exercise due diligence in publishing information” about Agape. (The lawyer in the case, Eliot Bloom, is representing an Agape investor in a separate lawsuit against Dunn & Bradstreet, which provided data to Entrepreneur to help rank the companies.)

“Entrepreneur did not attempt to verify the information it received from Agape, at no time did Entrepreneur visit Agape headquarters,” the suit alleges, or “meet with its principals. … Had Entrepreneur conducted itself with a minimum of due diligence … it would have found much of the information provided by Agape as false.”

In a statement provided to FOLIO:, Entrepreneur CEO Peter Shea said: “Given the limited information provided about each company, it was certainly not Entrepreneur’s intention to evaluate or predict a specific company’s investment potential nor expectation that anyone would rely on such information to make investment decisions … Placing blame for these unfortunate events on Entrepreneur is unwarranted.”

Each of the 87 investors named in the suit relied on Entrepreneur’s “conclusions regarding Agape’s financial stature” and decided to invest.

Click here for a PDF of the lawsuit.

RELATED LINKS

A Ponzi Lawsuit That Sounds Like a Scam

Post Comment / Discuss This Story - Info/Rules

Dumb@$$

Submitted by Anonymous on Wed, 05/06/2009 - 08:39.

Why didn't the investors do their homework?

Personal Responsibility

Submitted by Anonymous on Wed, 05/06/2009 - 10:42.

Can you sue any investment magazine if they either rank or recommend a stock or fund? I think you still have to be responsible for the decision you made with your money. Maybe we can all sue Jim Cramer for, say, $236 billion?

magazine lists

Submitted by Anonymous on Wed, 05/06/2009 - 17:15.

This lawsuit against Entrepreneur does sound like a stretch…but shouldn't Entrepreneur have some level of responsibility for the accuracy of its own laudatory list? A lot of reasonably intelligent people probably did in some way rely upon Entrepreneur's list…which is of course why magazines publish these kinds of lists, to profit from readers who will buy a magazine to read a list.

scalded

Submitted by Anonymous on Thu, 05/07/2009 - 14:07.

This foolish lawsuit sounds akin to those idiot folks who burned themselves on hot coffee they purchased at McDonald's... and they won, and Mickey D's then had to put disclaimers atop every cup of java to cover themselves against future claims by morons.

Confederacy of dunces

Submitted by Anonymous on Thu, 05/07/2009 - 14:10.

There are clearly too many law schools in this country.

This (law)suit needs to be dropped, not drycleaned

Submitted by Anonymous on Thu, 05/07/2009 - 14:15.

It's ridiculous to expect Entreprenuer to pay any monetary damages unless the plaintiff can prove Entreprenuer acted in a willful way to purposely mislead the public. If E used data that at the time the public and D&B believed to be accurate at the time it was released on its list, then this lawsuit is completely without merit. Shame on these 87 investors for attempting to place blame on a publisher for their own actions. It looks like these investors have an extreme case of spilled milk. Instead of using logic in determining whether or not their investments would earn the promised return prior to making the investments, which was likely very high, and taking their own due dilligence, these investors are now attempting to bully a publisher who is likely struggling with ad sales due to the economy. Understandably, the investors are upset, but this suit is not worth taking to the dry cleaner!

Group Files $178M Suit

Submitted by Anonymous on Thu, 05/07/2009 - 14:31.

These list are completely useless and are typical in the US to always rank everything. To rely on this information is to admit that someone is blanty stupid since it does not excempt an investment firm for doing due diligence. This is another careless attempt by lawyers to make money out of nowhere. I will not only dismiss this lawsuite if I were a judge but also make the investor paid the money back to those who they represent

c'mon

Submitted by Anonymous on Thu, 05/07/2009 - 14:34.

Entrepreneur, D & B, and all others who work with financial information are not capable of actually auditing these companies. The figures Entrepreneur and others are working with are the same numbers provided to our own gov't for tax purposes. Entrepreneur can only offer advice based off figures presented and analyze off those figures to see if anything seems off. If the company is good with hiding true facts - like these ponzi schemers are - then how can Entrepreneur be held accountable? It's the very risk we all take with our investing.

The Other 72

Submitted by Anonymous on Thu, 05/07/2009 - 14:56.

These plaintiffs better show significant investments in the 72 companies ranked higher than Agape on that hot list.

Let's walk through this:

Submitted by Anonymous on Thu, 05/07/2009 - 15:03.

Let's walk through this: Investors rely on a magazine story to make an investment and then sue the magazine for not performing adequate due diligence? Now that's chutzpah.

Entrepreneur 0% responsible for its content?

Submitted by Anonymous on Thu, 05/07/2009 - 15:59.

Us Folio readers are surely pro-magazine and anti-lawyer, aren't we? Entrepreneur shouldn't be held 100% responsible for investment decisions its naive readers make due to their content…but can Entrepreneur convince a jury that it has 0% responsibility for the accuracy of its content? Whatever happened to fact-checking? If Entrepreneur wasn't standing behind its Hot 100 list, shouldn't they have let their readers know by running a disclaimer in their magazine? Seems like common sense to me, especially considering how litigious our society has become. Apparently, Entrepreneur doesn't have very good attorneys, or doesn't heed their advice.

Seriously???

Submitted by Anonymous on Fri, 05/08/2009 - 09:18.

If I get food poisoning from a restaurant recommended by Where Chicago, can I sue them? If I flunk out of a school on the US News list, can I sue them? It is scams like this that destroy the content that publications can provide. It is amazing that anyone can do business anymore when this is allowed to go on. Looks like this will be the end of top 10 lists.

Who is this Investor Group?

Submitted by Anonymous on Tue, 05/26/2009 - 17:03.

As Investment Bankers we see this all the time. I do not know who this so called investment group or their attorneys are but file this under you must be kidding me. Any Company or publication, has disclaimers all over the place and certainly ANY sophisticated investor knows to rely on nothing that is published, and always do your own due diligence. This is what gives the legal system its well deserved knocks as this clearly, should never have been taken by any reputable law firm, and the court should have dismissed it with prejudice and if the facts you reported are correct they should assess court costs to the plaintiffs and any legal fees incurred by the Publisher of the Magazine. File this under the definition of a frivouls lawsuit and the Attorneys should know better. We get calls all the time to provide due diligence and investigative services for investors all across the country, to investigate investments much smaller than this. Even then we have a limited amount of liability as once we provide our reseach, the investors must do their own due diliugence and make the final decision themselves. Get real, these investors made some stupid mistakes and did not do their howework, the courts are just a last ditch feeble attempt to get something they are not entitled to. Buyer and Investors beware, DO YOUR HOMEWORK.

Group Files $178M Suit Against Entrepreneur

May 2008 issue featured company found to be running alleged Ponzi scheme.

RELATED LINKS

Latest Featured Jobs

UPCOMING WEBINARS

RECENT WEBINARS

WHAT'S HOT