A group of more than 50 businesses that have appeared on CNBC’s hit reality show “The Profit” allege that the show’s star Marcus Lemonis and the TV network use the series as a guise to defraud and ruin small businesses.
A proposed amended complaint filed on Saturday with the United States District Court for the Southern District of New York alleges that Lemonis, NBCUniversal, and production company Machete employed mob-like tactics against companies that have appeared on “The Profit” to defraud business owners and take their companies.
“Marcus Lemonis is a wolf in sheep’s clothing, and a false prophet who uses his fame and fortune to steal small businesses from everyday Americans,” states the proposed amended complaint. “Through NBC’s television show, The Profit, Lemonis presents himself as a savior of struggling small business owners, all the while preying on the business he purports to be saving.”
The filing says that an eight-month investigation revealed that at least 51 companies that have appeared on the show suffered a similar “hellish nightmare” and pattern of humiliation, fraud, extortion and other charges.
“Lemonis strategically and deliberately drowns these businesses in debt to him and his entities in order to foreclose on them and take their assets and intellectual property to expand his own empire,” the filing states.
The premise of the show, which is in its eighth season on CNBC, is that Lemonis, who is also the CEO of Camping World Holdings, a Lincolnshire, Illinois-based company that sells recreational vehicles and camping supplies, makes an investment in a struggling business and then helps pull off a business makeover.
For years, however, small business owners who’ve been on the show have alleged that there is a dark side to the man known as The Profit. Lemonis has denied any wrongdoing and suggested any companies that are unhappy with their company’s performance should look in the mirror.
Lemonis, when reached for comment, did not mince words. “This feels like a grand shake down from people who are not entitled to anything,” Lemonis says.
Lemonis continues: “In every single business that I’ve ever tried to help, or made a grant to, or made a loan to, or an investment to, specifically related to this show, and the reality releases they signed, I’ve only ever put money into people’s businesses and never once got any form of payment back including expenses, interest, principle, anything.”
NBCUniversal and CNBC, through a spokesperson, said “no comment.”
The proposed amended complaint is part of a lawsuit first filed against Lemonis last year by Nicolas Goureau and his sister Stephanie Menkin, who appeared on the show in 2014 with their mother hoping to cut a deal with Lemonis to help grow their family-owned clothing boutique. Courage.B, which Noemi Goureau, the family matriarch, started in 2008 through the family business Gooberry, had seven locations in cities like Aspen, New York and Palm Beach and pulled in $5.5 million in annual revenue.
Lemonis struck a deal with the family to invest $800,000 for a 32% stake in the business, but the shareholder agreement, according to the complaint, gave Lemonis what amounted to complete control over the company’s finances. The capital for the investment was funded through a line of credit at 5% interest with a company associated with Lemonis and only $200,000 was supposed to go towards renovations and rebranding, but he spent $2 million, or ten times more, the lawsuit claims.
When Goureau and Menkin approached Lemonis about the skyrocketing renovation costs, Lemonis said if they want to back out of the deal, they could pay him back for the renovations, which they could not afford. Throughout the years, Lemonis allegedly saddled the company with more debt, had the company buy inventory and sell it at a loss, and acquire other companies it could not afford, the complaint says.
“From June 2014 to present, with Lemonis’ ‘help,’ Gooberry has gone from a valuation of roughly $2.6 million to being practically insolvent,” the original complaint reads.
The lawsuit seeks damages of no less than $12 million and alleges fraudulent inducement, unjust enrichment, breach of fiduciary duty, and other charges including violations of the Racketeering Influenced and Corrupt Organizations Act.
Lemonis says that the three family members made about $3 million in wages over the years and he alleges that they charged $1.3 million in personal expenses on the company credit card.
“The good news about being in America is that it’s the home of the free, the brave and the people who like to shake you down,” says Lemonis. “Nicolas is in big trouble because he realizes that he’s done some things that he shouldn’t have.”
Goureau denies any wrongdoing. “If CNBC did their homework and listened to countless warnings from people, he would not have had the platform to hurt people then, now and later,” says Goureau.
In an unrelated case—a petition for bankruptcy protection for a company named Tumbleweed Tiny Houses, which appeared on “The Profit” and owes a company related to Camping World more than $2 million—filings show that the 51 companies are seeking a settlement with Lemonis and an unnamed entity for alleged “illegal activities surrounding the television show ‘The Profit’” and will go into mediation at the end of September.
Lemonis says he has not agreed to attend the mediation. “If it’s headed to mediation, I’m not sure who is going to be there,” he says.
Gerard Fox, the Los Angeles-based attorney who is representing Goureau and his sister and the 51 other companies, says he has an agreement signed by Lemonis’ lawyer that he is committed to attending mediation.
In another lawsuit filed against Lemonis by the founder of New York-based company Bowery Kitchen Supplies, a judge dismissed the allegations involving violations of the RICO Act. The case is ongoing with trademark and unfair competition related allegations.
Pete Athans, who appeared on “The Profit” in 2014 with his Illinois-based car dealership Athans Motors, says that he wishes he never appeared on the CNBC reality show.
“He ruined more than my company—he ruined my life,” says Athans, who is part of the group of companies headed into mediation.
One of Lemonis’ former executives, who is not party to any lawsuit or mediation, says the way Lemonis treats the business owners who appear on his show is “unethical.”
“The mob has this thing called a bust out—if you owe them money, they take over your business and they put a lot of debt on it…your business is decimated, your credit is decimated,” the former executive says, who wanted to remain anonymous for fear of retribution. “It’s a version of a bust out, is what he’s done. He did that to Nicolas, he did that to other companies too.”
Lemonis, who will host a series on HGTV “The Renovator” starting next year and has his own podcast produced by Wondery, flatly denies any wrongdoing: “I didn’t do anything wrong, ever,” he says.
NBCUniversal’s parent company Comcast did not respond to requests for comment.
On Tuesday night, “The Profit” premiered its first episode of its eighth season. During the one-hour show, Lemonis tried to cut a deal with a mainstay pizza parlor in Santa Monica, California that has racked up tens of thousands of dollars in debt. After giving the pizza joint a makeover, Lemonis lorded over what devolved into a daytime soap opera-level drama between the owner and partner.
At one point during the show, Lemonis asks the owner: “Do you want me to invest in this shitbox right now? Because I’m not going to do that.”