For a price, John and Roman Cresto sold themselves as e-commerce experts who could teach regular consumers and investors how to succeed on Amazon and Walmart.

The couple flooded social media with lavish vacations and high-end cars, creating an image of success fueled by falsehoods and deception, federal regulators claim.

It is the latest example of the Federal Trade Commission cracking down on deceptive e-commerce consultancies. With retailers increasingly moving online and marketplaces such as Amazon and Walmart flourishing, a robust industry of consultants and agencies has emerged, often referred to as “coaches” and “gurus.” Often, these coaches claim to have hit it rich with e-commerce, and they offer expensive courses without guaranteeing success to users.

A judge on Tuesday temporarily barred the Cresto brothers from doing business, as part of a lawsuit the FTC filed earlier this month in the United States judicial district court for the Southern District of California.

Through their companies, including Empire Ecommerce, the Cresto brothers “promised to expertly manage the operations of automated online stores” on Amazon and Walmart, handling everything from finding products to fulfilling orders. For the initial investment, they charged consumers between $10,000 and $125,000, and for working capital, they charged consumers between $15,000 and $80,000.

According to the complaint, the Cresto brothers also took 35% of profits from their “partners'” e-commerce stores. In June 2022, less than 10% of Empire-managed stores generated sales, according to the FTC. In October 2022, Amazon had suspended or terminated most of these stores for violating its intellectual property policies and using a business method called dropshipping, where companies don’t actually have the products they sell, but instead order them from a manufacturer after a customer makes a purchase. FTC officials report that the majority of Empire’s storefronts on Walmart’s marketplace were either never activated or terminated for policy violations.

Empire for years falsely promoted the success of its Amazon businesses by recruiting affiliate marketers to post splashy videos online claiming they earned “significant passive income” through Empire’s automation services. According to the FTC, Empire managed to lure more than 60 new clients through this affiliate marketing scheme and earned more than $1.5 million in commission fees.

In its complaint, Empire claimed that most of its clients lost money and virtually none made the advertised amounts.

The suspensions left Empire’s clients deeply in debt, the FTC alleged, “because Empire typically had its clients pay for inventory on credit cards.” According to the FTC, Empire refused to refund victims tens of thousands of dollars or goods they had purchased from Empire.

Among their clients, the brothers made more than $22 million, the FTC alleged.

In the FTC complaint and social media posts, the Crestos have been accused of diverting millions of dollars for themselves. This money was spent on high-end cars, vacations, and even a luxury wedding in Italy.

After selling Empire at the beginning of this year, the Crestos launched Automators AI, a new company that claims to teach consumers how to become online sellers who make “over $10,000 in sales per month,” and how to create customer service scripts using popular AI chatbot ChatGPT, according to the FTC. According to the Federal Trade Commission, the scheme continues to defraud consumers.

A request for comment from CNBC was not immediately returned by Amazon or Walmart.

A fire sale exit

The Cresto brothers attempted to pawn off their businesses to Daniel Cohen as the clock ran down on Empire’s alleged fraudulent behavior.

Now Cohen is suing the Crestos, accusing them of deceiving him about the true state of the business and using him to deflect responsibility.

The Cresto brothers approached Cohen, a Florida businessman, about buying Empire in October 2022, the same month the FTC reported most of Empire’s Amazon stores had been suspended. According to Roman Cresto’s projections, his business was highly profitable and strong.

Cohen told CNBC in an interview that the Crestos contacted him via Instagram and that they met on Zoom later that month. Cresto assured Cohen in that Zoom meeting that Empire was not facing any litigation or major concerns, except for a few unhappy clients.

Cohen told CNBC that he asked the question because he knew the industry well. He was also presented with projections that Empire supposedly collected up to 50% of profit from its thousands of stores.

Cohen told CNBC that he wasn’t sure where their projections came from. Perhaps at some point they had a store that performed well, and maybe they used that result for all, but I believe most of it was made up.”

The following day, Cohen wired the Crestos $100,000 to complete the purchase of their business. The Crestos revealed two days later that their defense firm, Stubbs Alderton & Markiles, was handling five ongoing “legal disputes.”

“I paid Roman 490k for 6 stores… between LLC setup fees, credit card feeding fees, virtual store fees, their software that they claimed would push my stores to the top, etc, etc, they scammed me for well over $525k,” one client wrote, according to Cohen’s lawsuit.

The Cresto brothers were facing dozens more complaints claiming negligence or shady dealings.

I paid you guys $65k for a store with experience. The performance of my store since opening has been nowhere near my expectations. Now there are no sales at all at my store. What happened and why is this happening? Cohen’s lawsuit cites an email that says “I am starting to feel like I have been scammed and I need to get my lawyer involved.”.

CNBC also reported that Cohen was fired as a client by Stubbs Alderton & Markiles before learning they would now represent the Cresto brothers.

In terms of morality. Nima Tahmassebi, Cohen’s current attorney, told CNBC that “it just doesn’t smell right.”

The attorneys at Stubbs Alderton & Markiles did not respond to CNBC’s inquiries. We did not receive a response from the Cresto brothers when we reached out to them for comment.