Amazon AI scammers blew millions on Lake Como wedding and cars, FTC alleges
Lake Como in northern Italy’s Lombardy region.
Westend61 | Westend61 | Getty Images
John and Roman Cresto made millions of dollars selling themselves as e-commerce “experts” who could teach regular consumers and investors the secret to selling success on Amazon and Walmart, for a price.
They splashed lavish vacations and high-end cars across their social media account, creating a multimillion-dollar image of success that federal regulators now say was fueled by falsehoods and deception.
The case is the latest example of the Federal Trade Commission cracking down on deceptive e-commerce consultancies that target consumers and fledgling online businesses. A robust industry of consultants and agencies, often referred to as “coaches” or “gurus,” have emerged as retailers increasingly move online and marketplaces on sites such as Amazon and Walmart flourish. These coaches often claim to have struck it rich in e-commerce and will pass along their expertise to users who pay for expensive courses with no guarantee of success.
The FTC on Tuesday asked a judge to bar the Cresto brothers from doing business temporarily, in connection with a lawsuit the agency filed earlier this month in U.S. District Court for the Southern District of California.
The Cresto brothers “promised to expertly manage the operations of automated online stores” on both Amazon and Walmart through their companies, including Empire Ecommerce, doing everything from finding products to fulfilling orders, the complaint says. They charged consumers anywhere from $10,000 to $125,000 for the initial investment, and $15,000 to $80,000 in additional funding as working capital, the FTC alleged.
The Cresto brothers also took 35% of any profits from their “partners'” e-commerce stores, the complaint says. By June 2022, less than 10% of Empire-managed stores generated sales, the FTC alleged. By October 2022, Amazon had either suspended or terminated most of those stores for violating its policies around intellectual property and a business method called dropshipping, where companies never actually have the inventory they’re selling, and instead order products through a manufacturer after a shopper makes a purchase, the complaint says. The majority of Empire’s storefronts on Walmart’s marketplace were either never activated or terminated for policy violations, according to the FTC.
Despite the suspensions, Empire for years continued to falsely promote the success of its Amazon businesses by recruiting affiliate marketers to post splashy videos online claiming they made “significant passive income” through Empire’s automation services. Empire was able to lure more than 60 new clients through this affiliate marketing scheme and netted over $1.5 million in commission fees, the FTC alleged.
“In truth, most of Empire’s clients lost money and virtually none made the advertised amounts,” the agency wrote in its complaint.
The suspensions left Empire’s clients deeply in debt, the FTC alleged, “because Empire typically had its clients pay for inventory on credit cards.” Empire refused to refund victims tens of thousands of dollars that victims had paid out to Empire or for goods sold, the FTC alleged.
The two brothers made more than $22 million from their clients, the FTC alleged.
The millions that the Crestos diverted for themselves were spent on high-end cars, vacations and even a luxury wedding in Italy, according to the FTC complaint and social media posts.
At the beginning of this year, after selling Empire, the Crestos spun up a new business called Automators AI, which claims to teach consumers how to use artificial intelligence to become online sellers making “over $10,000 per month in sales,” and use popular AI chatbot ChatGPT to create customer service scripts, the FTC alleged. The scheme is ongoing and defrauding consumers of tens of thousands of dollars, according to the FTC.
Amazon and Walmart did not immediately respond to CNBC’s requests for comment.
A fire sale exit
As the clock ran down on Empire’s alleged fraudulent behavior, the Cresto brothers attempted to pawn off their businesses to another operator, Daniel Cohen.
Cohen is now suing the Crestos, alleging that they deceived him about the true state of the business and used him to deflect blame from themselves.
In October 2022 — the same month the FTC alleged most of Empire’s working Amazon stores had been suspended — the Cresto brothers approached Cohen, a Florida businessman, about buying their empire. Roman Cresto showed projections that suggested his business was strong and highly profitable.
Cohen told CNBC in an interview that the Crestos first messaged him via Instagram and that they met over Zoom later that month. John Cresto assured Cohen in that Zoom meeting that Empire was not facing any litigation or major concerns, beyond a “couple” of unhappy clients.
“It was something I asked them, because I do know this industry,” Cohen told CNBC. The Crestos also offered him projections that claimed Empire collected up to 50% of profit from the thousands of stores they supposedly operated.
“I’m not sure where they got their projections from,” Cohen told CNBC. “Maybe at some point they did have a store that performed well, and maybe they just used that result for everybody, but I believe most of it was likely made up.”
Cohen agreed to buy the Crestos’ business Nov. 7, 2022, wiring them $100,000 the following day. Two days later, the Crestos revealed five ongoing “legal disputes” being handled by their defense firm, Stubbs Alderton & Markiles.
“I paid Roman 490k total for 6 stores … between LLC set-ups/fees, credit card feeding, virtual store fees, their software on several that they told me would push my stores to the top, etc, etc, they scammed me for well over $525k total,” one email from a client read, according to Cohen’s lawsuit.
Dozens more complaints were languishing in an inbox, detailing alleged negligence or “shady” dealings by the Cresto brothers.
“I paid you guys $65k for a experienced store. Since starting my store has done no where near the projections. Now my store has stopped having any sales at all. I need to know why this is and what happened. I am starting to feel like I was scammed and I need to get my lawyer involved,” read another email cited in Cohen’s lawsuit.
Cohen also told CNBC that Stubbs Alderton & Markiles agreed to serve as his law firm, before firing him as a client and telling Cohen that they would now represent the Cresto brothers.
“From a moral perspective. It just doesn’t smell right,” Cohen’s present attorney, Nima Tahmassebi, told CNBC.
Attorneys at Stubbs Alderton & Markiles did not respond to CNBC’s inquiries about their handling of the cases. The Cresto brothers did not respond to CNBC’s request for comment.
Jakub Porzycki | Nurphoto | Getty Images
Mark Zuckerberg’s announcement this week that Meta would pivot its moderation policies to allow more “free expression” was widely viewed as the company’s latest effort to appease President-elect Donald Trump.
More than any of its Silicon Valley peers, Meta has taken numerous public steps to make amends with Trump since his election victory in November.
That follows a highly contentious four years between the two during Trump’s first term in office, which ended with Facebook — similar to other social media companies — banning Trump from its platform.
As recently as March, Trump was using his preferred nickname of “Zuckerschmuck” when talking about Meta’s CEO and declaring that Facebook was an “enemy of the people.”
With Meta now positioning itself to be a key player in artificial intelligence, Zuckerberg recognizes the need for White House support as his company builds data centers and pursues policies that will allow it to fulfill its lofty ambitions, according to people familiar with the company’s plans who asked not to be named because they weren’t authorized to speak on the matter.
“Even though Facebook is as powerful as it is, it still had to bend the knee to Trump,” said Brian Boland, a former Facebook vice president, who left the company in 2020.
Meta declined to comment for this article.
In Tuesday’s announcement, Zuckerberg said Meta will end third-party fact-checking, remove restrictions on topics such as immigration and gender identity and bring political content back to users’ feeds. Zuckerberg pitched the sweeping policy changes as key to stabilizing Meta’s content-moderation apparatus, which he said had “reached a point where it’s just too many mistakes and too much censorship.”
The policy change was the latest strategic shift Meta has taken to buddy up with Trump and Republicans since Election Day.
A day earlier, Meta announced that UFC CEO Dana White, a longtime Trump friend, is joining the company’s board.
And last week, Meta announced that it was replacing Nick Clegg, its president of global affairs, with Joel Kaplan, who had been the company’s policy vice president. Clegg previously had a career in British politics with the Liberal Democrats party, including as a deputy prime minister, while Kaplan was a White House deputy chief of staff under former President George W. Bush.
Kaplan, who joined Meta in 2011 when it was still known as Facebook, has longstanding ties to the Republican Party and once worked as a law clerk for the late conservative Supreme Court Justice Antonin Scalia. In December, Kaplan posted photos on Facebook of himself with Vice President-elect JD Vance and Trump during their visit to the New York Stock Exchange.
Joel Kaplan, Facebook’s vice president of global policy, on April 17, 2018.
Niall Carson | PA Images | Getty Images
Many Meta employees criticized the policy change internally, with some saying the company is absolving itself of its responsibility to create a safe platform. Current and former employees also expressed concern that marginalized communities could face more online abuse due to the new policy, which is set to take effect over the coming weeks.
Despite the backlash from employees, people familiar with the company’s thinking said Meta is more willing to make these kinds of moves after laying off 21,000 employees, or nearly a quarter of its workforce, in 2022 and 2023.
Those cuts affected much of Meta’s civic integrity and trust and safety teams. The civic integrity group was the closest thing the company had to a white-collar union, with members willing to push back against certain policy decisions, former employees said. Since the job cuts, Zuckerberg faces less friction when making broad policy changes, the people said.
Zuckerberg’s overtures to Trump began in the months leading up to the election.
Following the first assassination attempt on Trump in July, Zuckerberg called the photo of Trump raising his fist with blood running down his face “one of the most badass things I’ve ever seen in my life.”
A month later, Zuckerberg penned a letter to the House Judiciary Committee alleging that the Biden administration had pressured Meta’s teams to censor certain Covid-19 content.
“I believe the government pressure was wrong, and I regret that we were not more outspoken about it,” he wrote.
After Trump’s presidential victory, Zuckerberg joined several other technology executives who visited the president-elect’s Mar-a-Lago resort in Florida. Meta also donated $1 million to Trump’s inaugural fund.
On Friday, Meta revealed to its workforce in a memo obtained by CNBC that it intends to shutter several internal programs related to diversity and inclusion in its hiring process, representing another Trump-friendly move.
The previous day, some details of the company’s new relaxed content-moderation guidelines were published by the news site The Intercept, showing the kind of offensive rhetoric that Meta’s new policy would now allow, including statements such as “Migrants are no better than vomit” and “I bet Jorge’s the one who stole my backpack after track practice today. Immigrants are all thieves.”
Recalibrating for Trump
Zuckerberg, who has been dragged to Washington eight times to testify before congressional committees during the last two administrations, wants to be perceived as someone who can work with Trump and the Republican Party, people familiar with the matter said.
Though Meta’s content-policy updates caught many of its employees and fact-checking partners by surprise, a small group of executives were formulating the plans in the aftermath of the U.S. election results. By New Year’s Day, leadership began planning the public announcements of its policy change, the people said.
Meta typically undergoes major “recalibrations” after prominent U.S. elections, said Katie Harbath, a former Facebook policy director and CEO of tech consulting firm Anchor Change. When the country undergoes a change in power, Meta adjusts its policies to best suit its business and reputational needs based on the political landscape, Harbath said.
“In 2028, they’ll recalibrate again,” she said.
After the 2016 election and Trump’s first victory, for example, Zuckerberg toured the U.S. to meet people in states he hadn’t previously visited. He published a 6,000-word manifesto emphasizing the need for Facebook to build more community.
The social media company faced harsh criticism about fake news and Russian election interference on its platforms after the 2016 election.
Following the 2020 election, during the heart of the pandemic, Meta took a harder stand on Covid-19 content, with a policy executive saying in 2021 that the “amount of COVID-19 vaccine misinformation that violates our policies is too much by our standards.” Those efforts may have appeased the Biden administration, but it drew the ire of Republicans.
Meta is once again reacting to the moment, Harbath said.
“There wasn’t a business risk here in Silicon Valley to be more right-leaning,” Harbath said.
While Trump has offered few specific policy proposals for his second administration, Meta has plenty at stake.
The White House could create more relaxed AI regulations compared with those in the European Union, where Meta says harsh restrictions have resulted in the company not releasing some of its more advanced AI technologies. Meta, like other tech giants, also needs more massive data centers and cutting-edge computer chips to help train and run their advanced AI models.
“There’s a business benefit to having Republicans win, because they are traditionally less regulatory,” Harbath said.
Meta’s CEO Mark Zuckerberg reacts as he testifies during the Senate Judiciary Committee hearing on online child sexual exploitation at the U.S. Capitol in Washington, U.S., January 31, 2024.
Evelyn Hockstein | Reuters
Meta isn’t alone in trying to cozy up to Trump. But the extreme measures the company is taking reflects a particular level of animus expressed by Trump over the years.
Trump has accused Meta of censorship and has expressed resentment over the company’s two-year suspension of his Facebook and Instagram accounts following the Jan. 6 attack on the Capitol.
In July 2024, Trump posted on Truth Social that he intended to “pursue Election Fraudsters at levels never seen before, and they will be sent to prison for long periods of time,” adding “ZUCKERBUCKS, be careful!” Trump reiterated that statement in his book, “Save America,” writing that Zuckerberg plotted against him during the 2020 election and that the Meta CEO would “spend the rest of his life in prison” if it happened again.
Meta spends $14 million annually on providing personal security for Zuckerberg and his family, according to the company’s 2024 proxy statement. As part of that security, the company analyzes any threats or perceived threats against its CEO, according to a person familiar with the matter. Those threats are cataloged, analyzed and dissected by Meta’s multitude of security teams.
After Trump’s comments, Meta’s security teams analyzed how Trump could weaponize the Justice Department and the country’s intelligence agencies against Zuckerberg and what it would cost the company to defend its CEO against a sitting president, said the person, who asked not to be named because of confidentiality.
Meta’s efforts to appease the incoming president bring their own risks.
After Zuckerberg announced the new speech policy Tuesday, Boland, the former executive, was among a number of users who took to Meta’s Threads service to tell their followers that they were quitting Facebook.
“Last post before deleting,” Boland wrote in his post.
Before the post could be seen by any of his Threads followers, Meta’s content moderation system had taken it down, citing cybersecurity reasons.
Boland told CNBC in an interview that he couldn’t help but chuckle at the situation.
“It’s deeply ironic,” Boland said.
— CNBC’s Salvador Rodriguez contributed to this report.
WATCH: Meta is returning to free speech tradition, says Facebook’s former chief privacy officer Chris Kelly
Jaap Arriens | Nurphoto | Getty Images
Apple is losing market share in China due to declining iPhone shipments, supply chain analyst Ming-Chi Kuo wrote in a report on Friday. The stock slid 2.4%.
“Apple has adopted a cautious stance when discussing 2025 iPhone production plans with key suppliers,” Kuo, an analyst at TF Securities, wrote in the post. He added that despite the expected launch of the new iPhone SE 4, shipments are expected to decline 6% year over year for the first half of 2025.
Kuo expects Apple’s market share to continue to slide, as two of the coming iPhones are so thin that they likely will only support eSIM, which the Chinese market currently does not promote.
“These two models could face shipping momentum challenges unless their design is modified,” he wrote.
Kuo wrote that in December, overall smartphone shipments in China were flat from a year earlier, but iPhone shipments dropped 10% to 12%.
There is also “no evidence” that Apple Intelligence, the company’s on-device artificial intelligence offering, is driving hardware upgrades or services revenue, according to Kuo. He wrote that the feature “has not boosted iPhone replacement demand,” according to a supply chain survey he conducted, and added that in his view, the feature’s appeal “has significantly declined compared to cloud-based AI services, which have advanced rapidly in subsequent months.”
Apple’s estimated iPhone shipments total about 220 million units for 2024 and between about 220 million and 225 million for this year, Kuo wrote. That is “below the market consensus of 240 million or more,” he wrote.
Apple did not immediately respond to CNBC’s request for comment.
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