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Power lines. REUTERS/David Gray

$1B suit accuses direct-energy retailer Ambit of fraud

5/24/2011 COMMENTS (4)

NEW YORK, May 24 (Reuters) - Direct-to-consumer energy retailer Ambit Energy LP was hit Monday with a lawsuit seeking more than $1 billion for allegedly defrauding and harassing an independent consultant it had signed up to recruit new customers.

The suit, filed in Brooklyn federal court, accuses the Texas-based company of federal racketeering, fraud and unfair business practices. The plaintiffs, Nicole Gubin and her company, BH Seven LLC, also brought claims of libel, defamation and harassment.

Ambit buys electricity and natural gas at wholesale prices and resells it to customers recruited by a network of more than 60,000 independent agents such as Gubin. The company operates in New York, Texas and several other states with deregulated energy markets.

The lawsuit characterizes Ambit as "operating as a pyramid scheme which makes false and misleading statements that constitute deceptive acts or practices."

The suit also accuses Ambit's top executives of spreading false statements about Gubin's job performance, poaching her customers and discriminating against her for being Jewish and a woman.

The plaintiffs seek $600 million in compensatory damages, $250 million in punitive damages, $250 million in liquidated damages and $13 million in attorneys' fees and costs. They also requested a permanent injunction enjoining Ambit from doing business in New York.

A representative for Ambit, Robin Stevens, said the company had not had a chance to review the allegations made by Gubin, who is still listed as one of the company's active consultants.

But Stevens added that the company has "done nothing to defame, defraud or otherwise damage Ms. Gubin, and we are confident these allegations as stated will be shown to be groundless and without merit."

According to the complaint, the company unfairly accused Gubin of violating its policies and procedures and blocked her from operating a website on which she signed up new Ambit customers. She also alleged Ambit attempted to sign up new customers on its own, siphoning off her potential recruits, and withheld monthly payments and bonuses.

The case is Nicole Gubin and BH Seven LLC v. Ambit Energy LP et al., in the U.S. District Court for the Eastern District of the State of New York, no. 11-2483.

For Gubin: Flora Rainer of the Law Office of Flora Rainer.

For Ambit: Not immediately available.

(Reporting by Jessica Dye)


Comments (4)

10/25/2011 3:59:38 PM by Phlyer64

I've been an Ambit consultant for about a year and I have found Ambit to be a company that strives to uphold a high standard of integrity in their business practices. It is a legitimate retail energy company who has chosen to use MLM as a marketing model for reaching customers. It is my understanding that more than 90% of their revenue comes from energy sales, not from signing up new consultants. So calling them a pyramid scheme has no merit. Ambit has rules about things like independent web sites to protect the company against unscrupulous agents. It sounds like Ms Gubin decided to run her business in a way that violated Ambit policy and got bent out of shape when Ambit called her on it. The fact that Ambit has over 100,000 consultants and over $400 million in sales with very few complainers like Ms Gubin is sufficient evidence that they are a reputable company. I hope Ambit countersues.

9/14/2011 3:27:04 PM by TEXACAone

Mr 6/10/2011 Anonymous sounds like he has drank the Jim Jones Kool-aid..or in this case the Ambit Kool-aid. Wake up, Private and Corporate Enterprises will Lie, Cheat, Steal, Deceive and Abuse whomever they can, and whenever they can get away with it. Especially when there is NO oversight and regulations, and Week Government(or should that read Small Government) Enron, Arthur Anderson, AIG, BearSterns,Lehman Broters, BOA, WorldCom, Halliburton, BlackWater, Boeing, Lockheed Martin, all of the Commercial Airline carriers, especially those that have defaulted on their Pension Funds, thanx to the Republican Controlled Federal Courts, all have done this at one point or another. Its all in the History.

6/10/2011 9:13:49 AM by Anonymous

This is ridiculous. What was Ms. Gubin thinking when she decided to file charges on anyone, let alone Ambit Energy, for over $1Billion!!? Does she really believe that she's entitled to win this lawsuit? I don't know if it's for the money or the fame but at the end she'll make nothing and will be famous for "world's most outrageous accuser". She makes individuals like myself who loves being a partner with Ambit Energy love the company and it's executives even more for the opportunity they have brought in my lifetime. To be honest, I believe Ms. Gubin was the one to commit fraud and practice deceptive acts on behalf our company. I'm guessing that she's just angry at how things were not going her way and as planned, so why not try the next best thing and sue? What this lady needs to learn is that she cannot blame others for her mistakes but to learn from them and do better in the future. It could be possible that she joined the independent consulting biz not understanding what the company is about and how it does business. Ambit is absolutely NOT a pyramid scheme. Any higher-level consultant who earns money is getting paid because the consultants in their team have acquired a number of real customers themselves. There is no way the company would pay their partners for simply recruiting new partners. The goal with Ambit Energy is to gather as many customers as possible while maintaining one's integrity and I do believe the method of referral marketing is truly the best and most cost-effective way to do so. You have to trust and believe in what you're providing to your customers. If you do, people will see your efforts and praise your positive work ethics. If you don't believe in what your offering, it may lead you down a dark path which causes you to work in a behavior that is unacceptable. Point blank, I just don't see how the CEO of Ambit Energy would allow poor work ethics within his company being that his family is the founders of 7-eleven! I would never risk ruining my name and reputation for wealth. It's just sad to see that others would love to ruin it for you.

5/28/2011 3:35:23 PM by leon7102

no comment


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