GRAND RAPIDS, Mich. — Sales Pad, a software company that provides programs to improve business efficiency, filed suit Dec. 19 against Marcus Lemonis, CEO and chairman of Camping World and host of the CNBC reality TV show The Profit.
The suit was filed in the Federal District Court for the Western District of Michigan, where Sales Pad is headquartered.
According to the complaint, negotiations began in 2015 between Lemonis and Sales Pad which were intended to lead to the formal execution of a marketing and promotional services agreement. Under that agreement, Lemonis was to act as a consultant to Sales Pad and provide marketing and promotional services through various entertainment and media outlets including television, radio, Internet and social media promotions for the sale and licensing of Sales Pad’s point-of-sale accounting software and services and related products.
Target markets were to include small businesses and other entities to be identified by Lemonis in which he and his private company, Marcus Lemonis LLC, held an equity interest or had a business relationship. The target markets were to also include the many entrepreneurs and small business owners who view Lemonis’ CNBC television program “The Profit” or who follow Lemonis’ posts on social media platforms including Facebook and Twitter.
In exchange for Lemonis entering into the marketing agreement, Sales Pad proposed to make certain cash payments to Lemonis’ company and to enter in a separate agreement with Marcus Lemonis LLC to issue warrants or other rights whereby Lemonis’ firm could initially acquire 105,000 non-voting units of Sales Pad contingent upon achievement of certain sales targets and other requirements.
Sales Pad also proposed that, if additional sales targets and requirements were achieved, then Marcus Lemonis LLC could subsequently exercise additional warrants or rights to acquire an additional 117,222 non-voting units of Sales Pad.
In reliance upon the initial negotiations, the complaint charges that Sales Pad commenced performance of the marketing agreement with Sales Pad software installation, first, in the Chicago area at a dog food company known as Bentley’s Corner Barkery, and later at a business in Pittsburgh known as Simple Greek.
During the course of negotiations with Sales Pad, and prior to the execution of any written documents, but during the course of continuing to exchange various written drafts of term sheets and proposed agreements, Lemonis demanded Sales Pad wire transfer $250,000 to Marcus Lemonis LLC as a condition precedent for Sales Pad continuing the software implementation at Simple Greek as well as for Lemonis continuing the ongoing negotiations of the marketing agreement and other proposed agreements.
Based upon Lemonis’ assurances that he would continue implementation of Sales Pad products and that Lemonis would continue to provide the marketing and promotional services pursuant to the marketing agreement agreed upon in principle, but not yet consummated, Sales Pad wire transferred $250,000 to Marcus Lemonis LLC’s account at the Private Bank in Chicago in January 2016.
Court documents noted Lemonis is the manager and sole member of Marcus Lemonis LLC.
Following payment from Sales Pad, Lemonis failed to provide the marketing and promotional services that he had promised to provide including but not limited to social media, TV shows, joint press releases and promotional appearances, the complaint notes.
By June, Lemonis failed to honor his commitments, and failed to finalize or execute any written agreements between himself and Sales Pad and between Marcus Lemonis LLC and Sales Pad as contemplated by the draft term sheet and other proposed agreements.
In June, Sales Pad reluctantly concluded Lemonis had completely misrepresented and defrauded Sales Pad into believing he had the capability and intention to perform the agreed upon marketing and promotional services, including Lemonis’ false assurances that in certain instances, he had performed and provided the agreed marketing and promotional services but failed to do so.
In June, Sales Pad demanded a return of the $250,000 it had wired to Marcus Lemonis LLC in January 2016. At the time that Lemonis received the $250,000, the complaint claims he knew that Sales Pad was relying upon Lemonis’ representations, that he would continue to provide the marketing and promotional services pursuant to the marketing agreement then agreed upon in principle, but not yet consummated.
The complaint charges that Lemonis knew his representations to Sales Pad in January 2016 were false when made and were made with the intention that Sales Pad would rely upon same to induce it into wire transferring the $250,000 to Marcus Lemonis LLC.
Sales Pad acted in reliance upon Lemonis’ representations and, as a direct, natural and proximate result of such false and reckless representations, Sales Pad has been damaged in the amount of $250,000, the complaint shows.
Sales Pad is seeking a judgment against Marcus Lemonis, LLC and Marcus Lemonis, individually, jointly and severally, in the amount of $250,000 plus costs, interest and attorney fees so unjustly incurred, the complaint reads.
As of today, Lemonis has not yet responded to the complaint.
RV Daily Report will continue to monitor the case and provide updates as warranted.