Patriots football fan Michael Livieratos is doing something that would once have been considered sacrilege in New England: he’s suing former Patriots quarterback Tom Brady. Livieratos, 56, filed a lawsuit for unspecified damages from Brady and “Shark Tank” co-host Kevin “Mr. Wonderful” O’Leary for his FTX and cryptocurrency marketing.
Livieratos essentially argues that a quarterback screwed him after he invested practically his life savings in FTX before it collapsed. Setting aside his decision to base financial decisions on commercials made by an athlete, Livieratos’ lawsuit raises tough questions about the liability of celebrities who become paid corporate spokespersons.
Brady is not alone; other celebrity endorsers are also being sued, including his ex-wife, supermodel Gisele Bundchen.
There is no question that celebrities can sell their fans by promoting products based on little knowledge or competition. However, the question for consumers is whether being a fool is the same as being a victim.
lighten told the Washington Post that “as a lifelong New England Patriots fan, you can imagine the influence Tom Brady would have.” Certainly one can imagine how a celebrity could goad you into buying a car in order to look as good as, say, Matthew McConaughey. Yet few of us would bet our life savings on his financial advice. In fact, if my Lincoln turned out to be a lemon, I wouldn’t blame McConaughey that the car didn’t turn out to be “my sweet spot.”
In fact, McConaughey epitomizes the problem in these lawsuits. He says a handful of words in each commercial and practically nothing about the Lincoln’s capabilities. In one, he just smiles before falling backwards, fully clothed, into a pool. You had to look closely to know that he was selling cars: McConaughey was selling McConaughey, and the car was merely an add-on.
Nobody thought that McConaughey took the car apart or compared other cars before taking a truckload of money for commercials. The question is whether it is to be assumed that Brady did more research before telling people to jump into cryptocurrency.
However, according to the lawsuit, O’Leary and Brady “advocated, assisted, and actively participated in” the “offering and sale of unregistered securities” of FTX. He is accused of “aggressively marketing” FTX’s allegedly “deceptive” practices.
Brady, along with his ex-wife, acquired an equity stake in FTX last year and agreed to donate millions of dollars to FTX’s mission of effective altruism. In particular, it appears that Brady and O’Leary may also have lost money on the company.
A prior class action named Sam Bankman-Fried, Tom Brady, Gisele Bundchen, Stephen Curry, Golden State Warriors, Shaquille O’Neal, Udonis Haslem, David Ortiz, William Trevor Lawrence, Shohei Ohtani, Naomi Osaka, Lawrence Gene David, and Kevin O’Leary as accused .
The class action lawsuit alleges that “some of the biggest names in sports and entertainment have invested in or served as brand ambassadors for FTX. Several of them promoted FTX to their fans on social media, which fueled the adoption of the deceptive FTX platform by retail consumers.”
The litigants argue that these celebrities helped prop up a “house of cards” operated by a “Ponzi scheme where FTX Entities shuffled client funds” to maintain the fraud.
States like Texas Brady and others are also being investigated for their role in the allegedly fraudulent company.
brady has hired Latham and Watkins to defend him in these lawsuits.
I am very skeptical of liability theories. There is no evidence that these celebrities knowingly said anything false. These commercials also present a different problem than actor Ryan Reynolds. present Mint Mobile as owner; You are not just launching but producing the product.
Celebrities often launch products from hair gel to burgers. They read scripts and few would believe they are experts in the products they sell.
These commercials clearly include a personal endorsement that they are good and appropriate. Tom Selleck can be seen every night on TV introducing AAG with the enthusiasm of a carnival barker: “And let me tell you something: I wouldn’t be here if I thought reverse mortgages took advantage of any elderly American. Or even worse, that it was a way to take your home.
There is no indication that AAG is fraudulent or that Selleck is wrong to state that “I think I know what’s what” on reverse mortgages. However, even if Selleck were to dismiss his “what’s what” as a “whatever” at a later date, his credibility, not his responsibility, should be the issue.
However, some celebrities have solved similar cases in the past. In 2018, the Securities and Exchange Commission (SEC) went after former boxing champion Floyd Mayweather Jr. and music producer DJ Khaled for their role in launching initial coin offerings. They agreed to pay profits, penalties, and interest related to their promotions.
In addition, the SEC settled with TV star and businesswoman Kim Kardashian earlier this year for her promotion of the EthereumMax (EMAX) crypto token without disclosing the payment she had received. She paid $1.26 million without admitting fault.
For Kardashian, the key difference is tripping over the wire of a stock product rather than a simple product. Most products fall under the US Federal Trade Commission (FTC) Backup Guidelines. That just requires “simple and clear language” showing that a commercial release is part of an “announcement” or “sponsored” feature.
Notably, Kardashian labeled her EthereumMax post an “ad,” but the SEC see a crypto asset as a value, not as another product. Under SEC rules, a celebrity promoting a crypto asset must disclose the nature, source, and amount of compensation received in exchange for the promotion.
Kardashian captures the craze of celebrity endorsements. The Kardashians are the famous Slurpees of popular culture, the entertainment option with no nutritional value. They are a family that became famous by claiming to be famous without any appreciable ability or worth other than being celebrities.
For someone to follow Kim Kardashian’s investment advice is the ultimate example of a fool and your money is soon parted. However, whose fault is it when you make Kardashian or Brady your financial advisor on the basis of a 30 second commercial?
We live in a culture dominated by celebrities. For all our progress as a species, it’s likely that more people know and follow Kim Kardashian’s advice than the Dalai Lama’s. In fact, few of us want to imagine the Dalai Lama in Lululemon yoga pants, and I doubt that will lead to a shopping spree.
Ultimately though, celebrities sell themselves, and the rule for consumers remains “caveat emptor” or “buyer beware.”
Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University. Follow him on Twitter @JonathanTurley.