90 Day Fiancé star Nicole Nafziger and Sister Wives star Meri Brown are both employees of the clothing company LuLaRoe, which has been accused of being an illegal pyramid scheme in the past. Now, RadarOnline.com can exclusively reveal the shady company has been hit with yet another lawsuit.
In court papers obtained from United States District Court for Alaska, Katie Van, on behalf of others, sued LuLaRoe in a class action lawsuit, claiming the company charged unlawful sales tax to customers.
“From at least April 2016 through June 1, 2017, Defendants unlawfully charged a ‘sales tax’ to consumers in tax-free jurisdictions in Alaska on their purchases of clothing,” the amended complaint filed on September 13, 2018 read. “LuLaRoe knew its collection of taxes in these jurisdictions was unlawful, but concealed this fact from consumers, actively misleading them regarding the legality of its practice. This unlawful practice harmed Plaintiff and each class member in precisely the same manner.”
The plaintiffs call LuLaRoe’s sales tax “unlawful, unjust, deceptive and fraudulent.”
“Beginning in 2014, LuLaRoe was being pressured by taxing authorities to remit tax on its retailers’ sales,” the complaint read. “As a result, it initiated a relationship with Utah-based POS vendor ControlPad to implement a POS system called ‘Audrey.’”
The court papers claim that before 2016, the Audrey system included a toggle-switch, which permitted LuLaRoe retailers to turn off tax charges when they made a sale in a tax-free jurisdiction.
Then in January 2016, LuLaRoe senior tax advisor undertook prior tax filings. Because of the way Audrey was programmed, LuLaRoe was paying sales tax on all sales regardless of whether or not the end consumer was charged or paid sales tax on a transaction.
“LuLaRoe was overpaying sales tax because it was paying tax on the transactions shipped to class members,” the papers continued.
The 2016 Tax Policy was then designed to “wrongly shift the overpayments cause by the failures of LuLaRoe’s Audrey system from LuLaRoe to its end consumers.”
“LuLaRoe altered the Audrey POS to prevent retailers from turning off the sales tax feature when making sales delivered into other states with no sales tax,” the filing continued. “LuLaRoe retailers were instructed not to change the sales tax rate calculated by Audrey, even for remote sales delivered to jurisdictions where the purchases were not taxable.”
In an example, they explained, “If a consumer from Anchorage, Alaska purchased a LuLaRoe product online from a retailer in a state with sales tax on clothes, such as Ohio, and had that product shipped to Anchorage, Alaska, LuLaRoe improperly charged the Alaska resident an Ohio state and local sales tax on that purchase.”
The court papers claim the clothing company charged a fraudulent tax on at least 72,503 sales transactions shipped into non-taxing jurisdictions in Alaska from April 2016 through June 1, 2017.
LuLaRoe asked for a motion for extension of time to respond to the complaint. The company has until October 26, 2018 to file paperwork.
In October 2017, LuLaRoe was hit with a lawsuit accusing the company of being an illegal pyramid scheme and violating a federal racketeering law used to target members of organized crime. The case is dismissed.
Sister Wives star Meri Brown is a longtime employee of the company, as she often promotes the company on her social media.
90 Day Fiancé star Nafziger recently joined the company.
“Swipe left for more beautiful patterns,” she posted on Instagram. “I’ve started posting some of my #LuLaRoe at discounted prices! There is some awesome Disney Leggings and more on my #Mercari app! Click the link in my bio to check it all out! I’ll be adding more pieces this week. I hope you find something that catches your eye.”
The sketchy business comes after Nafziger gave her fiancé $6,000 to start a beauty business on 90 Day Fiancé: Will Nicole & Azan Say I Do?, while her fiancé Azan Tefou only contributed $500.
Nagziger’s mother called the business a “get-rich-quick scheme,” as Tefou called off the wedding and used the money for the business.
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