More Motions from the Armando Montelongo Lawsuit

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
CLAUDIA OCORO, ISRAEL ROSALES,
DIANA ALVARADO HARRIS, CYNTHIA
WOODS JONES, GALE JONES, et al.
Plaintiffs,
v.
ARMANDO MONTELONGO, JR., REAL
ESTATE TRAINING INTERNATIONAL,
LLC, PERFORMANCE ADVANTAGE
GROUP, INC., and LICENSE BRANDING,
LLC,
Defendants.
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§ Case No. 5:16-cv-01278-RCL
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PLAINTIFFS’ RESPONSE TO DEFENDANTS’ MOTION TO DISMISS
PLAINTIFFS’ FIRST AMENDED COMPLAINT (Fed. R. Civ. P. 12(b)(6))
Case 5:16-cv-01278-RCL Document 46 Filed 05/03/18 Page 1 of 17

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I. INTRODUCTION
Defendants’ Rule 12(b)(6) motion to dismiss ignores many of the well-pleaded
allegations in Plaintiffs’ First Amended Complaint and so should, in the main, be
denied. The few arguable gaps Defendants identify can be remedied by amendment,
and so leave to amend should be granted.
Pursuant to Local Rule CV-7(h), Plaintiffs request an oral hearing on the motion.
II. FACTUAL BACKGROUND
A. Defendants’ Nationwide Scheme
Defendant Armando Montelongo, Jr. is a reality television star who has parlayed
his national fame into a hugely profitable real estate seminar business. Defendants Real
Estate Training International, LLC (“RETI”), Performance Advantage Group, Inc.
(“PAG”), and License Branding, LLC (“LB”) are corporations Montelongo owns and
controls, and uses to provide his seminars. Together, the Defendants operate as an
enterprise called “Armando Montelongo Seminars” (“AMS”). ¶¶ 13, 17.1
For more than a decade, Defendants have conducted a nationwide scheme to
defraud thousands of individuals seeking financial security in uncertain times with
promises of a “can’t fail” real estate investment system that “works in any financial
market, at any given time.” Defendants’ scheme follows a standard progression
everywhere they do business: They advertise a free introduction to Montelongo’s
courses (the “free event”), and use that event to sell a $1,500 “three day event” taught by
Montelongo’s employees. At the “three day event,” they sell students $18,000 to
$54,000 packages that include the “bus tour,” taught in part by Montelongo himself,
along with “boots on the ground,” “cash flow,” and “asset protection” events.
Defendants use these events, in turn, to sell their “master mentor” ($25,000-plus) and
“market domination” programs ($25,000).
1 Unless otherwise noted, all paragraph references are to Plaintiffs’ First Amended
Complaint (ECF 37).

2
¶¶ 14-15 & 19.
The AMS system is not a genuine educational offering, and Defendants’ seminars
are not intended to equip their students to be successful real estate investors. Instead,
the system is comprised of worthless, dangerous, and unlawful advice that has caused
the student Plaintiffs financial harm when they attempt to follow it. Defendants employ
their seminars to loot the students’ retirement and other accounts, sell the students
properties at inflated prices without disclosing their stake in them, and encourage the
students to pursue real estate investments using Montelongo’s allies, who also victimize
the students. ¶¶ 17-36.
B. The Student Plaintiffs
Plaintiffs are 330 current or former students of Defendants who reside all over
the United States, including in Texas, Pennsylvania, Illinois, Minnesota, Florida,
California, Arizona, New York, Missouri, Colorado, Nevada, Massachusetts, Indiana,
New Jersey, North Carolina, Ohio, Connecticut, Oklahoma, Georgia, Delaware,
Wisconsin, Arkansas, Tennessee, Virginia, Washington, and Maryland, who have chosen
to work together to pursue claims against Defendants for their fraudulent scheme. ¶¶ 7-
8.
III. LEGAL STANDARD
In order to survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead
“enough facts to state a claim to relief that is plausible on its face.” In re Katrina Canal
Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). When determining whether a pleading states a plausible
claim for relief, a court begins “by taking note of the elements a plaintiff must plead to
state a claim.” Ashcroft v. Iqbal, 556 U.S. 675, 681 (2009). After identifying the factual
allegations of the complaint, a court must “draw on its judicial experience and common
sense” for the “context-specific task” of determining whether the allegations amount to a

3
plausible claim. Id. at 679. The complaint need not contain detailed factual allegations,
but it must contain enough factual matter to raise a reasonable expectation that
discovery will reveal evidence of each element of the plaintiff’s claim. See Lormand v.
US Unwired, Inc., 565 F.3d 228, 257 (5th Cir. 2009). In ruling on a Rule 12(b)(6)
motion, the court must accept all well-pleaded facts as true, viewing them in the light
most favorable to, and drawing all reasonable inferences in favor of, the plaintiff. See id.
at 239; Calhoun v. Hargrove, 312 F.3d 730, 733 (5th Cir. 2002).
IV. PLAINTIFFS HAVE SUFFICIENTLY STATED ALL OF THEIR CLAIMS
Plaintiffs have pleaded RICO claims under 18 U.S.C. § 1962(c) (conducting a
RICO enterprise by a pattern of racketeering activity) and 18 U.S.C. § 1962(d)
(conspiring to conduct a RICO enterprise by a pattern of racketeering activity), as well
as state law claims for negligence and negligent misrepresentation. Defendants’ attacks
on the sufficiency of these allegations are largely without merit, and the few colorable
defects they identify can be remedied by amendment.
A. Each of the Plaintiffs Has Standing to Bring RICO Claims
Against the Defendants
Section 1964(c) identifies four factors that must be satisfied to establish standing
to bring a civil RICO claim: (1) the plaintiff must be a “person” (2) who sustains injury
(3) to his or her “business or property” (4) “by reason of” the defendant’s violation of
§ 1962. 18 U.S.C. § 1964(c); see also Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496
(1985) (a RICO “plaintiff only has standing if, and can only recover to the extent that, he
has been injured in his business or property by the conduct constituting the violation”).
The Supreme Court has held that section 1964(c) “requires [a] plaintiff to establish
proximate cause in order to show injury by reason of’ a RICO violation,” Bridge v.
Phoenix Bond & Indem. Co., 553 U.S. 639, 654 (2008), which requires “some direct

4
relation between the injury asserted and the injurious conduct alleged,” Holmes v. Sec.
Investor Prot. Corp., 503 U.S. 258, 268 (1992).
Under these standards, Plaintiffs have standing, because they are persons who
lost money as a result of Defendants’ fraudulent scheme and predicate acts. Defendants’
contention that the complaint is insufficient, because the individual Plaintiffs have not
“identifie[d] any particular damages that he or she sustained . . . that were proximately
caused by Defendants’ alleged predicate acts” of wire fraud and receipt and transmission
of money obtained by fraud (Mot. 9) ignores the plain allegations of the pleading.
The complaint describes in detail Defendants’ scheme to use coercive and
deceptive tactics (¶¶ 17-30) to sell worthless, dangerous real estate investing advice
(¶¶ 31-32), engage in undisclosed self-interested dealings with the students (¶¶ 33-34),
and expose the students to predation by Defendants’ allies (¶¶ 35-36). It describes the
monetary harms the Plaintiffs suffered, including the funds they spent on Defendants’
courses (¶ 38), their travel and meal expenses to attend the events (¶ 39), feesand
interest incurred on credit cards and IRAs (¶ 40), and financial losses from transactions
they entered into with Defendants (¶ 41) and Defendants’ allies (¶ 44). And it explains
how Defendants’ conduct caused their harm:
The [] student plaintiffs are all victims of Defendants’ fraudulent scheme
who, as a result of Defendants’ actions and omissions have suffered,
continue to suffer, and will suffer into the foreseeable future damages and
injuries. Each purchased one or more of the AMS foundation event, bus
tour, master mentor, asset protection, market domination, and cash flow
products; attended those events and attempted to employ the “advice”
they received; and suffered financial injury as a result, including the
money they paid directly to Defendants, the expenses they incurred to
attend the events, the investments they lost when they followed
Defendants’ “system,” predation by Defendants’ allies, penalties from their
use of retirement funds, interest on consumer debt used to purchase AMS
seminars, damage to their credit rating, bankruptcy, and (in some cases)
severe emotional distress.
¶ 46. See also ¶ 17 (“Although the ostensible purpose of the AMS programs is to educate
students about how to gain economic security and independence by flipping houses,

5
their real aim and result is to enrich Montelongo and his related entities and allies at the
expense of the students, including the Plaintiffs herein.”).
With respect to the particular predicate acts, the complaint identifies 30
instances of wire fraud (¶ 50(a)-(dd)) using email, Facebook, YouTube, the Defendants’
website, and broadcast television, specifically referencing the date, sender, and natureof
the communication. See, e.g., ¶ 50(e) (“On September 22, 2012, Montelongo sent an
email blast titled ‘Executive Summary - Day 6 of 6 High Level Investment Strategy.’”); ¶
50(v) (“On January 12, 2016, Montelongo posted a video on YouTube promoting the
AMS ‘asset protection’ program.”); ¶ 50(cc) (“On November 11, 2016, Montelongo
posted on his Facebook page an announcement about a bus tour event in Doral,
Florida.”). It also explains how these acts furthered the fraudulent scheme:
Defendants market the AMS programs extensively through websites, email
campaigns, late-night television, radio, and social media in the hopes of
luring students to attend the programs, where they will be deceived into
purchasing additional AMS products.
¶18. See also ¶ 51 (Defendants “developed a scheme to defraud Plaintiffs out of their
money by false promises and misrepresentations about their products and about the
market for house flipping . . . and Defendants used the wires to further that scheme by
promoting their products”).2 Plaintiffs need not show they relied on any of these wires.
All they must allege is that those wires were used in furtherance of the scheme. As the
Supreme Court has explained in the context of the companion mail fraud statute:
Using the mail to execute or attempt to execute a scheme to defraud is
indictable as mail fraud, and hence a predicate act of racketeering under
RICO, even if no one relied on any misrepresentation. And one can
conduct the affairs of a qualifying enterprise through a pattern of such acts
without anyone relying on a fraudulent misrepresentation.
Bridge, 553 U.S. at 648-49 (citation omitted).
2 The complaint also describes how Montelongo uses the story of his personal rise to
wealth to market his programs, and how he “trumpets his wealth” on social media using
the “hashtag #millionaire.” ¶¶ 1, 14 & 16.

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The complaint also identifies 12 predicate acts of inducing a person to travel in
interstate commerce to defraud them of more than $5,000 (¶ 53(a)-(l)), and there, too,
explains how these predicate acts furthered Defendants’ fraudulent scheme. “At live
events, over the phone, and online, Defendants persuaded students (including some
Plaintiffs herein) to travel to events in other states, where they were deceived into
spending thousands or tens of thousands of dollars on AMS products.” ¶ 53.
At bottom, Defendants’ argument is that Plaintiffs have failed to individualize
their pleading sufficiently. But no individual detail that Defendants seek is required to
establish Plaintiffs’ standing (or the legal sufficiency of any other aspect of their
allegations). Defendants cite no authority establishing that Plaintiffs must identify, at
the pleading stage, “what products they purchased, how much they paid and to whom,
or what occurred at those events that gives rise to their complaint.” Mot. 3. There is
none, and “numerous courts have held that [Rule 9]’s language does not extend the
heightened pleading requirement to allegations concerning damages in a fraud case.”
Bear Ranch, LLC v. HeartBrand Beef, Inc., No. 6:12-CV-00014, 2013 WL 6190253, at
*2 (S.D. Tex. Nov. 26, 2013) (collecting cases). Cf. Fed. R. Civ. P. 9(g) (“special
damages,” not ordinary damages, must be “specifically stated”). These are questions for
discovery and summary judgment, not Rule 12.
Thus, Plaintiffs have pleaded all the elements required to establish RICO
standing—they are persons who lost money due to Defendants’ fraudulent scheme and
predicate acts. See 18 U.S.C. § 1964(c).
B. Plaintiffs Have Sufficiently Pleaded Their Section 1962(c) Claim
Defendants’ motion should also be denied because Plaintiffs have alleged facts
sufficient to establish each of the essential elements of a RICO claim. See Price v.
Pinnacle Brands, Inc., 138 F.3d 602, 606 (5th Cir. 1998). Plaintiffs have brought a
claim against defendants for a violation of Section 1962(c), which “requires (1) conduct
(2) of an enterprise (3) through a pattern (4) of racketeering activity.” Sedima, 473 U.S.

7
at 496. Defendants attack the complaint’s allegations on the existence of an enterprise
and pattern of racketeering activity, but both of their lines of argument fall short.
1. Existence of Enterprise
Section 1961(4) defines an enterprise as “any individual, partnership, corporation
or other legal entity, and any union or group of individuals associated in fact although
not a legal entity.” 18 U.S.C. § 1961(4). The term “enterprise” is interpreted broadly.
See Boyle v. United States, 556 U.S. 938, 944 (2009) (“[The] enumeration of included
enterprises is obviously broad, encompassing ‘any . . . group of individuals associated in
fact.’ The term ‘any’ ensures that the definition has a wide reach . . .”) (emphasis in
original; citation omitted). An association-in-fact enterprise under RICO requires only
“three structural features: a purpose, relationships among those associated with the
enterprise, and longevity sufficient to permit these associations to pursue the
enterprise’s purpose.” Id. at 946.
Plaintiffs have pleaded each of these elements for the enterprise, denominated
“AMS,” which includes Montelongo and defendants RETI, PAG, and LB. ¶ 13. The
purpose of the enterprise is “to enrich Montelongo and his related entities and allies at
the expense of the students, including the Plaintiffs herein” by selling their fraudulent
real estate programs. ¶ 17. The relationships among the Defendants are that
Montelongo owns the corporate entities. ¶ 2 (Montelongo is “acting through his many
corporate shells”); ¶ 13 (the three named defendants are part of Montelongo’s “web of
companies”). Longevity is established by Defendants’ more-than-decade-long operation
of the AMS seminars (¶ 13), and more than 40 predicate acts between 2011 and the
present (¶¶ 50 & 53).
Relying on Crowe v. Henry, Defendants argue that Plaintiffs’ pleading is deficient
for failure to establish the separate existence of the enterprise apart from the pattern of
racketeering. Mot. 10-11. Crowe, however, demonstrates the complaint is adequate. In
that case, a client sued his former attorneys under RICO for defrauding him of real

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property, and alleged that the RICO enterprise consisted of a joint farming venture the
client and one of the attorneys had formed. 43 F.3d 198, 202-03 (5th Cir. 1995). The
defendants moved to dismiss, arguing (like Defendants here) that the plaintiff had failed
to plead the separate existence of the enterprise from its pattern of racketeering activity.
The court rejected that contention, looking to whether the association “extended beyond
[the defendant’s] alleged acts of fraud and theft,” and concluding that it did based on its
length of operation (four years) and ongoing activities. Id. at 204-05. These same
factors are present here: The complaint specifically alleges that the seminars have been
operating since 2005—six years before the first predicate act alleged—and describes the
Defendants’ ongoing seminar business, which includes free events, three-day events,
bus tours, master mentor programs, and other products sold throughout the nation. ¶¶
13, 15. All of these activities “extend[] beyond” the 42 specific predicate acts of wire
fraud and interstate transportation of money and persons for purposes of fraud. Crowe
at 205.
Defendants also argue that the complaint does not describe the enterprise’s
decision-making structure. But it does: It alleges Montelongo runs the enterprise,
“acting through his many corporate shells,” of which RETI, PAG, and LB are three. ¶¶ 2
& 13.
2. Racketeering Activity
Section 1961(1) defines “racketeering activity” broadly to include violations of
state and federal laws, including the federal wire fraud statute (18 U.S.C. § 1343) and the
federal statute prohibiting interstate transport of stolen property (18 U.S.C. § 2314).
The Plaintiffs have adequately alleged violations of both these statutes.
a) Wire Fraud
The elements of a wire fraud claim under section 1343 are “(1) a scheme to
defraud, and (2) the use of, or causing the use of, wire communications in furtherance of
that scheme.” United States v. Rush, 236 Fed. Appx. 944, 947 (5th Cir. 2007). Proof of a

9
scheme to defraud also requires a showing that the defendant possessed a fraudulent
intent, which “can be shown by proving that the defendant contemplated or intended
some harm to the property rights of his victims.” Id. In addition, Federal Rule of Civil
Procedure 9(b) requires plaintiffs to “state with particularity the circumstances
constituting fraud or mistake.”
Plaintiffs have satisfied these standards. They have identified in detail the
circumstances that “constitut[e] fraud,” describing the Defendants’ fraudulent scheme
(¶¶ 17-30), as well as their representations about their “step-by-step methodical system
[that] works in any financial market, at any given time” (¶¶ 14-15) and why that system
is, contrary to those representations, a “recipe for financial disaster” (¶ 31 (listing a few
of the system’s failings)); the Defendants’ use of false promises about educational
content, fake personal success stories, and guarantees they do not intend to honor to
upsell students on the next product in the AMS series (¶¶ 21-23); and the Defendants’
undisclosed self-dealing (¶¶ 33-34).
Plaintiffs do not need to show that the predicate act wires were themselves
fraudulent; what matters is that the wires were used to further Defendants’ scheme. See
Smith v. Our Lady of the Lake Hosp., Inc., 960 F.2d 439, 445 (5th Cir. 1992) (“[T]he
communications in question need not be inherently fraudulent or deceptive; they merely
must involve the mails (or wires) for the purpose of executing the scheme to commit
fraud. Even communications devoid of any deception or falsehood may constitute mail
or wire fraud if they are integral parts of a scheme to defraud.”) (citations omitted).
Thus, these wires are not the subject of the Rule 9 particularity analysis. Nonetheless,
Plaintiffs have identified, for each of the first 29 predicate wire fraud acts,3
the speaker
(in all cases, Montelongo), the date and “place” (i.e., Facebook, YouTube, email, the CBS
3 The final predicate wire fraud act refers generally to Defendants’ use of two websites to
promote the AMS seminars.

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network), and the title or nature of the communication.4
They have also explained how
these wires furthered Defendants’ scheme. ¶ 18 (“Defendants market the AMS
programs extensively through websites, email campaigns, late-night television, radio,
and social media inthe hopes of luring students to attend the programs, where they will
be deceived into purchasing additional AMS products.”).
Plaintiffs have also alleged Defendants’ intent to cause “harm to the property
rights of [their] victims.” Rush, 236 Fed. Appx. at 947. See ¶ 17 (“Although the
ostensible purpose of the AMS programs is to educate students about how to gain
economic security and independence by flipping houses, their real aim and result is to
enrich Montelongo and his related entities and allies at the expense of the students,
including the Plaintiffs herein.”).5
b) National Stolen Property Act
Plaintiffs’ other predicate acts are also adequately pleaded. The National Stolen
Property Act prohibits the interstate transportation of more than $5,000 obtained by
fraud, as well as inducing a person to travel in interstate commerce to defraud that
person of more than $5,000. See 18 U.S.C. § 2314. Although Defendants contend
Plaintiffs have alleged no facts to support a violation of this statute, Plaintiffs have
actually identified 12 separate predicate instances where Defendants induced
individuals to cross state lines as part of Defendants’ scheme. ¶ 53 (identifying the date
of travel, state of origin, state of destination, and type of AMS event attended).
Although Defendants again complain that no particular Plaintiff is identified as the
individual who crossed state lines, they cite no authority requiring such identification.
4 Were it required, Plaintiffs could amend their complaint to specifically identify the
complete contents of these wires.
5 If granted leave, Plaintiffs could amend their complaint to explain that RETI operates
the bus tours, PAG operates the master mentor program, and LB claims ownership over
the websites Defendants use to promote the AMS seminars.

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C. Plaintiffs Have Sufficiently Alleged their Section 1962(d) Claim
Section 1962(d) makes it unlawful to conspire to violate subsections (a), (b), or
(c) of section 1962. See 18 U.S.C. § 1962(d). “‘[B]ecause the core of a RICO civil
conspiracy is an agreement to commit predicate acts, a RICO civil conspiracy complaint,
at the very least, must allege specifically such an agreement.’” Crowe, 43 F.3d at 206
(quoting Tel-Phonic Servs., Inc. v. TBS Int’l, Inc., 975 F.2d 1134, 1140 (5th Cir. 1992)
(additional citation omitted)). However, in order to violate section 1962(d), a person
need only agree to violate one of the aforementioned RICO subsections. See Oki
Semiconductor Co. v. Wells Fargo Bank, Nat’l Ass’n, 298 F.3d 768, 774 (9th Cir. 2002)
(“It is the mere agreement to violate RICO that § 1962(d) forbids . . .”). A conspirator
also does not necessarily have to agree to commit or facilitate every part of the
substantive offense to violate section 1962(d), but need only to “intend to further an
endeavor which, if completed, would satisfy all of the elements of a substantive criminal
offense . . . .” Salinas v. United States, 522 U.S. 52, 65 (1997). Consequently, a plaintiff
need only plead facts showing “‘(1) that two or more people agreed to commit a
substantive RICO offense and (2) that [the defendants] knew of and agreed to the
overall objective of the RICO offense.’” Chaney v. Dreyfus Serv. Corp., 595 F.3d 219,
239 (5th Cir. 2010) (quoting United States v. Sharpe, 193 F.3d 852, 869 (5th Cir. 1999)).
Plaintiffs have satisfied these standards, pleading both an agreement to commit
substantive offenses and a shared objective:
Defendants . . . agreed to market and conduct the AMS programs through
a pattern of deceptive behavior, wire fraud, interstate transportation of
money obtained by fraud, and inducement of persons to travel across state
lines for the purpose of defrauding them, and use the proceeds from their
misconduct to market and sell still further AMS programs.
¶ 65. They have also explained, more generally, that Montelongo controls the other
entities and uses them as shells (¶¶ 2 & 13), giving rise to a fair inference that, as his

12
alter egos, they possess the same knowledge as he did. See generally Lormand, 565
F.3d at 239 (plaintiff is entitled to all favorable inferences on Rule 12 motion).
D. Plaintiffs Have Adequately Pleaded Their Negligence Claims
Defendants’ attacks on Plaintiffs’ claims for negligence and negligent
misrepresentation fare no better: Plaintiffs have satisfied their pleading obligations.
1. Negligence
“A cause of action for negligence has three elements: (1) the existence of a legal
duty; (2) a breach of that duty; and (3) damages proximately resulting from the breach.”
Willis v. Marshall, 401 S.W.3d 689, 700 (Tex. App. 2013) (citing Praesel v. Johnson,
967 S.W.2d 391, 394 (Tex. 1998)). Plaintiffs have satisfied all of these, alleging that
Defendants owed them a duty of reasonable care in providing their real estate investing
education services; that Defendants breached that duty by not ensuring their seminars
contained sufficient educational content to permit the Plaintiffs to succeed as real estate
investors, and by recommending to Plaintiffs that they work with individuals
Defendants knew or should have known would harm the Plaintiffs through
incompetence or intentional misconduct; and that Plaintiffs were harmed as a result.
¶¶ 69-71. See also ¶¶ 37-45 (detailed allegations of harm).
Defendants contend that Plaintiffs’ negligence claim fails because it depends on a
heightened “special or fiduciary duty” (Mot. 17), but they are mistaken. The cause of
action does not purport to depend on anything other than the “duty to use reasonable
care.” While Plaintiffs have alleged that, as a result of Montelongo’s encouragement of
Plaintiffs to “treat him and his employees . . . as mentors, and to put trust in Defendants’
superior expertise in real estate investment,” ¶ 69, the claim does not depend upon this
allegation (or the allegations of self-dealing at which Defendants also take aim).

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2. Negligent Misrepresentation
Similarly, Plaintiffs have alleged all the elements of a negligent misrepresentation
claim:
(1) defendant’s representation to a plaintiff in the course of defendant’s
business or in a transaction in which the defendant had an interest;
(2) defendant’s providing false information for the guidance of others;
(3) defendant’s failure to exercise reasonable care or competence in
obtaining or communicating information; (4) plaintiff’s justifiable reliance
on defendant’s representation; and (5) defendant’s negligent
misrepresentation proximately causing the plaintiff’s injury.
Willis, 401 S.W.3d at 698. The complaint alleges Defendants represented that their
seminars, events, and related products would give Plaintiffs the skills necessary to
succeed “in any financial market, at any given time,” that the properties sold by
Defendants at their events were good investment opportunities, and that the individuals
and entities with whom Defendants recommended Plaintiffs do business were skilled in
their respective fields and trustworthy. They also allege Defendants failed to use
reasonable care in communicating this information, and that the information was false,
because the AMS seminars were not genuine educational offerings, but instead ruses to
sell more seminars and products, the properties sold at Defendants’ events were owned
by Defendants or others in league with them, and were being offered at prices that made
them poor investment opportunities, and Defendants knew or should have known of the
risks that the AMS allies to whom they referred the students were likely to harm
Plaintiffs through incompetence or intentional misconduct. They also allege causation
and injury. ¶¶ 75-81. And, while Defendants argue these allegations must satisfy Rule 9,
because they are based on the same allegations as the RICO claim, these allegations
comply with the Rule for the same reasons the RICO claims do. See sections IV.B and
IV.C above.
Defendants contend they could not have had any duty to Plaintiffs giving rise to a
negligent misrepresentation claim, because their relationship with Plaintiffs was strictly
at arm’s-length. This argument ignores the structure of Defendants’ scheme, which

14
Plaintiffs allege relies on a series of upsells: The free day event is used to sell the paid
three-day event; the three-day event is used to sell the bus tour; the bus tour is used to
sell the master mentor and other “continuing education” classes. ¶ 19. Thus, by the
time the Plaintiffs purchased their first paid event (and a fortiori when theypurchased
their later events), they already had a relationship with Defendants. In addition, the
Defendants affirmatively set out to cultivate a relationship of trust and confidence,
“encourag[ing] Plaintiffs to treat [Montelongo] and his employees . . . as mentors, and to
put trust in Defendants’ superior expertise in real estate investment.” ¶ 75. On this
ground, too, Defendants’ motion should be denied.
E. Leave to Amend Should Be Granted
As noted in the footnotes above, the few potential defects in Plaintiffs’ complaint
can be remedied by amendment to further specify the details of Defendants’ scheme and
Plaintiffs’ experiences. Defendants do not contend otherwise, having not even moved
for dismissal without leave to amend. Accordingly, if the court grants any part of the
motion, it should hew to the “policy of the federal rules” and “permit liberal amendment
to facilitate determination of claims on the merits and to prevent litigation from
becoming a technical exercise in the fine points of pleading.” Dussouy v. Gulf Coast Inv.
Corp., 660 F.2d 594, 598 (5th Cir. 1981).

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V. CONCLUSION
For the foregoing reasons, the court should deny Defendants’ motion to dismiss
or, in the alternative, grant Plaintiffs leave to amend.
Dated: May 3, 2018 Respectfully submitted,
By: /x/ Christopher Wimmer
Christopher Wimmer
EMERGENT LLP
Christopher Wimmer (pro hac vice)
Peter Roldan (pro hac vice)
Jason Fisher (pro hac vice)
535 Mission St., 14th Floor
Phone: (415) 894-9284
Fax: (415) 276-8929
chris@emergent.law
peter@emergent.law
jason@emergent.law
SERNA & ASSOCIATES PLLC
Enrique G. Serna (State Bar No. 00178617)
20985 IH 10 West
San Antonio, Texas 78257 Phone: (210) 228-0095
Fax: (210) 228-0839
enrique@serna-associates.com
Attorneys for Plaintiffs CLAUDIA OCORO,
ISRAEL ROSALES, DIANA ALVARADO HARRIS,
CYNTHIA WOODS JONES, GALE JONES, et al.

CERTIFICATE OF SERVICE
I hereby certify that counsel of record listed below, who are deemed to have
consented to electronic service, are being served this 3rd day of May, 2018 with a copy
of this document via the court’s CM/ECF system per Local Rule CV-5.
Jason Davis
Santos Vargas
Davis & Santos, P.C.
719 S. Flores St.
San Antonio, Texas 78204
(210) 853-5882 (Telephone)
(210) 200-8395 (Facsimile)
jdavis@dslawpc.com
svargas@dslawpc.com
Attorneys for Defendants Armando Montelongo, Jr., Real
Estate Training International, LLC, Performance
Advantage Group, Inc., and License Branding, LLC
/x/ Christopher Wimmer___
Christopher Wimmer

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