MONTELONGO
no jurisdiction to hear it. The plaintiffs refiled the case in late 2016 in San Antonio federal court. A judge later dismissed the case, ruling that the plaintiffs failed to argue sufficient facts in support of their allegations that Montelongo and his companies engaged in a “pattern of racketeering activity.” Racketeering involves illegal business activities.
A month after the dismissal, in July 2018, the plaintiffs sued in state District Court in San Antonio. They accused Montelongo and his three companies — Real Estate Training International LLC, Performance Advantage Group Inc. and License Branding LLC — of deceptive trade practices and negligence.
Montelongo responded to the lawsuit via Twitter:
“To the 350, now 420, I have stood relatively silently by because I understand that there is prosperity in peace, But now your (sic) simple minded,” he wrote. “Hatred will understand the expense of war. I do not wish you good luck, but you will need it. Because you will feel the full brunt of my Capabilities and a resolve that you have never dealt with. You are following extremely weak leaders who will now lead you down the path 2 bk (bankruptcy).”
Montelongo said in an interview at the time that he planned to file his own lawsuit against all of the students, but it doesn’t appear that he did.
The former students amended their lawsuit in early 2019, adding claims of fraud, conspiracy to commit fraud, fraudulent concealment and breach of contract.
They alleged in their lawsuit that Montelongo’s “high-pressure sales tactics and promises of future fortune do not come with any educational substance.”
“The core of (his) ‘methodical step-by-system’ is so simple it can be taught in a sentence,” the complaint said. “Take out highinterest debt to purchase dilapidated homes, make cosmetic repairs, and then quickly flip them to the next investor.”
Before a bus tour event, the students alleged, Montelongo will use an affiliate to buy properties in an area and then sell them to students at “inflated prices without disclosing that he has an interest in the sales or or receives a share of the properties.”
Montelongo responded by filing an ANTI-SLAPP motion — SLAPP stands for strategic lawsuit against public participation — under the Texas Citizens Participation Act, saying certain portions of the fraud claims relate to his exercise of his First Amendment right of free speech.
Those fraud claims, in part, related to accusations that Montelongo preyed on students, was “self-dealing” and deleting Facebook posts that were critical of him or his seminars.
A state court judge denied the motion, a ruling that Montelongo appealed. The 4th Court of Appeals in San Antonio upheld the ruling on a technicality, so he appealed to the Texas Supreme Court. It reversed the appeals court ruling and sent the case back to hear the appeal.
In June, the appeals court denied Montelongo’s motion. So he appealed again to the Supreme Court, which denied his appeal Friday.
Johnson, the plaintiffs’ lawyer, expects activity in state District Court litigation will resume in a couple of months and allow for the gathering of evidence.
“Then we can actually find out what they were doing on the inside,” Johnson said. “That’s the biggest impact that this ruling is going to have, is that we’ll be able to do our discovery now.”
Johnson said he wants to learn about Montelongo’s policies and procedures, as well as his net worth so plaintiffs can find out whether there are assets to satisfy their claims.