Online Marketers Brought Up On RICO Charges

When I say RICO, you think Goodfellas, right? Well, think again, because a law firm in Michigan, Seikaly & Stewart, decided to pursue a RICO lawsuit against an online marketing firm, The Rainmaker Institute, over so-called “worthless [online] marketing [plans] and fraudulent link-building [plans].”

Yep, gang, you read that correctly: professional SEOs are being brought up on racketeering charges for not meeting client expectations. Does the plaintiff in this case have a legitimate shot at winning? Is it possible to successfully sue an SEO company for poor results? We’ll deconstruct the lawsuit and examine the complex relationship of online marketing, search engine technology and the law.

Before We Sink Our Teeth Into The Case, Let’s Take A Quick Look At The Current State of SEO

The Uncertain World of Search Engine Optimization

As every professional SEO knows, the online marketing industry is as mercurial as a hormonal teenager. How impulsive? Imagine you’re an elementary school educator with 20 years’ experience. You are a rock star when it comes to teaching cursive writing, science 101 and early childhood socialization. Then one day, without warning, you arrive, in your classroom and find 20 M.I.T. educated scientists expecting you to wax poetic about the Quantum Field Theory.

Oh, and if you did not say something substantial and innovative, you’d get fired.

That is the environment in which online marketers deal, daily. Every so often, without warning, SEOs wake up to discover that Google changed its algorithms. Phones start ringing; angry customers demand to know why their websites no longer “show up in Google.” And simultaneously, industry forums alight with the single question on everybody’s fingertips: “did anybody else drop dramatically in the SERPs?”

Panda and Penguin: The Algorithm Updates That Changed The Web Forever

“Keywords” used to be the end-all, be-all of online marketing. But in time, algorithms grew up, and non-keyword-laden content started doing a bit better in the SERPs.

Then, between 2010 and 2012, Google unleashed two mother-load-algorithm updates called “Penguin” and “Panda.”

Panda and Penguin dramatically changed the online marketing landscape. In what seemed like the stroke of a wand, tried-and-true search engine optimization methods became obsolete. Online businesses suddenly stopped generating money. Elaborate linking schemes were rendered useless. It was, in a word, pandemonium.

When the change struck, online marketers worked feverishly to “figure out” the new Google. So-called link farms deteriorated like an untended city park in a time-lapse video; SEOs abandoned link mazes that had brought them SERP dominance just 12 hours earlier; consensus on the street was that lots of high-quality content and high-quality links were the preferred new SEO techniques.

The Panda/Penguin updates figure prominently in the Seikaly & Stewart RICO SEO lawsuit.

The Online Marketing RICO Lawsuit: Who is Suing Who?

So let us get down to the particulars this RICO SEO case.

About The Plaintiffs: Seikaly & Stewart

Seikaly & Stewart is a Michigan-based law firm. Unhappy with the Defendants’ online marketing program, Seikaly & Stewart filed a RICO test case in Federal court.

About the Defendants: The Rainmaker Institute, Stephan Fairley & Does

On its website, the Rainmaker Institute describes itself as “the nation’s largest law firm marketing provider.” Founded in 1999, TRI claims to use “cutting edge legal marketing strategies” that have helped “over 8,000 attorneys from hundreds of law firms generate more and more referrals and fill their practice.” TRI CEO Stephen Fairley began by lecturing at bar association gatherings and other speaking engagements. Over the years, he built TRI into a successful online marketing business by offering a host of products and services including books, CDs, live seminars, webinars, 2-day marketing “boot camps,” private in-house seminars and long-term marketing programs.

In 2011, Seikaly & Stewart hired The Rainmaker Institute as the firm’s online marketing agent.

Timeline and Facts of the Marketing Defamation Lawsuit

From July 22 to 23, 2011, one of the defendants from Seikaly & Stewart attended one of Fairley’s talks in Orlando, Florida. In the lawsuit, Seikaly & Stewart’s lawyers make note of the “generic” nature of the handouts his client received at the TRI seminar. Mentioning the marketing material used at the seminar may seem like a random point to highlight, as the vast majority of seminar handouts are generic; but, as you will soon see, the minor point does come in handy when arguing a far-fetched RICO charge.

After the two-day boot camp class, Seikaly & Stewart hired The Rainmaker Institute to develop and maintain the firm’s online marketing program. A representative from the law firm signed a $40,000 contract, and it was off to the digital races.

It was at this time that the Plaintiffs believe TRI hired a third-party contractor to create links to the firm’s websites.

After detailing how the two parties met at the Orlando seminar, and their decision to work together, the lawsuit glides over the year in which Seikaly & Stewart contracted TRI to conduct the firm’s online marketing efforts.

Did Seikaly & Stewart do better in the rankings? The suit does not say. Instead, the claim’s timeline picks up again when the initial contract ended. Curiously, it was at this time that Seikaly & Stewart doubled down and signed up for another 6 months of TRI’s service.

While it doesn’t specifically state so in the claim, it can be inferred from available information that post-Panda/Penguin updates, someone did an audit of Seikaly & Stewart’s website and noticed low-quality automated links, in addition to evidence of duplicate content. Consequently, the bell was rung at Seikaly & Stewart and the firm concluded that TRI must only be using “old school” online marketing techniques. As such, the Michigan attorneys moved to end their relationship with TRI. They also wanted a refund. TRI refused. So Seikaly & Stewart filed a RICO lawsuit.

Why RICO?

RICO stands for Racketeer Influenced and Corrupt Organizations. Passed in 1970, RICO was meant as a catchall for organized crime criminals. In brief, an individual associated with a criminal “enterprise” can be brought up on RICO charges if he or she commits two similar crimes in a 10-year period. What makes RICO different than other fraud charges is that the focus is on showing a “pattern of behavior” as opposed to a one-off act. If an individual is guilty of RICO charges, he or she can be fined up to $10,000 and 20-years in prison, per incident.

Presumably in an effort to highlight the “patterned behavior” necessary to win a racketeering claim, lawyers for the plaintiffs explained, “this case is not being brought for lack of success per se, the lack of success merely being evidence of fraud and damages to business or property.”

Another RICO requirement is the enterprise provision. It is not enough to bring a lone criminal up on RICO charges, he or she must be “backed” by a “coordinated enterprise” that manages long-term frauds. Lastly, a RICO case can only be successful if it is apparent that many people were affected by the “scheme” in question and the perpetrators knowingly sought to defraud.

Plaintiffs Arguments for Racketeering on the Part of The Rainmaker Institute, Online Marketers

As stated, in order to win a RICO case, the plaintiff must demonstrate a pattern of criminal activity within a 10-year period that affects multiple people or businesses. Lawyers for the claimants point to several facts, which, they argue, prove a pattern of RICO-esque behavior on the part of Fairley and the TRI enterprise.

Duplicate Content

Plaintiff Argument

The lawsuit mentions duplicate content that appears on websites associated with TRI clients. Why concentrate on duplicate content? According to the claim, “Defendant FAIRLEY through THE RAINMAKER INSTITUTE, engaged in an ongoing fraud upon the Victim Firms by selling the same supposedly “unique” blog content for posting on the firms’ web pages to several firms at the same time.”

Possible Defense

So-called “duplicate content” was not always a frowned upon online marketing technique. In this instance, it could be argued that the existence of duplicate content was a remnant from past efforts that was either overlooked or left alone for strategic purposes (i.e., the money spent eliminating all duplicate content would cost more than implementing new strategies).

Pattern of Corruption

Plaintiff Argument

Again, in order for a case to pass the RICO test, the plaintiffs must establish a “pattern of corruption.” In this case, the claimants argue that the defendants knowingly entered into a “RICO scheme” that “was based in part upon a series of fraudulent representations about the defendant’s experience and skills in the use of what is known as Search Engine Optimization (‘SEO’).” In other words, Stephen Fairley, et al knew that their SEO techniques were worthless but continued to market and sell their wares anyway – using “generic” materials mentioned earlier.

The plaintiffs push the pattern theory, stating, “The continued marketing by the Defendants of internet marketing services that the Defendants knew were worthless and knew were on misleading representations to unsuspecting clients, misled the clients into believing that the sheer number of links created would yield positive optimization results. This conduct represents a pattern of activity in violation of the RICO statutes.”

Possible Defense

The defense could attack this argument from several angles. First, it can be argued that just because artifacts of past SEO efforts still exist online does not mean that said artifacts are the only efforts associated with a given site. And, as explained earlier, it is not always possible to remove the remains of past SEO efforts – efforts that, at one time, worked.

And that is not all.

Websites that do follow Google’s guidelines sometimes perform well in Google SERPs. This fact raises a couple of key questions:

  1. Since guideline-breaking sites have been known to perform well in Google’s index, is it the responsibility of online marketers to follow Google’s published suggestions, or should SEOs weigh the field and use any techniques they think will work best for each client – even if that means using publicly frowned upon methods?
  2. Are online marketers beholden to Google’s guidelines? In the lawsuit, the Plaintiffs bring up the issue of “trade secrets” implying that TRI is fraudulently hiding behind them. Yet, Google is the poster-child for trade secret protection. As such, if search engines don’t give SEOs their algorithms, how can SEOs be chastised for not revealing their SEO plans? Moreover, how are SEOs supposed to follow guidelines if the art of online marketing is imprecise and in some ways subjective?
Made Use of “Wires”

Plaintiff Argument

By using the Internet, email and telephones to conduct their business, so the Plaintiffs argue, the Defendants violated 18 U.S.C. § 1341 and 18 U.S.C. § 1343. Specifically, “The defendants use the Internet, telephones and the U.S. Mail to promote their scheme [and] to negotiate contracts for their services and receive payment for them.”

Possible Defense

If the defense convincingly argues the other points, this one will be moot.

Issues To Consider In This RICO/SEO Lawsuit

Seikaly & Stewart v. The Rainmaker Institute is a fascinating case that begs us to consider a few Internet law legal questions.

Trade Secrets

These days, it all about information, baby! Trade secrets are a vital vein of the online marketing industry. As such, Seikaly & Stewart’s insinuation that TRI purposefully “[cloaked] their schemes in allegations of ‘trade secrets’ to avoid the balance of the scheme from coming to light” is (with all due respect) at worst, a reach, at best, naïve. The arguable nucleus of the search marketing world, Google, relies on trade secrets to maintain their spot as the #1 search engine. So it would be the height of hypocrisy for the courts to allow Google to protect the $%&^$ out of their trade secrets, but force SEO professionals to reveal theirs.

Hyperlinks & The Law

Inferring from passages in the lawsuit, the Plaintiffs probably hired a link expert to review the Seikaly & Stewart website, and it seems the expert came back with bad news: many of the links pointing to it were low-quality, automated links. Plus, according to the presumed link-person, fewer links existed than the Defendants promised. When the law firm approached TRI about the link situation, the latter supposedly “claimed that the process of building links, including where the links were to be found, was a trade secret.” As such, the Plaintiffs chose to conclude that TRI purposefully built bogus links as part of a premeditated plan to scam law firms.

OK. Let’s break this down.

First, as previously discussed, low-quality links may still point to a site as a result of past SEO efforts. Sometimes it’s impossible to remove unwanted links. Furthermore, since Google keeps changing the rules, it is debatable if low-quality links are wholly bad. Sure, Google recently introduced a new tool that allows webmasters to “disavow” any unwanted backlinks. But who is to say that TRI hasn’t already tried to disavow Seikaly & Stewart’s “bad links,” but Google hasn’t gotten around to updating their index? Moreover, who is to say that Google won’t change their mind about the negative value of link farms? After all, the search engine giant has reversed algorithm decisions before.

Second, the Plaintiffs argue that TRI delivered fewer links than promised. This raises the question: what tool did Seikaly & Stewart use to determine how many links were pointing to their site. For any SEO knows: different link report tools give different results.

Thirdly, trade secrets rule the online marketing industry. Not to be dramatic, but if TRI is forced to reveal their link strategy trade secrets, it could ultimately crush an entire segment of the online economy.

Essentially, the Plaintiff’s case can be summed up by one passage in the original filing: “The action is based on the fact that, at the time the Defendants were promoting this marketing scheme…they knew the techniques they proposed to use were in violation of the guidelines already well-established and published by Google.”

In this firm’s opinion, however, Seikaly & Stewart’s argument is weak. The mercurial nature of Google makes constant Google compliance near impossible, not to mention the near impossibility of immediately scrubbing the Internet of all past SEO efforts when a search engine decides to unveil a new algorithm.

But this case should serve as a warning to any and all online marketers and SEO professionals: Manage your clients’ expectations and don’t make empty promises. Also, make sure your client contract addresses the uncertain nature of search engine marketing.

We’ll be keeping an eye on this case, so check back often for updates. And if you ever need some legal help, get in touch.

Yes, I Want to Speak with Someone about an Internet Law Issue »