In March of this year, Foreman began accepting payments for its trainers to deliver training courses to consumers.
The payments were in addition to Foreman’s existing annual training fees, which were around $50 million in 2015.
The company, which is based in Austin, Texas, has since expanded its offerings and now has more than 800 training providers, including Foreman, Jawbone, and Microsoft.
But the company has also been in the midst of a major financial crisis.
Foreman is now the subject of a Securities and Exchange Commission investigation, after it emerged that Foreman paid $1.6 billion in 2016 to a handful of former employees and contractors to get the money back, and that the payments were made to cover Foreman “excessive and illegal payments” to vendors, according to The Wall Journal.
The Wall is reporting that more than $300 million of the $1,000,000 settlement was paid to employees of the company, while another $300,000 was paid directly to vendors.
But while the payments to former employees were questionable, they weren’t the biggest problem for Foreman.
Foremen is now facing a potential $1bn payout after being found guilty of fraud by a New York state grand jury.
The investigation was led by the Securities and Commodities Futures Trading Commission (SCC), which is investigating whether Foreman illegally paid vendors, employees, and contractors for the use of their services.
The settlement includes $1 million to each of the former employees, while a second $1m was to each former employee and contractor who was paid more than twice, The Wall reported.
According to the SEC’s report, there was no indication that the fraud was intentional, but instead that it was a “fraud by omission” to “facilitate and further conceal the fraudulent conduct.”
That’s not the only bad news for Foremen in recent years.
In June, the company settled a lawsuit filed by former employees over a Foreman-branded fitness product that contained a fake calorie counter.
The FTC said that the settlement “is in response to allegations of the product’s misuse and misuse of customers’ credit card information.”
In January of this, a federal judge in the Southern District of New York ordered the company to pay $3.5 million in refunds to the plaintiffs for money owed to them after they claimed to have been cheated by Foreman and other companies.
The lawsuit was filed in the same year that Foremen’s CEO, John Bircher, resigned after the company was found guilty by a federal jury in Florida.
In the wake of those findings, Foremen was accused of making false statements to its customers about the company’s fitness products.
The SEC is also investigating whether other companies also received payment from the company for their services in the past.
Foresons settlement with former employees could make it harder for the company in the future, though.
In December, the SEC fined Foreman for misleading its customers.
The agency said that Foremans “failure to maintain adequate records of customer credit card transactions” meant that the company had “misrepresented the extent of its use of customer data to generate revenue.”
According to The Associated Press, the fines are the largest ever for fraud in the SEC, and the company is also facing a lawsuit from former employees.
Foremans settlement with ex-employees could also have a negative impact on the company financially.
According a Securities Industry and Financial Markets Association (SIFMA) report published in March, the settlement could “cost Foreman more than a billion dollars to settle” as well as “likely result in higher operating costs, reduced training and sales, and lost revenue” for the firm.
The report estimated that the financial impact would likely be “significantly negative” for Foremans financials, because the company could lose about $200 million if the SEC found that the companies violations resulted in financial harm to the company.
The SIFMA did not provide any specific examples of financial harm that Foremings past could have had on Foremans business.
The firm is currently embroiled in another investigation, this time by the New York State attorney general over a training course that was created in the wake a company investigation.
According the New Times, the lawsuit alleges that the trainer had misrepresented the existence of the training, which included using fake credit card numbers and credit card statements to track the training’s progress.
The Attorney General’s Office is investigating how the company used the fake cards and the courses as part of a “scheme to steal credit cards.”