Ballesteros Awarded $30K in App Fraud Lawsuit
Table of Contents
Background
Michelle Ballesteros, a veteran special education administrator, saw the need for an app to help parents navigate the IEP (Individualized Education Program) process. Many families relied on costly, unqualified “advocates” during IEP meetings. Michelle and her husband, Chris, used a modest inheritance to fund development of a solution: IEPPros, a parent-facing and administrator-supporting app designed to improve special education outcomes.
The Scheme
In early 2021, the Ballesteroses found Brainy Apps, a Florida-based app development firm. Its website showed strong reviews and sample projects. Michelle spoke with Gus Irizarry, who claimed his team could build the app. She paid $448 for a “brainstorming” phase. That led to a rough “mindmap,” which Michelle rejected. The revised version was merely her own notes rephrased.
Despite doubts, she moved forward. She paid $4,081 for a “blueprint” phase and $26,000 more for coding. Brainy Apps’ team, including John and Carmen Lakatis, became unresponsive. Promised deliverables like a functioning app, promotional video, and press release never materialized. By late 2021, all communications ceased. The company filed for bankruptcy soon after.
The Harm
Plaintiffs lost $30,678. They also lost time, effort, and faith in a project intended to help children with disabilities. Michelle experienced emotional distress and reputational strain. Defendants delivered nothing of functional value, leaving only a hollow prototype and unanswered emails.
The Losses
Plaintiffs sought over $100,000 in damages. This included the $30,678 paid, plus treble damages, emotional harm, attorney’s fees, and other related costs.
Key Arguments and Proceedings
Legal Representation
Plaintiffs: Michelle Ballesteros | Chris Ballesteros
Counsel for Plaintiffs: Jay L. Farrow | Teri Guttman Valdes
Defendants: Deron Wagner | Gus Irizarry | John Lakatis | Carmen Lakatis | CJ Spector, Inc. | Morpheus Trading, LLC
Counsel for Defendants:
Claims
Count I – Civil RICO (18 U.S.C. § 1962(c))
Defendants ran a fraudulent operation using Brainy Apps to commit wire fraud through false promises and fake services.
Count II – RICO Conspiracy (18 U.S.C. § 1962(d))
Defendants conspired to defraud consumers, coordinating their actions to extract funds without fulfilling obligations.
Count III – Florida Deceptive and Unfair Trade Practices (FDUTPA)
Defendants misled consumers, promised services they never delivered, and operated in bad faith.
Count IV – Negligent Misrepresentation
Plaintiffs relied on inaccurate claims and suffered financial harm due to Defendants’ carelessness and deceit.
Count V – Civil Conspiracy
Defendants jointly planned and executed a scheme to defraud Plaintiffs under the guise of legitimate app development.
Default Judgement
Michelle and Chris Ballesteros moved for default judgment against Deron Wagner, John Lakatis, Carmen Lakatis, and Morpheus Trading, LLC. They alleged Defendants ran a fraudulent scheme using Brainy Apps to collect $30,529 for a mobile app they never delivered.
Plaintiffs paid in three phases between April and August 2021. Defendants stopped responding. All were served but failed to answer, leading to defaults.
Plaintiffs requested $91,587 in trebled damages under RICO against Wagner, John, and Carmen, and $30,529 against Morpheus Trading.
Verdict
On February 8, 2025, the Court entered a Final Default Judgment in favor of Plaintiffs Michelle Ballesteros and Chris Ballesteros. The Court awarded $30,529 in damages against Defendants Deron Wagner, John Lakatis, Carmen Lakatis, and Morpheus Trading, LLC, jointly and severally.
The judgment followed Defendants’ failure to respond to the Complaint alleging fraud, RICO violations, and deceptive trade practices related to a failed app development agreement. The Court found the damages to be liquidated and properly supported by evidence, and further reserved jurisdiction to determine attorneys’ fees, costs, and applicable interest.