Company and Owner Charged with Securities Violations and Investment Fraud
BALTIMORE, MD – May 6, 2010 – (RealEstateRama) — Attorney General Douglas F. Gansler announced today that the Securities Division has issued a Summary Order to Cease and Desist against Diversified Marketing Consultants, Inc., d/b/a DMC and ShopD2Z, Lamondes D. Williams, and related entities Digital Zone Electronics Warehouse and Mainline Properties LLC, all operating in the metro-Baltimore area. They have been ordered to cease and desist violating Maryland’s securities laws by operating a fraudulent investment scheme that offered “employment” in a venture to recruit others, with the promise of profit and the use of an apartment for a year.
The Securities Division’s investigation revealed that DMC was soliciting investments into a supposed downline program that would make “employees” out of investors, and promised commissions and use of an apartment or car. At meetings held in area hotels, Williams and others raised over $800,000 by offering the opportunity to invest in DMC for as little as an initial $100 followed by monthly payments of $100. In exchange, investors acquired the right to receive income based on the investor’s recruiting other “employees.” More than 115 investors/employees also took advantage of an offer, for the advance payment of a few thousand dollars, to receive use of an apartment for a year. They all now face eviction.
According to the order, DMC and its agents failed to disclose to potential investors that no one was selling products but that the DMC income was based on recruiting other individuals, that commissions and rent would come from payments made by subsequent investors, and that DMC did not have sufficient funds to pay everyone’s rent.
“This has all the earmarks of a pyramid or ponzi scheme,” said Attorney General Gansler. “When there is no identified source of income except other investors, the risk of loss increases sharply. In addition, neither the company nor its promoters are registered with the Securities Division as required by Maryland law to sell securities.”
The Securities Division brought the action not only to halt the registration violations, but also because of the material misrepresentations and omissions made in connection with the DMC investment program, including not disclosing the fact that Williams had been previously convicted in a Maryland court for promoting a similar pyramid investment scam, and ordered in that case to pay $146,000 in restitution.
“The law requires that investors be given material facts that could affect their investment decision,” said Attorney General Gansler. “This case emphasizes the need to verify with the Securities Division – before you invest – that any investment opportunity is registered and is free of complaints.”
Investors can contact the Securities Division at 410-576-7786 if they have questions about the status of investment promoters or the securities in which they plan to invest. A copy of the Cease and Desist Order can be found at: http://www.oag.state.md.us/Securities/Actions/2010/Diversified_DMC_SummOCD_OSC%20%205_5_10.pdf
Raquel Guillory, 410-576-6357
rguillory (at) oag.state.md (dot) us