Gansler
BALTIMORE (Legal Newsline) - Maryland Attorney General Douglas Gansler announced a cease and desist order against a Baltimore company and its related entities on Thursday following allegations of the use of a fraudulent "employment" pyramid investment scheme.
Diversified Marketing Consultants, Inc., doing business as DMC and ShopD2Z, Lamondes D. Williams, and related entities Digital Zone Electronics Warehouse and Mainline Properties LLC were ordered to cease and desist violating Maryland's securities laws.
The companies are alleged to have operated the fraudulent investment scheme, offering employment in a venture as a means of recruiting more investors, who were promised profit and the use of an apartment for a year.
DMC, Gansler's Securities Division determined in an investigation, solicited investments into a supposed downline program that made "employees" out of investors and promised commissions and the use of the apartment or a car.
Williams and other raised more than $800,000 at meetings held in area hotels by offering the opportunity to invest in DMC for as little as an initial $100, Gansler said. Monthly payments of $100 would follow. Investors, in exchange for their investment, acquired the right to receive income based on their recruitment of other "employees," Gansler said.
More than 115 people also took advantage of DMC's offer for the use of an apartment for a year for an advance payment of a few thousand dollars. All of those investors now face eviction.
DMC and its agents, the order says, failed to disclose to potential investors that no one was selling products. Instead, the DMC income was based on recruiting other individuals and commissions and rent came from payments made by subsequent investors, Gansler said. DMC also failed to disclose that it did not have sufficient funds to pay everyone's rent, Gansler said.
"This has all the earmarks of a pyramid or ponzi scheme," Gansler said. "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."