This year, staff and volunteers at the NTVCC provided education and prevention services to over 150,000 consumers. As part of our programming here at the NTVCC we talk with consumers every day and hear stories from people who have been victimized, or are about to be victimized by very sophisticated con artists illegally selling investment opportunities.
How can NTVCC help?
Consumers are often unaware of risks involved with start-up companies raising money to get a project off the ground (e.g. movie deal, oil and gas, new medical or technology devices).We help consumers check out these opportunities before they invest.For example:
Is the salesperson licensed to sell securities (a piece of paper for your money)?
The California Department of Corporations and the Financial Industry Regulatory Authority (FINRA.org) license brokers and dealers.Just as someone selling insurance or real estate, people getting a commission to advise you how to invest your life savings need specific education, training, and a license (accountability). Even if they say they do not need a license, would you go to a doctor who was not licensed by the Medical Board? This involves your financial health.
Is this called a “Private Placement?
If so, it can only be offered and sold to “accredited” investors – defined by federal regulations as people with one million dollars net worth and annual income of $200,000 to $300,000.If you are not accredited and they offer the investment to you anyway – the company could be shut down by regulators and then where would your money be?
In addition, Private Placements are exempt from mandatory government review – there are no audited financial statements and no assurances that anything they say is true.If regulators do discover a problem they issue a Cease and Desist or Desist and Refrain Order to stop the illegal activity.Would you want to invest with a company that has a history of violating the law?We help people find these Orders.
Is the business location a mail drop? Is the President of the company using his real name?
Sometimes even the most basic information in the offering material is a lie. Even if the salesperson sounds like someone you can trust, your money will be spent by the President. What do you know about this person?Many times the President has a history of Cease and Desist Orders, fraud, bankruptcies and lawsuits so he will not use his own name. Check and verify representations (prior successes, contracts they say they have).There is nothing to prevent them from collecting investor monies, spending it on salaries and overhead, and simply going out of business.
What do consumers do after they invest and the number has been disconnected?
NTVCC counsels individual as well as groups of consumers regarding the appropriate agencies to complain to in order for them to be included on any victim or restitution list. NTVCC also forwards offering material and names of helpful witnesses to regulators and law enforcement regarding ongoing solicitations so they can proactively shut down and prosecute illegal companies before more people are taken.
In 2009, NTVCC helped 1018 consumers file complaints with law enforcement and securities regulators, resulting in numerous administrative, civil and criminal actions.
Below is an example of some of the actions taken with the assistance of the NTVCC:
The Commission alleges that Bowen, age 57, of Rancho Cucamonga, Calif., solicited investors nationwide through three different unregistered offerings...
WILLIAM EDWARD MARLIN, a 54-year-old resident of Los Angeles, California, was arraigned and pled guilty to mail fraud and money laundering. MARLIN claimed to be a Hollywood businessman who had formed numerous companies that were allegedly associated with the film industry. MARLIN started Starmax Entertainment in 2004 and solicited over a million dollars of investments for that alleged business. MARLIN would use aliases when soliciting investors and funding for the business. In 2006, the California Board of Corporations issued a cease and desist order to shut the company down since investors had never been paid.
(sometimes titled TAG Entertainment) was largely founded by Steve Austin and became a publicly-held movie production company formerly headquartered in Santa Monica, Ca. Tag Entertainment and its subsidiaries were the subject of several government investigations. There are approximately 800 victims nationwide who are covered by this federal prosecution...