ADMINISTRATIVE PROCEEDING BEFORE THE SECURITIES COMMISSIONER OF MARYLAND FINAL ORDER TO CEASE AND DESIST

Transcription

1 ADMINISTRATIVE PROCEEDING BEFORE THE SECURITIES COMMISSIONER OF MARYLAND IN THE MATTER OF: * * FAMILY TREE DIGITAL VIDEO CORP., * Case No and * ROBBIE DON FRITZER, * Respondents. * * * * * * * * * * * * * * * * FINAL ORDER TO CEASE AND DESIST WHEREAS, the Securities Division of the Office of the Attorney General of Maryland (the Securities Division ) initiated an investigation into the business opportunity-related activities of Family Tree Digital Video Corp. and Robbie Don Fritzer (collectively Respondents ) under the authority granted under the Maryland Business Opportunity Sales Act, MD. BUS. REG. CODE ANN et seq. (2004 Repl. Vol. and Supp. 2008) (the Maryland Business Opportunity Act ) and Code of Maryland Administrative Regulations (COMAR) ; and WHEREAS, on the basis of that investigation, the Maryland Securities Commissioner (the Commissioner ) concluded that grounds existed to allege that Respondents violated the registration, disclosure and antifraud provisions of the Maryland Business Opportunity Act, in relation to the offer and sale of a Family Tree Video business opportunity in Maryland; and WHEREAS, on April 30, 2009, the Commissioner issued an Order to Show Cause against Respondents, requiring them to show cause why they should not be ordered to permanently cease and desist from the offer of business opportunities in violation of the Maryland Business Opportunity Act; and

2 WHEREAS, the Order to Show Cause gave Respondents notice of the opportunity for a hearing in this matter, provided Respondents submit an answer within 15 days of service of the Order to Show Cause, including a request for a hearing, and further gave notice to Respondents that failure to file a written answer, including a request for a hearing, shall be deemed a wavier of the right to a hearing and shall result in entry of a final order directing Respondents to permanently cease and desist from the offer or sale of business opportunities in violation of the Maryland Business Opportunity Act; and WHEREAS, a copy of the Order to Show Cause was served upon Respondents on May 5, 2009 by Federal Express; and WHEREAS, on May 20, 2009, Respondent Robby D. Fritzer sent a letter by facsimile transmission to the Securities Division on behalf of himself and Family Tree Digital Video Corp. contesting certain facts in to the Order to Show Cause, but Fritzer did not answer the allegations in the Order to Show Cause or request a hearing; and WHEREAS, on May 26, 2009, the Securities Division responded to Fritzer s May 20, 2009 letter and advised him that an answer from a Respondent must admit or deny each factual allegation in the Order to Show Cause and indicate whether that Respondent requests a hearing; and that an answer from Family Tree Digital Video Corp. must be filed by an attorney licensed to practice law in Maryland; and WHEREAS, the Securities Division gave Respondents an extension of time to file an answer and request for a hearing until June 30, 2009; and WHEREAS, Respondents did not file an answer or request for a hearing as of June 30, 2009; and 2

3 WHEREAS, on July 14, 2009, the Securities Division sent a letter to the Commissioner, with a copy to Respondents, requesting the entry of a default Final Order to Cease and Desist against Respondents; and WHEREAS, on July 15, 2009, the Commissioner sent a letter to Respondents and advised them that, although Respondents have had ample opportunity to file an Answer, out of an abundance of caution and because Respondent Fritzer appears to be pro se and because Family Tree Digital Video [Corp.] would need but appears not to have counsel, I will allow Respondents 15 days from the date of this letter to file an appropriate Answer(s). If Respondents do not file such an Answer(s), I will enter, by default, a Final Order to Cease and Desist ; and WHEREAS, on July 21, 2009 the Commissioner conducted a telephone conference with Respondent Fritzer and the Securities Division s attorney during which the Commissioner reiterated the July 30, 2009 deadline for resolving this matter or Respondents filing a written answer and request for a hearing; and WHEREAS, Respondents did not file an answer or request for a hearing by the July 30, 2009 deadline, as required by the Commissioner s July 15, 2009 letter and July 21, 2009 telephone conference; and WHEREAS, the Commissioner has determined that it is in the public interest to issue this Final Order to Cease and Desist, NOW, THEREFORE, THE COMMISSIONER HEREBY FINDS AND ORDERS: I. JURISDICTION 1. The Commissioner has jurisdiction in this proceeding and over Respondents pursuant to section (a) of the Maryland Business Opportunity Act. 3

4 II. FINDINGS OF FACT Respondent 2. Family Tree Digital Video Corp. ( Family Tree ) is a California corporation with a principal place of business at 2966 Wildwind Drive, El Cajon, California Family Tree offers and sells business opportunities in the form of equipment, marketing, sales training and materials for persons to operate a business producing the history of families on video, CD-ROMs and DVDs. 4. Family Tree advertises its business opportunity on the Internet, at franchise and business opportunity websites, and on its own website at Family Tree states on its Internet website that it started business in 1985 and has opened 350 companies worldwide. 5. Robby Don Fritzer, a.k.a. Rob Fritzer ( Fritzer ) is the president of Family Tree and is involved in the offer and sale of Family Tree Video business opportunities. Sale of Business Opportunity 6. In early 2006, Phillip Guthrie ( Guthrie ), a resident of Baltimore, Maryland, began looking into the possibility of investing in a business opportunity or franchise. After finding information about Family Tree on an independent franchise website, Guthrie contacted Family Tree by for more information about the Family Tree business opportunity. 7. Guthrie reviewed information about the Family Tree Video business opportunity at and received an from Family Tree with additional information, including a downloadable prospectus. 8. The Family Tree prospectus sent to Guthrie states in part: 4

5 We have invented equipment that allows only us to produce these keepsakes 7 times faster than anyone in the digital industry. We can show you 20 years of success and several hundred thousand dollars in production revenue our clients paying $300 to $10,000 each to produce their Family Tree Video. Most of these productions were $750 to $3000 each, and each production was completed in 3 to 8 hours, netting $225 per hr, minimum. Remember, without a successful marketing and sales program and knowing exactly how to present our program to people, all you have is a very expensive hobby. 9. The Family Tree website that Guthrie reviewed also included success stories of satisfied buyers of the Family Tree Video business opportunity. 10. On or about May 26, 2006, Guthrie received an from Fritzer. Fritzer s represented that Family Tree would reimburse Guthrie for his expenses to travel to San Diego, California to learn more about the Family Tree Video business opportunity. Fritzer s stated that Family Tree would pay all expenses, up to $750, regardless of whether or not Guthrie bought a Family Tree Video business, and up to $1,200 if Guthrie bought a Family Tree Video business. 11. On June 9, 2006, Guthrie traveled from Maryland to San Diego, California to further investigate the Family Tree business opportunity. 12. While in San Diego, Guthrie met with Fritzer to discuss the possibility of Guthrie buying a Family Tree Video business opportunity. 13. While at the Family Tree offices in San Diego, Guthrie observed Fritzer take delivery of several checks in amounts of $1,000 or more that Fritzer told Guthrie were payments for video services offered by Family Tree. 14. While in San Diego, Fritzer gave Guthrie a business opportunity disclosure statement, entitled Disclosure Required by California Law. Fritzer also gave Guthrie a proposed business 5

6 opportunity purchase contract to purchase a Family Tree Video Business Opportunity. 15. After Guthrie returned from San Diego, in late June or early July 2006, Guthrie received from Fritzer several boxes of production equipment related to this business opportunity. Some of the equipment was used. Fritzer called Guthrie and told him that Family Tree would replace the used equipment with new equipment if Guthrie purchased the Family Tree Video business opportunity for the $65,000 purchase price. 16. Fritzer also told Guthrie that if Guthrie produced keepsake DVD or videos as a business, Fritzer would sue him, since Fritzer said he had already given Guthrie access to information and equipment related to the Family Tree Video business opportunity. Guthrie had previously produced DVDs and videos and planned to operate a business selling keepsake DVDs and videos. 17. Fritzer also told Guthrie that he could easily earn $1,500 or more per week operating the Family Tree Video business opportunity. 18. In July 2006, Guthrie agreed to purchase a Family Tree Video business opportunity for a total of $65,000, with an immediate payment of $45,000 and a balance of $20,000 payable in monthly installments. Guthrie later agreed to purchase an additional piece of equipment from Family Tree for an additional $1, On July 26, 2006, Guthrie gave two checks totaling $46,000 to a Family Tree representative who came to Guthrie s home to train him on equipment. 20. Although Fritzer sent Guthrie a signed a Business Opportunity Purchase Contract, Guthrie did not sign the agreement, and the document was not dated. 21. Family Tree never delivered to Guthrie any replacement equipment, as Fritzer 6

7 promised if Guthrie purchased a Family Tree Video business opportunity. 22. Guthrie was dissatisfied with the equipment and his relationship with Family Tree, and he requested a refund of his purchase price. 23. Fritzer refused to offer Guthrie a refund but agreed to forego collection of the $20,000 balance Guthrie owed on the purchase price for this business opportunity in exchange for Guthrie s return of the equipment that Fritzer represented could generate keepsakes 7 times faster than anyone in the digital industry. 24. Guthrie returned to Family Tree the equipment that Fritzer advised him to return. III. CONCLUSIONS OF LAW The Commissioner concludes that: 25. Respondents offered and sold a business opportunity in Maryland as defined under section of the Maryland Business Opportunity Act. 26. Respondents never registered with the Securities Division to offer or sell business opportunities in violation of section of the Maryland Business Opportunity Act. 27. Respondents gave to a prospective Maryland buyer a business opportunity disclosure statement that was not registered by the Division and did not contain all of the disclosures required under the Maryland Business Opportunity Act in violation of section of the Maryland Business Opportunity Act. 28. Respondents made representations to a prospective Maryland buyer about the income potential of a business opportunity, but Respondents did not provide substantiation to that prospective Maryland buyer about the income potential when the representation was made, in violation of section of the Maryland Business Opportunity Act. 7

8 29. Respondents made material misrepresentation of fact and/or omissions of material fact to a prospective Maryland buyer in connection with the offer or sale of a business opportunity in violation of section of the Maryland Business Opportunity Act. IV. SANCTION NOW, THEREFORE, the Commissioner finds it to be in the public interest to issue this Final Order to Cease and Desist, and HEREBY ORDERS THAT: 30. Respondents Family Tree Digital Video Corp. and Robby Don Fritzer permanently cease and desist from violations of the registration, disclosure, and antifraud provisions of the Maryland Business Opportunity Act. V. JURISDICTION RETAINED 31. Jurisdiction is retained by the Commissioner for the purpose of enabling any party to this Final Order to Cease and Desist to apply for such further orders and directions as may be necessary or appropriate for the construction or enforcement of this Final Order to Cease and Desist. VI. APPEAL RIGHTS 32. Any Respondent may appeal this Final Order to Cease and Desist to the appropriate Circuit Court for the State of Maryland within 30 days from the date this Final Order to Cease and Desist is mail by the Securities Division. SO ORDERED: Dated : August 11, 2009 Commissioner s Signature is on File with Original Document MELANIE SENTER LUBIN SECURITIES COMMISSIONER 8