CONSENT ORDER (As to Respondents North America Marketing, LLC and TM Multimedia Marketing, LLC)

Transcription

1 ADMINISTRATIVE PROCEEDING BEFORE THE SECURITIES COMMISSIONER OF MARYLAND IN THE MATTER OF: North America Marketing and Associates, LLC, and Case No TM Multimedia Marketing, LLC, and Kimberly Birdsong, Respondents, CONSENT ORDER (As to Respondents North America Marketing, LLC and TM Multimedia Marketing, LLC) WHEREAS, the Securities Division of the Office of the Maryland Attorney General (the Securities Division ), initiated an investigation into the activities of North America Marketing and Associates, LLC, TM Multimedia Marketing LLC, and Kimberly Birdsong (collectively Respondents ) under the authority granted under the Maryland Business Opportunities Sales Act, MD. CODE ANN. BUS. REG et seq. (2010 Repl. Vol.) (the Maryland Business Opportunity Act ); and WHEREAS, as a result of that investigation, on June 5, 2012, the Maryland Securities Commissioner (the Commissioner ) issued an Order to Show Cause against Respondents, alleging that Respondents violated the anti-fraud, registration, and disclosure provisions of the Maryland

2 Business Opportunity Act in relation to the the offer and sale in Maryland of a website business opportunity; and WHEREAS, on May 24, 2012, the United States District Court for the District of Arizona entered a Preliminary Injunction Order Freezing Assets, Appointment of Permanent Receiver and other Equitable Relief against North America Marketing and Associates, LLC and TM Multimedia Marketing, LLC, among other defendants, in a civil action captioned Federal Trade Commission v. North America Marketing and Associates, LLC, et al., Case No. 2:12-cv DGC ( the Receivership Proceeding ). WHEREAS, the Commissioner and Respondents North America Marketing and Associates, LLC, and TM Multimedia Marketing LLC (collectively Corporate Respondents ) have reached an agreement in this action whereby Corporate Respondents, represented by counsel, without admitting or denying any conclusion of law, consent to the terms of this Order; and WHEREAS, the Commissioner has determined that it is in the public interest to issue this Order; THEREFORE, before the holding of a hearing in this matter, without trial or final adjudication of any issue of fact or law, and upon consent of the Corporate Respondents hereto, IT IS HEREBY AGREED AND THE COMMISSIONER ORDERS: I. JURISDICTION 1. The Commissioner has jurisdiction in this proceeding pursuant to (a) of the Maryland Business Opportunity Act. 2. Corporate Respondents permanently waive the right to a hearing and appeal under the Act and the rules and regulations promulgated thereunder with respect to this Consent Order and -2-

3 the Order To Show Cause. 3. If judicial intervention in this matter is sought by any party, Corporate Respondents consent to the jurisdiction of the Circuit Court for Baltimore City over any such proceeding and as to themselves. II. PARTIES 4. Melanie Senter Lubin is the Securities Commissioner of Maryland. 5. North America Marketing and Associates, LLC ( North America Marketing ) is or was a Nevada limited liability company with a mailing address of P.O. Box 46243, Denver Colorado TM Multimedia Marketing, LLC ( TM Multimedia ) is or was a Nevada limited liability company with a mailing address of 1550 S. Larimer Street, Suite 516, Denver, CO III. FINDINGS OF FACT The Commissioner finds the following facts: A. Nature of Corporate Respondents Business 7. North America Marketing and TM Multimedia, individually and working together, marketed a home-based business opportunity throughout the US, including in Maryland. 8. Corporate Respondents business opportunity purported to offer buyers the opportunity to earn income from operating their own Internet websites, which Corporate Respondents represented would generate commissions for the website owners. 9. Corporate Respondents used telemarketers to contact prospective buyers at home. 10. Corporate Respondents, acting through North America Marketing, first convinced -3-

4 buyers to purchase an Internet website, generally for a fee of under $ Not long after buyers agreed to purchase an Internet website, Corporate Respondents, then acting through TM Multimedia, contacted those buyers to convince them that, in order to succeed in their business opportunity, the buyers must purchase advertising to promote their Internet website. 12. TM Multimedia sold advertising packages to a buyer of the North America Marketing website for fees of, or in excess of, $10,000. B. The Business Opportunity Sale in Maryland 13. In January 2010, LW, a resident of Montgomery County, Maryland who was 94 years old at that time, received an unsolicited telephone call at his residence from an individual who said he had an opportunity for LW to earn money from home. 14. In January 2010, LW had recently lost his wife of 69 years and was interested in earning extra income to help his family. 15. The individual who called LW in January 2010 ( North America Salesman ) told LW he was calling from North America Marketing. The North America Salesman said his company was offering an investment opportunity in an online business. 16. LW advised the North America Salesman that he did not own a computer, and the North America Salesman replied that LW would not need a computer or computer skills in order to make money in this business opportunity. 17. The North America Salesman told LW the business opportunity involved setting up Internet websites selling products to department stores, and that his company would provide all the assistance LW would need to get the business started. -4-

5 18. On January 12, 2010, LW paid a total of $59.99 by credit card to North America Marketing and Associates, LLC for this business opportunity. 19. The Customer Profile Sheet that LW received from North America Marketing indicates that he purchased from North America Marketing a website with the URL address in addition to a back office tracking system, online media guide membership, and web development, all for $ Sometime after January 12, 2010, LW received a follow-up telephone call from someone who identified himself as Michael Parks ( Parks ). 21. LW believed that Parks was calling on behalf of North America Marketing. 22. Parks said he was calling LW to follow-up on LW s website business opportunity. 23. Parks told LW that he needed to purchase advertising for his website business opportunity to earn income. 24. Parks also told LW that he should be able to earn a return of $60,000 per year if he invested an additional $10,000 for advertising to generate traffic to LW s website. 25. Parks represented to LW that he could obtain a refund of the fees LW paid for advertising if the business opportunity didn t generate the returns that Parks promised. 26. On or about January 23, 2010, LW received documents via UPS, which he signed and returned, authorizing payment of $10,000 for advertising services related to LW s website business opportunity. 27. The Customer Invoice that LW signed stated that he purchased a website, TV Commerical (DVD), 48,000 Targeted Visitors, and Premium Domain/1 year Search Engine, all for $10,

6 28. LW paid TM Multimedia the $10,000 fee for advertising services using two separate credit cards he had. 29. LW has not received any income at all from his investment in this business opportunity. 30. LW and his granddaughter made repeated attempts to obtain a refund of LW s investment, but Corporate Respondents refused to return any of his money. 31. In one such refund demand, LW spoke by telephone with someone who identified himself as Richard Alexander from TM Multimedia Marketing, LLC. Alexander denied that his company charged LW s credit card, and then later promised LW a full refund of his investment, but that refund was never paid. IV. CONCLUSIONS OF LAW The Commissioner therefore, concludes as a matter of law: 32. Corporate Respondents violated section of the Maryland Business Opportunity Act by offering and selling a business opportunity in Maryland without the business opportunity being registered with the Commissioner. 33. Corporate Respondents violated section section of the Maryland Business Opportunity Act by offering and selling a business opportunity in Maryland without first giving a prospective buyer a copy of a disclosure document at least 10 full business days before the buyer executes an agreement or pays any consideration towards the purchase of the business opportunity. 34. Respondent TM Multimedia violated section of the Maryland Business Opportunity Act by representing, in connection with the offer or sale of a business opportunity, that the business opportunity provides income or earning potential of any kind unless: (1) the seller has -6-

7 documentation to substantiate the representation; and (2) the person discloses the documentation to the prospective buyer when the representation is made. 35. Corporate Respondents violated of the Maryland Business Opportunity Act by obtaining thousands of dollars for a business opportunity that Corporate Respondents represented would generate significant income, but the business opportunity did not generate any income, as Corporate Respondents represented. V. REPRESENTATIONS BY CORPORATE RESPONDENTS 36. Corporate Respondents represent that, as of the date of this Consent Order, they are aware of only one Maryland resident to whom they sold products or services of the type described in this Consent Order for a total consideration of $300 or more, payable to Corporate Respondents, individually or collectively. 37. Corporate Respondents shall not object to, and shall fully cooperate in the processing and payment of any claim for reimbursement to LW in the amount of $10,059.99, to the extent funds are available in the Receivership Proceeding for restitution or rescission to buyers/consumers. 38. Corporate Respondents agree to notify the Securities Division if they receive information about any additional Maryland residents who bought products or services of the type described in this Consent Order, payable to Corporate Respondents, individually or collectively. 39. If Corporate Respondents or the Receiver in the Receivership Proceeding identify any additional Maryland residents who purchased products or services from Respondents of the type described in this Consent Order, payable to Corporate Respondents, individually or collectively, Corporate Respondents shall not object to, and shall fully cooperate in the processing and payment of, any claim for reimbursement to any such Maryland residents, to the extent funds are available -7-

8 in the Receivership proceeding for restitution or rescission to buyers/consumers. VI. SANCTIONS 40. Corporate Respondents consent, and it is hereby ORDERED that: (A) Corporate Respondents shall permanently cease and desist from offering or selling, in Maryland, any business opportunity as defined under the Business Opportunity Act; and that (B) Corporate Respondents are permanently barred from offering and selling business opportunities in Maryland or to Maryland residents; and that (C) This Consent Order is a discloseable order as described under (c)(10) of the Maryland Business Opportunity Act and 16 CFR 437.3(a) (3) of the Federal Trade Commission Business Opportunity Rule. VII. CONSEQUENCES OF VIOLATION OF CONSENT ORDER 41. If any Respondent fails to comply with any term of this Consent Order, the Commissioner may proceed against that Respondent with full administrative and/or judicial proceedings to enforce this Consent Order, or to impose sanctions for violating an order of the Commissioner, and may take any other action authorized under the Maryland Business Opportunity Act or any other applicable law. For the purposes of determining any sanctions, the Statement of Facts and the violations of the Maryland Business Opportunity Act set forth above shall be deemed admitted by the Respondent and may be introduced into evidence against that Respondent. -8-

9 VIII. MODIFICATION OF TERMS OF THIS CONSENT ORDER 42. No term of this Consent Order may be modified or vacated except by a subsequent order issued by the Commissioner. IX. JURISDICTION RETAINED 43. Jurisdiction shall be retained by the Commissioner for the purpose of enabling any party to this Consent Order to apply for such further orders and directions as may be necessary or appropriate for the construction or enforcement of the Consent Order. IT IS SO ORDERED September 4, 2012 Commissioner s Signature is on File With Original Document MELANIE SENTER LUBIN SECURITIES COMMISSIONER BY CONSENT: NORTH AMERICA MARKETING AND ASSOCIATES, LLC TM MULTIMEDIA MARKETING, LLC By: /S/ By: /S/ Print Name Print Name Print title of executive officer Print title of executive officer August 29, 2012 August 29, 2012 Date Date -9-