DMC told to stop alleged free rent scheme by Maryland attorney general
The Attorney General office's securities division investigation alleges that through public meetings in hotels starting in 2009, DMC sought investors in a "downline" program that hired them as employees -- if they invested $100 and then paid $100 monthly -- and promised commissions and the use of an apartment or car. Downline programs are also called multi-level or network marketing, and critics say they are profitable only for the members who have been in the program the longest.
The investors, called "sales reps," could sign up additional people under them and earn commissions for everyone who joined under them, according to the order. There was also talk of earning commissions for selling cell phones, goods or services. However the order alleges selling products wasn't necessary to earn commissions.
The attorney general's office said in a statement that more than 115 people took advantage of the offer for an apartment -- all in tony suburban Baltimore areas -- and now all face eviction. DMC rented the apartments for investors as well as leased vehicles, according to the order.
In all, the investigation alleges the scheme raked in more than $800,000 from more than 500 people from June to September 2009.
DMC is the business name of Diversified Marketing Consultants Inc., which also does business as the website ShopD2Z.com. Also named in the order were DMC president Lamondes D. Williams and related companies, Digital Zone Electronics Warehouse and Mainline Properties LLC. All are in the Baltimore area.
The order issued Thursday also alleges Williams failed to tell potential investors he was convicted in 2005 for running a pyramid scheme, fined $146,000, sentenced to five years and did serve some prison time in that case.
Attempts to reach Williams for comment were unsuccessful. A recording on one of the four contact phone numbers listed on the ShopD2Z.com site said it was a customer service number for Sears Home Improvement centers. The website remained active Friday when Consumer Ally visited it, however, some of the links went to private Google docs pages unavailable for viewing and others went to pages that didn't exist.
While a cease and desist ordered was issued, AG office spokeswoman Raquel Guillory said no charges were filed. DMC, Williams and the other businesses have 15 days to respond or face fines of up to $20,000 per violation and possible criminal charges.
The U.S. Federal Trade Commission warns to check out multilevel or network marketing plans before investing any money. Be wary of a proposal that is based mostly on the number of distributors you recruit and your sales to them instead of product sales to people outside of the network. Find out what kind of products will be sold and if you don't understand something, ask questions.