Job Seekers Become Offering Fraud Victims
Unemployed professionals thought they were being requested to appear for a job interview. On arrival they were solicited to purchase shares in a group of companies. In the end the the unemployed professionals were the victims of an offering fraud. And, they were still unemployed. In the Matter of Edward M. Daspin, Adm. Proc. File No. 3-16509.
Respondents named in the proceeding, initially filed on April 23, 2015, were Edward Daspin, founder and control person of three related companies, Luigi Agostini, a director and COB of the companies and Lawrence Lux CEO of the firms. Mr. Lux previously settled. Now. Mr. Agostini is settling.
Beginning in December 2010, and continuing for another 18 months, about $2.47 million was raised from seven investors by Respondents. Mr. Daspin, the organizer of the scheme, targeted unemployed professional and solicited them for what was called a job interview. At the interview the executives were solicited to invest in Worldwide Mixed Martial Arts Sports, Inc. and an affiliate, WMMA Distribution Inc. (collectively the “Companies”) with a series of false statements. Those false statements included a claim that the Companies were well funded and that he had skin in the game. Neither claim was true. In fact the Companies never generated any revenue and quickly burned through the investor funds.
During the interviews Mr. Daspin used an alias and sought to conceal his identify. This at least delayed disclosure of his prior bankruptcy fraud conviction as well as his other failed ventures. Indeed, Mr. Daspin presented himself as a consultant to the Companies when in fact he controlled them.
Mr. Daspin also drafted a private placement memorandum used in the solicitations. That PPM represented that the Companies had an email and telephone marketing database run by International Marketing Corporations Inc. with Worldwide Mixed Martial Arts. The PPM also claimed that the International Marketing database contained about 840 million email addresses which supposedly was the centerpiece of the Companies’ marketing plan. In fact the representations were false as was the claim that the data base was worth about $82 million.
Respondents Agostini and Lux facilitated the scheme. They were presented to prospective investors as directors when in reality they deferred all decisions to Mr. Daspin. They also knew that the PPMs were inaccurate and that Mr. Daspin controlled the Companies, contrary to representations made to potential investors.
The Companies met their demise when they produced a charity fundraising in El Paso, Texas in March 2012. The event ended with a $500,000 loss, consuming most of their remaining cash. By June 2012 they were out of cash and ceased operation. The Order alleged violations of Securities Act Sections 17(a)(2) and (3). The action was initially to be set for hearing.
Mr. Agostini resolved the matter, consenting to the entry of a cease and desist order based on the Sections cited in the Order. He also agreed to pay disgorgement of $15,869.20, prejudgment interest and a penalty of $7,500.
Previously, Mr. Lux settled with the Division, consenting to the entry of a cease and desist order based on Securities Act Sections 5(a), 5(c) and 17(a)(3) and Exchange Act Section 15(a). He also agreed to be barred from the securities business and from engaging in any penny stock offering. In addition, Mr. Lux will pay disgorgement of $36,853.21 and prejudgment interest. Payment is waived based on financial condition. In addition to cooperating Mr. Lux agreed to accept service of a subpoena from the staff and appear for testimony.