STATE OF MAINE
121 STATE HOUSE
AUGUSTA, MAINE 04333-0121
Trinity Consulting Services, LLC ) NOTICE OF INTENT TO
American Certificate & Title Company ) ISSUE
A CEASE AND DESIST
Andres Calvo ) ORDER
David Todd Zussman ) No. 03-100-CDO
Kevin C. Grom )
Andrew L. Wardein )
Consulting Services, LLC (“Trinity”), is a foreign business entity with a last
known business address of 17310 Redhill Avenue
Irvine, California 92614. Trinity was organized in California in 2002 as a limited
liability company. According to the
records of the Maine Office of Securities (“the Office”), Trinity has never
been licensed, or applied for a license, as a broker-dealer in Maine.
Certificate & Title Company (“ACT”) is a foreign corporation with a last
known business address of 655 Anton Boulevard #A, Costa Mesa, California 92626. ACT was incorporated in Nevada in 1999. According to the records of the Office, ACT
has never been licensed, or applied for a license, as a broker-dealer in Maine.
Todd Zussman (“Zussman”) is an individual who at all times relevant to this
matter has been president, secretary, and treasurer of ACT and a control person
of ACT, as defined in 32 M.R.S.A. §10602(3).
Zussman’s last known business address is P.O. Box 27740, Las Vegas, Nevada 89126. According to the records of the Office,
Zussman has never been licensed, or applied for a license, as a sales
representative or investment adviser representative in Maine.
Calvo (“Calvo”) is an individual who at all times relevant to this matter acted
as a sales representative for Trinity and ACT.
Calvo’s last known business address is 17310 Redhill Avenue
Irvine, California 92614. According to the records of Securities, Calvo
has never been licensed, or applied for a license, as a sales representative in
C. Grom (“Grom”) is an individual who at all times relevant to this matter has
been a member, manager or partner of Trinity and a control person of Trinity,
as defined by 32 M.R.S.A. § 10602(3). Grom’s
last known business address is 17310 Red Hill Avenue
Irvine, California 92614.
L. Wardein (“Wardein”) is an individual who at all times relevant to this
matter has been a member, manager or partner of Trinity and a control person of
Trinity, as defined by 32 M.R.S.A. § 10602(3).
Wardein’s last known business address is17310 Red Hill Avenue #135, Irvine, California 92614.
or about April 17, 2003, a man received an
e-mail message in his electronic mailbox at his workplace in Maine. He promptly forwarded the message to a co-worker,
who was also located in Maine. The subject line of the message read, “Want
an Investment Backed By Real Property?”
The body of the message read, in part, “Government Guarantees Security In
Your Investment” and, “The average return one makes is 15%-50% GUARANTEED by
the Government, and this is on the low end.”
man’s co-worker, a Maine person, selected an option
on the e-mail message that read, “For free information on ‘INSIDER SECRETS TO
INVESTING IN GOVERNMENT SECURED TAX CERTIFICATES.’ CLICK HERE.” which brought her to another page which read, in part,
“Real Estate For Pennies On The Dollar! Or Earn 15-50% Interest On Your
Investment GUARANTEED BY THE GOVERNMENT,” and which made the following representations:
highest guaranteed interest returns compared to any other investment.”
up to 100 times your money backed by government property.”
in your investment the stock market cannot compare to.”
programs to accommodate individual needs and goals.”
Maine person submitted an
electronic request for the free information on or about April
10. On or about April
Calvo called the Maine person in response to
her Internet request for more information on investing in the government
secured tax certificates. They spoke briefly.
Calvo agreed to call back later in the day when her husband would be
available so that he would also be able learn more about the investment.
11. When Calvo called the Maine person for the second
time on April 23rd, she and her husband (“the Maine consumers”) told Calvo
that they were conservative investors, and initially refused to provide Calvo
with information regarding their financial status other than to say that they
were not accredited investors. Calvo
described to them a $5,000 training program he was offering that would teach investors
how to make their own investments in tax liens and tax certificates.
12. During the second April
23rd telephone call, the Maine consumers told Calvo
that they wanted to receive and review the information they had requested online
before proceeding further. Calvo agreed
to send them the information and to call them back after they had received it.
13. The Maine consumers also informed
Calvo that they were not interested in learning how to purchase the tax liens
and certificates on their own, but that they were interested in an investment
where they did not do any work at all. Calvo
stated that if the Maine consumers had more than
$80,000 to invest, they could get involved in a program (hereinafter referred
to the “ACT investment”) that he described as follows:
act as agents and we’ll do all the work for you—100% of the work. We’ll buy all of the tax liens . . . In that
situation you guys would keep 100% of the money you make off the
return—whatever the percentage is that the county gives you. You make 100% of
that money. And where we make our money
off that is we split the profits off the properties that we acquire and sell—we
split those profits 65-35. We make 35%
percent of the net profits on those properties.
14. When the Maine consumers asked if Calvo’s
company would do all of the research on the property, Calvo answered, “You
don’t do anything. We’re completely agents. You just sit back and wait. We just
tie up your money for three years.”
15. On or about April
one of the Maine consumers received, in
her electronic mailbox, the free information that Calvo had promised her. The sender of the e-mail message was listed
as Andres Calvo, of Trinity Consulting Services. Within the message there was a letter from Zussman,
the president of ACT, to potential investors, in which Zussman described how, for
a “front-end agency fee” of 15% of the total investment, “ACT will reinvest the
client’s money for any early redemptions of a lien or deed purchased for the
client. For a period of up to 30 months or
3 separate times or a completed lien or deed.” The letter also stated that,
[would] hire all necessary experts to acquire, renovate and sell the property
for the client that will produce any net profits to split. After the client receives their original
investment capital back. Thereafter the
client will receive 65% of all net profits and ACT will receive 35% of all net
16. The Maine consumers received
another call from Calvo on April 25, 2003. Calvo discussed again the two different
methods of investing. The Maine consumers reiterated
their interest in the passive investment rather than the $5,000 training
program. Calvo agreed to send the Maine consumers the contract
that would have to be signed to purchase the ACT investment.
17. During the April 25th
call, Calvo stated that the investment capital would be illiquid for three
years, that ACT would reinvest the money three times during that period, and
that the money would be returned to the investor after the end of that three-year
18. The contract was mailed
to the Maine consumers from Huntington Beach, California, on or about April
19. On or before May
one of the Maine consumers retrieved a package
from Calvo from a United States Post Office.
In the package were four documents: An American Certificate & Title
Company Agency Consultant Service Agreement (the contract to be completed in
order to make the investment with ACT) and three exhibits. “Exhibit A” is a
list of ACT’s 26 preferred states in which to purchase tax liens and
certificates. “Exhibit B” is a form for investors
to complete to indicate (1) how much investment capital they want invested in
liens and/or deeds, (2) to which of the preferred states they want their
investment capital directed, (3) how they want their capital allocated among
residential, commercial, industrial or agricultural properties (although ACT
recommends that they only invest in residential property), and (4) “other
selected investment criteria that they request ACT to consider when purchasing
the liens and/or deeds for them.” “Exhibit
C” is a form for investors to complete to provide instructions to the escrow
20. On or about May 12,
2003, Calvo called the Maine consumers, who expressed concern over the contract’s
language, which read, “PRINCIPAL
UNDERSTANDS AND AGREES THAT IT IS THEIR SOLE RESPONSIBILITY TO INSTRUCT ACT AS
TO THE LIENS OR DEEDS TO BE SELECTED. TO
ACCOMPLISH THIS, THE PRINCIPAL SHOULD PERFORM THEIR OWN INVESTIGATION OR RELY
ON THEIR OWN PROFESSIONAL ADVISORS AND CONSULTANTS. . . .” [Emphasis in original.]
21. Calvo reassured the Maine consumers that, despite
what the contract said, the investment would in fact be passive—that ACT would
determine which liens or deeds to purchase.
Calvo explained that ACT would attempt to comply with the investors’
guidelines, but if it could not, ACT would decide which tax liens/certificates to
purchase and would purchase them without prior consultation with the Maine consumers. Calvo said that the person choosing which
liens to purchase on their behalf would be “purchasing the best liens that can
make you guys money and can make us money.
Yah, because we’re both trying to make money. That’s the deal.” Calvo also told the Maine consumers that the only
time ACT would contact the investor would be if one of the liens was not redeemed,
at which time ACT would contact the investor to receive approval to proceed
with the foreclosure of the property and to hire a real estate agent to list
22. Calvo said during the May
12 call that their money would be handled by David Zussman, whom Calvo
described as a securities lawyer who had been doing this type of investing of other
people’s money for over ten years.
23. The ACT investment offered
by Calvo is an "investment contract" as well as "evidence of
indebtedness" and is thus a security under 32 M.R.S.A. § 10501(18). Calvo’s offer of the ACT investment therefore
involves the offer of securities under the Revised Maine Securities Act (the
24. Pursuant to 32 M.R.S.A. §
10401, a person may not offer or sell any security in Maine unless the security is
registered under the Act.
25. According to the records
of Securities, the ACT investment is not registered under the Act for offer and
sale in Maine.
26. Calvo, Trinity, and ACT
violated 32 M.R.S.A. § 10401 by offering unregistered securities in Maine.
27. Pursuant to 32 M.R.S.A.
§ 10301(1), it is unlawful for any person to transact business in this State as
broker-dealer or sales representative unless licensed to do so.
28. Calvo violated 32
M.R.S.A. § 10301(1) when he offered securities in Maine as a sales
representative of Trinity and ACT without being licensed under the Act.
29. Trinity and ACT violated
32 M.R.S.A. § 10301(1) when they offered securities in Maine as a broker-dealer
without being licensed under the Act.
30. Pursuant to 32 M.R.S.A.
§ 10301(2), it is unlawful for any broker-dealer to employ or contract with a
person as a sales representative in Maine unless the sales
representative is licensed or exempt from licensing under the Act.
31. Trinity and ACT violated
32 M.R.S.A. § 10301(2) when they employed or contracted with Calvo as a sales
representative in Maine when he was not
licensed under the Act.
32. Pursuant to 32 M.R.S.A.
§ 10602(3), as a “control person” of ACT, Zussman is liable for the securities
law violations of Calvo and ACT to the same extent as Calvo and ACT.
33. Pursuant to 32 M.R.S.A.
§ 10602(3), as “control persons” of Trinity, Grom and Wardein are liable for
the securities law violations of Calvo and Trinity to the same extent as Calvo
34. Pursuant to 32 M.R.S.A.
§ 10602(1)(A), the Securities Administrator may, after notice and opportunity
for hearing, issue a cease and desist order against any person if the
Securities Administrator reasonably believes that the person has engaged, is
engaging, or is about to engage in any act or practice constituting a violation
of any provision of the Act.
Pursuant to 32 M.R.S.A. §10708(6), notice is
hereby given that the Securities Administrator intends to issue an Order to
Cease and Desist against respondents, pursuant to 32 M.R.S.A. §10602, to
prohibit further violations of the Revised Maine Securities Act.
Pursuant to 32 M.R.S.A. §10708 (2), interested
parties have thirty (30) calendar days from the entry of this Notice of Intent
to file a written request for a hearing.
18, 2003 /s/ Christine A. Bruenn
18, 2003 /s/ Bonnie E. Russell
Bonnie E. Russell
Assistant Securities Administrator
18, 2003 /s/ Jacqueline M. Drouin
Jacqueline M. Drouin