Serve PureInvestor.com, Inc at:
PT8407 Taman Desa Jasmin
Bandar Baru Nilai
Negeri Sembilan 71800 Malaysia
Serve Bryan Marsden, PIPS Inc. & PIC Trust Limited at:
PT7323 Jalan BBN 1/2 E
Bandar Baru Nilai
Negeri Sembilan 71800 Malaysia
On the 24th day of June 2005, Patrick T. Morgan, Deputy Chief Counsel for the Securities Division, submitted a petition for a Cease and Desist Order. After reviewing the petition, the Commissioner issues the following findings of fact, conclusions of law and order:
Bryan Marsden, Private Investment Profit System, Inc. ("PIPS Inc."), and PIC Trust Limited have a registered last known address of PT7323 Jalan BBN ½ E, Bandar Nilai, Negeri Sembilan 71800 Malaysia.
a. PIPS Inc. purports to be a "Private Investment fund" registered in the Republic of Panama.
PureInvestor.com, Inc. has a registered last known address of PT 8407 Taman Desa Jasmin, Bandar Baru Nilai, Negeri Sembilan 71800 Malaysia
As used in this petition for a cease and desist order, the term "Respondents" refers to Marsden, PureInvestor.com, PIPS Inc., and PIC Trust Limited.
On or about June 6, 2005, PureInvestor.com and Marsden maintained a website1 accessible in Missouri that read in part as follows:
Emphasis in original.
Private Investment Profit System (PIPS)
Growing Investments for a Secure Financial Future
. . .
PIPS is designed to ensure members achieve the financial independence they desire. Members of PIPS take control of their own financial growth without relying on the growth of matrices or selling products. Members can also take comfort in the fact that they will be providing urgently needed aid to underdeveloped countries and will also be assisting in the building of a sustainable world environment.
PIPS Members through their monthly subscriptions build and grow their funds at a rate they can afford, the returns are only limited by a members [sic] own goals. This balance of improving your financial position along with improving the life of those less fortunate than us creates an elegant Win / Win situation.
How it Works
To become a PIPS member you click on the Join Now button and make a payment of US$450, from this payment US$25 is the account setup fee and the remaining US$425 is a private agreement between you and PIPS to LOAN those funds to the company for a period of 180 calendar days.
PIPS agree [sic] to repay such loan to you with interest as determined by the program. Repayments and interest are paid only on Business Days, the Business Days are determined in line with the NYSE calendar.
. . .
Over the period of each month a deduction totaling US$170 is made out of which US$150 is added back as a further loan to your account the remaining US$20 is the monthly administration fee.
A management fee of 5% is also applied to all repayments.
On the website there is a link that allows an individual to purchase a PIPS Inc. "membership" using a credit card. Clicking on this link connects an individual to a webpage2 where, to continue to purchase, PIPS Inc. requires the individual to enter, among other things, his or her first and last name, address, e-mail address, and a password.
After entering this information an internal window under the words "Loan Agreement" appears within the webpage. That internal window can be scrolled through and reads, in pertinent part, as follows:
PRIVATE LOAN AGREEMENT BETWEEN PIPS INCORPORATED AND SECOND PARTY
Company Name: PIPS Incorporated . . .
AND Name entered above.
. . .
B. WHEREAS the First Party is a Private Investment fund that provides financial services for individual and corporate members. The First Party is conducting a short term financial relationship program between Second Party, the program known as Private Investment Profit System (PIPS). . . .
D. The Participant hereby voluntarily agrees to loan funds to the First Party for a fixed period of 180 calendar days and the First Party agrees to repay the loan plus interests may [sic] be determined from time to time on a trading day basis under PIPS program to repay the capital of USD 450.00 or equivalent 17 units or any other amount from time to time to be fully self funded [sic] in consideration of 2% profit per day per unit for the period of 180 calendar days.
Under the window titled "Loan Agreement" and at the bottom of the webpage is a box that an individual can check. The words next to this box read, "I AGREE with the agreement above and all entered data are correct and accurate." Beneath this text are two "buttons" that read "Confirm" and "Back."
Clicking on the "Confirm" button links the individual to another webpage titled "Purchase of Membership3." Under this is the following sentence: "To make payment for your selected signup please complete the form and click the 'Submit Payment Button Below [sic]. Note there is a 5% processing fee added to the total amount."
When the "Submit" button is pressed, another screen appears4. This screen is entitled "Your Agreement with EC Trust." On this screen, PIPS Inc. represents that "ECT [sic] Trust . . . is a licensed trust company incorporated in Labuan Malaysia. . . . EC Trust through its appointed credit card clearing provider receives your payment as your trustee. By completing the transaction below you are instructing EC Trust to forward your payment to your contracted merchant."
On or about March 2, 2005, PureInvestor.com maintained a website5 accessible in Missouri that made the following statements:
PIPS is a Licensed Private Investment Fund that provides services for individual and corporate members. The unique factor of PIPS is the ability of its members to earn additional income from Investment Centre Subscription sales plus the provision of Environmental and Humanitarian Aid around the world.
Disclaimer: PIPS does not sell or offer to sell Equities, Securities or Financial Instruments, it is a Private Membership Investment Fund where members deposit funds into Trust Account Debentures, which are managed by Independent Licensed Trustees insuring the security of member deposits. Further detailed information on investments is provided in the Private Members Area. Members are in no way permitted to promote, advertise or make public any of the investment information contained within the PIPS website.
On or about June 6, 2005, PureInvestor.com and Marsden maintained a website6 bearing the words "PIC Trust Limited" and "5 Year Trust Plan." This website read in part as follows:
The PIPS 5 Year Plan has been designed to provide PIPS Members, Custodians as individuals, Corporates and Employees with a short term [sic] plan for financial independence and corporate growth.
PIPS Members can be assured of a fully managed plan without worrying about other investments, the plan is set at a low cost of US$175 for entry plus US$25 per month for 5 years. On maturity the member will receive a Lump Sum of US$87017.47 and a monthly income of US$9323.30 for the duration of their life.
At the bottom of the website is the text "CAN YOU AFFORD NOT TO BE IN THIS PLAN" and beneath that a button with the word "Join" on it.
Clicking on the "Join" button opens another website7 that, among other things, contains the following statement: "This website is wholly owned by PIPS Inc."
At the bottom of the webpage is a button that an individual can click to signify that one "agrees with and understands the agreement . . . ." Clicking on this button opens another website8 titled "Sign Up New Member." This site has several blanks requiring information that an individual is to provide, including e-mail, first and last name, address, bank account number, bank name, bank address, and either a passport, driver's license or social security number. At the bottom of this page, an individual must select his payment method and payment type.
Another PIC Trust Limited website accessible in Missouri is titled "Plan Benefits." This website includes a statement that reads: "The tables below show your contributions and your fund growth to financial independence." Underneath the statement are schedules purporting to show the monthly "benefits" to be gained from "contribut[ing]" $25.00 a month to the PIPS 5 Year Plan. Thus, after contributing $25.00 for twelve months, PIC Trust Limited's website claims that one's "Fund Growth" would purportedly be $1,033.90. Similarly, after contributing $25.00 for five years (i.e., 60 months), one's "Fund Growth" would allegedly be $124,310.67.
Another PIC Trust Limited website9 accessible in Missouri makes the following statements:
None of the webpages referred to above included any information concerning the following:
At all times relevant to this petition the records maintained by the Missouri Commissioner of Securities contained no registration, granted exemption or notice filing indicating status as a "federal covered security" for any securities offered by Respondents in Missouri.
This order is in the public interest.
Section 409.1-102(26), RSMo Supp. 2004, defines "offer to sell" as "every attempt or offer to dispose of, or solicitation of an offer to purchase, a security or interest in a security for value."
Section 409.1-102(28), RSMo Supp. 2004, defines a "security" to include a "debenture." That same section includes "investment contract" as a security, and defines "investment contract as" an "investment in a common enterprise with the expectation of profits to be derived primarily from the efforts of a person other than the investor . . . ." Section 409.1-102(28)(D), RSMo Supp. 2004.
Section 409.3-301, RSMo Supp. 2004, reads as follows:
It is unlawful for a person to offer or sell a security in this state unless:
(1) The security is a federal covered security;
(2) The security, transaction, or offer is exempted from registration under sections 409.2-201 to 409.2-203; or
(3) The security is registered under this act.
Section 409.5-501, RSMo Supp. 2004, reads as follows:
It is unlawful for a person, in connection with the offer, sale, or purchase of a security, directly or indirectly:
(1) To employ a device, scheme, or artifice to defraud;
(2) To make an untrue statement of a material fact or to omit state a material
fact necessary in order to make the statement made, in the light of the circumstances under which it is made, not misleading; or
(3) To engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person.
Section 409.5-503(a), RSMo. Supp. 2004, reads as follows: "In a[n] . . . administrative proceeding under this act, a person claiming an exemption, exception, preemption, or exclusion has the burden to prove the applicability of the claim."
Section 409.6-604(a), RSMo Supp. 2004, reads as follows:
If the commissioner determines that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this act or a rule adopted or order issued under this act . . . the commissioner may:
(1) Issue an order directing the person to cease and desist from engaging in the act, practice, or course of business or to take other action necessary or appropriate to comply with this act . . . .
Section 409.6-604(b), RSMo Supp. 2004, reads as follows:
An order under subsection (a) is effective on the date of issuance. . . . If a person subject to the order does not request a hearing and none is ordered by the commissioner within thirty days after the date of service of the order, the order becomes final as to that person by operation of law.
Section 409.6-604(c), RSMo Supp. 2004, reads in part as follows: "The final order may make final, vacate, or modify the order issued unless under subsection (a)."
Section 409.6-604(d), RSMo Supp. 2004, reads as follows: "In a final order under subsection (c), the commissioner may impose a civil penalty up to one thousand dollars for a single violation or up to ten thousand dollars for more than one violation."
Section 409.6-604(e), RSMo Supp. 2004, reads as follows: "In a final order, the commissioner may charge the actual cost of an investigation or proceeding for a violation of this act . . . . These funds may be paid into the investor education and protection fund."
Section 409.6-610, RSMo Supp. 2004, reads in pertinent part as follows:
(a) Sections 409.3-301 [and] 409.5-501 . . . do not apply to a person that . . . offers to sell a security unless the offer to sell . . . is made in this state . . . .
(c) For the purpose of this section, an offer to sell . . . is made in this state, whether or not either party is then present in this state, if the offer: . . .
(2) Is directed by the offeror to a place in this state and received at the place to which it is directed
Marsden, PureInvestor.com, and PIPS Inc. violated § 409.3-301, RSMo Supp. 2004, when they offered a security in Missouri without the security being (1) a federal-covered security, (2) exempt from registration under §§ 409.2-201 or 409.2-202, or (3) registered under the Missouri Securities Act of 2003 when they offered unregistered, nonexempt debentures in Missouri.
Respondents violated § 409.3-301, RSMo Supp. 2004, when they offered a security in Missouri without the security being (1) a federal-covered security, (2) exempt from registration under §§ 409.2-201 or 409.2-202, or (3) registered under the Missouri Securities Act of 2003 when they offered unregistered, nonexempt investment contracts in Missouri.
Marsden, PureInvestor.com, and PIPS Inc. violated § 409.5-501(2), RSMo Supp. 2004, when, in connection with the offer of debentures issued by PIPS Inc., they omitted to state the following material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading:
Respondents violated § 409.5-501(2), RSMo Supp. 2004, when, in connection with the offer of an investment contract issued by PIPS Inc., they omitted to state the following material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading:
NOW, THEREFORE, it is hereby ordered that Respondents, their agents, employees and servants, and all other persons participating in or about to participate in the above-described violations with knowledge of this order are prohibited from
offering or selling the above-described securities in the State of Missouri unless those securities are registered with the Securities Division of the Office of the Secretary of State in accordance with the provisions of § 409.3-304, RSMo Supp. 2004; and
violating or materially aiding in any violation of § 409.5-501, RSMo Supp. 2004, by, in connection with the offer or sale of the above-described securities, making an untrue statement of a material fact or omitting to state a material fact necessary in order to make the statement made, in the light of the circumstances under which it is made, not misleading.
IT IS FURTHER ORDERED that, pursuant to § 409.6-604(d), the Commissioner will grant the Enforcement Division's petition for an imposition of a civil penalty of ten thousand dollars ($10,000) against Respondents, jointly and severally, in a final order unless Respondent requests a hearing and shows cause why the penalty should not be imposed.
IT IS FURTHER ORDERED that, pursuant to § 409.6-604(e), the Commissioner will grant the Enforcement Section's petition and charge Respondents, jointly and severally, the costs of the investigation in this matter. The Commissioner will charge Respondents an amount to be determined after review of evidence submitted by the Enforcement Section, unless Respondents request a hearing and shows cause why he should not be charged such costs.
IT IS FURTHER ORDERED that, pursuant to § 409.6-608(a), this matter shall be referred to the United States Attorney for the Western District of Missouri.
WITNESS MY HAND AND OFFICIAL SEAL OF MY OFFICE AT JEFFERSON CITY, MISSOURI THIS 24TH DAY OF JUNE, 2005.
SECRETARY OF STATE
DAVID B. COSGROVE
COMMISSIONER OF SECURITIES
1Available at http://pips.pipsinc.com/guest/pips_main2.php?sponsor= (last visited June 6, 2005).
2 Available at http://pips.pipsinc.com/guest/signup_junction/signup_new.php (last visited June 6, 2005).
3 Available at https://pips.pipsinc.com/gues/signup junction/Nssignup payment5.php (last visited June 6, 2005).
4 Available at https://www.ectrustco.com/payrt/pay.asp (last visited March 2, 2005).
5 Available at http://www.pureinvestor.com (last visited March 2, 2005).
6 Available at http://www.pipstrust.com/main.php (last visited June 6, 2005).
7 Available at http://www.pipstrust.com/guest/sign_up.php?agent= (last visited June 6, 2005).
8 Available at http://www.pipstrust.com/guest/SignUpMember.php (last visited June 6, 2005).
9 Available at http://www.pipstrust.com/guest/retirement_info.php (last visited June 6, 2005).