On Wednesday, the Securities and Exchange Commission announced that a Las Vegas resident had been charged with operating a $5.7 million Ponzi scheme, which claimed to generate profits utilizing advertisements on automobiles. The SEC’s complaint alleges that Robert Cortez Marshall raised approximately $5.7 million from roughly 200 investors from various states in an unregistered offering for securities in his company, Adz on Wheelz.
Marshall is accused of creating offering materials, which promised investors “guaranteed weekly royalty” payments and returns of over 200% a year. Marshall allegedly told investors that Adz on Wheelz would utilize funds to purchase vehicles, which would be used for display advertisements. Large computer monitors were to be installed on the vehicles’ doors, trunk, and roof. Investors were told they could receive a weekly payment between $5 to $31 depending on their investment amount.
In the offering materials, investors were told they would be entitled to drive the vehicle they partially owned for a maximum of one hour a month. The SEC suggests that Adz anticipated hiring drivers to drive the vehicles and generate revenue.
Ultimately, the automobiles would become traveling billboards that would be driven through the streets of Las Vegas. In reality, Adz sold few advertisements and generated a meager $5,000 in advertisement revenue. Technical issues resulted in poor visibility of the monitors. Marshall made around $2.54 million in royalty payments to investors. It is alleged that he did so using funds from other investors and therefore classifies his actions as a Ponzi scheme.
Simultaneously, the SEC accuses Marshall of misappropriating $1.63 million of investor funds for his own personal benefit. The SEC also alleges that Marshall made misleading statements to investors through offering materials. For instance, the complaint suggests that Marshall told investors they could receive a full refund when that was virtually impossible.
According to the SEC complaint, one brand promoter borrowed roughly $66,000 from three online lenders with Marshall’s encouragement. Then, Marshall allegedly urged the investor to reinvest her royalty payments instead of paying off her loan balances. She did and was later forced to file for personal bankruptcy, when Adz was unable to make her royalty payments as initially promised. From January 2014 to January 2015, Adz raised a minimum of $5.7 million from 209 investors throughout the country.
The defendant, Robert Cortez Marshall, resides in Las Vegas, Nevada. The defendant worked as Adz’s CEO and controlled the company as the sole trustee, settlor and beneficiary of R.B.J Generational Wealth Management Trust, which owned Adz on Wheelz. The SEC will seek permanent injunctions and disgorgement of ill-gotten gains.