OLYMPIA – The Washington State Department of Financial Institutions (DFI) issued a Statement Charges, Notice of Intent To Enter an Order to Cease and Desist and Notice Of Intent To Impose Fines And Recover Costs against a Seattle-based real estate development company, NDG Investment Group, LLC (NDG), its principal Jose Nino de Guzman (Nino de Guzman) and related persons in connection with the offer and sale of partnership, limited liability company and promissory note investments.
NDG and Nino de Guzman are believed to have raised an estimated $15,000,000 from more than 100 investors from 2006 to 2009 for the purpose of developing numerous residential and/or commercial real estate development projects in Lima, Peru. They spent lavishly in entertaining and marketing to potential and existing investors by hosting events at Seattle area hotels and other venues. They entertained investors at their $100,000-plus Seattle Seahawks suite. A number of investors were flown to Lima, Peru to tour development sites and met prominent local Peruvian figures, including the First Lady of Peru.
DFI alleges that Nino de Guzman and NDG misrepresented material facts to investors by representing they had successfully completed prior real estate development projects in Peru and investors’ money would be used to purchase specific pieces of property. DFI further alleges that Nino de Guzman and NDG represented to investors that their investments would yield 40% to 60% returns, but had no reasonable basis for projecting such returns. They failed to disclose that sales commissions paid in connection with the sale of the investments or to provide material financial information, including financial statements, for NDG.
DFI alleges that Nino de Guzman, NDG and related entities failed to register the offering of their securities with the Securities Division. DFI also alleges that NDG employees and a consultant acted as unregistered securities salespersons and received commissions in the recruitment and solicitation of investors.
DFI intends to order Nino de Guzman, NDG and other Respondents to cease violations of anti-fraud laws, violations of state laws requiring the registration of securities for sale and/or registration of persons offering securities. DFI also seeks to impose a fine of $50,000 each against Nino de Guzman and NDG and recover the costs of its investigation.
Respondents each have a right to request a hearing on the allegations made by DFI.
On June 21, 2010, Respondent Jose Nino de Guzman requested a hearing on the Statement of Charges.
“Check with DFI before investing to see if an investment and the person offering it are registered,” DFI Division of Securities Chief of Enforcement Suzanne Sarason said. “A small investment of time to investigate before investing can save you financial loss and heartache later on.”