SEC v. JAMES L. ERWIN; and JOINT VENTURE SOLUTIONS, INC., No. 2:14-cv-623, District of Nevada (Apr. 28, 2014) — Complaint

Stephen W. Simpson
Timothy N. England
Stephen L. Cohen
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Fax: 202.772.9228
[email protected] /  Tel. 202.551.4513
[email protected] /  Tel. 202.551.4959
[email protected] /  Tel. 202.551.4472
 Attorneys for the Plaintiff
UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEVADA

)

SECURITIES AND EXCHANGE
COMMISSION,
)
)
Plaintiff,
)
)
)
v.
) 2:13-cv-623
JAMES L. ERWIN and JOINT
VENTURE SOLUTIONS, INC.
)
)
)
Defendants.
)
)
)
COMPLAINT
Plaintiff Securities and Exchange Commission (“Commission”) alleges as follows:
SUMMARY
1. Between 2009 and 2011, Defendants James L. Erwin (“Erwin”) and Joint Venture
Solutions, Inc. (collectively, “Defendants”) participated in two advance-fee high-yield
investment scams perpetrated by Switzerland-based Malom Group AG (“Malom”) – an acronym
for “Make A Lot Of Money” – and Las Vegas-based M.Y. Consultants, Inc.  Erwin, acting
1

through his company, Joint Venture Solutions, Inc., promoted investments in Malom, offered
Malom’s securities to prospective investors, and acted as an intermediary between investors and
Malom.
2. The securities at issue include two types of investment contracts:  a joint venture
agreement and a structured note transaction.  The joint venture agreements purported to allow
investors, in exchange for an upfront fee, to “use” Malom’s purportedly vast financial resources
to entice third parties to enter into investment transactions with Malom, typically high-yield
overseas trading programs, that would generate astronomically-high investment returns for
Malom and the investor.  Malom, however, had no funds to invest, never entered into any of the
transactions with third parties, and did not return any investor’s funds.
3. In the structured note transactions, Malom promised to generate funding through
the creation and sale of structured notes that would be listed on “Western European” exchanges,
in some cases supported by Brazilian sovereign bonds from the 1970s that the Brazilian
government has publicly disclaimed as worthless.  To induce investors to pay an “underwriting
fee,” Malom and one of its corporate officers issued corporate and personal guarantees to repay
investors’ fees if Malom did not successfully generate funding within 90 to 120 days.  Malom
did not use the fees collected from investors to underwrite any offering, failed to create any
structured notes, and failed to satisfy its guarantees.
4. Neither the joint venture agreements nor the structured note transactions were
registered with the Commission, as is required for these securities, and no exemption to
registration applied.
2

5. Erwin, through Joint Venture Solutions, variously held himself out as a
representative of Malom and/or as an intermediary between investors and Malom.  He offered
securities to prospective investors through in-person contacts and, for the joint venture offering,
through Joint Venture Solutions’ website, http://www.jointventuresolutionsinc.com, which
Erwin created, maintained, and controlled.
6. When prospective investors expressed interest in exploring a transaction with
Malom, Erwin explained Malom’s offerings, introduced investors to Malom’s representatives,
and participated in the securities offerings at key points.
7.
Erwin and Joint Venture Solutions successfully recruited at least five investors who
paid Malom approximately $2,575,000 to enter into agreements with Malom.  These investors
lost all of their invested funds.
8. As a result of their efforts to recruit and act as an intermediary to investors, Erwin
and Joint Venture Solutions received approximately $210,000 in transaction-based
compensation.
9.
By virtue of the conduct alleged herein, Erwin and Joint Venture Solutions violated
Section 15(a)(l) of the Exchange Act of 1934 (failure to register with the Commission as a broker-
dealer) [15 U.S.C. § 78o] and Sections 5(a) and (c) of the Securities Act of 1933 (offering or sale of
securities without a required registration statement and not exempt from registration) [15 U.S.C. §§
77e(a) and (c)].
3

JURISDICTION AND VENUE
10. The Commission brings this action, and this Court has jurisdiction over this
action, pursuant to authority conferred by Section 20(b) and 22(a) of the Securities Act [15
U.S.C. §§ 77t(b) and 77v(a)] and Sections 21(d), 21(e) and 27 of the Exchange Act [15 U.S.C.
§§ 78u(d), 78u(e) and 78aa].
11. This Court has personal jurisdiction over the Defendants and venue is proper in
the District of Nevada pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)] and
Section 27 of the Exchange Act [15 U.S.C. § 78aa] because Defendants engaged in transactions,
acts, practices, and courses of business constituting the violations alleged in this Complaint
within this district.
12. The Defendants, directly and indirectly, have made use of the means and
instrumentalities of interstate commerce, and the means and instruments of transportation and
communication in interstate commerce, in connection with the transactions, acts, practices, and
courses of business alleged in this Complaint.
13. While carrying out the actions alleged in this Complaint, the Defendants resided
in this judicial district.
DEFENDANTS AND RELATED PARTIES
14. James L. Erwin, age 49, is a resident of Las Vegas, Nevada.  Erwin is the
founder, sole officer, and sole owner of Joint Venture Solutions, Inc.  He also owns and controls
Blue Sky Global Enterprises, Inc., James L. Erwin, Inc., and Nationwide Affordable Auto Sales,
Inc., all corporations registered under Nevada law.  At all times relevant to this Complaint,
Erwin controlled all activities undertaken by Joint Venture Solutions.  He created its website,
4

opened bank accounts under its name, controlled any and all funds it received, and
communicated with existing and potential clients. Erwin has never been registered with the
Commission as a broker or dealer.
15. Joint Venture Solutions, Inc. is a corporation organized under Nevada law in
November 2009.  Erwin is its sole owner, officer, and employee.  At all times relevant to this
Complaint, Joint Venture Solutions was in the business of inducing, or attempting to induce,
others to purchase or sell securities using the mails or other means of interstate commerce.  At all
times relevant to this Complaint, Joint Venture Solutions operated the website:
http://www.jointventuresolutionsinc.com.  Joint Venture Solutions has never been registered
with the Commission as a broker or dealer.
16. Malom Group AG is a company formed under the laws of Switzerland in 1973.
Its principal place of business is Baar, Switzerland.  “Malom” is an acronym for “Make A Lot Of
Money.”  Malom and its principals, Martin U. Schläpfer and Hans-Jurg Lips are named as
defendants in SEC v. Malom Group AG, et al., 2:13cv2280 (D. Nev. Dec. 16, 2013).  Lips and
Schläpfer are named as criminal defendants in United States v. Brandel, 2:13cr489 (D. Nev. Dec.
11, 2013).
17. M.Y. Consultants, Inc. is a consulting firm formed under the laws of Nevada in
April 2007.  Its principal place of business was Las Vegas, Nevada.  Anthony Brandel served as
its sole director.  It had few, if any, regular employees.  Through Brandel, M.Y. Consultants
arranged transactions with Malom, handled investor funds, negotiated transaction documents,
and communicated with investors.  M.Y. Consultants and its director, Brandel, are named as
5

defendants in SEC v. Malom Group AG, et al., 2:13cv2280 (D. Nev. Dec. 16, 2013).  Brandel is
named as a criminal defendant in United States v. Brandel, 2:13cr489 (D. Nev. Dec. 11, 2013).
FACTUAL ALLEGATIONS
I. Malom’s Offerings
18. From approximately August 2009 to fall 2011, Malom and its principals, agents,
and promoters used the mail and wires to defraud at least 31 investors out of approximately
$10.8 million through two schemes involving the offer and sale of securities.
A. Joint Venture Offering
19. The joint venture offering targeted investors with the promise that, for an advance
fee, they could enter into trading programs and other transactions that could yield extraordinary
returns (e.g., 100% in a single day) through risk-free transactions utilizing Malom’s substantial
assets.  This offering lasted from approximately August 2009 to approximately August 2011.
20. Under the joint venture agreements, investors were required to pay an upfront fee
of between $150,000 and $1 million and identify transactions to be funded by Malom and to be
entered into between Malom and third parties.  In turn, Malom was to provide the investors with
evidence of its supposedly substantial assets, such as a bank statement or “proof of funds” bank
letter, showing that Malom, or an entity whose funds Malom purportedly had access to, had tens
to hundreds of millions of dollars available in overseas banks.  Malom was then responsible for
exploring the investors’ proposed transactions with third parties, called “contract counter-
parties.”
21. If, in its sole discretion, Malom deemed a transaction acceptable, it was to enter
into the transaction directly with the contract counter-party and give a lion’s share of the profit
6

back to the investor.  Malom deemed acceptable only those transactions that posed “no
perceptible risk of loss” to its funds.
22. Although termed “Joint Venture Agreements,” the agreements did not purport to
create separate legal entities, contained no management provisions, and expressly did not create
general partnerships between the investors and Malom.
23. None of the transactions in securities offered or sold by or for Malom was
registered with the Commission, or is eligible for an exemption from registration.
B. Structured Note Offering
24. Under the structured note offering, which began in early 2011 and lasted through
fall 2011, Malom pledged to underwrite, securitize, “credit enhance”, register, list, and market
structured notes for companies who sought funding.  Malom promised to sell the structured notes
on unspecified “Western European” exchanges and to privately place the notes with unspecified
subscribers.  This offering resulted in at least six agreements and raised nearly $3.5 million.
25. In the structured note agreements, Malom required investors to pay an upfront
“underwriting fee” or “deposit” that would be used for the structured note offering.  This was the
investors’ sole responsibility in the structured note transactions.
26. If a transaction was successful, Malom agreed to refund the investor’s
underwriting fee with a 25-50% premium.  If a transaction was not successful, Malom agreed to
refund the underwriting fee and pay a small penalty to the investor.
27. Generally, the structured note contracts anticipated successful transactions within
90-120 days after entering into an agreement, and thus would result in investors receiving a
refund and either a success premium or penalty in that time.
7

28. Malom did not undertake any steps to create or market any structured notes.
Instead, the underwriting fees were immediately distributed among the participants in the scheme
and others who had no role in effecting the contemplated transactions.
29. Malom failed to secure any funding, did not have any funds with which to refund
the structured note investors, and ultimately did not refund fees to any investor.
II. Defendants’ Involvement in the Offering
30. Erwin, at all times working through his company, Joint Venture Solutions, Inc.,
began working as a promoter for Malom and M.Y. Consultants in approximately fall 2009 and
continued in this role through 2011.
31. During this time, Erwin had little knowledge or past experience in subjects such
as domestic and foreign securities and financial markets, banking and bank instruments, the
SWIFT system, or securities trading; had no licenses in these industries; and had received no
training in such subjects.
32. Neither Joint Venture Solutions nor Erwin at any time registered with the
Commission as a broker or dealer, as is required for individuals and firms seeking to offer
securities to investors in the circumstances described in this Complaint.
33. The Defendants recruited investors for the joint venture and structured note
programs by soliciting investors through personal contacts, telephone, email, and internet
communications.
34. The Defendants held themselves out as representatives of Malom or as
intermediaries between investors and Malom.  Erwin explained the joint venture and structured
8

note programs to investors, handled contractual documents, and regularly communicated with
investors regarding the status of their agreements with Malom.
35. For example, in spring 2011, Erwin contacted one investor with whom he had a
prior relationship and who he knew was looking for funding for a real estate project.  Erwin
explained that he was associated with Malom and that Malom had the ability to fund the
investor’s project.  After the investor became interested in the prospect of a transaction, Erwin,
acting as the investors’ “broker,” attended several meetings with the investor and representatives
for Malom and M.Y. Consultants.
36. The investor and Malom entered into a structured note transaction for which the
investor paid Malom $400,000.  The investor has not received the promised funding or a refund.
37. For recruiting this investor, the Defendants were paid a $40,000 fee.
38. In another example, in fall 2009, Erwin personally contacted another investor
with whom he had a prior relationship.  Erwin told this investor that, through a joint venture
agreement, he could use Malom’s money to pursue a high-yield trading program so long as
Malom’s money was not put at any risk.  The investor and Malom entered into a joint venture
agreement for which the investor paid Malom $300,000.
39. For recruiting this investor, the Defendants were paid a $25,000 fee.
40. The Defendants also solicited investors and offered to sell securities through Joint
Venture Solutions’ website, http://www.jointventuresolutionsinc.com, which Erwin maintained
and controlled throughout the time period relevant to this Complaint.
41. The website heading advertises its purpose:  “Joint Venture, Buy, Sell, MT799,
POF, Proof of Funds, VOD, Verification of Funds.”
9

42. On the main page of Joint Venture Solutions’ website, Erwin, as “Operations
Manager,” describes their services as “connecting clients and our investor [Malom], to
participate in [] transactions,” and notes that “[o]ur investor [Malom] has allowed us to bring him
potential clients that have a need to show capability to perform.”
43. The website specifically targeted investors interested in Malom’s joint venture
offering, generally describing a transaction where “the client and the investor [Malom] sign a
Joint Venture to enter into contracts together using the strength of the investor’s bank accounts.”
44. The website details the procedure for entering into a joint venture with Malom,
directing potential investors to complete an online application and a non-disclosure agreement.
45. Erwin further describes the actions that he and Joint Venture Solutions will take
to facilitate the transaction, including “send[ing] all executed documents to the client,”
“verifying that escrow has received the deposit for the [advance fee],” and “hav[ing] [Malom]
sign the Joint Venture Agreement, and attach all authentic attachments, and deliver to escrow
and Client.”
46. Although the website does not mention Malom by name, it includes a sample
“Joint Venture Agreement” that is identical in all substantive ways to the joint venture
agreements used by Malom and refers to the “investor” as a “Suisse Company.”  Moreover, it
references Credit Suisse and the Instituto Brasileiro De Custodias, two financial institutions with
which Malom claimed to have relationships.
47. As a result of these efforts, the Defendants successfully recruited five investors,
two into joint venture agreements and three into structured note transactions.  Collectively, these
10

investors paid Malom $2,575,000.  None of the investors received a return on their investment or
a refund of their advance fees.
48. Malom directed a percentage of the fees paid by each investor to the various
promoters who recruited them, including the Defendants.
49. Generally, M.Y. Consultants was responsible for collecting funds from investors
and distributing these payments to the promoters, including the Defendants.
50. At times, however, promoters, including the Defendants, were paid directly out of
escrow accounts into which investors initially deposited funds.
51. For Defendants’ efforts, Erwin received approximately of $210,000 in
transaction-based compensation.
52. Erwin received these funds directly and through entities he owned and controlled,
including Joint Venture Solutions, Bluesky Global Enterprises, Inc. and Nationwide Affordable
Auto Sales, Inc.
COUNT ONE

Violation of Securities Act Section 5

53. The Commission realleges and incorporates herein by reference paragraphs 1
through 52 above.
54. Defendants, directly or indirectly, made use of the means or instruments of
transportation or communication in interstate commerce or of the mails to offer and sell
securities through the use or medium of a prospectus or otherwise, and carried or caused to be
carried through the mails or in interstate commerce, such securities for the purpose of sale or for
11

delivery after sale, when no registration statement had been filed or was in effect as to such
securities and no legally recognized exemption from registration applied.
55. By reason of the foregoing, Defendants violated and unless restrained and
enjoined, will continue to violate Securities Act Sections 5(a) and (c) [15 U.S.C. § 77e(a) and
(c)].
COUNT TWO

Violation of Exchange Act Section 15(a)

56. The Commission realleges and incorporates herein by reference paragraphs 1
through 55 above.
57. Defendants, while acting as brokers or dealers, made use of the mails or any
means or instrumentality of interstate commerce to effect transactions in, or to induce or attempt
to induce the purchase or sale of, securities without being registered with the Commission as a
broker or dealer or an associated person of a registered broker-dealer.
58. By reason of the foregoing, Defendants violated and, unless restrained and
enjoined, will continue to violate Exchange Act Section 15(a) [15 U.S.C. § 78o(a)].
PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that the Court:

I.
Enter judgment in favor of the Commission finding that Defendants violated the federal
securities laws and Commission rules alleged against them in this Complaint;
12

II.
Permanently enjoin Defendants from further violations of the federal securities laws and
Commission rules alleged in this Complaint;
III.
Permanently enjoin Defendants from directly or indirectly participating in the issuance, offer,
or sale of any security, including but not limited to joint venture agreements, proofs of funds, bank
guarantees, medium term notes, standby letters of credit, structured notes, and similar instruments,
with the exception of the purchase or sale of securities listed on a national securities exchange;
IV.
Order Defendants to disgorge, as the Court may direct, all ill-gotten gains received or
benefits in any form derived from the illegal conduct alleged in this Complaint, together with pre­
judgment interest thereon;
V.
Order Defendants to pay civil monetary penalties pursuant to Securities Act Section 20(d)
[15 U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)]; and
13

VI.
Grant such other equitable and legal relief as may be appropriate or necessary for the benefit
of investors pursuant to Exchange Act Section 21(d)(5) [15 U.S.C. § 78u(d)(5)].
Date:  April 23, 2014 By:
/s/ Stephen W. Simpson
Stephen W. Simpson
Timothy N. England
Stephen L. Cohen
Attorneys for Plaintiff
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Fax: 202.772.9228
[email protected] /  Tel. 202.551.4513
[email protected] /  Tel. 202.551.4959
[email protected] /  Tel. 202.551.4472
14

Case 2:14-cv-00623 Document 1 Filed 04/23/14 Page 1 of 14 

Stephen W. Simpson 
Timothy N. England 
Stephen L. Cohen 
U.S. Securities and Exchange Commission 
100 F Street, N.E. 
Washington, DC 20549 
Fax: 202.772.9228 
[email protected] / Tel. 202.551.4513 
[email protected] / Tel. 202.551.4959 
[email protected] / Tel. 202.551.4472

 Attorneys for the Plaintiff  

UNITED STATES DISTRICT COURT
 
FOR THE DISTRICT OF NEVADA 


)

SECURITIES AND EXCHANGE 
COMMISSION, 

) 
) 

Plaintiff, 
) 
) 
) 

v. ) 2:13-cv-623 

JAMES L. ERWIN and JOINT 
VENTURE SOLUTIONS, INC. 

) 
) 
) 

Defendants. 
) 
) 
) 

COMPLAINT  

Plaintiff Securities and Exchange Commission (“Commission”) alleges as follows: 

SUMMARY 

1. Between 2009 and 2011, Defendants James L. Erwin (“Erwin”) and Joint Venture 

Solutions, Inc. (collectively, “Defendants”) participated in two advance-fee high-yield 

investment scams perpetrated by Switzerland-based Malom Group AG (“Malom”) – an acronym 

for “Make A Lot Of Money” – and Las Vegas-based M.Y. Consultants, Inc.  Erwin, acting 

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   Case 2:14-cv-00623 Document 1 Filed 04/23/14 Page 2 of 14 

through his company, Joint Venture Solutions, Inc., promoted investments in Malom, offered 

Malom’s securities to prospective investors, and acted as an intermediary between investors and 

Malom. 

2. The securities at issue include two types of investment contracts:  a joint venture 

agreement and a structured note transaction.  The joint venture agreements purported to allow 

investors, in exchange for an upfront fee, to “use” Malom’s purportedly vast financial resources 

to entice third parties to enter into investment transactions with Malom, typically high-yield 

overseas trading programs, that would generate astronomically-high investment returns for 

Malom and the investor.  Malom, however, had no funds to invest, never entered into any of the 

transactions with third parties, and did not return any investor’s funds.   

3. In the structured note transactions, Malom promised to generate funding through 

the creation and sale of structured notes that would be listed on “Western European” exchanges, 

in some cases supported by Brazilian sovereign bonds from the 1970s that the Brazilian 

government has publicly disclaimed as worthless.  To induce investors to pay an “underwriting 

fee,” Malom and one of its corporate officers issued corporate and personal guarantees to repay 

investors’ fees if Malom did not successfully generate funding within 90 to 120 days.  Malom 

did not use the fees collected from investors to underwrite any offering, failed to create any 

structured notes, and failed to satisfy its guarantees. 

4. Neither the joint venture agreements nor the structured note transactions were 

registered with the Commission, as is required for these securities, and no exemption to 

registration applied. 

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5. Erwin, through Joint Venture Solutions, variously held himself out as a 

representative of Malom and/or as an intermediary between investors and Malom.  He offered 

securities to prospective investors through in-person contacts and, for the joint venture offering, 

through Joint Venture Solutions’ website, http://www.jointventuresolutionsinc.com, which 

Erwin created, maintained, and controlled.  

6. When prospective investors expressed interest in exploring a transaction with 

Malom, Erwin explained Malom’s offerings, introduced investors to Malom’s representatives, 

and participated in the securities offerings at key points. 

7. Erwin and Joint Venture Solutions successfully recruited at least five investors who 

paid Malom approximately $2,575,000 to enter into agreements with Malom.  These investors 

lost all of their invested funds.   

8. As a result of their efforts to recruit and act as an intermediary to investors, Erwin 

and Joint Venture Solutions received approximately $210,000 in transaction-based 

compensation. 

9. By virtue of the conduct alleged herein, Erwin and Joint Venture Solutions violated 

Section 15(a)(l) of the Exchange Act of 1934 (failure to register with the Commission as a broker-

dealer) [15 U.S.C. § 78o] and Sections 5(a) and (c) of the Securities Act of 1933 (offering or sale of 

securities without a required registration statement and not exempt from registration) [15 U.S.C. §§ 

77e(a) and (c)]. 

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JURISDICTION AND VENUE 

10. The Commission brings this action, and this Court has jurisdiction over this 

action, pursuant to authority conferred by Section 20(b) and 22(a) of the Securities Act [15 

U.S.C. §§ 77t(b) and 77v(a)] and Sections 21(d), 21(e) and 27 of the Exchange Act [15 U.S.C. 

§§ 78u(d), 78u(e) and 78aa]. 

11. This Court has personal jurisdiction over the Defendants and venue is proper in 

the District of Nevada pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)] and 

Section 27 of the Exchange Act [15 U.S.C. § 78aa] because Defendants engaged in transactions, 

acts, practices, and courses of business constituting the violations alleged in this Complaint 

within this district. 

12.  The Defendants, directly and indirectly, have made use of the means and 

instrumentalities of interstate commerce, and the means and instruments of transportation and 

communication in interstate commerce, in connection with the transactions, acts, practices, and 

courses of business alleged in this Complaint. 

13. While carrying out the actions alleged in this Complaint, the Defendants resided 

in this judicial district. 

DEFENDANTS AND RELATED PARTIES 

14. James L. Erwin, age 49, is a resident of Las Vegas, Nevada. Erwin is the 

founder, sole officer, and sole owner of Joint Venture Solutions, Inc.  He also owns and controls 

Blue Sky Global Enterprises, Inc., James L. Erwin, Inc., and Nationwide Affordable Auto Sales, 

Inc., all corporations registered under Nevada law.  At all times relevant to this Complaint, 

Erwin controlled all activities undertaken by Joint Venture Solutions.  He created its website, 

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opened bank accounts under its name, controlled any and all funds it received, and 

communicated with existing and potential clients. Erwin has never been registered with the 

Commission as a broker or dealer. 

15. Joint Venture Solutions, Inc. is a corporation organized under Nevada law in 

November 2009.  Erwin is its sole owner, officer, and employee.  At all times relevant to this 

Complaint, Joint Venture Solutions was in the business of inducing, or attempting to induce, 

others to purchase or sell securities using the mails or other means of interstate commerce.  At all 

times relevant to this Complaint, Joint Venture Solutions operated the website: 

http://www.jointventuresolutionsinc.com. Joint Venture Solutions has never been registered 

with the Commission as a broker or dealer. 

16. Malom Group AG is a company formed under the laws of Switzerland in 1973.  

Its principal place of business is Baar, Switzerland.  “Malom” is an acronym for “Make A Lot Of 

Money.” Malom and its principals, Martin U. Schläpfer and Hans-Jurg Lips are named as 

defendants in SEC v. Malom Group AG, et al., 2:13cv2280 (D. Nev. Dec. 16, 2013).  Lips and 

Schläpfer are named as criminal defendants in United States v. Brandel, 2:13cr489 (D. Nev. Dec. 

11, 2013). 

17. M.Y. Consultants, Inc. is a consulting firm formed under the laws of Nevada in 

April 2007. Its principal place of business was Las Vegas, Nevada.  Anthony Brandel served as 

its sole director. It had few, if any, regular employees.  Through Brandel, M.Y. Consultants 

arranged transactions with Malom, handled investor funds, negotiated transaction documents, 

and communicated with investors.  M.Y. Consultants and its director, Brandel, are named as 

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defendants in SEC v. Malom Group AG, et al., 2:13cv2280 (D. Nev. Dec. 16, 2013).  Brandel is 

named as a criminal defendant in United States v. Brandel, 2:13cr489 (D. Nev. Dec. 11, 2013). 

FACTUAL ALLEGATIONS 

I. Malom’s Offerings  

18. From approximately August 2009 to fall 2011, Malom and its principals, agents, 

and promoters used the mail and wires to defraud at least 31 investors out of approximately 

$10.8 million through two schemes involving the offer and sale of securities.   

A. Joint Venture Offering 

19. The joint venture offering targeted investors with the promise that, for an advance 

fee, they could enter into trading programs and other transactions that could yield extraordinary 

returns (e.g., 100% in a single day) through risk-free transactions utilizing Malom’s substantial 

assets. This offering lasted from approximately August 2009 to approximately August 2011. 

20. Under the joint venture agreements, investors were required to pay an upfront fee 

of between $150,000 and $1 million and identify transactions to be funded by Malom and to be 

entered into between Malom and third parties.  In turn, Malom was to provide the investors with 

evidence of its supposedly substantial assets, such as a bank statement or “proof of funds” bank 

letter, showing that Malom, or an entity whose funds Malom purportedly had access to, had tens 

to hundreds of millions of dollars available in overseas banks.  Malom was then responsible for 

exploring the investors’ proposed transactions with third parties, called “contract counter-

parties.” 

21. If, in its sole discretion, Malom deemed a transaction acceptable, it was to enter 

into the transaction directly with the contract counter-party and give a lion’s share of the profit 

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back to the investor.  Malom deemed acceptable only those transactions that posed “no 

perceptible risk of loss” to its funds. 

22. Although termed “Joint Venture Agreements,” the agreements did not purport to 

create separate legal entities, contained no management provisions, and expressly did not create 

general partnerships between the investors and Malom. 

23. None of the transactions in securities offered or sold by or for Malom was 

registered with the Commission, or is eligible for an exemption from registration. 

B. Structured Note Offering 

24. Under the structured note offering, which began in early 2011 and lasted through 

fall 2011, Malom pledged to underwrite, securitize, “credit enhance”, register, list, and market 

structured notes for companies who sought funding.  Malom promised to sell the structured notes 

on unspecified “Western European” exchanges and to privately place the notes with unspecified 

subscribers. This offering resulted in at least six agreements and raised nearly $3.5 million.   

25. In the structured note agreements, Malom required investors to pay an upfront 

“underwriting fee” or “deposit” that would be used for the structured note offering.  This was the 

investors’ sole responsibility in the structured note transactions.   

26. If a transaction was successful, Malom agreed to refund the investor’s 

underwriting fee with a 25-50% premium.  If a transaction was not successful, Malom agreed to 

refund the underwriting fee and pay a small penalty to the investor.   

27. Generally, the structured note contracts anticipated successful transactions within 

90-120 days after entering into an agreement, and thus would result in investors receiving a 

refund and either a success premium or penalty in that time.   

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28. Malom did not undertake any steps to create or market any structured notes.  

Instead, the underwriting fees were immediately distributed among the participants in the scheme 

and others who had no role in effecting the contemplated transactions.  

29. Malom failed to secure any funding, did not have any funds with which to refund 

the structured note investors, and ultimately did not refund fees to any investor.   

II. Defendants’ Involvement in the Offering 

30. Erwin, at all times working through his company, Joint Venture Solutions, Inc., 

began working as a promoter for Malom and M.Y. Consultants in approximately fall 2009 and 

continued in this role through 2011.  

31. During this time, Erwin had little knowledge or past experience in subjects such 

as domestic and foreign securities and financial markets, banking and bank instruments, the 

SWIFT system, or securities trading; had no licenses in these industries; and had received no 

training in such subjects. 

32. Neither Joint Venture Solutions nor Erwin at any time registered with the 

Commission as a broker or dealer, as is required for individuals and firms seeking to offer 

securities to investors in the circumstances described in this Complaint. 

33. The Defendants recruited investors for the joint venture and structured note 

programs by soliciting investors through personal contacts, telephone, email, and internet 

communications. 

34. The Defendants held themselves out as representatives of Malom or as 

intermediaries between investors and Malom.  Erwin explained the joint venture and structured 

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note programs to investors, handled contractual documents, and regularly communicated with 

investors regarding the status of their agreements with Malom. 

35. For example, in spring 2011, Erwin contacted one investor with whom he had a 

prior relationship and who he knew was looking for funding for a real estate project.  Erwin 

explained that he was associated with Malom and that Malom had the ability to fund the 

investor’s project.  After the investor became interested in the prospect of a transaction, Erwin, 

acting as the investors’ “broker,” attended several meetings with the investor and representatives 

for Malom and M.Y. Consultants. 

36. The investor and Malom entered into a structured note transaction for which the 

investor paid Malom $400,000.  The investor has not received the promised funding or a refund.   

37. For recruiting this investor, the Defendants were paid a $40,000 fee. 

38. In another example, in fall 2009, Erwin personally contacted another investor 

with whom he had a prior relationship.  Erwin told this investor that, through a joint venture 

agreement, he could use Malom’s money to pursue a high-yield trading program so long as 

Malom’s money was not put at any risk.  The investor and Malom entered into a joint venture 

agreement for which the investor paid Malom $300,000. 

39. For recruiting this investor, the Defendants were paid a $25,000 fee.  

40. The Defendants also solicited investors and offered to sell securities through Joint 

Venture Solutions’ website, http://www.jointventuresolutionsinc.com, which Erwin maintained 

and controlled throughout the time period relevant to this Complaint.   

41. The website heading advertises its purpose:  “Joint Venture, Buy, Sell, MT799, 

POF, Proof of Funds, VOD, Verification of Funds.” 

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42. On the main page of Joint Venture Solutions’ website, Erwin, as “Operations 

Manager,” describes their services as “connecting clients and our investor [Malom], to 

participate in [] transactions,” and notes that “[o]ur investor [Malom] has allowed us to bring him 

potential clients that have a need to show capability to perform.” 

43. The website specifically targeted investors interested in Malom’s joint venture 

offering, generally describing a transaction where “the client and the investor [Malom] sign a 

Joint Venture to enter into contracts together using the strength of the investor’s bank accounts.”  

44. The website details the procedure for entering into a joint venture with Malom, 

directing potential investors to complete an online application and a non-disclosure agreement. 

45. Erwin further describes the actions that he and Joint Venture Solutions will take 

to facilitate the transaction, including “send[ing] all executed documents to the client,” 

“verifying that escrow has received the deposit for the [advance fee],” and “hav[ing] [Malom] 

sign the Joint Venture Agreement, and attach all authentic attachments, and deliver to escrow 

and Client.” 

46. Although the website does not mention Malom by name, it includes a sample 

“Joint Venture Agreement” that is identical in all substantive ways to the joint venture 

agreements used by Malom and refers to the “investor” as a “Suisse Company.”  Moreover, it 

references Credit Suisse and the Instituto Brasileiro De Custodias, two financial institutions with 

which Malom claimed to have relationships. 

47. As a result of these efforts, the Defendants successfully recruited five investors, 

two into joint venture agreements and three into structured note transactions.  Collectively, these 

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investors paid Malom $2,575,000.  None of the investors received a return on their investment or 

a refund of their advance fees. 

48. Malom directed a percentage of the fees paid by each investor to the various 

promoters who recruited them, including the Defendants.   

49. Generally, M.Y. Consultants was responsible for collecting funds from investors 

and distributing these payments to the promoters, including the Defendants. 

50. At times, however, promoters, including the Defendants, were paid directly out of 

escrow accounts into which investors initially deposited funds. 

51. For Defendants’ efforts, Erwin received approximately of $210,000 in 

transaction-based compensation.   

52. Erwin received these funds directly and through entities he owned and controlled, 

including Joint Venture Solutions, Bluesky Global Enterprises, Inc. and Nationwide Affordable 

Auto Sales, Inc. 

COUNT ONE
 
Violation of Securities Act Section 5 


53. The Commission realleges and incorporates herein by reference paragraphs 1 

through 52 above. 

54. Defendants, directly or indirectly, made use of the means or instruments of 

transportation or communication in interstate commerce or of the mails to offer and sell 

securities through the use or medium of a prospectus or otherwise, and carried or caused to be 

carried through the mails or in interstate commerce, such securities for the purpose of sale or for 

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   Case 2:14-cv-00623 Document 1 Filed 04/23/14 Page 12 of 14 

delivery after sale, when no registration statement had been filed or was in effect as to such 

securities and no legally recognized exemption from registration applied. 

55. By reason of the foregoing, Defendants violated and unless restrained and 

enjoined, will continue to violate Securities Act Sections 5(a) and (c) [15 U.S.C. § 77e(a) and 

(c)]. 

COUNT TWO 

Violation of Exchange Act Section 15(a) 


56. The Commission realleges and incorporates herein by reference paragraphs 1 

through 55 above. 

57. Defendants, while acting as brokers or dealers, made use of the mails or any 

means or instrumentality of interstate commerce to effect transactions in, or to induce or attempt 

to induce the purchase or sale of, securities without being registered with the Commission as a 

broker or dealer or an associated person of a registered broker-dealer.  

58. By reason of the foregoing, Defendants violated and, unless restrained and 

enjoined, will continue to violate Exchange Act Section 15(a) [15 U.S.C. § 78o(a)].  

PRAYER FOR RELIEF 


WHEREFORE, the Commission respectfully requests that the Court: 


I. 

Enter judgment in favor of the Commission finding that Defendants violated the federal 

securities laws and Commission rules alleged against them in this Complaint; 

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   Case 2:14-cv-00623 Document 1 Filed 04/23/14 Page 13 of 14 

II. 

Permanently enjoin Defendants from further violations of the federal securities laws and 

Commission rules alleged in this Complaint; 

III. 

Permanently enjoin Defendants from directly or indirectly participating in the issuance, offer, 

or sale of any security, including but not limited to joint venture agreements, proofs of funds, bank 

guarantees, medium term notes, standby letters of credit, structured notes, and similar instruments, 

with the exception of the purchase or sale of securities listed on a national securities exchange;   

IV. 

Order Defendants to disgorge, as the Court may direct, all ill-gotten gains received or 

benefits in any form derived from the illegal conduct alleged in this Complaint, together with pre­

judgment interest thereon; 

V. 

Order Defendants to pay civil monetary penalties pursuant to Securities Act Section 20(d) 

[15 U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)]; and 

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   Case 2:14-cv-00623 Document 1 Filed 04/23/14 Page 14 of 14 

VI. 

Grant such other equitable and legal relief as may be appropriate or necessary for the benefit 

of investors pursuant to Exchange Act Section 21(d)(5) [15 U.S.C. § 78u(d)(5)]. 

Date: April 23, 2014 By: 

/s/ Stephen W. Simpson 
Stephen W. Simpson 
Timothy N. England 
Stephen L. Cohen 

Attorneys for Plaintiff 
U.S. Securities and Exchange Commission 
100 F Street, N.E. 
Washington, DC 20549 
Fax: 202.772.9228 
[email protected] / Tel. 202.551.4513 
[email protected] / Tel. 202.551.4959 
[email protected] / Tel. 202.551.4472 

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