Maryland Attorney General Brian E. Frosh is seeking to shut down a prominent Towson financial-advice business, accusing it of fraudulently misrepresenting the risks of its investment strategy.
Frosh also announced Thursday that his office wants to permanently prohibit Philippe Rousseaux of Baltimore, owner of Everest Wealth Management and Everest Investment Advisors Inc., from offering his investment services in Maryland.
Frosh said the action sends a message to investors and advisers. He said consumers should be wary if an investment company promises a guaranteed rate of return or an unusually high return on investments.
"If it sounds too good to be true, it is," Frosh said.
The attorney general said the message to advisers is that if they make such promises, "we are going to be looking closely at your business, and with great skepticism."
According to the attorney general's office, the companies are well known in Baltimore for their televised infomercials promoting Rousseaux and his team as "The Money Guys." An order to show cause issued by Frosh's office alleges that the ads "lure customers with promises of guaranteed returns and limited risk."
It accuses the companies of multiple violations of Maryland securities laws, including fraud in connection with the offer, sale or purchase of securities; dishonest and unethical practices; and acting as an unregistered investment adviser.
The attorney general is not alleging that client funds were misappropriated.
"While Maryland's Attorney General disagrees with our marketing techniques, Everest's extended and deeply experienced legal team is fully confident we have taken the proper measures to comply with all securities regulations," Rousseaux said in a statement issued late Thursday.
Russell Duncan, an attorney for the Everest firms and Rousseaux, said his clients would contest the charges. Duncan questioned why the complaint would be brought now, contending that any regulatory problems had been fixed by last year and that Rousseaux is now fully compliant with the rules.
"Clearly there's no reason for investors to have any concern today," Duncan said.
Everest is a high-profile sponsor of Baltimore Orioles radio broadcasts on WJZ-FM. At various times, the team's announcers tell listeners they are broadcasting from the Everest Wealth Management booth, and some of the company ads are recorded by Ed Norris, the radio personality and former Baltimore police commissioner.
Greg Bader, a spokesman for the Orioles, said the club is reviewing the matter. The general manager of WJZ could not be reached. Norris was said to be traveling abroad.
Everest Wealth Management also advertises in The Baltimore Sun, where it ran an ad as recently as Wednesday. "We are currently assessing the situation," said Renee Mutchnik, a spokeswoman for the newspaper.
One of the charges in the complaint is that the wealth management firm identified itself as an investment adviser when it was not properly registered in Maryland as such.
The attorney general also said Rousseaux and his firms violated their responsibility to investors by blurring the distinction between the insurance policies they were selling and their fee-based investment advice.
Using what it said were Rousseaux's own words, the complaint says Rousseaux bragged to people in the industry that his marketing strategy used "psychological warfare" and "mind games" to lure investors.
The administrative action, which is neither a criminal charge nor a civil lawsuit, said the companies continued to do so despite receiving repeated warnings from the attorney general's Securities Division.
Duncan acknowledged that Rousseaux may have used the words the attorney general quoted to describe his strategy but denied that there was any improper intent.
"All human relations are built on psychology," he said.
David Nitkin, a spokesman for Frosh, said the actions were filed with the state's independent Office of Administrative Hearings, where the case will be heard by administrative law judge who will make a recommendation to Maryland Securities Commissioner Melanie Senter Lubin.
Lubin's decision could then be appealed in Circuit Court. Possible penalties include fines of up to $5,000 per violation, revocation of Rousseaux's registration as an investment adviser and a permanent ban of the companies acting as investment advisers in Maryland.
On the Everest Investment website, Rousseaux is identified as Philip, but the attorney general's office used the version of his name used on his registration with the Financial Industry Regulatory Authority, known as FINRA.
The attorney general's complaint lays out a broad pattern of alleged deceptions and rules violations by the two companies and Rousseaux.
The company countered in a statement that no investors had been harmed.