Injunction Prevents Maryland Company From Luring Nys Investors Over The Internet

Attorney General Spitzer today announced that he had obtained an order in Manhattan State Supreme Court preventing the Cellular Video Car Alarms Corporation from using the Internet to solicit New Yorkers to invest in the company. The case complements actions taken against the same company by the United States Securities and Exchange Commission (SEC) and the Maryland Attorney General's office.

The Maryland-based company allegedly made false representations to potential investors on the Internet about a video car alarm system it sought to manufacture. The product -- a device designed to alert owners to a break-in of their car through a video image -- has not yet been tested.

In his solicitations, corporation founder Carl Robinson projected that the company would be worth $44 billion in five years and that the price of the stock, currently valued at $1.25 per share, would trade at $100 per share by 2002 and $700 by 2005. Robinson also told prospective investors he had an agreement with AT&T to market the product, when in fact AT&T had advised him that it had no interest in the device.

Spitzer obtained the injunction against Robinson, a resident of Hagerstown, Maryland and Garden City, New York, his sister Veronica Bryant, and his brother Darret Robinson. Both Veronica Bryant and Darret Robison are Maryland residents and serve as officers in the company. Overall, Robinson collected $400,000 from investors, including $150,000 from more than 40 New York residents. The largest amount invested was $12,500. The injunctive action alleges that as of this past August, all but approximately $15,000 of the investors' funds had been eaten up with no prototype of the product in sight.

"This case shows that my office will work with other regulatory agencies to fight fraud and to protect investors," Attorney General Spitzer said. "The public needs to be extremely cautious when investing its money though online solicitations and should always research any company before doing so."

The Manhattan court order prevents Cellular Video from further soliciting New Yorkers to invest in the company, and also prohibits the officers from spending any funds, except for normal business expenses, or from transferring any of its other assets.

The respondents have been ordered to appear in court on October 30 to give testimony and produce their books and business records.

The SEC also filed an action against the company in Manhattan federal court. Late Tuesday the SEC obtained a temporary restraining order against Robinson and the corporation. A hearing will be held in federal court on October 10, 2000 where the SEC seek a permanent injunction. In Maryland, Attorney General Joe Curran Jr. has also taken action against the company by filing a summary cease and desist order barring the company from soliciting investors. Curran's office also provided assistance to Spitzer's office on the case.

Spitzer thanked the SEC and Maryland Attorney General Curran and their staffs for assisting his office in the investigation.

The case is being handled by Assistant Attorneys General Gary R. Connor and Scott Anderson of the Investor Protection Bureau.

In Maryland the case is being handled by Assistant Attorney General Timothy Cox. Also working on the action is Maryland Securities Commissioner Melanie Senter Lubin.