While a Derry business owner is under investigation by the New Hampshire Securities Commission for allegedly soliciting investments over Facebook, the owner and creator of the Facebook posts said this week that he wasn’t intending to be a stockbroker.
Bill Williams, owner of the Used Apple Store at 6 West Broadway, was issued a cease-and-desist order Thursday, April 23, by the Bureau of Securities Regulation, a division of the Attorney General’s Office, according to Adrian Larochelle, one of the Bureau’s attorneys.
Larochelle said in a phone interview Monday that “We received information about a Facebook post allegedly by Mr. Williams. At that time, the post in question had been up since the 19th. The content had been edited, but he was still seeking investments for securities.”
Larochelle wrote in the cease-and-desist order that the Bureau received a tip on April 20. The Facebook post read, “We’re going to try something interesting… Come in and give us any amount of cash and we will give you twice as much back in 90 days.” The post went on to say that Williams had the right to “cap this offer at $1,000 per person” or decline for any reason. The offer was open until April 25, according to the Facebook post.
Williams also wrote, “We double our own internal investments in about 90 days. That’s how long it takes us to purchase, fix/upgrade and resell an item. Our average product purchases versus resale is double. So we are happy to extend this offer to our customers or anybody to see what the reaction is.”
Larochelle paraphrased the post as saying, “If you give us any amount of cash, we can double it in 90 days.”
Larochelle said the Bureau contacted Williams by telephone on April 21 and directed him to take down the post. “Mr. Williams did not remove or edit the post based on this conversation,” Larochelle said.
The Bureau again contacted Williams on April 22 and again “strongly urged” Williams to take down the post and work with the Bureau to resolve any issues. According to Larochelle, Williams was informed that if the post was not removed by the end of the day, the Bureau would file an action against Williams and the Used Apple Store.
Larochelle said Williams did not remove the post. An updated version of the post was on the store’s Facebook page late Monday afternoon and read: “Update* We’re going to try something interesting…. Come in and give us any amount of cash and we will give you 2X (twice as much) back in 90 days. This is written as a promissory note or loan as it is commonly known. We reserve the right to cap this offer at $1,000 per person or decline any person for any reason this offer. You get a receipt stating the transaction. There are no conditions and get cash back after 90 days no risk. This week only until April 25th, 2015. … We are doing this just to see what people’s reaction is. We double our own internal investments in about 10 days. That’s how long it takes for us to purchase, fix/upgrade and resell an item. Our average product purchases versus resale is double. So we are happy to extend this offer to our customers or anybody to see what the reaction is. The interest rate on this loan to you is actually 1600 percent compounded per year. That means if we offered the 2X on a continued basis for a year it would double 4 times through the year which is 1600 percent. If only the principal is loaned back then it would be 400 percent interest per year with the earned part taken by you each 90 day cycle. We will decide if we will have this offer after this one is matured.”
The post fit the description of advertising for the sale of securities, according to Larochelle. “It is selling investments without a license,” LaChappelle said.
The post did not involve Williams’ brick-and-mortar Used Apple Store, which is a legitimate business, Larochelle said.
Larochelle said his department had to act quickly, and he did not know if money had changed hands. “Normally our investigation procedure requires a request for information followed by sifting through the information,” he said. “This situation was an immediate concern and we had to act quickly.”
To sell securities in New Hampshire an individual needs either to be licensed or exempt from licensing, Larochelle said, adding, “Mr. Williams is neither.”
Larochelle said there were two posts that he knew of, the original one and the edited one. Williams was ordered to take both down.
As of Monday both posts were still up on Facebook, but Williams said in a phone interview that he had edited and clarified his intent. Williams said he is not attempting to sell stock, investments or securities. “It is a simple loan,” he said. “It’s a 90-day loan.”
Williams said he was inspired to start offering loans when he looked at the “disconnect” between profit-driven companies and their customers. “Three-fourths of the people who come in to us, come in because Apple told them it would be ‘cheaper’ to buy a new machine and to throw it out,” he said. “Apple wants you to buy a new one. But our take is, we can take a piece of equipment someone sold us for $100, because they were told it wasn’t ‘worth anything,’ and fix it and sell it for $500. We double our profits every 10 days.”
Williams said his goal was to tell customers, “You can do this too. And if you don’t want to, let us do it for you.”
“It is a simple loan,” Williams said. “I am not a stockbroker.”
Williams said currently the offer is only open to Massachusetts residents, so he isn’t violating New Hampshire law. “The transactions will take place in Massachusetts,” he said. “I need to see their Massachusetts driver’s license.
“If it’s a securities issue, I’m sure Massachusetts will come forward,” Williams said.
But Larochelle said the sale of securities without a license is a violation of RSA 421-B and the Secretary of State has authority to impose administrative penalties of up to $2,500 for each violation, according to the cease-and-desist order.
“We don’t know the full extent of this yet,” Larochelle said. “If this is what has occurred, it’s one issue. But there are still other issues with this.”
Larochelle said a press release has been issued directing people who have given money to Williams to contact the Bureau.
Larochelle said the cease and desist order had two parts. They are requesting Williams to cease and desist any further violation of the securities laws and also to remove the posts.
The fines for securities violations are fact-specific or tailored to the case, Larochelle said. They are based on the period of violations and could go as high as $2,500. With only a handful of violations, a person could be looking at a fine in the hundreds, he said.
“The fine will be determined by a hearing officer and will cover our costs,” he said.