Beyond Diamonds Investments Inc., Darial Chatman Subjects Of ‘Cease And Desist’ Order In South Carolina; State Says Firm Was Selling Unregistered Securities And Claiming To Be ‘SEC Compliant’

UPDATED 12:52 P.M. EDT (USA) A South Carolina man previously ordered by Pennsylvania to stop selling unregistered securities for a real-estate business now has been ordered by South Carolina to stop selling unregistered securities for yet-another business, authorities said.

Darial Chatman, also known as Darrell Chatman and Darrell Chapman, was ordered by the Pennsylvania Securities Commission in May 2009 to halt the selling of securities for his business, Dream Builders of South Carolina LLC. He also was issued a cease-and-desist order in South Carolina for the same company, according to records.

Now the office of South Carolina Attorney General Henry McMaster has ordered Chatman to stop selling unregistered securities for a company known as Beyond Diamonds Investments Inc. (BDI), amid allegations it “advertised investment opportunities earning 30% annually” and made statements that were “materially misleading or false.”

South Carolina authorities said they believed BDI was not registered to do business in any state, but had placed postcards in “newspaper boxes at some residences in the area of Columbia” and mailed postcards to other prospects.

Among the assertions on the postcard was that BDI was “SEC Compliant.” The company claimed it “Will Financially Out Perform (sic) Your Current Brokerage or Investment Firm,” authorities said, noting that BDI’s postcard advertised an “Account Minimum” of $5,000 and claimed to charge no fees.

BDI operates a website filled with grammar, spelling and usage errors to recruit investors, South Carolina investigators said. They added that the company claims not to divulge its method of making money.

“We all know there are hundreds of other ways to make money outside of stocks, mutual funds, cd’s ect ect (sic),” the state quoted the firm as saying. “We have the experience to make you money using all those other ways. Sorry, we do not discuss our methods.”

Among the other assertions:

• “Our principle (sic) has over 15 years experience in aggressive investing in high risk projects.”
• “[O]ur principle (sic) has fifteen years experience in this field and has earned millions of dollars for people just like you[.]”
• “We can guarantee that you will not lose money working with us.”
• “[W]e are … still in the process of getting proper compliance with the state. However, we can still get your account set-up and start working for you.”
• “We are also involved with the Securities Industry Association in the continuing enhancement and standardization of industry practices.”

But McMaster’s office said it did not believe BDI was a member of the Securities Industry Association, a trade group based in Alexandria, Va.

On July 12, according to investigators, a person identifying himself as Chatman replied to a message left at the phone number provided on BDI’s postcard.

“Chatman stated that the investments in question involved organizing and capitalizing concerts by ‘big’ acts in South Carolina, and he specifically cited a concert he claimed to have organized in Florence, South Carolina, with John Michael Montgomery as the headline act,” South Carolina authorities said. “Chatman stated he made only $6,000 on that concert at one dollar per ticket.”

Investigators said they believed the concert Chatman referenced sold fewer than 700 tickets and that “Chatman continues to owe approximately $6,000 in expenses to the Florence Civic Center.”

Moreover, authorities said, the concert was promoted as a fundraiser for a charity known as Donate A Blessing Foundation Inc. The charity uses the same address as BDI, and Chatman is listed as its chief executive officer.

BDI also promotes a purported “scholarship” program on its website, which uses a tag line of, “If it makes since (sic) to us, it makes money for you.”

Read the South Carolina cease-and-desist order against BDI and Chatman. The order was brought by the Securities Division of McMaster’s office.