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'DREAM LIFESTYLES' FINED FIRM PROMOTES HOT SPIEL ON WEB

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By Jeff Nash

November 8, 1999 6:01 am ET

A securities firm penalized for failing to monitor some of its 9,000 brokers has begun promoting a website that promises its associates "dream lifestyles" and "big-city incomes" by selling a variety of products, including financial services.

The firm, WMA Securities Inc. of Norcross, Ga., has provided a link on its website to Zillionaire.com, an Internet marketing website that proclaims it is "uniquely positioned to allow people from all walks of life to be on the cutting-edge of the exciting e-business world..."

Neither WMA nor Zillionaire.com executives returned telephone calls, and their precise connection remains unclear. The Zillionaire.com site states that it has "forged a dynamic relationship" with WMA that allows what it calls I-Associates "to benefit from the value of financial services-based e-commerce."

That relationship includes a requirement that I-Associates must join and be licensed through WMA to sell financial service products.

The I-Associates, according to the site's business presentation, will be part of a loose network of independent sales representatives -- the same type of sales force that landed WMA in hot water a year ago.

Regulators in Arizona and Ohio fined WMA $2.5 million in 1998 to settle charges that its brokers were selling investments that were not approved by the home office.

The company neither admitted nor denied the allegations and said at the time that it was improving its compliance oversight and had fired the brokers involved.

A Florida lawyer also filed $2 million in arbitration claims against the company in Florida, Ohio and California on behalf of a dozen clients. The claims are pending.

The brokers were selling viatical settlements unapproved by the home office and promissory notes backed by a company that eventually went bankrupt.

WMA Securities is a subsidiary of financial services marketing company WMA Inc., which was founded in 1991 by Hubert Humphrey, a former sales agent of A.L. Williams & Co. Williams is now called Primerica Financial Services Inc., a unit of Citigroup Inc.

At the heart of its regulatory problems was the five-year-old brokerage's staff of independent contractors, many of whom are part-timers working from home. According to regulators, they were too far-flung to monitor easily and managers failed to keep up with the staff's rapid growth.

Much of this growth has been fostered by the firm's recruiting, which involves giving brokers a piece of the commissions generated by the new reps they help bring into the organization in what appears to be a multilevel marketing scheme.

According to Zillionaire.com's website, people interested in becoming I-Associates can complete an application online and an agent will contact them. Only $50 is needed to join -- no experience necessary. The business was launched on Oct. 21, according to the Zillionaire.com's website, which touts the slogan "The Net Way to Net Worth."

Zillionaire.com wants to "lead the e-commerce revolution." It promises that I-Associates will be able to "substantially increase" their personal net worth and to take their families "to dream destinations of the world," among other inducements, by selling its products.

The associates are supposed to derive at least some of their income from what the site calls "ownership marketing," which also appears to be a form of multilevel sales.

In addition, I-Associates are supposed to be paid in various ways, including commission and a stock option plan.

It could not be determined whether Zillionaire.com has actually created a sales force.

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