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ORDER TO CEASE AND DESIST ORDER TO MAKE RESTITUTION AND NOTICE OF RIGHT TO HEARING DOCKET NO. CRF-18-8403-S |
I. PRELIMINARY STATEMENT
| 1. | The Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the General Statutes of Connecticut, the Connecticut Uniform Securities Act (“Act”), and Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies (“Regulations”) promulgated under the Act. |
| 2. | Pursuant to Section 36b-26(a) of the Act, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, has conducted an investigation into the activities of Respondents to determine if Respondents have violated, are violating or are about to violate provisions of the Act or Regulations (“Investigation”). |
| 3. |
As a result of the Investigation, the Commissioner has reason to believe that Respondents have violated certain provisions of the Act. |
| 4. | As a result of the Investigation, the Commissioner has the authority to issue a cease and desist order against Respondents pursuant to Section 36b-27(a) of the 2018 Supplement to the General Statutes (“2018 Supplement”). |
| 5. |
As a result of the Investigation, the Commissioner has the authority to order that Respondents make restitution pursuant to Section 36b-27(b) of the 2018 Supplement. |
| 6. | As a result of the Investigation, the Commissioner has the authority to impose a fine upon Respondents pursuant to Section 36b-27(d) of the 2018 Supplement. |
II. RESPONDENTS
| 7. |
Endeavor is an executive search and management consulting company with its principal place of business at 45 Rockefeller Plaza, 630 Fifth Avenue, 20th Floor, New York, New York 10111. |
| 8. | Doyle is an individual whose address last known to the Commissioner is 300 Highpoint Drive, #403, Hartsdale, New York 10530. Doyle is a Senior Managing Director of Endeavor. |
| 9. | On June 5, 2017, the State of Maine, Office of Securities (“Maine Securities”) entered a Cease and Desist Order, Imposition of Civil Fines and Order of Restitution against Respondents (In re: Endeavor Management Solutions, LLC and James Ward Doyle, No. 16-12370-CDO). Maine found that, inter alia, Respondents violated the Maine Uniform Securities Act through the offer and sale of unregistered securities, transacting business in Maine as a broker-dealer or agent of a broker-dealer or issuer without being licensed to do so or falling within an licensing exemption, and engaging in fraud. Maine entered into a Cease and Desist Order against Respondents, ordered Endeavor to pay a civil fine of $20,000, ordered Doyle to pay a civil fine of $40,000 and entered into an order of restitution in the amount of $20,000 for the investor that was the subject of the action. |
III. STATEMENT OF FACTS
10.
Among its services, Endeavor provides executive searches for Boards of Directors seeking new members, and attempts to match these Boards with individuals interested in joining a Board of Directors.
11.
Investor A is a Connecticut resident who was interested in joining a Board of Directors. In or around June 2017, Investor A was introduced to Doyle and Endeavor by a colleague. Investor A and Doyle discussed the possibility of Endeavor assisting Investor A in searching for and obtaining a Board of Directors position.
12.
In a June 27, 2017 e-mail to Investor A, Doyle stated that Endeavor had a program for “first time board candidates . . . to become part of a ‘go to’ pool of select candidates who may become part of future board candidates for additional searches.” Doyle described Endeavor’s “Cash Reserve Fund”, an investment that was “for first time board candidates [that] allows our firm to maintain a certain level of cash reserves.”
13.
On or about June 30, 2017, Investor A agreed to invest $30,000 with Endeavor through a Letter of Agreement. In the Letter of Agreement, Endeavor, among other things, promised to return the sum of $30,000 with interest at the rate of 10% (total $33,000) in one lump sum to Investor A on July 31, 2017. In a June 30, 2017 e-mail to Investor A, Doyle thanked Investor A for investing in Endeavor and represented to Investor A that her “funds will remain on deposit at all times in our cash reserve account. We mutually agree that upon our lump sum payment to you of US$33,000 on July 31, 2017, all financial obligations between you and our firm will be complete.”
14.
July 31, 2017 passed, and neither Endeavor nor Doyle paid Investor A the $33,000 as promised.
15.
To date, despite multiple attempts by Investor A to recover her investment of $30,000 plus $3,000 interest, neither Endeavor nor Doyle has repaid Investor A the $30,000 initially invested or the $3,000 return on that investment.
16.
The Letter of Agreement and its accompanying guarantee of a set return constitutes a security in the form of an investment contract, evidence of indebtedness and/or certificate of interest, note or participation in a profit-sharing agreement within the meaning of Section 36b-3(19) of the Act. Such security was not registered under Section 36b-16 of the Act nor was it the subject of a filed exemption claim or claim of covered security status.
17.
In the Letter of Agreement, Respondents represented to Investor A that the investment amount of $30,000 would be returned to Investor A with $3,000 in interest, that the $30,000 would be maintained on deposit with Endeavor and that the “funds will never be placed at risk whatsoever.” These representations were false and misleading because Investor A’s funds were in fact at risk because the funds have not been returned to her as was promised to her by Respondents. Moreover, Respondents failed to disclose to Investor A the basis for their ability to pay a guaranteed 10% return to Investor A on her investment, specifically what Endeavor did to generate this return, or the fact that the investment was not properly registered as a security as required by the Act. Lastly, Respondents failed to disclose to Investor A the fact that on June 5, 2017, just a few weeks before Investor A’s investment, the State of Maine entered a Cease and Desist Order, Imposition of Civil Fines and Order of Restitution against Respondents involving a factual scenario similar to Investor A’s investment with Respondents.
ORDER TO MAKE RESTITUTION AND ORDER IMPOSING FINE
a. Violation of Section 36b-16 of the Act – Offer and Sale of Unregistered Securities
| 18. | Paragraphs 1 through 17, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 19. |
Respondents, offered and sold unregistered securities in or from Connecticut to at least one investor, as more fully described in paragraphs 9 through 16, inclusive, which securities were not registered in Connecticut under the Act, as more fully described in paragraph 15. The offer and sale of such securities absent registration constitutes a violation of Section 36b-16 of the Act, which forms a basis for an order to cease and desist to be issued against Respondents under Section 36b-27(a) of the 2018 Supplement, an order that Respondents make restitution under Section 36b-27(b) of the 2018 Supplement, and for the imposition of a fine upon Respondents under Section 36b-27(d) of the 2018 Supplement. |
b. Violation of Section 36b-4(a) of the Act –
Fraud in Connection with the Offer and Sale of any Security
| 20. | Paragraphs 1 through 19, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 21. |
The conduct of Respondents, as more fully described in paragraphs 9 through 16, inclusive, constitutes, in connection with the offer, sale or purchase of any security, directly or indirectly employing a device, scheme or artifice to defraud, making an untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in an act, practice or course of business which operates or would operate as a fraud or deceit upon any person. Such conduct constitutes a violation of Section 36b-4(a) of the Act, which forms a basis for an order to cease and desist to be issued against Respondents under Section 36b-27(a) of the 2018 Supplement, an order that Respondents make restitution under Section 36b-27(b) of the 2018 Supplement, and for the imposition of a fine upon Respondents under Section 36b-27(d) of the 2018 Supplement. |
V. ORDER
NOTICE OF INTENT TO FINE AND NOTICE OF RIGHT TO HEARING
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Endeavor has committed at least one violation of Section 36b-16 of the Act, and at least one violation of Section 36b-4(a) of the Act;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Doyle has committed at least one violation of Section 36b-16 of the Act, and at least one violation of Section 36b-4(a) of the Act;
WHEREAS, the Commissioner further finds that the issuance of an Order to Cease and Desist, Order to Make Restitution, and the imposition of a fine upon Respondents is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policies and provisions of the Act;
WHEREAS, notice is hereby given to Respondents that the Commissioner intends to impose a maximum fine not to exceed one hundred thousand dollars ($100,000) per violation upon Respondents;
WHEREAS, the Commissioner ORDERS that ENDEAVOR MANAGEMENT SOLUTIONS, LLC, its affiliates and successors in interest CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation, (1) offering and selling unregistered securities; and (2) in connection with the offer, sale or purchase of any security, directly or indirectly employing any device, scheme or artifice to defraud, making an untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in an act, practice or course of business which operates or would operate as a fraud or deceit upon any person;
WHEREAS, the Commissioner ORDERS that JAMES W. DOYLE CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation, (1) offering and selling unregistered securities; and (2) in connection with the offer, sale or purchase of any security, directly or indirectly employing any device, scheme or artifice to defraud, making an untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in an act, practice or course of business which operates or would operate as a fraud or deceit upon any person;
WHEREAS, the Commissioner ORDERS that RESPONDENTS MAKE RESTITUTION of any sums obtained as a result of Respondents’ violations of Sections 36b-4(a) and 36b-16 of the Act, plus interest at the legal rate set forth in Section 37-1 of the General Statutes of Connecticut. Specifically, the Commissioner ORDERS that:
| 1. | Within forty-five (45) days from the date this Order to Make Restitution becomes permanent, Respondents shall reimburse Investor A $30,000 plus 10 percent interest in the amount of $3,000 (total of $33,000), for Investor A’s investment in Endeavor Management Solutions, LLC. Such restitution shall be made by certified check, and shall be sent by certified mail, return receipt requested, to Investor A; and |
| 2. | Within ninety days (90) days from the date this Order to Make Restitution becomes permanent, Respondents shall provide the Division with proof in the form of a copy of the certified check and the return receipt required by paragraph 1 above, that Respondents have reimbursed Investor A $33,000, with respect to the transaction effected on June 30, 2017. |
THE COMMISSIONER FURTHER ORDERS THAT, pursuant to Section 36b-27 of the 2018 Supplement, each Respondent will be afforded an opportunity for a hearing on the allegations set forth above if a written request for a hearing is received by the Department of Banking, Securities and Business Investments Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following each Respondent’s receipt of this Order. To request a hearing, complete and return the enclosed Appearance and Request for Hearing Form to the above address. If any Respondent will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”. If a hearing is requested, the hearing will be held on July 31, 2018, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
The hearing will be held in accordance with the provisions of Chapter 54 of the General Statutes of Connecticut. At such hearing, each Respondent will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.
If any Respondent does not request a hearing within the time period prescribed or fails to appear at any such hearing, the allegations herein against any such Respondent will be deemed admitted. Accordingly, the Order to Cease and Desist and Order to Make Restitution shall remain in effect and become permanent against any such Respondent and the Commissioner may order that the maximum fine be imposed upon any such Respondent.
| Dated at Hartford, Connecticut, | ____/s/_____________ | |
| this 21st day of May 2018. | Jorge L. Perez | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 22nd day of May 2018, I caused to be mailed by certified mail, return receipt requested, the foregoing Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing to: Endeavor Management Solutions, LLC, 45 Rockefeller Plaza, 630 Fifth Avenue, 20th Floor, New York, New York 10111, certified mail no. 7013 3020 0000 4226 6714; James Ward Doyle, c/o Endeavor Management Solutions, LLC, 45 Rockefeller Plaza, 630 Fifth Avenue, 20th Floor, New York, New York 10111, certified mail no. 7013 3020 0000 4226 6721; and James Ward Doyle, 300 Highpoint Drive #403, Hartsdale, New York 10530, certified mail no. 7013 3020 0000 4226 6738.
| ___/s/____ |
| W. C. Hall |
| Paralegal |