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IN THE MATTER OF: (Collectively "Respondents") * * * * * * * * * * * * * * * * * * |
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AMENDED AND RESTATED AMENDED AND RESTATED AND NOTICE OF RIGHT TO HEARING DOCKET NO. CRF-16-8169-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 reason to believe that a basis exists to issue a cease and desist order against Respondents as authorized by Section 36b-27(a) of the Act. | |||
| 5. |
As a result of the Investigation, the Commissioner has reason to believe that a basis exists to order that Respondents make restitution as authorized by Section 36b-27(b) of the Act. | |||
| 6. | As a result of the Investigation, the Commissioner has reason to believe that a basis exists to impose a fine upon Respondents as authorized by Section 36b-27(d) of the Act. | |||
| 7. | As a result of the Investigation, on August 17, 2016, the Commissioner, acting pursuant to Section 36b-27 of the Act, issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (collectively “Order and Hearing Notice”) against OmniView Capital Advisors LLC (“Advisors”) and Abraxas J. Discala a/k/a AJ Discala (“Discala”), which Order and Hearing Notice is hereby amended and superseded. | |||
| 8. | On September 29, 2016, Advisors and Discala requested a hearing on the allegations set forth in the Order and Hearing Notice. The hearing is currently scheduled (after the grant of continuances by the Hearing Officer) for February 28, 2017. | |||
| 9. | Section 36b-31(a) of the Act authorizes the Commissioner to make and amend “such . . . orders as are necessary to carry out the provisions of sections 36b-2 to 36b-34, inclusive . . . .” | |||
| 10. | Section 36a-1-22 of the Regulations of Connecticut State Agencies provides, in pertinent part, that:
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II. RESPONDENTS
| 11. |
Advisors is or was a Delaware limited liability company that had its principal place of business at 140 Rowayton Avenue, Norwalk, Connecticut 06853. Advisors marketed itself as a merchant bank that sought to create partnerships with companies that were fundamentally sound in order to provide required capital and strategic advice. Advisors claimed it possessed a team of seasoned professionals who had extensive knowledge of the capital markets, including having (i) experience in raising capital through private placements, alternative public offerings and reverse takeovers of companies whose shares were traded on the Over-the-Counter (“OTC”) exchanges; (ii) substantial contacts to bolster management boards; and (iii) a model that prevented any conflicts of interest between Advisors, investors and the target companies. At no time has Advisors been registered in any capacity under the Act. |
| 12. | Omni View Capital LLC (“Capital”) is or was a Delaware limited liability company that had its principal place of business at 140 Rowayton Avenue, Norwalk, Connecticut 06853. Capital marketed itself as a privately held investment advisory and merchant-banking firm that sought out financially sound companies to create a true partnership by adding required capital, assuming the risk and providing advice to help companies achieve their goals and providing significant added value beyond the capital investment. Capital claimed it possessed a team that had over 20 years of experience in merchant banking and principal investing, and advised over $1 billion in secured debt, equity and mezzanine financing transactions across a spectrum of industries. At no time has Capital been registered in any capacity under the Act. |
| 13. | Discala is an individual whose address last known to the Commissioner is 10 Vincent Place, Norwalk, Connecticut, 06853. Discala was the Chief Executive Officer of Advisors, which was formed in 2011, and Capital, which was formed in 2012. For all intents and purposes, Advisors and Capital were the alter ego of Discala who exercised domination and control over their operations. At no time has Discala been registered in any capacity under the Act. |
| 14. | In their business dealings, Advisors and Capital were known as and referred to by Discala and others as: OmniView Capital Advisors; OmniView Capital; OmniView Capital LLC; Omni View Capital; Omni View Capital, LLC; OmniView; and OVCA. |
III. STATEMENT OF FACTS
15.
On August 15, 2013, Crackpot Inc., a Nevada corporation (“Crackpot”), engaged Advisors to assist Crackpot with its intended capital raise and the trading of Crackpot stock in the public marketplace. Advisors’ role was to raise funds for Crackpot.
16.
In December 2013, Crackpot and Discala, as President of “Omniview Capital, LLC” [sic], entered into a Security Agreement. Pursuant to the Security Agreement, Crackpot granted “Omniview Capital, LLC” [sic] a security interest in and lien upon all of the Collateral identified in the Security Agreement to secure the payment of principal or interest and all other amounts owing to the purchasers of notes sold by Crackpot.
17.
In early March 2014, Advisors and/or Capital, through Discala, offered and sold ten thousand (10,000) shares of Crackpot for ten thousand dollars ($10,000) to a married couple who were and are Connecticut residents (“Investors”). Respondents received compensation or other remuneration directly or indirectly for providing such services.
18.
On March 24, 2014, Cubed. Inc., a shell public company with only nominal assets and no revenues (“Cubed”), filed with the U.S. Securities and Exchange Commission a Form 8-K stating that it had entered into an intellectual property purchase agreement (“Asset Purchase Agreement”) with Crackpot. Pursuant to the Asset Purchase Agreement, Cubed acquired intellectual property, specifically a “mobile-first platform”, from Crackpot. In exchange for this intellectual property, Cubed agreed to pay Crackpot three hundred fifty thousand dollars ($350,000) and to transfer 2,537,455 restricted shares of Cubed to Crackpot. At the time of the Asset Purchase Agreement, the Cubed shares were penny stocks.
19.
In March or early April 2014, Advisors and/or Capital, through Discala, offered and sold an additional thirty thousand (30,000) shares of Crackpot for thirty thousand dollars ($30,000) to the Investors. Respondents received compensation or other remuneration directly or indirectly for providing such services.
20.
The forty thousand (40,000) shares of Crackpot the Investors purchased from Respondents are securities within the meaning of Section 36b-3(19) of the Act, which securities were not registered in Connecticut under Section 36b-16 of the Act nor were they the subject of a filed exemption claim or claim of covered security status.
21.
At the time of the offers and sales of the Crackpot shares, Advisors and Capital were not registered in Connecticut as a broker-dealer or in any other capacity under the Act. At the time of the offers and sales of the Crackpot shares, Discala was not registered in Connecticut as an agent, broker-dealer or in any other capacity under the Act, nor was he an associated person representing a broker-dealer in effecting transactions described in subdivisions (2) and (3) of Section 15(h) of the Securities Exchange Act of 1934, nor was he excluded from the definition of “agent” under Section 36b-3(1) of the Act.
22.
In connection with the offer and sale of the Crackpot shares, Respondents failed to disclose any financial information about the investment, the registration status of the Crackpot shares, that neither Advisors nor Capital was a registered broker-dealer in Connecticut, that Discala was not a registered broker-dealer agent in Connecticut, and risk factors related to the investment.
23.
On June 3, 2014, Scanbuy Inc., a Delaware corporation (“Scanbuy”), engaged Advisors to raise funds for Scanbuy.
24.
In June 2014, Advisors and/or Capital, through Discala, offered and sold thirty thousand (30,000) shares of Scanbuy stock for fifteen thousand dollars ($15,000) to the Investors. Respondents received compensation or other remuneration directly or indirectly for providing such services.
25.
The thirty thousand (30,000) shares of Scanbuy the Investors purchased from Respondents in June 2014 are securities within the meaning of Section 36b-3(19) of the Act, which securities were not registered in Connecticut under Section 36b-16 of the Act nor were they the subject of a filed exemption claim or claim of covered security status.
26.
At the time of the offers and sales of the Scanbuy shares, neither Advisors nor Capital was registered in Connecticut as a broker-dealer or in any other capacity under the Act. At the time of the offers and sales of the Scanbuy shares, Discala was not registered in Connecticut as an agent, broker-dealer or in any other capacity under the Act, nor was he an associated person representing a broker-dealer in effecting transactions described in subdivisions (2) and (3) of Section 15(h) of the Securities Exchange Act of 1934, nor was he excluded from the definition of “agent” under Section 36b-3(1) of the Act.
27.
In connection with the offer and sale of the Scanbuy shares, Respondents failed to disclose any financial information about the investment, the registration status of the Scanbuy shares, that Advisors and Capital were not registered broker-dealers in Connecticut, that Discala was not a registered broker-dealer agent in Connecticut, and risk factors related to the investment.
28.
On November 17, 2014, the Investors received seven thousand five hundred dollars ($7,500) from Capital as a partial refund of their purchase of Scanbuy.
ORDER TO MAKE RESTITUTION AND ORDER IMPOSING FINE
a. Violation of Section 36b-6(a) of the Act by Advisor [sic] and Capital –
Unregistered Broker-dealer Activity
| 29. | Paragraphs 1 through 28, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 30. |
Advisors transacted business as a broker-dealer in or from Connecticut absent registration, as more fully described in paragraphs 11 through 28, inclusive. Such conduct constitutes a violation of Section 36b-6(a) of the Act, which forms a basis for an order to cease and desist to be issued against Advisors under Section 36b-27(a) of the Act, and for the imposition of a fine upon Advisors under Section 36b-27(d) of the Act. |
| 31. | Capital transacted business as a broker-dealer in or from Connecticut absent registration, as more fully described in paragraphs 11 through 28, inclusive. Such conduct constitutes a violation of Section 36b-6(a) of the Act, which forms a basis for an order to cease and desist to be issued against Capital under Section 36b-27(a) of the Act, and for the imposition of a fine upon Capital under Section 36b-27(d) of the Act. |
b. Violation of Section 36b-6(a) of the Act by Discala –
Unregistered Broker-dealer Agent Activity
| 32. | Paragraphs 1 through 31, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 33. |
Discala transacted business as a broker-dealer agent of Advisors and/or Capital in or from Connecticut absent registration, as more fully described in paragraphs 11 through 28, inclusive. Such conduct constitutes a violation of Section 36b-6(a) of the Act, which forms a basis for an order to cease and desist to be issued against Discala under Section 36b-27(a) of the Act, and for the imposition of a fine upon Discala under Section 36b-27(d) of the Act. |
c. Violation of Section 36b-16 of the Act by Respondents –
Sale of Unregistered Securities
| 34. | Paragraphs 1 through 33, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 35. |
Respondents offered and sold securities in or from Connecticut to at least one investor, as more fully described in paragraphs 11 through 28, inclusive, which securities were not registered in Connecticut under the Act, as more fully described in paragraphs 20 and 25. 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 Act, an order that Respondents make restitution under Section 36b-27(b) of the Act, and for the imposition of a fine upon Respondents under Section 36b-27(d) of the Act. |
d. Violation of Section 36b-4(a) of the Act by Respondents –
Fraud in Connection with the Offer, Sale or Purchase of any Security
| 36. | Paragraphs 1 through 35, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 37. |
The conduct of Respondents, as more fully described in paragraphs 11 through 28, 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 Act, an order that Respondents make restitution under Section 36b-27(b) of the Act, and for the imposition of a fine upon Respondents under Section 36b-27(d) of the Act. |
V. AMENDED AND RESTATED ORDER
AMENDED AND RESTATED ORDER TO MAKE RESTITUTION,
AMENDED AND RESTATED 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, Advisors has committed at least one violation of Section 36b-6(a) of the Act, 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, Capital has committed at least one violation of Section 36b-6(a) of the Act, 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, Discala has committed at least one violation of Section 36b-6(a) of the Act, 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 Amended and Restated Order to Cease and Desist, Amended and Restated 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 fine not to exceed the maximum fine of one hundred thousand dollars ($100,000) per violation upon Respondents;
WHEREAS, the Commissioner ORDERS that OMNIVIEW CAPITAL ADVISORS LLC CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) transacting business as an unregistered broker-dealer in or from Connecticut; (2) offering and selling unregistered securities in or from Connecticut; and (3) 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;
WHEREAS, the Commissioner ORDERS that OMNI VIEW CAPITAL LLC CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) transacting business as an unregistered broker-dealer in or from Connecticut; (2) offering and selling unregistered securities in or from Connecticut; and (3) 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;
WHEREAS, the Commissioner ORDERS that ABRAXAS J. DISCALA CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) transacting business as an unregistered broker-dealer agent in or from Connecticut; (2) offering and selling unregistered securities in or from Connecticut; and (3) 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;
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 thirty (30) days from the date this Amended and Restated Order to Make Restitution becomes permanent, Respondents shall provide the Division with a written disclosure which contains (a) the name and address of each investor who purchased Crackpot and Scanbuy shares through Respondents from August 15, 2013 through December 2014, (b) the amount collected from each investor, (c) the date of each investment, and (d) the amount of any refunds of principal or purported interest payments made to each investor; |
| 2. | Within forty-five (45) days from the date this Amended and Restated Order to Make Restitution becomes permanent, Respondents shall reimburse each investor the amount of funds collected from the investor plus interest, less funds returned in the form of purported refunds of principal and purported interest payments, with respect to each investor’s purchase of the Crackpot and Scanbuy shares. Such restitution shall be made by certified check, and shall be sent by certified mail, return receipt requested, to each affected investor; and |
| 3. | Within ninety days (90) days from the date this Amended and Restated Order to Make Restitution becomes permanent, Respondents shall provide the Division with proof in the form of copies of the certified checks and the return receipts required by paragraph 2 of Section V of this Amended and Restated Order to Cease and Desist, Amended and Restated Order to Make Restitution, Amended and Restated Notice of Intent to Fine and Notice of Right to Hearing, that Respondents have reimbursed each investor the amount of funds collected from the investor plus interest, less funds returned in the form of purported refunds of principal and purported interest payments, with respect to each investor’s purchase of the Crackpot and Scanbuy shares. |
THE COMMISSIONER FURTHER ORDERS THAT, pursuant to Section 36b-27 of the Act, 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 Amended and Restated Order.
To request a hearing, the newly added Respondent Omni View Capital LLC must complete and return the enclosed Appearance and Request for Hearing Form to the above address. If Omni View Capital LLC 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 by Omni View Capital LLC, the hearing will be held on February 28, 2017, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
Pursuant to Section 36a-1-22 of the Regulations of Connecticut State Agencies, the joint request for a hearing that was filed by OmniView Capital Advisors, LLC and Abraxas J. Discala is preserved as it relates to this Amended and Restated Order to Cease and Desist, Amended and Restated Order to Make Restitution, Amended and Restated Notice of Intent to Fine and Notice of Right to Hearing. Pursuant to Section 36a-1-28 of the Regulations of Connecticut State Agencies, proceedings involving the respective Respondents may be consolidated.
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 Omni View Capital LLC, the newly added Respondent, does not request a hearing within the time period prescribed or if any Respondent fails to appear at any such hearing, the allegations herein against any such Respondent will be deemed admitted. Accordingly, the Amended and Restated Order to Cease and Desist and Amended and Restated 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 17th day of February 2017. | Jorge L. Perez | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 21st day of February 2017, I caused to be mailed by certified mail, return receipt requested, the foregoing Amended and Restated Order to Cease and Desist, Amended and Restated Order to Make Restitution, Amended and Restated Notice of Intent to Fine and Notice of Right to Hearing to: Omni View Capital LLC, 140 Rowayton Avenue, Norwalk, Connecticut 06853, certified mail no. 7012 3050 0000 6997 6438; and Andrew B. Bowman, Esq., Law Offices of Andrew B. Bowman, 1804 Post Road East, Westport, Connecticut 06880, certified mail no. 7012 3050 0000 6997 6445; and by e-mail to andrew at andrewbowmanlaw dot com; and a copy to be hand-delivered to Stacey Serrano, Hearing Officer, State of Connecticut, Department of Banking, 260 Constitution Plaza, Hartford, Connecticut 06103-1800.
| __/s/____ |
| W. C. Hall |
| Paralegal |