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IN THE MATTER OF: (Collectively "Respondents") * * * * * * * * * * * * * * * * * * |
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ORDER TO CEASE AND DESIST ORDER TO MAKE RESTITUTION 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. |
II. RESPONDENTS
| 7. |
OmniView Capital Advisors, LLC (“OmniView”) was a Delaware limited liability company that had its principal place of business in 140 Rowayton Avenue, Norwalk, Connecticut 06853. OmniView 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. OmniView 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 OmniView, investors and the target companies. OmniView is not and has not been registered in any capacity under the Act. |
| 8. | Abraxas J. Discala a/k/a AJ Discala (“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 OmniView which he formed in 2011. Discala is not and has not been registered in any capacity under the Act. |
III. STATEMENT OF FACTS
9.
On August 15, 2013, Crackpot Inc., a Nevada corporation (“Crackpot”), engaged OmniView to assist Crackpot with its intended capital raise and the trading of Crackpot stock in the public marketplace. OmniView’s role was to raise funds for Crackpot. OmniView and Discala received compensation or other remuneration directly or indirectly for providing such services.
10.
On April 2, 2014, OmniView, through Discala, offered and sold thirty thousand (30,000) shares of Crackpot for thirty thousand dollars ($30,000) to a married couple who are Connecticut residents (“Investors”).
11.
The thirty thousand (30,000) shares of Crackpot the Investors purchased from OmniView on April 2, 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.
12.
At the time of the offers and sales of the Crackpot shares, OmniView was 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, as amended by Public Act 16-65.
13.
In connection with the offer and sale of the Crackpot shares, OmniView and Discala failed to disclose any financial information about the investment, the registration status of the Crackpot shares, that OmniView was not a registered broker-dealer in Connecticut, that Discala was not a registered broker-dealer agent in Connecticut, and risk factors related to the investment.
14.
On June 3, 2014, Scanbuy Inc., a Delaware corporation (“Scanbuy”), engaged OmniView for its business and financial services. OmniView’s role was to raise funds for Scanbuy. OmniView and Discala received compensation or other remuneration directly or indirectly for providing such services.
15.
On June 27, 2014, OmniView, through Discala, offered and sold thirty thousand (30,000) shares of Scanbuy stock for fifteen thousand dollars ($15,000) to the Investors.
16.
The fifteen thousand (15,000) shares of Scanbuy the Investors purchased from OmniView on June 27, 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.
17.
At the time of the offers and sales of the Scanbuy shares, OmniView was 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 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, as amended.
18.
In connection with the offer and sale of the Scanbuy shares, OmniView and Discala failed to disclose any financial information about the investment, the registration status of the Scanbuy shares, that OmniView was not a registered broker-dealer in Connecticut, that Discala was not a registered broker-dealer agent in Connecticut, and risk factors related to the investment.
19.
On November 17, 2014, the Investors received seven thousand five hundred dollars ($7,500) from OmniView 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 OmniView –
Unregistered Broker-dealer Activity
| 20. | Paragraphs 1 through 19, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 21. |
OmniView transacted business as a broker-dealer in Connecticut absent registration, as more fully described in paragraphs 7 through 19, inclusive. Such conduct constitutes a violation of Section 36b-6(a) of the Act, as amended by Public Act 16-65, which forms a basis for an order to cease and desist to be issued against OmniView under Section 36b-27(a) of the Act, and for the imposition of a fine upon OmniView 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
| 22. | Paragraphs 1 through 21, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 23. |
Discala transacted business as a broker-dealer agent of OmniView in Connecticut absent registration, as more fully described in paragraphs 7 through 19, inclusive. Such conduct constitutes a violation of Section 36b-6(a) of the Act, as amended, 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
| 24. | Paragraphs 1 through 23, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 25. |
Respondents offered and sold securities in or from Connecticut to at least one investor, as more fully described in paragraphs 7 through 19, inclusive, which securities were not registered in Connecticut under the Act, as more fully described in paragraphs 11 and 16. 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
| 26. | Paragraphs 1 through 25, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 27. |
The conduct of Respondents, as more fully described in paragraphs 7 through 19, 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 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. 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, OmniView has committed at least one violation of Section 36b-6(a) of the Act, as amended, 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, as amended, at least one violation 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 fine not to exceed the maximum fine of one hundred thousand dollars ($100,000) per violation upon Respondents;
WHEREAS, the Commissioner ORDERS that OMNVIVIEW 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 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 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 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 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 Order to Make Restitution becomes permanent, Respondents shall provide the Division with a written disclosure which contains (a) the name and address of each of the individual investors who purchased the Crackpot and Scanbuy shares 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 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 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 Order to Cease and Desist, Order to make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (collectively “Order”), 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 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 October 5, 2016, 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 17th day of August 2016. | Jorge L. Perez | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 18th day of August 2016, 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: OmniView Capital Advisors, LLC, 140 Rowayton Avenue, Norwalk, Connecticut 06853, certified mail no. 7012 3050 0000 6997 6179; and Abraxas J. Discala, 10 Vincent Place, Norwalk, Connecticut 06853, certified mail no. 7012 3050 0000 6997 6186.
| ___/s/____ |
| W. C. Hall |
| Paralegal |