| * * * * * * * * * * * * * * * * * * IN THE MATTER OF: 4 L.I.F.E., INC. TERRY MAYFIELD (Collectively "Respondents") * * * * * * * * * * * * * * * * * * |
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ORDER TO CEASE AND DESIST NOTICE OF INTENT TO FINE AND NOTICE OF RIGHT TO HEARING DOCKET NO. CF-2007-7180-S |
I. PRELIMINARY STATEMENT
| 1. | The Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (“Act”), and the regulations promulgated thereunder (Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies) (“Regulations”). |
| 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 they have violated, are violating or are about to violate provisions of the Act or Regulations. Section 36b-26(a) of the Act provides, in pertinent part:
The commissioner may, subject to the provisions of the Freedom of Information Act, . . . (1) [m]ake such public or private investigations within or outside of this state as the commissioner deems necessary to determine whether any person has violated, is violating or is about to violate any provision of sections 36b-2 to 36b-33, inclusive, or any regulation or order thereunder . . . . |
| 3. | As a result of the investigation by the Division, the Commissioner has reason to believe that Respondents have violated certain provisions of the Act. |
| 4. |
As a result of the investigation by the Division, the Commissioner has the authority to issue a cease and desist order against Respondents pursuant to Section 36b-27(a) of the Act, which provides, in pertinent part:
Whenever it appears to the commissioner after an investigation that any person has violated, is violating or is about to violate any of the provisions of sections 36b-2 to 36b-33, inclusive, . . . or that the further sale or offer to sell securities would constitute a violation of said sections . . . the commissioner may, in the commissioner’s discretion, order (1) the person . . . to cease and desist from the violations . . . of the provisions of said sections . . . or from the further sale or offer to sell securities constituting or which would constitute a violation of the provisions of said sections . . . . After such an order is issued, the person named in the order may, within fourteen days after receipt of the order, file a written request for a hearing. Any such hearing shall be held in accordance with the provisions of chapter 54. |
| 5. |
As a result of the investigation by the Division, the Commissioner has the authority to impose a fine on Respondents pursuant to Section 36b-27(d) of the Act, which provides, in pertinent part:
(1) Whenever the commissioner finds as the result of an investigation that any person has violated any of the provisions of sections 36b-2 to 36b-33, inclusive, . . . the commissioner may send a notice to (A) such person . . . by registered mail, return receipt requested . . . . Any such notice shall include: (i) A reference to the title, chapter, regulation, rule or order alleged to have been violated; (ii) a short and plain statement of the matter asserted or charged; (iii) the maximum fine that may be imposed for such violation; and (iv) the time and place for the hearing. Any such hearing shall be fixed for a date not earlier than fourteen days after the notice is mailed.
(2) The commissioner shall hold a hearing upon the charges made unless such person fails to appear at the hearing. Any such hearing shall be held in accordance with the provisions of chapter 54. After the hearing if the commissioner finds that the person has violated . . . any of the provisions of sections 36b-2 to 36b-33, inclusive, . . . the commissioner may, in the commissioner’s discretion and in addition to any other remedy authorized by said sections, order that a fine not exceeding one hundred thousand dollars per violation be imposed upon such person. If such person fails to appear at the hearing, the commissioner may, as the facts require, order that a fine not exceeding one hundred thousand dollars per violation be imposed upon such person. The commissioner shall send a copy of any order issued pursuant to this subsection by registered mail, return receipt requested, . . . to any person named in such order. |
II. RESPONDENTS
| 6. | 4LIFE is a Delaware corporation with its principal place of business last known to the Commissioner at 450 Stonewall Street, Suite 102, Atlanta, Georgia 30319. |
| 7. |
Mayfield is an individual whose address last known to the Commissioner is 120 Potters Pond Drive, Phoenixville, Pennsylvania 19460.
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III. STATEMENT OF FACTS
| 8. | From at least September 2004 to the present, 4LIFE was an issuer of securities in the form of investment contracts (“4LIFE Contract”). |
| 9. |
On or about September 3, 2004, Mayfield, on behalf of 4LIFE, effected a sale of one 4LIFE Contract for $25,000 to two Connecticut investors jointly for the purposes of investing in the L.I.F.E. Ventures Development Fund, which provided interim development funds to nonprofit developers for the purpose of the acquisition of multi-family properties in the Atlanta metro area. |
| 10. | In connection with the sale of the 4LIFE Contract, the Connecticut investors received a document entitled “L.I.F.E. VENTURES DEVELOPMENT FUND (PRELIMINARY CONCEPT PAPER)” that set forth certain terms of the investment. |
| 11. |
The “L.I.F.E. VENTURES DEVELOPMENT FUND (PRELIMINARY CONCEPT PAPER)” represented that, inter alia, “THE GOAL IS TO SECURE $1,400,000.00 (one million four hundred thousand dollars) FOR SHORT-TERM INVESTMENTS 3-6 MONTHS” and “INVESTMENT RETURNS ARE ANTICIPATED AT A MINIMUM OF 15% PER YEAR”. The “L.I.F.E. VENTURES DEVELOPMENT FUND (PRELIMINARY CONCEPT PAPER)” failed to disclose, inter alia, any risk factors, any financial information on 4LIFE and the relevant work history of the managing member of 4LIFE.
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| 12. |
Mayfield verbally represented to the Connecticut investors that they would receive their initial investment sum of $25,000 back within three to six months. |
| 13. | On February 19 and April 12, 2005, the Connecticut investors sent letters to Mayfield stating that Mayfield had violated the terms of their agreements by failing to give regular updates on the progress of the project, details about their percentage in the proposed deal and their estimated profits and failing to provide a lump sum payment of $25,000 within 3 months after the initial investment. |
| 14. | No funds were ever returned to the Connecticut investors by 4LIFE or Mayfield. |
| 15. |
The 4LIFE Contracts that were offered and sold by Respondents were never registered in Connecticut as required by Section 36b-16 of the Act, nor were they exempt from registration under Section 36b-21 of the Act, nor were they covered securities.
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IV. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST AND
ORDER IMPOSING FINE AGAINST RESPONDENTS
a. Violation of Section 36b-16 of the Act –
Offer and Sale of Unregistered Securities
| 16. | Paragraphs 1 through 15, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 17. |
Respondents offered and sold unregistered securities to at least two Connecticut investors, as more fully described in paragraphs 8 through 11, 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 Act, and for the imposition of a fine against Respondents under Section 36b-27(d) of the Act.
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b. Violation of Section 36b-4(a) of the Act –
Fraud in Connection with the Offer and Sale of any Security
| 18. | Paragraphs 1 through 17, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 19. |
The conduct of Respondents, as more fully described in paragraphs 8 through 14, inclusive, constitutes, in connection with the offer, sale or purchase of any security, employing any device, scheme or artifice to defraud, making of any untrue statements of material facts 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 any 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, and for the imposition of a fine against Respondents under Section 36b-27(d) of the Act.
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V. ORDER TO CEASE AND DESIST AND NOTICE OF RIGHT TO HEARING
AS A RESULT OF THE INVESTIGATION BY THE DIVISION, THE COMMISSIONER FINDS that, with respect to the activity described herein, 4 L.I.F.E., Inc. and Terry Mayfield have violated Sections 36b-16 and 36b-4(a) of the Act;
THE COMMISSIONER FURTHER FINDS that the issuance of this Order 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.
THE COMMISSIONER THEREFORE ORDERS that 4 L.I.F.E., Inc. and Terry Mayfield CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) offering and selling unregistered securities, and (2) in connection with the offer, sale or purchase of any security, employing a device, scheme or artifice to defraud, making of any untrue statements of material facts or omitting to state material facts necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in any act, practice or course of business which operates as a fraud or deceit upon any person;
THE COMMISSIONER FURTHER ORDERS that, pursuant to Section 36b-27(a) of the Act, 4 L.I.F.E., Inc. and Terry Mayfield will be afforded an opportunity for a hearing on the allegations set forth above.
A hearing will be granted to 4 L.I.F.E., Inc. and Terry Mayfield if a written request for a hearing is received by the Department of Banking, Legal Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800, within fourteen (14) days following each Respondent’s receipt of this Order. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If 4 L.I.F.E., Inc. and Terry Mayfield will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”. Once a written request for a hearing is received, the Commissioner may issue a notification of hearing and designation of hearing officer that acknowledges receipt of a request for a hearing, designates a presiding officer and sets the date of the hearing in accordance with Section 4-177 of the Connecticut General Statutes and Section 36a-1-21 of the Regulations of Connecticut State Agencies. If a hearing is requested, the hearing will be held on May 15, 2007, 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 Connecticut General Statutes. At such hearing, 4 L.I.F.E., Inc. and Terry Mayfield 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.
This Order shall remain in effect and become permanent against 4 L.I.F.E., Inc. if it does not request a hearing within the prescribed time period, and against Terry Mayfield if he does not request a hearing within the prescribed time period.
VI. NOTICE OF INTENT TO FINE RESPONDENTS AND NOTICE OF HEARING
WHEREAS, the Commissioner finds as a result of an investigation by the Division that 4 L.I.F.E., Inc. and Mayfield each committed one violation of Section 36b-16 of the Act and one violation of Section 36b-4(a) of the Act;
WHEREAS, the Commissioner believes that the imposition of a fine upon Respondents would be in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act;
AND WHEREAS, notice is hereby given to Respondents that the Commissioner intends to impose a fine not to exceed One Hundred Thousand Dollars ($100,000) per violation, or a maximum fine of Two Hundred Thousand Dollars ($200,000) on 4LIFE and a maximum fine of Two Hundred Thousand Dollars ($200,000) on Mayfield.
NOW THEREFORE, a hearing will be held in accordance with Section 36b- 27(d)(2) of the Act and Chapter 54 of the Connecticut General Statutes.
The hearing will be held on May 15, 2007, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
At the hearing, Respondents will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law relating to the allegations stated herein. If any Respondent fails to appear at such hearing, the Commissioner may order that the maximum fine be imposed upon such Respondent.
Dated at Hartford, Connecticut
this 8th day of March 2007. ________/s/_________
Howard F. Pitkin
Banking Commissioner
CERTIFICATION
I hereby certify that on this 8th day of March 2007, the foregoing Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing was sent by registered mail, return receipt requested, to 4 L.I.F.E., Inc., 450 Stonewall Street, Suite 102, Atlanta, Georgia 30319, registered mail no. RB028033848US; and to Terry Mayfield, 120 Potters Pond Drive, Phoenixville, Pennsylvania 19460, registered mail no. RB028033851US.
________/s/_________
Jesse B. Silverman
Prosecuting Attorney