Blue Coast 2007 NSTOP

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IN THE MATTER OF:

BLUE COAST FINANCIAL GROUP,
INC. a/k/a QUESTAR FINANCIAL
GROUP

("Respondent")

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NOTICE OF INTENT TO ISSUE
STOP ORDER DENYING
EFFECTIVENESS TO A BUSINESS
OPPORTUNITY REGISTRATION

NOTICE OF RIGHT TO HEARING

DOCKET NO. SO-2007-846-B

I. PRELIMINARY STATEMENT

1.	The Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672c of the Connecticut General Statutes, the Connecticut Business Opportunity Investment Act (“Act”).
2.	Pursuant to Section 36b-71(a) of the Act, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking (“Department”), has conducted an investigation into the activities of Respondent to determine if it has violated, is violating or is about to violate any provisions of the Act.
	Section 36b-71(a) of the Act provides, in pertinent part: Subject to the provisions of the Freedom of Information Act, as defined in section 1-200, the commissioner may: (1) Make such public or private investigations within or outside of this state as he deems necessary to determine whether any person has violated or is about to violate any provision of sections 36b-60 to 36b-80, inclusive, . . . or to aid in the enforcement of said sections . . . .
3.	The Commissioner has the authority to issue a stop order denying effectiveness to a business opportunity registration pursuant to Section 36b-68(a) of the Act which provides, in pertinent part: The commissioner may issue a stop order denying effectiveness to . . . any business opportunity registration if he finds: . . . (3) that the registration of the business opportunity is incomplete in any material respect but is not abandoned pursuant to subsection (e) of this section or contains any statement which was, in the light of the circumstances under which it was made, false or misleading with respect to any material fact . . . .
	Section 36b-68(c) of the Act provides, in pertinent part: No stop order may be entered under this section except as provided in subsection (b) of this section without: (1) Appropriate prior notice to the applicant . . . of a business opportunity; (2) opportunity for a hearing; and (3) the issuance of written findings of fact and conclusions of law by the commissioner.
4.	The Commissioner has reason to believe that Respondent’s application for registration of a business opportunity is incomplete in a material respect or contains false or misleading statements with respect to material facts.

II. RESPONDENT

5. Respondent is, and at all times relevant hereto was, an Arizona corporation with its principal place of business at 2929 North Power Road, Suite C100, Mesa, Arizona 85215.

III. STATEMENT OF FACTS

6. Respondent seeks to sell a business opportunity in the amount of $14,995 that consists of products, equipment, supplies or services to enable purchaser-investors to start a business that facilitates audits of workers compensation insurance premiums for the purpose of uncovering errors and overcharges, and in which Respondent represents that a marketing program will be provided to purchaser-investors (“Blue Coast Business”). Respondent represents that purchaser-investors will receive a percentage of the total premium refunded to clients as a result of such audits. Blue Coast Business’ marketing program includes, but is not limited to, personalized websites, brochures, presentation packages, business cards, training manuals, a contact database and marketing appointments. No federally registered service mark or trademark has been licensed in conjunction with the sale of Blue Coast Business’ marketing program.

7. On January 16, 2007, Jim Bell of Business Development Centers, a consultant for Respondent, filed an application to register Blue Coast Business as a business opportunity (“Application”) with the Commissioner that included a disclosure document intended for distribution to potential Connecticut purchaser-investors (“Disclosure Document”). The Commissioner has not deemed the Application abandoned pursuant to Section 36b-68(e) of the Act.

8. The Disclosure Document fails to summarize the principal factors that make the business opportunity one of high risk or of a speculative nature, as required pursuant to Section 36b-63(b)(27) of the Act, including those particular to the nature of Blue Coast Business, such as the competitiveness of the industry, the likelihood of failing to uncover errors and overcharges and the dependence of the business on qualified individuals to conduct the premium audits.

9. The Disclosure Document fails to disclose the complete business experience for the past five years of Shawn Hull, CEO; Lindsay Hull, President; and Shelee Loughmiller, Director, and makes no disclosure of the business experience of several individuals on Respondent’s management team, as required pursuant to Section 36b-63(b)(2) of the Act.
10. Prior to serving as CEO of Respondent, Shawn Hull was President and CEO of Taxback, LLC (“Taxback”) and Taxback Opportunities, LLC (“Taxback Opportunities”). On October 12, 2004, the Securities Division of the State of Washington Department of Financial Institutions entered a Consent Order against Taxback, Shawn D. Hull and Lindsay J. Hull, among others, concerning alleged violations of the business opportunity laws of Washington (“Washington Consent Order”). Although the Washington Consent Order is discussed in the Disclosure Document, the Disclosure Document fails to identify Shawn Hull and Lindsay Hull as Respondents, as required pursuant to Section 36b-63(b)(4)(C) of the Act.

11. On January 10, 2005, the Commissioner issued an Order to Cease and Desist against Taxback, for alleged violations of the Act, which became permanent as of January 29, 2005 (“Connecticut Order”). In addition, on June 7, 2005, the Commissioner entered into a Consent Order with Taxback and Taxback Opportunities concerning alleged violations of the Act (“Connecticut Consent Order”).

12.
In disclosing actions taken by the Commissioner against Taxback and Taxback Opportunities, the Disclosure Document only mentions a compliance letter received by Taxback Opportunities from the Department on November 4, 2004, and fails to disclose the Connecticut Order and Connecticut Consent Order.

IV. STATUTORY BASIS FOR NOTICE OF INTENT TO ISSUE STOP ORDER
DENYING EFFECTIVENESS TO A BUSINESS OPPORTUNITY REGISTRATION

a. Blue Coast Business is a Business Opportunity

13.

Paragraphs 1 through 12, inclusive, are incorporated and made a part hereof as if more fully set forth herein.

14.

Blue Coast Business constitutes a “business opportunity” as defined in Section 36b-61(6) of the Act, in that it involves “the sale or . . . offer for sale . . . of any products, equipment, supplies or services which are sold or offered for sale to the purchaser-investor for the purpose of enabling the purchaser-investor to start a business, and in which the seller represents . . . (D) that the seller will provide a sales program or marketing program to the purchaser-investor . . .”.

b. Filing an Application for Registration Which is Incomplete

in a Material Respect or Contains False or Misleading

Statements with Respect to Material Facts

15.

Paragraphs 1 through 14, inclusive, are incorporated and made a part hereof as if more fully set forth herein.

16.

Respondent has filed an application for registration which is incomplete in a material respect, but has not been deemed abandoned by the Commissioner or contains statements which, in light of the circumstances under which they were made, are false or misleading with respect to material facts, as more fully described in paragraphs 7 through 12, inclusive. Such filing of an application for registration forms a basis for a stop order denying effectiveness to a business opportunity registration under Section 36b-68(a)(3) of the Act.

V. NOTICE OF INTENT TO ISSUE A STOP ORDER DENYING
EFFECTIVENESS TO A BUSINESS OPPORTUNITY REGISTRATION
AND NOTICE OF RIGHT TO HEARING

AS A RESULT OF THE INVESTIGATION BY THE DIVISION, THE COMMISSIONER HAS REASON TO BELIEVE that Respondent’s application for registration of a business opportunity in Connecticut is incomplete in a material respect or contains statements that are false or misleading with respect to material facts.

NOW THEREFORE, notice is hereby given to Respondent that the Commissioner intends to issue a stop order denying effectiveness to its business opportunity registration, subject to Respondent’s right to request a hearing on the allegations set forth above. A hearing will be granted to Respondent 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 its receipt of this Notice. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If Respondent 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 July 2, 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, 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 no hearing is requested within the time prescribed, the Commissioner shall issue a stop order denying effectiveness to Respondent’s registration of a business opportunity in Connecticut.

Dated at Hartford, Connecticut
this 4th day of May 2007.                 ________/s/_________
                                                    Howard F. Pitkin
                                                    Banking Commissioner

CERTIFICATION

I hereby certify that on this 7th day of May 2007, the foregoing Notice of Intent to Issue Stop Order Denying Effectiveness to a Business Opportunity Registration and Notice of Right to Hearing was sent by certified mail, return receipt requested, to Blue Coast Financial Group, Inc. a/k/a Questar Financial Group, Attention: Amy Chenoweth, Agent, 2929 North Power Road, Suite C100, Mesa, Arizona 85215, certified mail no. 70031680000085235598; and Blue Coast Financial Group, Inc. a/k/a Questar Financial Group, P.O. Box 420335, Summerland Key, Florida 33042, certified mail no. 70031680000085235604.

                                                    ________/s/_________
                                                    Stacey Serrano Sarlo
                                                    Prosecuting Attorney

Administrative Orders and Settlements

6.	Respondent seeks to sell a business opportunity in the amount of $14,995 that consists of products, equipment, supplies or services to enable purchaser-investors to start a business that facilitates audits of workers compensation insurance premiums for the purpose of uncovering errors and overcharges, and in which Respondent represents that a marketing program will be provided to purchaser-investors (“Blue Coast Business”). Respondent represents that purchaser-investors will receive a percentage of the total premium refunded to clients as a result of such audits. Blue Coast Business’ marketing program includes, but is not limited to, personalized websites, brochures, presentation packages, business cards, training manuals, a contact database and marketing appointments. No federally registered service mark or trademark has been licensed in conjunction with the sale of Blue Coast Business’ marketing program.
7.	On January 16, 2007, Jim Bell of Business Development Centers, a consultant for Respondent, filed an application to register Blue Coast Business as a business opportunity (“Application”) with the Commissioner that included a disclosure document intended for distribution to potential Connecticut purchaser-investors (“Disclosure Document”). The Commissioner has not deemed the Application abandoned pursuant to Section 36b-68(e) of the Act.
8.	The Disclosure Document fails to summarize the principal factors that make the business opportunity one of high risk or of a speculative nature, as required pursuant to Section 36b-63(b)(27) of the Act, including those particular to the nature of Blue Coast Business, such as the competitiveness of the industry, the likelihood of failing to uncover errors and overcharges and the dependence of the business on qualified individuals to conduct the premium audits.
9.	The Disclosure Document fails to disclose the complete business experience for the past five years of Shawn Hull, CEO; Lindsay Hull, President; and Shelee Loughmiller, Director, and makes no disclosure of the business experience of several individuals on Respondent’s management team, as required pursuant to Section 36b-63(b)(2) of the Act.
10.	Prior to serving as CEO of Respondent, Shawn Hull was President and CEO of Taxback, LLC (“Taxback”) and Taxback Opportunities, LLC (“Taxback Opportunities”). On October 12, 2004, the Securities Division of the State of Washington Department of Financial Institutions entered a Consent Order against Taxback, Shawn D. Hull and Lindsay J. Hull, among others, concerning alleged violations of the business opportunity laws of Washington (“Washington Consent Order”). Although the Washington Consent Order is discussed in the Disclosure Document, the Disclosure Document fails to identify Shawn Hull and Lindsay Hull as Respondents, as required pursuant to Section 36b-63(b)(4)(C) of the Act.
11.	On January 10, 2005, the Commissioner issued an Order to Cease and Desist against Taxback, for alleged violations of the Act, which became permanent as of January 29, 2005 (“Connecticut Order”). In addition, on June 7, 2005, the Commissioner entered into a Consent Order with Taxback and Taxback Opportunities concerning alleged violations of the Act (“Connecticut Consent Order”).
12.	In disclosing actions taken by the Commissioner against Taxback and Taxback Opportunities, the Disclosure Document only mentions a compliance letter received by Taxback Opportunities from the Department on November 4, 2004, and fails to disclose the Connecticut Order and Connecticut Consent Order.

State of Connecticut Department of Banking