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IN THE MATTER OF: COMMONWEALTH EXPLORATION CARLOS E. CONDE (Collectively "Respondents") * * * * * * * * * * * * * * * * * * * * * |
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ORDER IMPOSING FINE DOCKET NO. CF-2008-7560-S |
I. PRELIMINARY STATEMENT
WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, 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;
WHEREAS, the Commissioner, through the Securities and Business Investments Division of the Department of Banking (“Department”), conducted an investigation into the activities of Respondents, pursuant to Section 36b-26(a) of the Act, to determine if Respondents had violated, were violating or were about to violate provisions of the Act or Regulations;
WHEREAS, on June 30, 2009, the Commissioner, acting pursuant to Sections 36b-27(a) and 36b-27(d) of the Act, issued an Order to Cease and Desist (“Order”), Notice of Intent to Fine (“Fine Notice”) and Notice of Right to Hearing against Respondents (collectively “Notice”), which Notice is incorporated by reference herein;
WHEREAS, on July 1, 2009, the Notice was sent by registered mail, return receipt requested, to Commonwealth (registered mail no. RB027869206US), Conde (registered mail nos. RB027869210US and RB027869223US), and Lofton (registered mail no. RB027869237US);
WHEREAS, on July 15, 2009, the Notice sent to Conde, registered mail no. RB027869223US, was returned to the Department marked “Return-UTF”;
WHEREAS, on July 21, 2009, the Department, acting pursuant to Section 36b-33(h) of the Act, served Commonwealth with a copy of the Notice by causing such copy to be served upon the Commissioner;
WHEREAS, on July 21, 2009, the Department, acting pursuant to Section 36b-33(h) of the Act, served Conde with a copy of the Notice by causing such copy to be served upon the Commissioner;
WHEREAS, on August 3, 2009, the Notice sent to Conde, registered mail no. RB027869210US, was returned to the Department marked “Returned to Sender-Unclaimed”;
WHEREAS, on August 5, 2009, the United States Postal Service Track & Confirm system indicated that the Notice sent to Commonwealth on July 1, 2009, was “Undeliverable as Addressed”;
WHEREAS, by letter dated August 7, 2009, Lofton requested a hearing on the Notice, which hearing was held subsequent to August 11, 2009;
WHEREAS, the Fine Notice stated that the Commissioner intended to impose a fine against Commonwealth and Conde, that a hearing would be held on the matters alleged in the Fine Notice on August 11, 2009 (“Fine Hearing”), and that if Commonwealth and Conde failed to appear at the Fine Hearing, the Commissioner may order that a maximum fine of Nine Hundred Thousand Dollars ($900,000) be imposed upon Commonwealth, and a maximum fine of Nine Hundred Thousand Dollars ($900,000) be imposed upon Conde;
WHEREAS, the Commissioner alleged in the Notice that Commonwealth and Conde, in violation of Section 36b-16 of the Act, offered and sold securities to at least one Connecticut investor, which securities were not registered in Connecticut under the Act, which forms a basis for the imposition of a fine against Commonwealth for three violations under Section 36b-27(d) of the Act and against Conde for three violations under Section 36a-27(d) [sic] of the Act;
WHEREAS, the Commissioner alleged in the Notice that Commonwealth’s and Conde’s conduct in connection with the offer, sale or purchase of any security, directly or indirectly, employing any device, scheme or artifice to defraud 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 constitutes a violation of Section 36b-4(a) of the Act, which forms a basis for the imposition of a fine against Commonwealth for three violations under Section 36b-27(d) of the Act and against Conde for three violations under Section 36a-27(d) [sic] of the Act;
WHEREAS, the Commissioner alleged in the Notice that Commonwealth, controlled by Conde, employed Lofton as an agent of issuer absent registration, in violation of Section 36b-6(b) of the Act, which forms a basis for the imposition of a fine against Commonwealth and Conde under Section 36b-27(d) of the Act;
WHEREAS, on August 10, 2009, a certification was issued rendering the Order against Commonwealth permanent as of August 7, 2009;
WHEREAS, on August 10, 2009, a certification was issued rendering the Order against Conde permanent as of August 7, 2009;
WHEREAS, the Commissioner found in the Notice, with respect to the activity described therein, that Commonwealth committed three separate violations of Sections 36b-16, 36b-4(a) and 36b-6(b) of the Act; and Conde committed three separate violations of Sections 36b-16, 36b-4(a) and 36b-6(b) of the Act;
WHEREAS, Attorney Doniel Kitt was appointed Hearing Officer for the Fine Hearing;
WHEREAS, Attorney Paul A. Bobruff represented the Department at the Fine Hearing;
WHEREAS, on August 11, 2009, Commonwealth and Conde failed to appear at the Fine Hearing;
WHEREAS, Section 36a-1-31(b) of the Regulations of Connecticut State Agencies provides, in pertinent part, that “[w]hen a party fails to appear at a scheduled hearing, the allegations against the party may be deemed admitted. Without further proceedings or notice to the party, the presiding officer shall submit to the commissioner a proposed final decision containing the relief sought in the notice, provided the presiding officer may, if deemed necessary, receive evidence from the department, as part of the record, concerning the appropriateness of the amount of any . . . fine . . . sought in the notice”;
WHEREAS, Section 36b-27(d)(2) of the Act provides, in pertinent part, that “[i]f 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”;
WHEREAS, Section 36b-31(a) of the Act provides, in pertinent part, that “[t]he commissioner may from time to time make . . . such . . . orders as are necessary to carry out the provisions of sections 36b-2 to 36b-33, inclusive”;
AND WHEREAS, Section 36b-31(b) of the Act provides, in pertinent part, that “[n]o . . . order may be made . . . unless the commissioner finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of sections 36b-2 to 36b-33, inclusive.”
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II. FINDINGS OF FACT AND CONCLUSIONS OF LAW | |
| 1. |
The facts as set forth in paragraphs 6 through 13, inclusive, of the Notice shall constitute findings of fact within the meaning of Section 4-180(c) of the Connecticut General Statutes with respect to Commonwealth and Conde, and the conclusions set forth in paragraphs 14 through 18, inclusive, of the Notice and paragraph 20 of the Notice shall constitute conclusions of law within the meaning of Section 4-180(c) of the Connecticut General Statutes and Section 36a-1-52 of the Regulations of Connecticut State Agencies with respect to Commonwealth and Conde. |
| 2. | The Notice was given to Commonwealth and Conde in compliance with Section 36b-27(d) of the Act and Section 4-177 of the Connecticut General Statutes. |
| 3. |
Section 36b-27(d) of the Act provides, in pertinent part, that:
(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, (B) any other person that directly or indirectly controls such person and that was a cause of the violation of said sections . . . due to an act or omission such other person knew or should have known would contribute to such violation . . . 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. (Emphasis added.) |
| 4. | The Notice alleged, among other things, that Conde was C.O.O., President and control person of Commonwealth. However, the Notice did not allege that Conde was a cause of any of the violations due to an act or omission that Conde knew or should have known would contribute to such violations. Based upon the foregoing, the facts deemed admitted pursuant to Section 36a-1-31(b) of the Regulations of Connecticut State Agencies do not include a finding that Conde was a cause of any of the violations due to an act or omission that Conde knew or should have known would contribute to such violations. |
| 5. |
Section 36b-27(d)(2) of the Act provides that if Conde 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. In this case, the facts do not require the imposition of a fine upon Conde.
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| 6. |
Based upon the nature of Commonwealth’s actions in violation of the Act and the absence of mitigating factors in the record regarding Commonwealth’s violation of the Act that justify lesser sanctions in this case, the facts require the imposition of the maximum fine against Commonwealth and this Order Imposing Fine against Commonwealth is necessary and appropriate in the public interest and for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of Sections 36b-2 to 36b-33, inclusive, of the Act. |
III. ORDER
Having read the record, I hereby ORDER, pursuant to Section 36b-27(d) of the Act, that:
| 1. | A fine of Nine Hundred Thousand Dollars ($900,000) be imposed against Commonwealth Exploration Corporation, to be remitted to the Department of Banking by cashier’s check, certified check or money order, made payable to “Treasurer, State of Connecticut”, no later than 45 days from the date this Order is mailed; and |
| 2. | This Order shall become effective when mailed. |
Dated at Hartford, Connecticut,
this 3rd day of December 2009. ________/s/_________
Howard F. Pitkin
Banking Commissioner
This Order was sent by registered mail,
return receipt requested, to Respondents
on December 3, 2009.
Commonwealth Exploration Corporation
2002 Summit Boulevard, Suite 1225
Atlanta, GA 30319
Registered Mail No. RB028036708US
Carlos E. Conde
1231 Adams Street
Franklin, TN 37064-3605
Registered Mail No. RB028036711US
Carlos E. Conde
1305 Perimeter Lofts Circle
Atlanta, GA 30346-1716
Registered Mail No. RB028036725US