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IN THE MATTER OF: CYNERGY ADVANCE SHELLY A. RICHARD (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-2010-7740-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 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, as amended by Public Act 10-141, the Commissioner, through the Securities and Business Investments 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 the authority to issue an order to cease and desist against Respondents pursuant to Section 36b-27(a) of the 2010 Supplement to the General Statutes (“2010 Supplement”), as amended by Public Act 10-141.
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| 5. |
As a result of the Investigation, the Commissioner has the authority to impose a fine against Respondents pursuant to Section 36b-27(d) of the 2010 Supplement, as amended by Public Act 10-141. |
II. RESPONDENTS
| 6. | Cynergy is a Florida limited liability company with its principal place of business last known to the Commissioner at 1128 Royal Palm Beach Boulevard, Suite 145, Royal Palm Beach, Florida 33411 and its mailing address at 615 West Johnson Avenue, Suite 202, Cheshire, Connecticut 06410. |
| 7. |
Richard is an individual whose addresses last known to the Commissioner are 98 Waverly Street, Cheshire, Connecticut 06410-2513; and 745 Main Street, Newington, Connecticut 06111. |
III. STATEMENT OF FACTS
| 8. | From at least August 8, 2008 to the present, Cynergy has been an issuer of securities in the form of notes, investment contracts or evidences of indebtedness (“Cynergy Securities”). |
| 9. | On or about August 8, 2008, Richard, on behalf of Cynergy, effected the sale of the Cynergy Securities from Connecticut to at least one investor. The investor had no role in the management of Cynergy, and relied solely on the efforts of Cynergy and Richard to achieve a promised annual return of 10%. |
| 10. | The Cynergy Securities that were offered and sold by Respondents were never registered in Connecticut under Section 36b-16 of the Act, as amended by Public Act 10-141, nor were they exempt from registration under Section 36b-21 of the Act, as amended by Public Act 10-141, nor were they covered securities. |
| 11. | Richard has never been registered in Connecticut as an agent of Cynergy, nor was she an associated person. |
| 12. |
To date, Respondents have failed to pay at least one investor any of the principal or interest required by the Cynergy Securities. |
| 13. | In connection with the offer and sale of the Cynergy Securities, Respondents failed to disclose, inter alia, the risk of loss of the entire investment, any risk factors related to the investment, any financial information on Cynergy or Cynergy’s business, or Cynergy’s ability to meet its obligations under the Cynergy Securities. Each of these omitted items was material to investors and prospective investors of the Cynergy Securities. |
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
| 14. | Paragraphs 1 through 13, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 15. |
Respondents offered and sold unregistered securities from Connecticut to at least one investor, as more fully described in paragraph 9, which securities were not registered in Connecticut under the Act, as more fully described in paragraph 10. The offer and sale of such securities absent registration constitutes a violation of Section 36b-16 of the Act, as amended, which forms a basis for an order to cease and desist to be issued against Respondents under Section 36b-27(a) of the 2010 Supplement, as amended, and for the imposition of a fine against Respondents under Section 36b-27(d) of the 2010 Supplement, as amended. |
b. Violation of Section 36b-4(a) of the Act –
Fraud in Connection with the Offer and Sale of any Security
| 16. | Paragraphs 1 through 15, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 17. | The conduct of Respondents, as more fully described in paragraphs 8 through 13, 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 2010 Supplement, which forms a basis for an order to cease and desist to be issued against Respondents under Section 36b-27(a) of the 2010 Supplement, as amended, and for the imposition of a fine against Respondents under Section 36b-27(d) of the 2010 Supplement, as amended. |
c. Violation of Section 36b-6(c) of the Act –
Unregistered Agent Activity
| 18. | Paragraphs 1 through 17, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 19. | Richard transacted business as an agent of issuer in this state on at least one occasion absent registration, as more fully described in paragraphs 9 and 11. Such conduct constitutes a violation of Section 36b-6(a) of the Act, as amended by Public Act 10-141, which forms a basis for an order to cease and desist to be issued against Richard under Section 36b-27(a) of the 2010 Supplement, as amended, and for the imposition of a fine against Richard under Section 36b-27(d) of the 2010 Supplement, as amended. |
| 20. | Cynergy employed Richard as an unregistered agent of issuer on at least one occasion, as more fully described in paragraphs 9 and 11. Such conduct constitutes a violation of Section 36b-6(b) of the Act, as amended by Public Act 10-141, which forms a basis for an order to cease and desist to be issued against Cynergy under Section 36b-27(a) of the 2010 Supplement, as amended, and for the imposition of a fine against Cynergy under Section 36b-27(d) of the 2010 Supplement, as amended. |
V. ORDER TO CEASE AND DESIST, 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, Cynergy has committed at least one violation of Section 36b-16 of the Act, as amended, at least one violation of Section 36b-4(a) of the 2010 Supplement, and at least one violation of Section 36b-6(b) of the Act, as amended;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Richard has committed at least one violation of Section 36b-16 of the Act, as amended, at least one violation of Section 36b-4(a) of the 2010 Supplement, and at least one violation of Section 36b-6(a) of the Act, as amended;
WHEREAS, the Commissioner further finds that the issuance of this Order to Cease and Desist and the imposition of a fine against 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 maximum fine not to exceed One Hundred Thousand Dollars ($100,000) per violation;
WHEREAS, the Commissioner ORDERS that Cynergy CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation, (1) offering and selling unregistered securities, (2) 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, and (3) employing an agent of issuer absent registration;
WHEREAS, the Commissioner ORDERS that Richard CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation, (1) offering and selling unregistered securities, (2) 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, and (3) transacting business as an agent of issuer in this state absent registration;
AND WHEREAS, pursuant to Section 36b-27 of the 2010 Supplement, as amended, Respondents will be afforded an opportunity for a hearing on the allegations set forth above.
THE COMMISSIONER FURTHER ORDERS that a hearing will be granted to each Respondent if a written request for a hearing is received by the Department of Banking, 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 any Respondent will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form for any such Respondent 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 General Statutes of Connecticut and Section 36a-1-21 of the Regulations of Connecticut State Agencies. If a hearing is requested, the hearing will be held on February 24, 2011, 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, Respondents 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 to Cease and Desist shall remain in effect and become permanent against any Respondent that fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
The Commissioner may order that the maximum fine be imposed upon any Respondent that fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
| Dated at Hartford, Connecticut, | ________/s/________ | |
| this 19th day of January 2011. | Howard F. Pitkin | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 19th day of January 2011, the foregoing Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing was sent by certified mail, return receipt requested, to Cynergy Advance Services, LLC at 1128 Royal Palm Beach Boulevard, Suite 145, Royal Palm Beach, Florida 33411, certified mail no. 7010 1870 0001 3619 4288; 745 Main Street, Newington, Connecticut 06111, certified mail no. 7010 1870 0001 3619 4295; and 615 West Johnson Avenue, Suite 202, Cheshire, Connecticut 06410, certified mail no. 7010 1870 0001 3619 4301; and to Shelly A. Richard at 98 Waverly Street, Cheshire, Connecticut 06410, certified mail no. 7010 1870 0001 3619 4318; and 745 Main Street, Newington, Connecticut 06111, certified mail no. 7010 1870 0001 3619 4325.
_______/s/_________
Paul A. Bobruff
Prosecuting Attorney