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ORDER IMPOSING FINE AND ORDER OF RESTITUTION DOCKET NO. CRF-12-8048-S |
I. PRELIMINARY STATEMENT
WHEREAS, 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;
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 (“Investigation”);
WHEREAS, on November 6, 2012, based on the Investigation, the Commissioner, acting pursuant to Sections 36b-27 of the Act, issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Revoke Registration as an Investment Adviser, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-12-8048-S) (collectively “Notice”) against Respondents, which Notice is incorporated by reference herein;
WHEREAS, on January 3, 2013, Respondents requested a hearing on the matters alleged in the Notice;
WHEREAS, Respondents executed a Limited Release and a General Release, dated March 30, 2013 and April 2, 2013, respectively, with the individual described as Investor One in the Notice, to make payment in good funds to resolve the securities claims of Investor One, as described in the Notice, and have provided copies of such releases to the Division;
WHEREAS, Respondents executed a General Release dated May 1, 2013 (“May 2013 General Release”) with the individual described as Investor Two in the Notice, to make payment in good funds to resolve the securities claims of Investor Two, as described in the Notice, and have provided copies of such release to the Division;
WHEREAS, Section 36b-31(a) of the Act provides, in relevant 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-34, inclusive”;
WHEREAS, an administrative proceeding initiated under Section 36b-27 of the Act would constitute a “contested case” within the meaning of Section 4-166(2) of the General Statutes of Connecticut;
WHEREAS, Section 36b-27(f) of the Act provides, in relevant part, that “[a]ny time after the issuance of an order or notice provided for in subsection (a), (b) . . . or subdivision (1) of subsection (d) of this section, the commissioner may accept an agreement by any respondent named in such order or notice to enter into a written consent order in lieu of an adjudicative hearing”;
WHEREAS, Section 4-177(c) of the General Statutes of Connecticut and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by consent order, unless precluded by law;
WHEREAS, on May 1, 2013, the Commissioner and Respondents entered into a Consent Order (Docket No. CO-12-8048-S), which Consent Order is incorporated by reference herein;
WHEREAS, the Consent Order provided, inter alia, that Respondents would make payment in good funds and resolve the securities claims involving Investor One by complying with the terms of the Limited Release and the General Release, and resolve the securities claims involving Investor Two by complying with the terms of the May 2013 General Release;
WHEREAS, on or about March 30, 2013, Respondents repaid Investor One Two Hundred Sixty-five Thousand Dollars ($265,000) in good funds, and have therefore performed their contractual obligation pursuant to the Limited Release and the General Release;
WHEREAS, Respondents have not performed their contractual obligation to repay Investor Two in good funds on or before June 30, 2013 pursuant to terms of the May 2013 General Release and the Consent Order;
WHEREAS, the Commissioner finds that Respondents have violated the terms of the Consent Order by failing to repay Investor Two in good funds on or before June 30, 2013 pursuant to the terms of the May 2013 General Release;
WHEREAS, the Consent Order provided, inter alia, that in the event of nonperformance by Respondents of their contractual obligation to repay Investor Two in good funds on or before June 30, 2013, Respondents consented to the immediate entry and imposition of an order of full restitution to Investor One and Investor Two by the Commissioner, knowingly, willfully and voluntarily waiving their right to notice and an administrative hearing in conjunction therewith;
WHEREAS, the Consent Order provided, inter alia, that in the event of nonperformance by Respondents of their contractual obligation to repay Investor Two in good funds on or before June 30, 2013, Respondents consented to the immediate entry and imposition of a One Hundred Thousand Dollar ($100,000) fine, knowingly, willfully and voluntarily waiving their right to notice and an administrative hearing in conjunction therewith;
WHEREAS, the Consent Order provided, inter alia, that in the event of nonperformance by Respondents of their contractual obligation to repay Investor Two in good funds on or before June 30, 2013, all of the allegations in the Notice were deemed admitted by Respondents, and Respondents knowingly, willfully and voluntarily waived their right to notice and an administrative hearing in conjunction therewith;
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-34, inclusive.”
II. FINDINGS OF FACT AND CONCLUSIONS OF LAW
| 1. |
The Commissioner finds that the facts as set forth in paragraphs 8 through 35, inclusive, of the Notice, shall constitute findings of fact within the meaning of Section 4-180(c) of the General Statutes of Connecticut and Section 36a-1-52 of the Regulations, and that the Statutory and Regulatory Basis for the Order to Cease and Desist, Order to Make Restitution and Order Imposing Fine set forth in paragraphs 36 through 49, inclusive, of the Notice shall constitute conclusions of law within the meaning of Section 4-180(c) of the General Statutes of Connecticut and Section 36a-1-52 of the Regulations. |
| 2. | The Commissioner finds that Respondents violated the Consent Order, and have committed at least one violation of 36b-6(c)(2) of the Act, at least one violation of 36b-6(c)(3) of the Act, at least one violation of Section 36b-4(a) of the Act, at least one violation of Section 36b-4(b) of the Act, at least one violation of Section 36b-23 of the Act, at least one violation of 36b-14(d) of the Act, and at least one violation of 36b-31-14f of the Regulations. |
| 3. | The Commissioner finds that the imposition of a fine and an order of restitution upon Respondents 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-34, inclusive, of the Act. |
III. ORDER IMPOSING FINE AND ORDER OF RESTITUTION
The Commissioner hereby ORDERS that:
1.
No later than September 6, 2013, Respondents shall reimburse Investor One the sum of One Hundred Ninety-seven Thousand Dollars ($197,000) and Investor Two the sum of One Hundred Seventeen Thousand Dollars ($117,000). Such restitution shall be made by certified check, and shall be sent by certified mail, return receipt requested to Investor One and Investor Two, respectively. Within five (5) days of such restitution being paid to Investor One and Investor Two, Respondents shall provide the Division with proof, in the form of copies of the certified checks and the return receipts, that Respondents have reimbursed Investor One and Investor Two;
2.
3.
This Order of Restitution and Order Imposing Fine shall become final when mailed.
| Dated at Hartford, Connecticut, | ______/s/__________ | |
| this 25th day of July 2013. | Howard F. Pitkin | |
| Banking Commissioner |
This Order was sent by certified mail,
return receipt requested, to Respondents
in care of:
Robert F. Shea, Jr., Esq.
Shea Law Inc.
P.O. Box 271883
West Hartford, CT 06127-1883
Certified mail no. 7012 3050 0002 1692 6118