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IN THE MATTER OF: ("Respondents") * * * * * * * * * * * * * * * * * * |
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ORDER TO CEASE AND DESIST |
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 Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies (“Regulations”) promulgated under the Act. |
| 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 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 a cease and desist order against Respondents pursuant to Section 36b-27(a) of the Act. |
II. RESPONDENTS
| 5. | Greenberg International Law & Tax Advisory (“Greenberg”) purports to be a law and tax advisory firm located at One Constitution Plaza, Kinsley Street, Hartford, Connecticut 06103. One Constitution Plaza is a large commercial building in downtown Hartford; however, Greenberg is not a tenant at that address. Greenberg has a website with an HTTP address of greenbergtaxandlaws.com and an email address of info at greenbergtaxandlaws.com, which is a functioning email address. Greenberg has not ever been registered in any capacity under the Act. The State of Connecticut Judicial branch does not appear to have any online record reflecting Greenberg’s status as a law firm. |
| 6. | Mike James (“James”) is purportedly employed by Greenberg as a Senior Investment Recovery Manager and a “broker”. James is not registered as an agent of Greenberg under the Act. |
| 7. | Robert Dunn (“Dunn”) is purportedly employed by Greenberg as a Senior Tax Attorney. Dunn is not registered as an agent of Greenberg under the Act. |
| 8. | Richard Fox (“Fox”) is purportedly employed by Greenberg as a Senior Investment Recovery Manager. Fox is not registered as an agent of Greenberg under the Act. |
III. STATEMENT OF FACTS
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Investor One | |
| 9. | Sometime between 2003 and 2005, an investor living in Singapore (“Investor One”) purchased shares of an entity called High Line Financial [sic] (“High Line”) in a private securities transaction. Investor One lost contact with the agent who originally sold him the High Line shares. |
| 10. | In or around November 2014, Investor One received a telephone call from an individual who identified himself as “Mike James” and as affiliated with Greenberg. James represented to Investor One that there was a buyer for Investor One’s High Line shares, and asked Investor One if he was willing to sell them. Investor One, believing his High Line shares were worthless, gave James permission to sell the High Line shares. |
| 11. | Division records do not disclose any current or prior securities registration record under the Act under the names “High Line” or “Highline.” |
| 12. | Investor One received a letter dated December 16, 2014 from James on behalf of Greenberg, representing that: 1) James, through Greenberg, sold Investor One’s High Line shares; 2) Investor One’s High Line shares were “Director or Restricted” shares and therefore subject to a trading restriction under Rule 144 of the Securities Act of 1933; and 3) the sales proceeds from the sale of the High Line shares could not be released to Investor One until he paid a registration fee of $5,200 to remove the restriction on the shares. James also forwarded Investor One a “Sell Confirmation” confirming the sale of Investor One’s High Line Shares, with James listed as the broker of record. The Sell Confirmation reflected a trade date of December 8, 2014 and that the transaction was “Brokered by Greenberg International.” “Robert Gould” signed the Sell Confirmation as Compliance Officer of Greenberg. Investor One did not pay the registration fee and forwarded the documentation to the Division for investigation. |
| 13. | On January 20, 2015, the Division sent Greenberg a certified letter providing it with an opportunity to disclose all securities transactions effected by Greenberg for Connecticut residents during the last six years. (emphasis added) On January 22, 2015, Dunn, on behalf of Greenberg, responded by email to the Division’s letter and represented that Greenberg had not conducted any “transactions in the last six years or at any time involving residents of Connecticut.” (emphasis added) |
| 14. | On January 23, 2015, the Division sent Greenberg a second certified letter, requesting a “report disclosing security [sic] transactions effected for all clients by Greenberg . . . during the last six years within or from Connecticut.” (emphasis added) Dunn’s email response dated January 26, 2015 stated that: “[y]ou have asked for the same information that we have provided to you already. . . [n]othing further has changed from our previous answer to you.” Significantly, Dunn failed to mention the Sell Confirmation that Greenberg, a purportedly Connecticut-based entity, sent to Investor One on December 16, 2014, or that the Sell Confirmation expressly stated that a sale of High Line securities was “[b]rokered by Greenberg International” on December 8, 2014. The statement made by Dunn on behalf of Greenberg denying any securities transactions by Greenberg in or from Connecticut was at odds with the Sell Confirmation Greenberg sent to Investor One. |
|
Investor Two | |
| 15. | On January 22, 2015, Investor Two, another individual living in Singapore (“Investor Two”), received documentation from Fox on behalf of Greenberg soliciting the purchase of shares of Sport Kinetix Corp. (“SK”) from Investor Two. The documentation from Fox on behalf of Greenberg reflects that the purported seller is Investor Two and the purported buyer is Greenberg, acting on behalf of an undisclosed purchaser. Fox signed the document on behalf of Greenberg. Specifically, Fox on behalf of Greenberg represented to Investor Two that Greenberg, on behalf of the buyer, would buy 20,000 shares of SK from Investor Two for $10.88 a share and that Greenberg would receive a 2% commission of $4,352. The document also instructed Investor Two to direct any questions to “your representative at 1-860-308-1421,” which is the Connecticut telephone number listed on Greenberg’s website. |
| 16. | Contrary to the representations of Fox and Greenberg, SK is not currently listed and/or traded on any securities exchange. However, Sport Kinetix Inc. was an entity that traded on the OTC Bulletin Board under the symbol “SRKIF”, but was delisted sometime in 2007. |
| 17. | Significantly, Investor Two did not own any shares of SK and had no prior relationship with either Greenberg or Fox. |
| 18. | The SK securities have never been registered at any time under the Act. |
| 19. | Investor Two did not follow-up on the transaction with Fox and/or Greenberg and forwarded the documentation he received to the Division for investigation. |
IV. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST
a. Violation of Section 36b-6(a) of the Act by Greenberg–
Unregistered Broker-dealer Activity
| 20. | Paragraphs 1 through 19, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 21. |
Greenberg transacted business as a broker-dealer in Connecticut absent registration, as more fully described in paragraphs 9 through 15, inclusive. Such conduct constitutes a violation of Section 36b-6(a) of the Act, which forms a basis for an order to cease and desist to be issued against Greenberg under Section 36b-27(a) of the Act. |
b. Violation of Section 36b-6(a) of the Act by James and Fox –
Unregistered Broker-dealer Agent Activity
| 22. | Paragraphs 1 through 21, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 23. |
James and Fox each transacted business as a broker-dealer agent of Greenberg in Connecticut absent registration, as more fully described in paragraphs 9 through 12, inclusive and paragraphs 15 and 16. Such conduct constitutes a violation of Section 36b-6(a) of the Act, which forms a basis for an order to cease and desist to be issued against James and Fox under Section 36b-27(a) of the Act. |
c. Violation of Section 36b-4(a) of the Act by Greenberg, James and Fox –
Fraud in Connection with the Offer, Sale or Purchase of any Security
| 24. | Paragraphs 1 through 23, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 25. |
The conduct of Greenberg, James and Fox, as more fully described in paragraphs 10 through 18, 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 any 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 Act, which forms a basis for an order to cease and desist to be issued against Greenberg, James and Fox under Section 36b-27(a) of the Act. |
d. Violation of Section 36b-23 of the Act by Greenberg and Dunn –
Making a Statement in an Investigation that is
False or Misleading in a Material Respect
| 26. | Paragraphs 1 through 25, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 27. |
Dunn’s statement on behalf of Greenberg to the Division, as more fully described in paragraphs 13 and 14, was, at the time and in light of the circumstances under which it was made, false or misleading in a material respect, which constitutes a violation of Section 36b-23 of the Act. Such violation forms a basis for an order to cease and desist to be issued against Dunn and Greenberg under Section 36b-27(a) of the Act. |
AND NOTICE OF RIGHT TO HEARING
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Greenberg has committed at least one violation of Section 36b-6(a) of the Act, at least one violation of Section 36b-4(a) of the Act, and at least one violation of Section 36b-23 of the Act;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, James has committed at least one violation of Section 36b-6(a) of the Act and at least one violation of Section 36b-4(a) of the Act;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Dunn has committed at least one violation of Section 36b-23 of the Act;
WHEREAS, as a result of the Investigation, the Commissioner finds that with respect to the activity described herein, Fox has committed at least one violation of Section 36b-6(a) of the Act and at least one violation of Section 36b-4(a) of the Act;
WHEREAS, the Commissioner further finds that the issuance of an Order to Cease and Desist 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, the Commissioner ORDERS that GREENBERG INTERNATIONAL LAW & ADVISORY CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) transacting business as an unregistered broker-dealer in Connecticut; (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 any act, practice or course of business which operates or would operate as a fraud or deceit upon any person; and (3) making statements to the Division during an investigation which are, at the time and in light of the circumstances under which they are made, false or misleading in a material respect;
WHEREAS, the Commissioner ORDERS that MIKE JAMES CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) transacting business as an unregistered broker-dealer agent; and (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 any act, practice or course of business which operates or would operate as a fraud or deceit upon any person;
WHEREAS, the Commissioner ORDERS that ROBERT DUNN CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation, making statements to the Division during an investigation which are, at the time and in light of the circumstances under which they are made, false or misleading in a material respect;
WHEREAS, the Commissioner ORDERS that RICHARD FOX CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) acting as an unregistered broker-dealer agent; and (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 any act, practice or course of business which operates or would operate as a fraud or deceit upon any person;
THE COMMISSIONER FURTHER ORDERS THAT, pursuant to Section 36b-27 of the Act, each Respondent will be afforded an opportunity for a hearing on the allegations set forth above if a written request for a hearing is received by the Department of Banking, Securities and Business Investments 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 any 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 General Statutes of Connecticut and Section 36a-1-21 of the Regulations. If a hearing is requested, the hearing will be held on June 23, 2015, 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, each 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.
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.
| Dated at Hartford, Connecticut, | ____/s/____________ | |
| this 20th day of May 2015. | Jorge L. Perez | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 20th day of May 2015, the foregoing Order to Cease and Desist and Notice of Right to Hearing was sent by certified mail, return receipt requested, to Greenberg International Law & Tax Advisory, One Constitution Plaza, Kinsley Street, Hartford, Connecticut 06103, certified mail no. 7014 3490 0002 3525 8063 and by e-mail to info at greenbergtaxandlaws.com; Mike James c/o Greenberg International Law & Tax Advisory, One Constitution Plaza, Kinsley Street, Hartford, Connecticut 06103 certified mail no. 7014 3490 0002 3525 8070 and by e-mail to info at greenbergtaxandlaws.com; Robert Dunn c/o Greenberg International Law & Tax Advisory, One Constitution Plaza, Kinsley Street, Hartford, Connecticut 06103 certified mail no. 7014 3490 0002 3525 8032 and by e-mail to info at greenbergtaxandlaws.com and Richard Fox c/o Greenberg International Law & Tax Advisory, One Constitution Plaza, Kinsley Street, Hartford, Connecticut 06103 certified mail no. 7012 1010 0001 7264 5151 and by e-mail to info at greenbergtaxandlaws.com.
____/s/___________
Elena Zweifler
Prosecuting Attorney