| * * * * * * * * * * * * * * * * * * * * IN THE MATTER OF: HCH CYPRESS, LLC ("HCH") (Collectively "Respondents") * * * * * * * * * * * * * * * * * * * * |
* * * * * * * * * * * |
ORDER TO CEASE AND DESIST ORDER IMPOSING FINE AND DOCKET NO. CF-2007-7134-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 2006 Supplement to the General Statutes, to determine if Respondents had violated, were violating or were about to violate provisions of the Act or Regulations;
WHEREAS, on January 11, 2007, the Commissioner, acting pursuant to Sections 36b-27(a) and 36b-27(d) of the 2006 Supplement to the General Statutes, issued an Order to Cease and Desist, Notice of Intent to Fine (“Fine Notice”) and Notice of Right to Hearing against Respondents (collectively “Notice”), which Notice is incorporated herein by reference;
WHEREAS, in the Notice the Commissioner ordered that Respondents cease and desist from directly or indirectly violating the provisions of the Act, including without limitation: (1) offering and selling unregistered securities; and (2) in connection with the offer, sale or purchase of a security, employing any device, scheme or artifice to defraud, making of any untrue statements of material facts or omitting to state material facts 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;
WHEREAS, in the Notice the Commissioner notified Respondents that they could request a hearing concerning the allegations set forth in the Notice;
WHEREAS, the Fine Notice stated that the Commissioner intended to impose a fine against Respondents, that a hearing would be held on the matters alleged in the Fine Notice on March 8, 2007 (“Fine Hearing”), and that if Respondents failed to appear at the Fine Hearing, the Commissioner may order that a maximum fine of Two Hundred Thousand Dollars ($200,000) be imposed upon HCH and a maximum fine of Four Hundred Thousand Dollars ($400,000) be imposed upon Kabbash;
WHEREAS, on January 12, 2007, the Notice was sent to by registered mail, return receipt requested, to HCH (Registered Mail No. RB028033397US);
WHEREAS, on January 12, 2007, the Notice was sent by registered mail, return receipt requested, to Kabbash (Registered Mail Nos. RB028033406US and RB028033471US);
WHEREAS, on January 17, 2007, the Notice was received by HCH;
WHEREAS, the Notice sent to Kabbash with Registered Mail No. RB028033406US was returned to the Department marked “Returned To Sender”;
WHEREAS, Kabbash filed an Appearance and Request for Hearing dated January 24, 2007;
WHEREAS, on February 6, 2007, the Commissioner issued a Notification of Hearing and Designation of Hearing Officer stating that the hearing would be held on March 8, 2007, at 10 a.m., at the Department of Banking and appointing Attorney William Nahas, Jr., as Hearing Officer;
WHEREAS, by letter dated March 9, 2007, Hearing Officer Nahas granted Kabbash’s request for a continuance and rescheduled the hearing to April 16, 2007, at 10 a.m.;
WHEREAS, on March 26, 2007, the Commissioner issued a Redesignation of Hearing Officer appointing Paul A. Bobruff, Principal Attorney, as Hearing Officer and stating that the hearing would be held on April 16, 2007, at 10 a.m., at the Department of Banking;
WHEREAS, by letter dated April 13, 2007, John Kuttas, Esq., filed an appearance on behalf of Kabbash and requested a continuance of the hearing;
WHEREAS, on April 13, 2007, Hearing Officer Bobruff granted Attorney Kuttas’ request for a continuance;
WHEREAS, by letter dated May 14, 2007, Hearing Officer Bobruff rescheduled the hearing to June 18, 2007, at 10 a.m.;
WHEREAS, by facsimile dated June 14, 2007, addressed to Hearing Officer Bobruff and Jesse Silverman, Esq., Attorney Kuttas stated that he would not be appearing at the hearing on June 18, 2007, and he did not expect Kabbash to be appearing;
WHEREAS, the Commissioner alleged in the Notice that Kabbash and Respondents both offered and sold unregistered securities to at least one investor, which securities were not registered in Connecticut under the Act, in violation of Section 36b-16 of the Act, which forms a basis for an order to cease and desist to be issued against Kabbash and Respondents under Section 36b-27(a) of the 2006 Supplement to the General Statutes, and for the imposition of a fine against Kabbash and Respondents under Section 36b-27(d) of the 2006 Supplement to the General Statutes;
WHEREAS, the Commissioner alleged in the Notice that the conduct of Kabbash and Respondents constitutes, in connection with the offer, sale or purchase of a security, employing a device, scheme or artifice to defraud, making of an untrue statements of material facts or omitting to state material facts 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 as a fraud or deceit upon any person, which 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 Kabbash and Respondents under Section 36b-27(a) of the 2006 Supplement to the General Statutes, and forms a basis for the imposition of a fine against Kabbash and Respondents under Section 36b-27(d) of the 2006 Supplement to the General Statutes;
WHEREAS, on June 18, 2007, HCH failed to appear at the Hearing;
WHEREAS, on June 18, 2007, Kabbash failed to appear at the 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”;
AND 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.”
II. FINDINGS OF FACT AND CONCLUSIONS OF LAW
| 1. | The Commissioner finds that the facts as set forth in paragraphs 6 through 15, inclusive, of the Notice shall constitute findings of fact 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, and the conclusions, set forth in paragraphs 16 through 21, inclusive, 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. |
| 2. | The Commissioner finds that HCH committed one violation of Section 36b-16 of the Act and one violation of Section 36b-4(a) of the Act, and that Kabbash committed two violations of Section 36b-16 of the Act and two violations of Section 36b-4(a) of the Act. |
| 3. | The Commissioner finds that the facts require the issuance of a permanent order to cease and desist against Respondents. |
| 4. | The Commissioner finds that the facts require the imposition of a fine against Respondents. |
| 5. | The Commissioner complied with the provisions of Section 36b-27(a) of the Act, as amended, and Section 36b-27(d) of the Act. |
| 6. | 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 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.” |
| 7. | The Commissioner finds that the issuance of an order to cease and desist and imposition of a fine against 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-33, inclusive, of the Act. |
III. ORDER
Having read the record, I hereby ORDER, pursuant to Section 36b-27(a) of the Act, as amended, and Section 36b-27(d) of the Act, that:
| 1. | The Order to Cease and Desist that was issued against HCH Cypress, LLC on January 11, 2007, be made PERMANENT; |
| 2. | The Order to Cease and Desist that was issued against Bradley W. Kabbash on January 11, 2007, be made PERMANENT; |
| 3. | A fine of $200,000 be imposed against HCH Cypress, LLC, 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 30 days from the date this Order is mailed; |
| 4. | A fine of $400,000 be imposed upon Bradley W. Kabbash, 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 30 days from the date this Order is mailed; and |
| 5. | This Order shall become effective when mailed. |
Dated at Hartford, Connecticut
this 18th day of September 2007.
________/s/_________
Howard F. Pitkin
Banking Commissioner
This Order was mailed by registered mail,
return receipt requested, to Respondents
on September 18, 2007.
HCH Cypress, LLC Registered Mail No. RB027866638US
c/o Five Mile Group
694 Boston Post Road
Darien, CT 06820
Bradley W. Kabbash Registered Mail No. RB027866641US
1598 Third Avenue, #107
New York, NY 10128