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IN THE MATTER OF: MARKLAND TECHNOLOGIES, INC. CHAD A. VERDI |
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ORDER TO CEASE AND DESIST NOTICE OF INTENT TO FINE AND NOTICE OF RIGHT TO HEARING DOCKET NOS. CF-2008-7550-S |
I. PRELIMINARY STATEMENT
| 1. |
The Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, 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”).
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| 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 they have violated, are violating or are about to violate provisions of the Act or Regulations. Section 36b-26(a) of the Act provides, in pertinent part: The commissioner may, subject to the provisions of the Freedom of Information Act . . . (1) [m]ake such public or private investigations within or outside of this state as the commissioner deems necessary to determine whether any person has violated, is violating or is about to violate any provision of sections 36b-2 to 36b-33, inclusive, or any regulation or order thereunder . . . . |
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As a result of the investigation by the Division, the Commissioner has reason to believe that Respondents have violated certain provisions of the Act. |
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As a result of the investigation by the Division, the Commissioner has the authority to issue a cease and desist order against Respondents pursuant to Section 36b-27(a) of the 2008 Supplement to the General Statutes, which provides, in pertinent part:
Whenever it appears to the commissioner after an investigation that any person has violated, is violating or is about to violate any of the provisions of sections 36b-2 to 36b-33, inclusive, . . . or that the further sale or offer to sell securities would constitute a violation of said sections . . . the commissioner may, in the commissioner’s discretion, order (1) the person . . . to cease and desist from the violations . . . of the provisions of said sections . . . or from the further sale or offer to sell securities constituting or which would constitute a violation of the provisions of said sections . . . . After such an order is issued, the person named in the order may, within fourteen days after receipt of the order, file a written request for a hearing. Any such hearing shall be held in accordance with the provisions of chapter 54. |
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As a result of the investigation by the Division, the Commissioner has the authority to impose a fine on Respondents pursuant to Section 36b-27(d) of the 2008 Supplement to the General Statutes, which provides, in pertinent part:
(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 . . . 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. |
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Markland is a Florida corporation with its principal place of business last known to the Commissioner at 222 Metro Center Boulevard, Warwick, Rhode Island 02886.
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Verdi is an individual whose address last known to the Commissioner is 100 Pheasant Drive, East Greenwich, Rhode Island 02818. |
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From at least March 2004 to at least September 2004, Markland was an issuer of securities in the form of convertible debentures (“Markland Debentures”). For all relevant periods, Markland’s principal place of business was 90 Grove Street, Ridgefield, Connecticut 06877.
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From at least July 2004 to at least September 2004, Verdi, on behalf of Markland, attempted to effect the sale of Markland Debentures to at least one Connecticut investor. On or about September 2004, Verdi, on behalf of Markland, did, in fact, effect the sale of $4,000,000 worth of Markland Debentures to at least that same Connecticut investor. |
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On or about August 1, 2006, the Commissioner, through employees of the Division, conducted an investigatory deposition (“Deposition”) of Verdi at the offices of the Department of Banking during which he provided sworn, on the record testimony. |
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During the Deposition, Verdi testified that, inter alia, he had no involvement with any literature, such as term sheets, that was sent out on behalf of Markland to potential investors; that his only role in soliciting funds on behalf of Markland was simply to call and verify the personal information of investors who had previously contacted Markland; and that he had no participation in negotiations with the Connecticut investor. In fact, Verdi actively solicited investments from new investors, regularly sent out and received documents regarding this solicitation, including term sheets, and actively participated in negotiations with the Connecticut investor.
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| 12. |
Verdi has never been registered in Connecticut as an agent of Markland, as required by Section 36b-6 of the Act.
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AND ORDER IMPOSING FINE AGAINST RESPONDENTS
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Paragraphs 1 through 12, inclusive, are incorporated and made a part hereof as if more fully set forth herein.
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Verdi’s statements to the Division, as more fully described in paragraph 11, were, at the time and in light of the circumstances under which they were 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 Verdi under Section 36b-27(a) of the 2008 Supplement to the General Statutes and the imposition of a fine against Verdi under Section 36b-27(d) of the 2008 Supplement to the General Statutes. Section 36b-27(d) of the 2008 Supplement to the General Statutes authorizes the Commissioner to impose a fine upon Verdi in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation. The Commissioner intends to impose a fine upon Verdi in an amount not to exceed One Hundred Thousand Dollars ($100,000), subject to Verdi’s right to a hearing on the allegations set forth above. |
Unregistered Agent Activity
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Paragraphs 1 through 14, inclusive, are incorporated and made a part hereof as if more fully set forth herein.
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Verdi acted as an agent of issuer on at least one occasion, as more fully described in paragraph 9, absent registration, as more fully described in paragraph 12. 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 Verdi under Section 36b-27(a) of the 2008 Supplement to the General Statutes, and for the imposition of a fine against Verdi under Section 36b-27(d) of the 2008 Supplement to the General Statutes. Section 36b-27(d) of the 2008 Supplement to the General Statutes authorizes the Commissioner to impose a fine upon Verdi in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation. The Commissioner intends to impose a fine upon Verdi in an amount not to exceed One Hundred Thousand Dollars ($100,000), subject to Verdi’s right to a hearing on the allegations set forth above. |
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Markland employed Verdi as an agent of issuer on at least one occasion, as more fully described in paragraph 9, absent registration, as more fully described in paragraph 12. Such conduct constitutes a violation of Section 36b-6(b) of the Act, which forms a basis for an order to cease and desist to be issued against Markland under Section 36b-27(a) of the 2008 Supplement to the General Statutes, and for the imposition of a fine against Markland under Section 36b-27(d) of the 2008 Supplement to the General Statutes. Section 36b-27(d) of the 2008 Supplement to the General Statutes authorizes the Commissioner to impose a fine upon Markland in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation. The Commissioner intends to impose a fine upon Markland in an amount not to exceed One Hundred Thousand Dollars ($100,000), subject to Markland’s right to a hearing on the allegations set forth above. |
THE COMMISSIONER THEREFORE ORDERS that Markland Technologies, Inc., CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation, employing an agent absent registration; and that Chad A. Verdi CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation, making an oral statement in an investigation that is false or misleading in a material respect, and acting as an agent of issuer absent registration;
THE COMMISSIONER FURTHER ORDERS that, pursuant to Section 36b-27(a) of the 2008 Supplement to the General Statutes, Markland Technologies, Inc., and Chad A. Verdi will be afforded an opportunity for a hearing on the allegations set forth above.
A hearing will be granted to Markland Technologies, Inc., and Chad A. Verdi if a written request for a hearing is received by the Department of Banking, Legal 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 Markland Technologies, Inc., or Chad A. Verdi 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 Connecticut General Statutes and Section 36a-1-21 of the Regulations of Connecticut State Agencies. If a hearing is requested, the hearing will be held on October 14, 2008, at 9 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
VI. NOTICE OF INTENT TO FINE RESPONDENTS AND NOTICE OF HEARING
WHEREAS, the Commissioner believes that the imposition of a fine upon Respondents would be in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act;
AND WHEREAS, notice is hereby given to Respondents that Section 36b-27(d) of the 2008 Supplement to the General Statutes authorizes the Commissioner to impose a fine not to exceed One Hundred Thousand Dollars ($100,000) per violation. The Commissioner intends to impose a maximum fine against Markland of One Hundred Thousand Dollars ($100,000), and a maximum fine against Verdi of Two Hundred Thousand Dollars ($200,000).
NOW THEREFORE, a hearing will be held in accordance with Section 36b-27(d)(2) of the 2008 Supplement to the General Statutes and Chapter 54 of the Connecticut General Statutes.
this 15th day of August 2008. _________/s/__________
Jesse B. Silverman
Prosecuting Attorney