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ORDER TO MAKE RESTITUTION AND NOTICE OF RIGHT TO HEARING DOCKET NO. CRF-13-7997-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 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 of the Department of Banking, has conducted an investigation into the activities of Respondents to determine if Respondents had 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. |
| 5. |
As a result of the Investigation, the Commissioner has the authority to order that Respondents make restitution pursuant to Sections 36b-27(b) and 36b-27(c) of the Act. |
| 6. | As a result of the Investigation, the Commissioner has the authority to impose a fine upon Respondents pursuant to Section 36b-27(d) of the Act. |
II. RESPONDENTS
| 7. |
Method is a Florida corporation whose principal place of business last known to the Commissioner is 250 181st Drive, Sunny Isles Beach, Florida 33160, and whose last known mailing address is 8939 Marks Street, Unit B, El Paso, Texas 79904. |
| 8. | Thelemaque is an individual whose address last known to the Commissioner is 8939 Marks Street, Unit B, El Paso, Texas 79904. From at least May 9, 2008, Thelemaque has been the President, Secretary and a Director of Method. |
| 9. | Stilas Financial, a subsidiary of Stilas International Law Services, P.A., is held out as a licensed financial institution of a licensed American law firm. Stilas Financial’s principal place of business last known to the Commissioner is the Trump Building, 40 Wall Street, 28th Floor, New York, New York 10005. |
| 10. | Greene is an individual whose address last known to the Commissioner is Portland House, 16th Floor, Stag Place, London SW1E 5RS, United Kingdom. Greene was the founder of Stilas Financial and President and Chief Legal Counsel of Stilas Financial from at least January 2008 until February 2009. |
III. STATEMENT OF FACTS
11.
In September 2008 and October 2008, Method and/or Thelemaque offered and sold securities issued by Method and/or Thelemaque to one or more Connecticut investors. The proceeds would be used to finance the production of one or more films, including a movie entitled “Enigma.”
12.
The securities offered and sold by Method and/or Thelemaque consisted of (a) an Investor Agreement pursuant to which Method, through its agent Thelemaque, agreed to split Enigma gross revenues in excess of $20,000 with investors in return for an investment of $100,000; and (b) a related Promissory Note pursuant to which obligors Method and Thelemaque promised to pay the affected investor $1.1 million on or before September 30, 2009 – a return of one thousand percent on a $100,000 investment. The Investor Agreement and the Promissory Note are referred to collectively herein as the “Method Securities.”
13.
Thelemaque advised at least one Connecticut investor (“Investor 1”) that Stilas Financial was securing financing for Method to produce a feature length movie.
14.
Investor 1 had a passing familiarity with Stilas Financial, since Investor 1 had unsuccessfully tried to obtain financing from Stilas Financial for a personal venture in early 2008. At that time, Greene, acting on behalf of Stilas Financial, told Investor 1 that Stilas Financial had a 100% success rate in obtaining funding for its investment projects.
15.
In October and November 2008, Thelemaque forwarded to Investor 1 correspondence from Stilas Financial regarding a purported agreement by Stilas Financial to finance Method’s Enigma film project. Specifically, Stilas Financial, through its President and Chief Legal Counsel Greene, provided Method and Thelemaque with an October 25, 2008 Confirmation and Approval of Project for International Financing – Enigma Film Franchise – $300 Million USD (“Confirmation and Approval”). Thelemaque forwarded the Confirmation and Approval to Investor 1. The Confirmation and Approval required a onetime fixed prepayment of Method’s share of preliminary expenses in the amount of $100,000. Based upon Respondents’ representations, Investor 1 believed that if he invested $100,000, the remainder of the financing needed for Method to produce a feature length movie would be secured through Stilas Financial, and the film project would proceed. Investor 1 relied on the Confirmation and Approval and on Respondents’ representations regarding financing and other matters in deciding to invest $100,000.
16.
In October 2008, at the direction of Thelemaque and Method, Investor 1 sent Stilas Financial $100,000 for the purpose of investing in the Method Securities.
17.
The Method Securities offered and sold by Thelemaque and Method with the material assistance of Stilas Financial and Greene were never registered in Connecticut under Section 36b-16 of the Act, nor were they exempt from registration under Section 36b-21 of the Act, nor were they the subject of a filed exemption claim or claim of covered security status.
18.
At no time were Respondents registered in any capacity under the Act.
19.
Thelemaque has never been registered in Connecticut as an agent of issuer of Method.
20.
In connection with the offer and sale of the Method Securities, Respondents failed to disclose, inter alia, any financial information about Respondents, that Thelemaque was not registered as an agent of issuer or in any other capacity to sell securities in Connecticut, the estimated cash proceeds to be raised from the sale of the Method Securities, any specific risk factors related to the investment in general or the film industry in particular, the remuneration to be paid to the directors, officers and/or principals of Method and the basis upon which a $100,000 investment in a $1.1 million Promissory Note could yield a rate of return of 1000 percent. Each of these omitted items was material to investors and prospective Method investors.
21.
To date, Respondents have failed to pay at least one Connecticut investor the promised rate of return on the Method Securities and have failed to return any investor monies.
ORDER TO MAKE RESTITUTION AND ORDER IMPOSING FINE
a. Violation of Section 36b-16 of the Act -
Offer and Sale of Unregistered Securities
| 22. | Paragraphs 1 through 21, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 23. |
Method and Thelemaque offered and sold securities in or from Connecticut, as more fully described in paragraphs 11 through 16, inclusive, which securities were not registered in Connecticut under the Act, as more fully described in paragraph 17. The offer and sale of such securities absent registration constitutes a violation of Section 36b-16 of the Act, which forms a basis for an order to cease and desist to be issued against Method and Thelemaque under Section 36b-27(a) of the Act, an order that Method and Thelemaque make restitution under Section 36b-27(b) of the Act, and for the imposition of a fine upon Method and Thelemaque under Section 36b-27(d) of the Act. |
| 24. | Stilas Financial and Greene materially aided Method and Thelemaque’s violation of 36b-16 of the Act, as more fully described in paragraphs 11 through 17, inclusive, which forms a basis for an order to cease and desist to be issued against Stilas Financial and Greene under Section 36b-27(a) of Act, an order that Stilas Financial and Greene make restitution under Section 36b-27(c) of the Act, and for the imposition of a fine upon Stilas Financial and Greene under Section 36b-27(d) of the Act. |
b. Violation of Section 36b-4(a) of the Act –
Fraud in Connection with the Offer and Sale of any Security
| 25. | Paragraphs 1 through 24, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 26. |
The conduct of Respondents, as more fully described in paragraphs 11 through 21, 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 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 Respondents under Section 36b-27(a) of the Act, an order that Respondents make restitution under Section 36b-27(b) of the Act, and for the imposition of a fine upon Respondents under Section 36b-27(d) of the Act. |
c. Violation of Section 36b-6 of the Act –
Unregistered Agent Activity
| 27. | Paragraphs 1 through 26, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 28. |
Thelemaque transacted business as an agent of issuer in this state absent registration, as more fully described in paragraphs 11 through 19, 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 Thelemaque under Section 36b-27(a) of the Act, and for the imposition of a fine upon Thelemaque under Section 36b-27(d) of the Act. |
| 29. | Method employed Thelemaque as unregistered agent of issuer in this state, as more fully described in paragraphs 11 through 19, inclusive. 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 Method under Section 36b-27(a) of the Act, and for the imposition of a fine upon Method under Section 36b-27(d) of the Act. |
V. ORDER TO CEASE AND DESIST, ORDER TO MAKE RESTITUTION,
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, Method has committed at least one violation of Section 36b-16 of the Act, at least one violation of Section 36b-4(a) of the Act, and at least one violation of Section 36b-6(b) of the Act;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Thelemaque has committed at least one violation of Section 36b-16 of the Act, at least one violation of Section 36b-4(a) of the Act, and at least one violation of Section 36b-6(a) of the Act;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Stilas Financial has committed at least one violation of Section 36b-4(a) of the Act and has materially aided in at least one violation of Section 36b-16 of the Act;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Greene has committed at least one violation of Section 36b-4(a) of the Act and has materially aided in at least one violation of Section 36b-16 of the Act;
WHEREAS, the Commissioner further finds that the issuance of an Order to Cease and Desist, Order to Make Restitution and the imposition of a fine upon 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 upon Respondents;
WHEREAS, the Commissioner ORDERS that METHOD FILMS, INC. CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, 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 any 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 in this state absent registration;
WHEREAS, the Commissioner ORDERS that THIERRY THELEMAQUE CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, 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 any 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) acting as an agent of issuer in this state absent registration;
WHEREAS, the Commissioner ORDERS that STILAS FINANCIAL SERVICES, S.A. CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation, Section 36b-4(a) of the Act, and cease and desist from materially aiding violations of Section 36b-16 of the Act;
WHEREAS, the Commissioner ORDERS that MATTHEW BENNETT GREENE CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation, Section 36b-4(a) of the Act, and cease and desist from materially aiding violations of Section 36b-16 of the Act;
WHEREAS, the Commissioner ORDERS that Respondents MAKE RESTITUTION of any sums obtained as a result of Respondents’ violations of Sections 36b-4(a) and 36b-16 of the Act, plus interest at the legal rate set forth in Section 37-1 of the General Statutes of Connecticut. Specifically, the Commissioner ORDERS that:
| 1. | Within thirty (30) days from the date this Order to Make Restitution becomes permanent, Respondents shall provide the Division with a written disclosure which covers the period from January 1, 2008 to the date this Order to Make Restitution becomes permanent and which contains (a) the name and address of each Connecticut investor, (b) the amount Respondents collected from each Connecticut investor, and (c) the amount of any refunds of principal or purported interest payments Respondents made to each Connecticut investor; |
| 2. | Within forty-five (45) days from the date this Order to Make Restitution becomes permanent, Respondents shall reimburse each Connecticut investor the amount of funds collected from the investor plus interest, less funds returned in the form of purported refunds of principal and purported interest payments made to the investor, with respect to all transactions effected from January 1, 2008 to the date this Order to Make Restitution becomes permanent. Such restitution shall be made by certified check, and shall be sent by certified mail, return receipt requested, to each affected Connecticut investor; and |
| 3. | Within ninety days (90) days from the date this Order to Make Restitution becomes permanent, Respondents shall provide the Division with proof in the form of copies of the certified checks and the return receipts required by paragraph 2 of Section V of this Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (collectively “Order”), that Respondents have reimbursed each Connecticut investor the amount of funds collected from each such investor plus interest, less funds returned in the form of purported refunds of principal and purported interest payments, with respect to all transactions effected from January 1, 2008 to the date this Order to Make Restitution becomes permanent. |
THE COMMISSIONER FURTHER ORDERS THAT, pursuant 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 of Connecticut State Agencies. If a hearing is requested, the hearing will be held on April 23, 2013 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.
This Order to Make Restitution 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 11th day of March 2013. | Howard F. Pitkin | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 11th day of March 2013, the foregoing Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing was sent by certified mail, return receipt requested, to Method Films, Inc. a/k/a Method Films, LLC a/k/a Method Film, LLC at 250 181st Drive, Sunny Isles Beach, Florida 33160, certified mail no. 7012 1010 0001 7264 6301; 8939 Marks Street, Unit B, El Paso, Texas 79904, certified mail no. 7012 1010 0001 7264 6318; and c/o Spiegel & Utrera, P.A., Registered Agent, 1840 SW 22nd Street, 4th Floor, Miami, Florida 33145, certified mail no. 7012 1010 0001 7264 6325; Thierry Thelemaque, 8939 Marks Street, Unit B, El Paso, Texas 79904, certified mail no. 7012 1010 0001 7264 6332; Stilas Financial Services, S.A., The Trump Building, 40 Wall Street, 28th Floor, New York, New York 10005, certified mail no. 7012 1010 0001 7264 6349; and Matthew Bennett Greene, Portland House, 16th Floor, Stag Place, London, SW1E 5RS, United Kingdom, registered mail no. RB028021045US.
| ____/s/___________ |
| Paul A. Bobruff |
| Prosecuting Attorney |