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IN THE MATTER OF: MOVIES FOR A BETTER (Collectively "Respondents") * * * * * * * * * * * * * * * * * |
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ORDER TO CEASE AND DESIST ORDER TO MAKE RESTITUTION AND NOTICE OF RIGHT TO HEARING DOCKET NO. CRF-11-7852-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 the regulations promulgated thereunder (Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies) (“Regulations”). |
| 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 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.
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| 5. |
As a result of the Investigation, the Commissioner has the authority to order that Respondents make restitution pursuant to Section 36b-27(b) of the Act. |
| 6. | As a result of the Investigation, the Commissioner has the authority to impose a fine against Respondents pursuant to Section 36b-27(d) of the Act. |
II. RESPONDENTS
| 7. | MFBW is a Connecticut limited liability company with its principal place of business last known to the Commissioner at 1 Glenville Street, Greenwich, Connecticut 06831, and its mailing address at P.O. Box 31037, Greenwich, Connecticut 06831. MFBW is or was purported to be a full service film, music and literary development company. |
| 8. | Martineau is an individual whose address last known to the Commissioner is 24 Pemberwick Road, Greenwich, Connecticut 06831. At all times relevant hereto, Martineau was a member and president of MFBW. |
III. STATEMENT OF FACTS
| 9. | From at least August 25, 2009 to the present, MFBW has been an issuer of securities in the form of notes, investment contracts, evidence of indebtedness, or certificates of limited interest or participation in a profit-sharing agreement (“MFBW Securities”). |
| 10. | On or about August 25, 2009 and September 3, 2009, MFBW and Martineau, acting on behalf of MFBW, offered and sold MFBW Securities from Connecticut to at least one Connecticut investor. The investor had no role in the management of MFBW, and relied solely on the efforts of MFBW and Martineau to receive a share of the net profits and the return of the investor’s principal. |
| 11. | In connection with the offer and sale of the securities, Respondents provided the investor with a document for signature entitled “Development Money Investment Agreement” (“Investment Agreement”). |
| 12. | The Investment Agreement provided that investors would receive a percentage of all net profits earned. |
| 13. |
The MFBW Securities offered and sold by Respondents 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. |
| 14. | Martineau has never been registered in Connecticut as an agent of MFBW, nor was he an associated person. |
| 16. [sic] | To date, at least one investor has not received any principal or interest from Respondents. |
| 17. | In connection with the offer and sale of the MFBW Securities, Respondents failed to disclose, inter alia, risk factors related to the investment; any financial information pertaining to MFBW or the performance of prior MFBW development projects; any financial or background information on directors, officers and/or principals of MFBW; the remuneration to be paid and/or paid to directors, officers and/or principals of MFBW; payments to be made and/or made to affiliated companies; the estimated cash proceeds of the MFBW securities offering; the registration status of the securities; the purposes for which the cash proceeds of the offering would be used by MFBW; MFBW’s financial statements; and material litigation involving any directors, officers and/or principals of MFBW. Each of these omitted items was material to investors and prospective investors of the MFBW securities. |
IV. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST,
ORDER TO MAKE RESTITUTION AND ORDER IMPOSING FINE
a. Violation of Section 36b-16 of the Act –
Offer and Sale of Unregistered Securities
| 18. | Paragraphs 1 through 17, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 19. |
Respondents offered and sold unregistered securities in or from Connecticut to at least one investor, as more fully described in paragraphs 7 through 12, inclusive, which securities were not registered in Connecticut under the Act, as more fully described in paragraph 13. 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 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 against Respondents 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
| 20. | Paragraphs 1 through 19, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 21. | The conduct of Respondents, as more fully described in paragraphs 7 through 17, 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 against Respondents under Section 36b-27(d) of the Act. |
c. Violation of Section 36b-6 of the Act –
Unregistered Agent Activity
| 22. | Paragraphs 1 through 21, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 23. | Martineau transacted business as an agent of issuer in this state on at least one occasion absent registration, as more fully described in paragraphs 9, 10 and 14. 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 Martineau under Section 36b-27(a) of the Act, and for the imposition of a fine against Martineau under Section 36b-27(d) of the Act. |
| 24. | MFBW employed Martineau as an unregistered agent of issuer in this state on at least one occasion, as more fully described in paragraphs 9, 10 and 14. 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 MFBW under Section 36b-27(a) of the Act, and for the imposition of a fine against MFBW 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, MFBW 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, Martineau 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, the Commissioner further finds that the issuance of an Order to Cease and Desist, Order to Make Restitution, and the imposition of a fine 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, 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 against Respondents;
WHEREAS, the Commissioner ORDERS that MFBW 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 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 Martineau 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 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 August 1, 2009 to the date this Order to Make Restitution becomes permanent and which contains (a) the name and address of each investor, (b) the amount Respondents collected from each investor, (c) the amount of any refunds of principal or purported interest payments Respondents made to each investor; |
| 2. | Within forty-five (45) days from the date this Order to Make Restitution becomes permanent, Respondents shall reimburse each 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 August 1, 2009 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 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 investor the amount of funds collected from investors plus interest, less funds returned in the form of purported refunds of principal and purported interest payments, with respect to all transactions effected from August 1, 2009 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 December 13, 2011 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 28th day of October 2011. | Howard F. Pitkin | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 28th day of October 2011, 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 Movies for a Better World, LLC, at 1 Glenville Street, Greenwich, Connecticut 06831, certified mail no. 7010 1870 0001 3619 4844; c/o David S. Shields II, Agent, 33 Church Street, Mystic, Connecticut 06355, certified mail no. 7010 1870 0001 3619 4851; and P.O. Box 31037, Greenwich, Connecticut 06831, certified mail no. 7010 1870 0001 3619 4868; and Michael J. Martineau, 24 Pemberwick Road, Greenwich, Connecticut 06831, certified mail no. 7010 1870 0001 3619 4875.
_______/s/_________
Paul A. Bobruff
Prosecuting Attorney