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IN THE MATTER OF: DANIEL MORRIS PORTER (Collectively "Respondents") * * * * * * * * * * * * * * * * * |
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ORDER TO CEASE AND DESIST AND NOTICE OF RIGHT TO HEARING DOCKET NO. CF-10-7399-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, as amended by Public Act 10-141, 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 an order to cease and desist against Respondents pursuant to Section 36b-27(a) of the 2010 Supplement to the General Statutes (“2010 Supplement”), as amended by Public Act 10-141. |
| 5. |
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 2010 Supplement, as amended by Public Act 10-141. |
II. RESPONDENTS
| 6. |
Daniel Morris Porter (“Porter”) is an individual whose last known addresses to the Commissioner are 1390 Vespucci Avenue, Copiague, New York 11726; and 109 Maple Parkway, Staten Island, New York 10303. |
| 7. | Porter does or has done business under various names, including D.P. Holdings Inc. Porter has held D.P. Holdings Inc. out as having a business address located at 109 Maple Parkway, New York, New York 10303. |
| 8. | J. Lawson & Associates, Inc. is a corporation formed under the laws of New York, whose registered agent is Jason A. Lawson, 134-25 Franklin Avenue, #303, Flushing, New York 11355. |
| 9. | Jason Alexander Lawson (“Lawson”) is an individual whose last known address to the Commissioner is 134-25 Franklin Avenue, #303, Flushing, New York 11355. |
III. STATEMENT OF FACTS
| 10. | On or about September 20, 2005, Porter contacted a Connecticut resident by telephone and portrayed himself as a representative of Ionic Water Technologies Inc. (“Ionic”) and offered to sell the securities of Ionic to the Connecticut resident (“Investor”). Porter sent the Investor a confirmation of the purchase of Ionic securities on D.P. Holdings Inc. letterhead. |
| 11. | On or about September 26, 2005, the Investor, at Porter’s direction, jointly paid J. Lawson & Associates, Inc. and Porter d/b/a D.P. Holdings Inc. for the Ionic securities. Porter and Jason A. Lawson established a bank account for J. Lawson & Associates, Inc. Lawson endorsed the Investor’s check for the Ionic securities and deposited the check in the bank account of J. Lawson & Associates, Inc. |
| 12. | The Investor was offered and sold Ionic securities four additional times by Porter and J. Lawson & Associates, Inc. The Investor sent Porter and J. Lawson & Associates, Inc. four additional payments for the Ionic securities. The payments were dated October 5, October 20, October 27, and November 17, 2005. Lawson endorsed the Investor’s checks, which noted that the payments were for the purchase of Ionic securities, and deposited the payments in the bank account of J. Lawson & Associates, Inc. |
| 13. | Lawson and Porter both withdrew funds provided by the Investor from the J. Lawson & Associates, Inc. bank account and used the Investor’s money for their personal use and not for the purchase of securities. |
| 14. | Lawson materially aided Porter and J. Lawson & Associates, Inc. in the offer and sale of the securities of Ionic to the Investor. |
| 15. | At no time were Respondents registered to do business in Connecticut as a broker-dealer, broker-dealer agent or as agents of issuer. |
| 16. | To date, Respondents have not provided the Investor with the Ionic securities that the Investor purchased, nor have they returned the Investor’s payments for the Ionic securities. |
| 17. | In connection with the offer and sale of the Ionic securities, Respondents failed to disclose, inter alia, the risk of loss of the entire investment; any risk factors related to the investment; any financial information pertaining to Ionic; the fact that Porter had been barred from association with any NASD/FINRA member in any capacity; or that Respondents would use the Investor’s money for their personal use and not for the purchase of Ionic securities. Each of these omitted items was material to investors and prospective investors of the Ionic securities. |
IV. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST
AND ORDER IMPOSING FINE AGAINST RESPONDENTS
a. Violation of Section 36b-6(a) of the Act –
Unregistered Broker-dealer Activity
| 18. | Paragraphs 1 through 17, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 19. |
Porter and J. Lawson Associates Inc. each transacted business as a broker-dealer in Connecticut absent registration, as more fully described in paragraphs 10 through 17, inclusive. Such conduct constitutes a violation of Section 36b-6(a) of the Act, as amended by Public Act 10-141, which forms a basis for an order to cease and desist to be issued against Respondents under Section 36b-27(a) of the of the 2010 Supplement, as amended, and the imposition of a fine against Respondents under Section 36b-27(d) of the 2010 Supplement, as amended. |
| 20. | Lawson, as more fully described in paragraphs 11 through 17, inclusive, has materially aided Porter and J. Lawson Associates Inc.’s violation of Section 36b-6(a) of the Act, as amended, which forms a basis for an order to cease and desist to be issued against Lawson under Section 36b-27(a) of the of the 2010 Supplement, as amended, and for the imposition of a fine against Lawson under Section 36b-27(d) of the Act, as amended. |
b. Violation of Section 36b-4(a) of the Act –
Fraud in Connection with the Offer and Sale of any Security
| 21. | Paragraphs 1 through 20, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 22. |
The conduct of Porter and J. Lawson Associates Inc., as more fully described in paragraphs 10 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 2010 Supplement, which forms a basis for an order to cease and desist to be issued against Porter and J. Lawson Associates Inc. under Section 36b-27(a) of the 2010 Supplement, as amended, and the imposition of a fine against Porter and J. Lawson Associates Inc. under Section 36b-27(d) of the 2010 Supplement, as amended. |
| 23. | The conduct of Lawson, as more fully described in paragraphs 11 through 17, inclusive, materially aided Porter and J. Lawson Associates Inc.’s violation of Section 36b-4(a) of the 2010 Supplement, which forms a basis for an order to cease and desist to be issued against Lawson under Section 36b-27(a) of the of the 2010 Supplement, as amended, and for the imposition of a fine against Lawson under Section 36b-27(d) of the Act, as amended. |
V. ORDER TO CEASE AND DESIST, 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, Porter and J. Lawson Associates Inc. have committed at least one violation of Section 36b-6(a) of the Act, as amended, and at least one violation of Section 36b-4(a) of the 2010 Supplement, and that Lawson has materially aided such violations;
WHEREAS, the Commissioner further finds that the issuance of this Order to Cease and Desist and the imposition of a fine 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;
AND WHEREAS, pursuant to Section 36b-27 of the 2010 Supplement, as amended, Respondents will be afforded an opportunity for a hearing on the allegations set forth above.
THE COMMISSIONER THEREFORE ORDERS that Respondents CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation, 1) transacting business as a broker-dealer in Connecticut absent registration, (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 an act, practice or course of business which operates as a fraud or deceit upon any person, and (3) materially aiding any such violation.
THE COMMISSIONER FURTHER ORDERS that a hearing will be granted to Respondents if a written request for a hearing is received by the Department of Banking, 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 for any such Respondent 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 October 7, 2010, 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 any such hearing, Respondents 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.
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 23rd day of August 2010. | Howard F. Pitkin | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 24th day of August 2010, the foregoing Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing was sent by certified mail, return receipt requested, to Daniel Morris Porter at 1390 Vespucci Avenue, Copiague, New York 11726, certified mail no. 7010 0290 0002 7489 7723; and 109 Maple Parkway, Staten Island, New York 10303, certified mail no. 7010 0290 0002 7489 7730; J. Lawson & Associates, Inc., 134-25 Franklin Avenue, #303, Flushing, New York 11355, certified mail no. 7010 0290 0002 7489 7747; and Jason Alexander Lawson, 134-25 Franklin Avenue, #303, Flushing, New York 11355, certified mail no. 7010 0290 0002 7489 7754.
_______/s/_________
Paul A. Bobruff
Prosecuting Attorney