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CONCLUSIONS OF LAW AND ORDER |
Note: Parenthetical references relate to exhibits entered into the hearing record
by the Hearing Officer (“HO Ex.”) or by the Division (“Div. Ex.”).
Transcript (“Tr.”) pages reflect where an exhibit was entered into the record
or where relevant testimony was given.
INTRODUCTION
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 promulgated under the Act (“Regulations”).
The above-referenced matter was initiated upon charges brought by the Commissioner to issue an order to cease and desist, an order to make restitution and an order imposing fine on Quesnel, among others. On June 22, 2015, the Commissioner issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (collectively, “Notice”) against Quesnel, among others. The Notice was sent by certified mail, return receipt requested. On July 10, 2015, Quesnel requested a hearing on the Notice.
On July 17, 2015, Bruce H. Adams, General Counsel, on behalf of the Commissioner, issued a Notification of Hearing and Designation of Hearing Officer stating that the hearing would be held on September 1, 2015, and appointing Director Eric Wilder as Hearing Officer. On August 28, 2015, the hearing was continued to October 20, 2015. On September 16, 2015, Bruce H. Adams, on behalf of the Commissioner, issued a Redesignation of Hearing Officer, appointing Stacey Serrano, Staff Attorney, as Hearing Officer. On October 20, 2015, a hearing was held at the Department of Banking (“Department”). Attorney Elena Zweifler represented the Department at the hearing and Quesnel failed to appear at the hearing. The hearing was conducted in accordance with Chapter 54 of the Connecticut General Statutes, the “Uniform Administrative Procedure Act”, and the Department’s contested case regulations, Section 36a-1-19 to 36a-1-57, inclusive, of the Regulations of Connecticut State Agencies.
Section 36a-1-31(b) of the Regulations of Connecticut State Agencies provides, in pertinent part, that:
| When a party fails to appear at a scheduled hearing, the allegations against the party may be deemed admitted. Without further proceedings or notice to the party, the presiding officer shall submit to the commissioner a proposed final decision containing the relief sought in the notice, provided the presiding officer may . . . receive evidence from the department . . . concerning the appropriateness of the amount of any . . . fine . . . sought in the notice. |
Having read the entire record, including testimony of the witnesses and documentary evidence, I make the following findings of fact and conclusions of law based on the preponderance of evidence in the record.
FINDINGS OF FACT
| 1. | Quesnel is an individual whose mailing address last known to the Commissioner is Post Office Box 615, Enfield, Connecticut 06083. (HO Ex. 1; Tr. at 8.) At various times between March 7, 1994 and January 14, 2011, Quesnel was registered as a broker-dealer agent in Connecticut. From July 9, 1992 through approximately August 29, 2011, Quesnel was licensed with the Connecticut Insurance Department and did business as Insurance and Investment Services LLC (“IIS”), a Connecticut limited liability company with its principal place of business at 50 Freshwater Boulevard, P.O. Box 615, Enfield, Connecticut 06083. In addition to selling insurance products, Quesnel doing business as IIS performed and sold securities research and technical analysis to broker-dealer agents. (HO Ex. 2, Tr. at 8; Div. Ex. 1, Tr. at 21-22.) |
| 2. | Overtime Marketing, LLC (“Overtime Marketing”) is a Texas limited liability company whose address last known to the Commissioner is 4455 LBJ Freeway, Dallas, Texas 75244. At no time were securities issued by Overtime Marketing registered under the Act. (HO Ex. 2; Div. Ex. 5, Tr. at 31.) |
| 3. | Overtime Sports Southeast, LLC (“Overtime Southeast”) is a Texas limited liability company whose address last known to the Commissioner is 4455 LBJ Freeway, Dallas, Texas 75244. At no time were securities issued by Overtime Southeast registered under the Act. (HO Ex. 2; Div. Ex. 5.) |
| 4. | Overtime Sports Southwest, LLC (“Overtime Southwest”) is a Texas limited liability company whose address last known to the Commissioner is 502 North Austin, Comanche, Texas 76442. At no time were securities issued by Overtime Southwest registered under the Act. (HO Ex. 2; Div. Ex. 5.) |
| 5. | Floridel, LLC (“Floridel”) is a Florida limited liability company whose address last known to the Commissioner is 13574 Village Park Drive, Orlando, Florida 32837. At no time were securities issued by Floridel registered under the Act. (HO Ex. 2; Div. Ex. 9, Tr. at 38.) |
| 6. | From January 1, 2004 through December 6, 2010 and from December 10, 2010 through January 14, 2011, Quesnel conducted broker-dealer agent activities on behalf of ING Financial Partners, Inc. (“ING”), now known as Voya Financial Advisors, Inc. (HO Ex. 2; Div. Ex. 1; Tr. at 22.) |
| 7. | Overtime Marketing, Overtime Southeast and Overtime Southwest (“Overtime Entities”) each issued promissory notes (“Overtime Notes”) secured by a percentage interest in the assets of the respective issuer. From at least February 2009 to May 2012, Quesnel, while registered as a broker-dealer agent of ING, offered and sold at least $1.9 million of Overtime Notes from Connecticut to at least ten investors in Connecticut and other states. The Overtime Notes were not 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. Many of the investors in Overtime Notes were Quesnel’s brokerage clients at ING. (HO Ex. 2; Div. Ex. 3, Tr. at 25; Div. Ex. 5; Div. Ex. 7, Tr. at 35.) |
| 8. | From June 2009 through January 2012, Quesnel received over $160,000 in compensation from the Overtime Entities in connection with the offer and sale of the Overtime Notes. (HO Ex. 2; Div. Ex. 6, Tr. at 32-34.) |
| 9. | Quesnel transacted business as an agent of the Overtime Entities in this state absent registration. (HO Ex. 2; Div. Ex. 5; Tr. at 34.) |
| 10. | In connection with the investigation conducted by the Securities and Business Investments Division (“Division”) of the Department into Quesnel’s activities (“Investigation”), the Division obtained on-the-record, sworn testimony from Quesnel, wherein he represented that he did not receive compensation for offering and selling the Overtime Notes. (HO Ex. 2; Div. Ex. 4 at 46, Tr. at 28.) |
| 11. | In connection with the offer and sale of Overtime Notes, Quesnel did not provide investors with any offering document or other written disclosure describing the risks associated with investing in the Overtime Notes or their registration status. (HO Ex. 2; Tr. at 27-28.) |
| 12. | While he was a broker-dealer agent of ING, Quesnel did not provide ING with prior written notice describing in detail that he was selling the Overtime Notes to investors in Connecticut and other states and whether Quesnel had or would receive compensation in connection with the transactions. (HO Ex. 2; Div. Ex. 11, Tr. at 42-44; Div. Ex. 4 at 57.) |
| 13. |
Floridel issued promissory notes (“Floridel Notes”) secured by a percentage interest in its assets. From at least September 2010 to April 2011, Quesnel joined Floridel in offering and selling at least $250,000 of Floridel Notes from Connecticut to at least four investors from Connecticut and other states. The Floridel Notes were not registered in Connecticut under Section 36b-16 of the Act, nor were they exempt from registration under Section 36b-21 under the Act, nor were they the subject of a filed exemption claim or claim of covered security status. At least one of the investors of the Floridel Notes was one of Quesnel’s ING brokerage clients. (HO Ex. 2; Div. Ex. 9; Tr. at 39; Div. Ex. 4 at 36-39.) |
| 14. | From February to June 2011, Quesnel received compensation of at least $8,000 from Floridel in connection with the offer and sale of the Floridel Notes. (HO Ex. 2; Div. Ex. 10, Tr. at 39-40.) |
| 15. |
Quesnel transacted business as an agent of Floridel in this state absent registration. (HO Ex. 2; Tr. at 42.) |
| 16. | In connection with the Investigation into Quesnel’s activities, the Division obtained on-the-record, sworn testimony from Quesnel, wherein he represented that he did not receive compensation for offering and selling the Floridel Notes. (HO Ex. 2; Div. Ex. 4 at 34.) |
| 17. | In connection with the offer and sale of the Floridel Notes, Quesnel did not provide the investors with any offering document or other written disclosure describing the risks associated with investing in the Floridel Notes or their registration status. (HO Ex. 2; Tr. at 38.) |
| 18. | While employed as a broker-dealer agent of ING, Quesnel did not provide ING with prior written notice describing in detail that he was selling the Floridel Notes to investors in Connecticut and other states and whether Quesnel had or would receive compensation in connection with the transactions. (HO Ex. 2; Div. Ex. 11.) |
| 19. | From at least September 2011 to December 2013, Quesnel gave securities-related investment advice to at least two Connecticut registered broker-dealer agents for compensation without being registered as an investment adviser under the Act. (HO Ex. 2; Div. Ex. 5; Tr. at 45-53; Div. Ex. 12 at 13, 19-21; Div. Ex. 13 at 10-12, 15, 19, 28-29; Div. Ex. 14; Div. Ex. 15 at 15-22; Div. Ex. 16.) |
| 20. | Quesnel was never registered as an investment adviser agent. (Tr. at 22-23.) |
| 21. | The Department requested that a fine of $600,000 be imposed on Quesnel. (Tr. at 16, 54.) |
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CONCLUSIONS OF LAW |
| 1. | Pursuant to Section 36a-1-31(b) of the Regulations of Connecticut State Agencies, the allegations made in the Notice against Quesnel are deemed admitted. |
| 2. |
Quesnel offered and sold unregistered securities in or from Connecticut to at least one investor, in violation of Section 36b-16 of the Act, which forms a basis for an order to cease and desist to be issued against Quesnel under Section 36b-27(a) of the Act and for the imposition of a fine upon Quesnel pursuant to Section 36b-27(d) of the Act. |
| 3. | Quesnel transacted business as agent of issuer in this state on at least one occasion absent registration, in violation of Section 36b-6(a) of the Act, which forms a basis for an order to cease and desist to be issued against Quesnel under Section 36b-27(a) of the Act and for the imposition of a fine upon Quesnel pursuant to Section 36b-27(d) of the Act. |
| 4. | Quesnel made statements to the Division during an investigation that were, at the time and in light of the circumstances under which they were made, false or misleading in a material respect, in violation of Section 36b-23 of the Act, which forms a basis for an order to cease and desist to be issued against Quesnel under Section 36b-27(a) of the Act and for the imposition of a fine upon Quesnel pursuant to Section 36b-27(d) of the Act. |
| 5. | The conduct of Quesnel 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 or would operate 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 Quesnel under Section 36b-27(a) of the Act, an order to make restitution against Quesnel pursuant to Section 36b-27(b) of the Act and for the imposition of a fine upon Quesnel pursuant to Section 36b-27(d) of the Act. |
| 6. | Quesnel, through the sale of Overtime Notes and Floridel Notes, participated in private securities transactions without providing prior written notice to his employing broker-dealer describing in detail the proposed transactions, his proposed role therein and stating whether he had received or would receive selling compensation in connection with such transactions, in violation of Section 36b-31-6e of the Regulations, which forms a basis for an order to cease and desist to be issued against Quesnel under Section 36b-27(a) of the Act and for the imposition of a fine upon Quesnel pursuant to Section 36b-27(d) of the Act. |
| 7. | Quesnel transacted business as an investment adviser in Connecticut absent registration, in violation of Section 36b-6(c)(1) of the Act, which forms a basis for an order to cease and desist to be issued against Quesnel under Section 36b-27(a) of the Act and for the imposition of a fine upon Quesnel pursuant to Section 36b-27(d) of the Act. |
| 8. | The issuance of an order to cease and desist, order to make restitution and order imposing a fine 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-34, inclusive, of the Act. |
| 9. | The Commissioner complied with Sections 36b-31(b), 36b-27(a), 36b-27(b) and 36b-27(d) of the Act and Section 4-177 of the Connecticut General Statutes. |
ORDER
Having read the record, I hereby ORDER that:
| 1. | Pursuant to Section 36b-27(a) of the Act, the Order to Cease and Desist issued against Dale Joseph Quesnel, Sr. on June 22, 2015, be made PERMANENT with respect to violations of Sections 36b-16, 36b-6(a), 36b-23, 36b-4(a) and 36b-6(c)(1) of the Act and Section 36b-31-6e of the Regulations; |
| 2. | Pursuant to Section 36b-27(b) of the Act, the Order to Make Restitution issued against Dale Joseph Quesnel, Sr. on June 22, 2015, be made PERMANENT; |
| 3. | Pursuant to Section 36b-27(d) of the Act, a FINE of Six Hundred Thousand Dollars ($600,000) be imposed on Dale Joseph Quesnel, Sr., 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 forty-five (45) days from the date this Order is mailed; and |
| 4. |
This Order shall become effective when mailed. |
| Dated at Hartford, Connecticut, | _____/s/____________ | |
| this 3rd day of March 2016. | Jorge L. Perez | |
| Banking Commissioner |
This Order was sent by certified mail,
return receipt requested, to
Dale Joseph Quesnel, Sr., and
hand delivered to Elena Zweifler, Esq.,
on March 4, 2016.
Dale Joseph Quesnel, Sr.
P. O. Box 615
Enfield, CT 06083
Certified Mail No. 7012 3050 0000 6997 8241
P. O. Box 615
Enfield, CT 06083
Certified Mail No. 7012 3050 0000 6997 8241