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ANTHONY CHARLES VASSALLO (Collectively "Respondents")
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ORDER TO CEASE AND DESIST NOTICE OF INTENT TO FINE AND NOTICE OF RIGHT TO HEARING DOCKET NO. CF-13-7795-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 (“Division”) of the Department of Banking, has conducted an investigation into the activities of Respondents to determine if Respondents have 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 impose a fine upon Respondents pursuant to Section 36b-27(d) of the Act. |
II. RESPONDENTS
| 6. | Anthony Charles Vassallo (“Vassallo”) is an individual whose address last known to the Commissioner is 149 Paddington Circle, Smithtown, New York 11787. Vassallo has not been registered as a broker-dealer agent under the Act since October 1993. On June 13, 1995, Vassallo entered into a consent order with the Securities and Exchange Commission (the “SEC”) for offering and selling unregistered securities and making misrepresentations and omissions of material fact in connection with the offer and sale of unregistered securities. See Securities and Exchange Commission v. Olsen Laboratories, Inc., et al., 1995 SEC Lexis 1479, Release No. 14528 (June 13, 1995). The consent order barred Vassallo from association with any broker, dealer, investment adviser, municipal securities dealer or investment company, with a right to reapply after four years, and barred him from participating in penny stock offerings. In a related action, on May 26, 1995 the United States District Court for the Southern District of New York permanently enjoined Vassallo from violations of the registration, antifraud and penny stock provisions of the federal securities laws. See Securities and Exchange Commission v. Olsen Laboratories, Inc., et al, 1:94-cv-06280-JFK (S.D.N.Y. May 26, 1995). |
| 7. | Terra Energy, LLC (“Terra Connecticut”) is a Connecticut limited liability company formed by Vassallo on January 5, 2010. Vassallo is the managing member of Terra Connecticut. The last known address of record for Terra Connecticut is 195 West Newberry Road, Bloomfield, Connecticut 06002. Records maintained by the Connecticut Secretary of the State list Vassallo’s residential address of record as 131 Main Street, Apt. 1A, East Windsor, Connecticut 06088. |
| 8. |
Terra Energy Resources, Ltd. a/k/a Terra Energy Resources, Inc. a/k/a Terra Energy Resources, Ltd. Inc. and f/k/a Terra Media, Ltd. (“Terra Delaware”) is a Delaware corporation formed on February 28, 2001 as Terra Media, Ltd. Terra Media, Ltd. changed its name to Terra Energy Resources, Ltd. on or about June 4, 2008. In filings made with the SEC prior to 2013, Terra Delaware’s principal executive office was variously listed as 17/6 Bell Lane, Gibraltar; 1028 Boulevard, Suite 242, West Hartford, Connecticut 06119; and 145 Highview Terrace, Hawthorne, New Jersey 07506. The West Hartford, Connecticut address was a mail drop at a UPS Store, and was established by Gabriel Joseph Abensur, P.O. Box 365, Gibraltar. Terra Delaware is quoted on OTC Link LLC, an alternative trading system, under the symbol “TRRE,” and was also traded on the OTC Bulletin Board until June 18, 2013. On June 17, 2013, Terra Delaware filed a Form 15 with the SEC voluntarily suspending its reporting obligations, and as a result Terra Delaware ceased its trading on the OTC Bulletin Board. Terra Delaware’s purported business included the acquisition of mineral rights, such as coal leases. In its June 17, 2013 Form 15 filing, Terra Delaware listed its principal executive office as 750 Main Street, Suite 902, Hartford, Connecticut 06103 and its phone number as 860-523-1220. Terra Delaware’s website (www.terra-energy-resources.com) also reflects the 750 Main Street, Suite 902, Hartford, Connecticut 06103 address. In its initial disclosure published on OTC Link on July 1, 2013, Terra Delaware indicated that 1) its principal executive office was located at 222 Bay 14th Street, 2nd Floor, Brooklyn, New York 11214; and 2) its legal counsel was the Law Office of Corey J. Brinson LLC, 750 Main Street, Suite 902, Hartford, Connecticut 06103. |
| 9. | Christian Meissenn a/k/a Christian Nigohossian a/k/a Christian Mason a/k/a Christian Levon Nigohossian (“Meissenn”) is an individual whose address last known to the Commissioner is 2618 Corbyton Court, Orlando, Florida 32828. Meissenn was last registered as a broker-dealer agent in Connecticut from October 17, 2001 to March 13, 2003. Meissenn was the owner and president of GIT Securities Corporation (“GIT”) (CRD No. 103735) located at 25 Fairchild Avenue, Plainview, New York 11803. GIT was registered as a broker-dealer in Connecticut from October 17, 2001 through March 13, 2003. On March 25, 2003, Meissenn and GIT were both barred from association and/or membership with any member of the National Association of Securities Dealers (“NASD”) (now the Financial Industry Regulatory Authority, Inc.) in any capacity for violation of NASD Conduct Rules 2110 and 2330. |
III. STATEMENT OF FACTS
| 10. | Commencing in February 2010 and following Vassallo’s formation of Terra Connecticut in January of that year, Vassallo and Terra Delaware offered and/or sold shares of Terra Delaware common stock to multiple investors in Connecticut and other states. Typically, Vassallo, acting alone and on behalf of Terra Delaware, would cold call prospective investors. In some cases, Vassallo would offer the investor the opportunity to exchange certain low-priced stocks held by the investor for Terra Delaware shares, with Vassallo representing to the investor that the payment Vassallo was requiring would be for “legal” and other fees. In remitting payment for the Terra Delaware shares, investor checks were made payable to “Terra Energy”, “Terra Escrow Account” and “Terra Energy Resources Client Services.” In return for their investment, investors received a Terra Delaware stock certificate bearing Vassallo’s signature as corporate secretary. Although investors were required to sign a document signifying that they were “accredited investors”, neither Vassallo nor Terra took steps to ensure that such was the case. Indeed, one of the investors checked off all of the criteria for “accredited investor” status, including a representation that the individual investor was a “bank.” |
| 11. | Although the investors expected that the monies they paid for the Terra Delaware shares would be forwarded to Terra Delaware, in reality, Vassallo deposited those funds into his Terra Connecticut account as well as his personal account and then made multiple cash withdrawals to pay for personal expenses such as Costco purchases and veterinary bills. Vassallo was the only individual who was authorized to write checks out of either the Terra Connecticut account or his personal bank accounts. |
| 12. | The Terra Delaware stock offered and/or sold by Vassallo and Terra Delaware was not registered in Connecticut under Section 36b-16 of the Act, nor was it exempt from registration under Section 36b-21 of the Act, nor was the offering the subject of a filed exemption claim or claim of covered security status. |
| 13. | During the relevant period of time, Vassallo was not registered in Connecticut as an agent of issuer or as a broker-dealer, nor was Vassallo exempt from such registration requirements. |
| 14. | In connection with the offer and/or sale of the Terra Delaware shares, Terra Delaware and Vassallo failed to provide investors with a prospectus or offering document, failed to provide investors with critical risk disclosures and failed to tell the investors that funds they thought were earmarked for Terra Delaware would actually be applied to pay for Vassallo’s personal expenses. |
| 15. | At all times relevant hereto, Meissenn and Vassallo were business associates and communicated regarding business transactions relating to Terra Connecticut and Terra Delaware. |
| 16. | In connection with the Division’s Investigation into Respondents’ activities, the Division obtained on-the-record, sworn testimony from Meissenn, wherein Meissenn represented that an entity which he controlled, Ironclad Investments, LLC, a non-party, did not make any payments to Vassallo or Terra Connecticut. |
IV. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST
AND ORDER IMPOSING FINE
a. Violation of Section 36b-16 of the Act by Vassallo and Terra Delaware -
Offer and/or Sale of Unregistered Securities
| 17. | Paragraphs 1 through 16, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 18. |
Vassallo and Terra Delaware offered and/or sold securities in or from Connecticut, as more fully described in paragraphs 10 and 11, which securities were not registered in Connecticut under the Act, as more fully described in paragraph 12. The offer and/or 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 Vassallo and Terra Delaware under Section 36b-27(a) of the Act, and for the imposition of a fine upon Vassallo and Terra Delaware under Section 36b-27(d) of the Act. |
b. Violation of Section 36b-6 of the Act by Vassallo and Terra Delaware –
Unregistered Agent Activity
| 19. | Paragraphs 1 through 18, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 20. |
Vassallo transacted business as an agent of issuer in this state absent registration, as more fully described in paragraphs 10 through 13, 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 Vassallo under Section 36b-27(a) of the Act, and for the imposition of a fine upon Vassallo under Section 36b-27(d) of the Act. |
| 21. | Terra Delaware employed Vassallo as an unregistered agent of issuer in this state, as more fully described in paragraphs 10 through 13, 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 Terra Delaware under Section 36b-27(a) of the Act, and for the imposition of a fine upon Terra Delaware under Section 36b-27(d) of the Act. |
c. Violation of Section 36b-6(a) of the Act by Vassallo –
Unregistered Broker-dealer Activity
| 22. | Paragraphs 1 through 21, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 23. |
Vassallo transacted business as a broker-dealer in Connecticut absent registration, as more fully described in paragraphs 10 through 13, inclusive by, inter alia, soliciting investors and effecting the purchase and sale of Terra Delaware by investors. 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 Vassallo under Section 36b-27(a) of the Act, and for the imposition of a fine upon Vassallo under Section 36b-27(d) of the Act. |
d. Violation of Section 36b-4(a) of the Act
by Vassallo and Terra Connecticut –
Fraud in Connection with the Offer and Sale of any Security
| 24. | Paragraphs 1 through 23, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 25. |
The conduct of Vassallo, alone and through the instrumentality of Terra Connecticut, as more fully described in paragraphs 10 through 14, 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 Vassallo and Terra Connecticut under Section 36b-27(a) of the Act, and for the imposition of a fine upon Vassallo and Terra Connecticut under Section 36b-27(d) of the Act. |
e. Violation of Section 36b-23 of the Act by Meissenn –
Making a Statement in an Investigation that is
False or Misleading in a Material Respect
| 26. | Paragraphs 1 through 25, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 27. |
Meissenn’s statement to the Division, as more fully described in paragraphs 15 and 16, was, at the time and in light of the circumstances under which it was made, false or misleading in a material respect, which constitutes a wilful violation of Section 36b-23 of the Act. Such violation forms a basis for an order to cease and desist to be issued against Meissenn under Section 36b-27(a) of the Act, and the imposition of a fine upon Meissenn under Section 36b-27(d) of the Act. |
V. ORDER TO CEASE AND DESIST, ORDER IMPOSING FINE [sic]
AND NOTICE OF RIGHT TO HEARING
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Vassallo has committed at least one violation of Section 36b-16 of the Act, two violations of Section 36b-6(a) of the Act, and at least one violation of Section 36b-(4)(a) of the Act;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Terra Delaware has committed at least one violation of Section 36b-16 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, Meissenn has committed at least one violation of Section 36b-23 of the Act;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Terra Connecticut has committed at least one violation of Section 36b-4(a) of the Act;
WHEREAS, the Commissioner further finds that the issuance of an Order to Cease and Desist 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 ANTHONY CHARLES VASSALLO CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation: (1) offering and selling unregistered securities in Connecticut, (2) acting as an unregistered agent of issuer in Connecticut, (3) acting as an unregistered broker-dealer in Connecticut, and (4) 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;
WHEREAS, the Commissioner ORDERS that TERRA ENERGY RESOURCES, LTD. CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation: (1) offering and selling unregistered securities in Connecticut, and (2) employing an unregistered agent of issuer;
WHEREAS, the Commissioner ORDERS that CHRISTIAN MEISSENN a/k/a CHRISTIAN NIGOHOSSIAN a/k/a CHRISTIAN MASON a/k/a CHRISTIAN LEVON NIGOHOSSIAN CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation, making a statement to the Division which is, at the time and in light of the circumstances under which it is made, false or misleading in a material respect;
WHEREAS, the Commissioner ORDERS that TERRA ENERGY, LLC CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including, without limitation, 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;
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 06108-1800 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 August 28, 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.
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 12th day of July 2013. | Howard F. Pitkin | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 12th day of July 2013, 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 Anthony Charles Vassallo, 149 Paddington Circle, Smithtown, New York 11787, certified mail no. 7012 1010 0001 7317 0386; Anthony Charles Vassallo, 131 Main Street, Apt. 1A, East Windsor, Connecticut 06088, certified mail no. 7012 1010 0001 7317 0379; Terra Energy Resources, Ltd., Attention: Rodrigo Von Unger, President, 222 Bay 14th Street, 2nd Floor, Brooklyn, New York 11214, certified mail no. 7012 1010 0001 7317 0362; Terra Energy Resources, Ltd., c/o Law Office of Corey J. Brinson LLC, 750 Main Street, Suite 902, Hartford, Connecticut 06103, certified mail no. 7012 1010 0001 7317 0355; Christian Meissenn a/k/a Christian Nigohossian a/k/a Christian Mason a/k/a Christian Levon Nigohossian, 2618 Corbyton Court, Orlando, Florida 32828, certified mail no. 7012 1010 0001 7317 0324; Christian Meissenn, c/o Richard R. Brown, Esq., Brown, Paindiris & Scott LLP, 100 Pearl Street, Hartford, Connecticut 06103, certified mail no. 7012 1010 0001 7317 0348; and Terra Energy, LLC, 195 West Newberry Road, Bloomfield, Connecticut 06002, certified mail no. 7012 1010 0001 7317 0331.
| ____/s/__________ | |
| Elena Zweifler | |
| Prosecuting Attorney |