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LEE TYROL
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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, order to make restitution and an order imposing fine upon Respondents. On August 29, 2016, 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 Respondents. The Notice was sent to Respondents by certified mail, return receipt requested. On September 13, 2016, Tyrol, on behalf of all Respondents, requested a hearing on the Notice.
On September 23, 2016, the Commissioner issued a Notification of Hearing and Designation of Hearing Officer stating that the hearing would be held on November 8, 2016, and appointing Attorney Stacey Serrano as Hearing Officer. After several continuances of the scheduled hearing date, a hearing was held at the Department of Banking (“Department”) on May 11, 2017. Attorney Elizabeth Mullin represented the Department at the hearing and Respondents 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, Sections 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:
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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. | Tyrol is an individual whose address last known to the Commissioner is 14 Ferry Road, Unit G2, Old Lyme, Connecticut 06371. Tyrol is not and has not been registered in any capacity under the Act. From approximately January 2009 to the present, Tyrol did business under the auspices of Tyrol Group and NATE. (HO Ex. 2; Tr. at 6.) 1 |
| 2. | Tyrol Group is a Connecticut limited liability company formed on October 17, 2008. Tyrol Group’s principal place of business and address last known to the Commissioner is 130 Captains Drive, Westbrook, Connecticut 06498. Tyrol Group is not and has not been registered in any capacity under the Act. (HO Ex. 2.) |
| 3. | NATE is a Connecticut limited liability company formed on August 16, 2010. NATE’s principal place of business and address last known to the Commissioner is 45 Foxboro Road, Essex, Connecticut 06426. NATE is not and has not been registered in any capacity under the Act. (HO Ex. 2.) |
| 4. | From approximately January 2009 to approximately April 2014, Tyrol, individually and/or on behalf of Tyrol Group and NATE, entered into “Agreements” with at least five individuals (“Investors”) for the sale of ownership interests in Tyrol Group and NATE. The Investors tendered at least $476,500 to Tyrol for investment purposes. Tyrol led the Investors to believe that their investment would be used to fund various business ventures. (HO Ex. 2; Div. Exs. 1, 2, and 3; Tr. at 10-17.) |
| 5. |
The Agreements are securities within the meaning of Section 36b-3(19) of the Act, which securities were not registered in Connecticut under Section 36b-16 of the Act nor were they the subject of a filed exemption claim or claim of covered security status. (HO Ex. 2.) |
| 6. | Tyrol induced the Investors to enter into the Agreements by representing that the money they invested would finance projects that were expected to earn upwards of 100 to 300 million dollars per year, resulting in annual multi-million dollar returns. Although Tyrol cautioned the Investors that the expected earnings could be wrong, he represented in writing to at least one Investor that, “[e]ven if my number is wrong I can be a lot wrong and you [can] still make a lot of money”. (HO Ex. 2.) |
| 7. |
In connection with the offer and sale of the Agreements, Tyrol, individually and/or on behalf of Tyrol Group and NATE, failed to disclose to investors, inter alia: (a) information pertaining to Tyrol Group and NATE, such as their operating history and financial information; (b) the risks associated with investing in Tyrol Group and NATE; (c) that Tyrol ultimately used investor funds for his personal expenses; and (d) the registration status of the securities issued by Tyrol Group and NATE. (HO Ex. 2.)
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| 8. |
On December 14, 2015, the Connecticut Superior Court for the Judicial District of Middlesex at Middletown entered a judgment against Respondents in the amount of $260,209.17 (Strategic Aegis, LLC v. Lee Tyrol; Tyrol Group, LLC and Native American Tyrol Energy, Docket No. MMX CV-14-6011117-S). The civil complaint leading up to the judgment alleged that Respondents fraudulently solicited investments by making false and misleading statements, failing to disclose the associated risks, and concealing information about the various business ventures pursued by Tyrol Group and NATE. (HO Ex. 2.) |
| 9. | The Department requested that a fine of $100,000 be imposed upon all Respondents, jointly and severally. (Tr. at 9, 18.) |
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 Respondents are deemed admitted. |
| 2. |
There is sufficient evidence for the Commissioner to find that Respondents offered and sold unregistered securities of Tyrol Group and NATE in or from Connecticut to at least five investors, in 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 upon Respondents pursuant to Section 36b-27(d) of the Act. |
| 3. |
There is sufficient evidence for the Commissioner to find that Respondents, in connection with the offer, sale or purchase of Tyrol Group and NATE, directly or indirectly employed a device, scheme or artifice to defraud, made an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, or engaged in an act, practice or course of business which operated or would operate as a fraud or deceit upon any person, in 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 pursuant to Section 36b-27(d) of the Act. |
| 4. |
There is sufficient evidence for the Commissioner to find that Tyrol Group and NATE employed Tyrol as an unregistered agent of issuer in this state, in violation of Section 36b-6(b) of the Act, which forms a basis for an order to cease and desist to be issued against Tyrol Group and NATE under Section 36b-27(a) of the Act and for the imposition of a fine upon Tyrol Group and NATE under Section 36b-27(d) of the Act. |
| 5. | There is sufficient evidence for the Commissioner to find that Tyrol transacted business as an agent of issuer in this state 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 Tyrol under Section 36b-27(a) of the Act and for the imposition of a fine upon Tyrol under Section 36b-27(d) of the Act. |
| 6. | There is sufficient evidence for the Commissioner to find that the issuance of an order to cease and desist 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. |
| 7. | There is sufficient evidence to find that 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
Based upon the record, I hereby ORDER, pursuant to Sections 36b-27(a), 36b-27(b) and 36b-27(d) of the Act, that:
| 1. | The Order to Cease and Desist issued against Lee Tyrol on August 29, 2016, be made PERMANENT with respect to violations of Sections 36b-16, 36b-4(a) and 36b-6(a) of the Act; |
| 2. | The Order to Cease and Desist issued against Tyrol Group, LLC on August 29, 2016, be made PERMANENT with respect to violations of Sections 36b-16, 36b-4(a) and 36b-6(b) of the Act; |
| 3. |
The Order to Cease and Desist issued against Native American Tyrol Energy, LLC on August 29, 2016, be made PERMANENT with respect to violations of Sections 36b-16, 36b-4(a) and 36b-6(b) of the Act; |
| 4. |
The Order to Make Restitution issued against Lee Tyrol, Tyrol Group, LLC and Native American Tyrol Energy, LLC on August 29, 2016, be made PERMANENT; |
| 5. |
A FINE of One Hundred Thousand Dollars ($100,000) be imposed upon Lee Tyrol, Tyrol Group, LLC and Native American Tyrol Energy, LLC, jointly and severally, to be remitted to the Department of Banking by wire transfer, 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 |
| 6. |
This Order shall become effective when mailed. |
| Dated at Hartford, Connecticut, | ____/s/____________ | |
| this 3rd day of November 2017. | Jorge L. Perez | |
| Banking Commissioner |
This Order was sent by certified mail,
return receipt requested, to Lee Tyrol on
behalf of all Respondents and hand
delivered to Elizabeth Mullin on
November 3, 2017.
Lee Robert Tyrol
14 Ferry Road, Unit G2
Old Lyme, Connecticut 06371
Certified mail no. 70123050000069995156
ENDNOTE
| Parenthetical references relate to exhibits entered into the hearing record by the Hearing Officer (“HO Ex.”) or the Department (“Div. Ex”). Transcript (“Tr.”) pages reflect where an exhibit was entered into the record or where relevant testimony was given. |