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IN THE MATTER OF: (Collectively, "Respondents") * * * * * * * * * * * * * * * * * * |
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ORDER TO MAKE RESTITUTION NOTICE OF INTENT TO FINE AND NOTICE OF RIGHT TO HEARING DOCKET NO. CRF-16-8171-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 reason to believe that a basis exists to issue a cease and desist order against Respondents as authorized by Section 36b-27(a) of the Act. |
| 5. |
As a result of the Investigation, the Commissioner has reason to believe that a basis exists to order that Respondents make restitution as authorized by Section 36b-27(b) of the Act. |
| 6. | As a result of the Investigation, the Commissioner has reason to believe that a basis exists to impose a fine upon Respondents as authorized by Section 36b-27(d) of the Act. |
II. RESPONDENTS
| 7. |
Lee Tyrol (“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 present, Tyrol did business under the auspices of Tyrol Group, LLC and Native American Tyrol Energy, LLC. |
| 8. | Tyrol Group, LLC (“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. |
| 9. | Native American Tyrol Energy, LLC (“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. |
III. STATEMENT OF FACTS
| 10. | From approximately January 2009 to approximately September 2013, 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 approximately $587,000 to Tyrol for this purpose. Tyrol lead the Investors to believe that their investment would be used to fund various business ventures. |
| 11. | 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. |
| 12. | 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.” |
| 13. | 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. |
| 14. | On December 14, 2015, the Connecticut Superior Court for the Judicial District of Middlesex at Middletown entered a judgment against the 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. |
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 by Respondents -
Offer and/or Sale of Unregistered Securities
| 15. | Paragraphs 1 through 14, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 16. |
Respondents offered and sold unregistered securities in or from Connecticut to at least one investor, as more fully described in paragraphs 10 through 13, inclusive, which securities were not registered in Connecticut under the Act, as more fully described in paragraph 11. 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 an order imposing a fine upon Respondents under Section 36b-27(d) of the Act. |
b. Violation of Section 36b-4(a) of the Act by Respondents –
Fraud in Connection with the Offer, Sale or Purchase of any Security
| 17. | Paragraphs 1 through 16, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 18. |
The conduct of Respondents, as more fully described in paragraphs 10 through 13, 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 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 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 under Section 36b-27(d) of the Act. |
c. Violation of Section 36b-6(b) of the Act by Tyrol Group and NATE –
Employing an Unregistered Agent of Issuer
| 19. | Paragraphs 1 through 18, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 20. |
Tyrol Group and NATE employed Tyrol 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 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. |
d. Violation of Section 36b-6(a) of the Act by Tyrol –
Unregistered Agent of Issuer
| 21. | Paragraphs 1 through 20, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 22. |
Tyrol 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, as amended by Public Act 16-65, 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. |
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, Tyrol 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, as amended;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Tyrol Group 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, NATE 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, the Commissioner further finds that the issuance of an Order to Cease and Desist, an Order to Make Restitution 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 each Respondent that the Commissioner intends to impose a fine not to exceed the maximum allowed by statute of one hundred thousand dollars ($100,000) per violation upon each Respondent;
WHEREAS, the Commissioner ORDERS that LEE TYROL CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) offering and selling unregistered securities in or from Connecticut; (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 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 TYROL GROUP, LLC CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) offering and selling unregistered securities in or from Connecticut; (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 or would operate as a fraud or deceit upon any person; and (3) employing unregistered agents of issuer in this state;
WHEREAS, the Commissioner ORDERS that NATIVE AMERICAN TYROL ENERGY, LLC CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) offering and selling unregistered securities in or from Connecticut; (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 or would operate as a fraud or deceit upon any person; and (3) employing unregistered agents of issuer in this state;
WHEREAS, the Commissioner ORDERS that LEE TYROL, TYROL GROUP, LLC, AND NATIVE AMERICAN TYROL ENERGY, LLC MAKE RESTITUTION of any sums obtained as a result of his violations of Sections 36b-16 and 36b-4(a) 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 contains (a) the name and address of each person who purchased securities from Respondents from January 1, 2009 through the present, (b) the amount collected from each investor, (c) the date of each investment, and (d) the amount of any refunds of principal or purported interest payments 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, with respect to each investor’s purchase of the securities. 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 the investor plus interest, less funds returned in the form of purported refunds of principal and purported interest payments, with respect to each investor’s purchase of the securities. |
THE COMMISSIONER FURTHER ORDERS THAT, pursuant to 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. To request a hearing, complete and return the enclosed Appearance and Request for Hearing Form 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”. If a hearing is requested, the hearing will be held on October 4, 2016 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.
If any Respondent does not request a hearing within the time period prescribed or fails to appear at any such hearing, the allegations herein against any such Respondent will be deemed admitted. Accordingly, the Order to Cease and Desist and Order to Make Restitution shall remain in effect and become permanent against any such Respondent and the Commissioner may order that the maximum fine be imposed upon any such Respondent.
| Dated at Hartford, Connecticut, | _____/s/____________ | |
| this 29th day of August 2016. | Jorge L. Perez | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 30th day of August 2016, I caused to be mailed by certified mail, return receipt requested, the foregoing Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing to: Lee Tyrol, 14 Ferry Road, Unit G2, Old Lyme, Connecticut 06371, certified mail no. 7012 3050 0000 6997 6216; Tyrol Group, LLC, 130 Captains Drive, Westbrook, Connecticut 06498, certified mail no. 7012 3050 0000 6997 6223; and Native American Tyrol Energy, LLC, 45 Foxboro Road, Essex, Connecticut 06426, certified mail no. 7012 3050 0000 6997 6230.
| ___/s/_____ | |
| W. C. Hall | |
| Paralegal |