Washington State Department of Financial Institutions

News Release

Monday, January 11, 2010


Suzanne Sarason, Chief of Enforcement
PH (360) 902-8734, suzanne.sarason@dfi.wa.gov

Lyn Peters, Director of Communications
PH (360) 902-8731 lyn.peters@dfi.wa.gov


Washington DFI Enters A Consent Order With King County Resident And Real Estate Developer Michael R. Mastro

Mastro agrees to cease and desist from violating registration and anti-fraud laws

OLYMPIA – The Washington State Department of Financial Institutions (DFI) Securities Division obtained a Consent Order from King County resident Michael Robert Mastro today. Without admitting or denying any violations, Mastro agrees to cease and desist from violating the registration and the anti-fraud provisions of the Securities Act of Washington.

DFI alleges that for more than 20 years, Mastro, a Seattle-area real estate developer, sold promissory notes to raise business operating capital. Mastro may have sold more than $100,000,000 worth of notes to more than 175 investors. Mastro was never registered as a securities broker-dealer or securities salesperson.

DFI’s investigation found that Mastro engaged in numerous violations of the Securities Act by misleading investors about how he would use their funds and how safe and liquid their funds would be. Most of the promissory notes Mastro sold were not secured by real property. DFI found Mastro led investors to believe they could get their money back on demand.

“This case demonstrates the harm that can be done when investors invest in unregistered and unsecured promissory notes,” DFI Division of Securities Director Michael Stevenson said. “Without full disclosure of all the facts, investors cannot accurately evaluate the risk posed by such investments. Mike Mastro provided virtually no disclosure.”

In a statement of charges issued Oct. 9, 2009, DFI alleged many things were hidden from investors, including:

DFI also alleged Mastro caused some investors to believe their investments were secured by real estate or by his personal insurance policies.

The Consent Order revokes Mastro’s exemptions for the future offer and sale of certain securities. The Consent Order also imposed a fine of $100,000, payment of which is deferred until the Mastro promissory note investors have been repaid in full. Mastro waived his rights to a hearing and to judicial review of the matter.

A copy of the Consent Order can be found at: http://www.dfi.wa.gov/sd/orders/orders2010.htm.

About DFI
www.dfi.wa.gov ▪ 360.902-8700 ▪ 877.746-4334
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders and securities brokers and dealers. The department also works to improve financial education throughout Washington through its outreach programs and online clearinghouse www.dfi.wa.gov/financial-education. In addition to posting information about licensees and administrative actions, DFI uses the Web and social media to provide financial education information: http://www.twitter.com/FinEd4All, www.twitter.com/DFIConsumers, www.finlit.blogspot.com, www.youtube.com/user/WADFI, www.homeownership.wa.gov.

About Division of Securities
www.dfi.wa.gov/sd ▪ 360.902.8760 ▪ 877.RING.DFI (746.4334)
The Division of Securities regulates securities investments, franchises, business opportunities, and off-exchange commodities sold in Washington and the firms and individuals that sell these products or provide investment advice. The Division handles complaints, conducts investigations, and takes appropriate enforcement actions to protect investors and combat fraud.