Orders From Other Years
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Associated Escrow LLC and Matthew Charles Dahlgren, Respondents - S-03-218-04-SC01 - Statement of Charges
On December 23, 2004, the Department of Financial Institutions entered a Statement of Charges and Notice of Intent to Cease and Desist, to Prohibit Participation in a Licensed Escrow Agent and to Impose Fines against Associated Escrow LLC and Matthew Charles Dahlgren. Dahlgren was the designated escrow officer for Associated Escrow LLC, a licensed escrow agent that did business in Federal Way, Washington. The Statement of Charges alleges that Respondents made unauthorized trust account withdrawals, failed to maintain adequate records and failed to notify the Department about Associated Escrow’s business closure. The Respondents each have the right to request a hearing.
Monart Franchise Corp., Respondent - S-04-213-04-CO01 - Consent Order
On December 15, 2004, the Securities Division entered into a Consent Order with Monart Franchise Corp. The Division alleged that the company sold franchises in the state of Washington prior to filing a registration application with the Securities Division. The franchise involves the operation of facilities for art instruction to children, teens and adults. The Respondent agreed in the order to comply with the registration and disclosure document provisions of the Franchise Investment Protection Act in the future and agreed to reimburse the Securities Division $500 for its costs of investigation relating to the case. The Respondent also waived its right to a hearing or other further proceedings in this matter.
Lynn Rivera - S-04-225-04-CO01 - Consent Order
On December 9, 2004, the Securities Division entered into a Consent Order with Lynn Rivera (“Rivera”). The Division alleged that Rivera failed to provide written notice to the Department at least 30 days prior to the March 1, 2004 effective date of the transfer in ownership of Newcastle Escrow Corporation. Also, Rivera failed to provide to the Department, at least 30 days prior to a change in a principal officer or controlling person, all information required of such a principal officer or controlling person that would be required for a new application for an escrow agent license. Pursuant to the terms of the Consent Order, Rivera offered and paid the Securities Division’s investigation costs in the amount of $1,000. Rivera also agreed to cooperate fully with future investigations. Rivera waived her right to a hearing and further proceedings in the matter.
Sunrise Energy, Inc. and Shea C. Silva - S-04-182-04-TO01 - Summary Order
On December 6, 2004, the Securities Division entered a Summary Order to Cease and Desist against Sunrise Energy, Inc. and Shea Silva. The Division alleges that from late 2001 and continuing through August 2003 Silva, through cold call telephone solicitations raised at least $365,000 from Washington residents to invest in Texas oil wells managed by Energy 2000, Inc. The investors were told that the oil wells that they were investing in were proven producers that would produce more oil with the replacement of the pump-jack with a submersible pump. The Securities Division further alleges that the profit potential provided to the Washington investors were not substantiated and unrealistic. Additionally, Silva failed to disclose the use of investor funds or disclose the compensation for Silva and Sunrise for soliciting investors. Silva also failed to disclose to investors the relationship between Sunrise and Energy 2000. Silva told investors that Sunrise owned the entire wells that they were selling and that Sunrise had hired Energy 2000 to manage the wells for Sunrise. In actuality, according to Energy 2000, Energy 2000 sold Sunrise a working interest in wells owned by Energy 2000 and that Sunrise was reselling that interest. Sunrise Energy, Inc. and Shea Silva were ordered to cease and desist from violations of the registration and anti-fraud provisions of the Securities Act, pending a final determination of the matter.
Rachel MacDuff, Respondent – S-03-177-04-CO01 – Consent Order
On November 15, 2004, the Securities Division entered into a Consent Order with Rachel MacDuff (“MacDuff”). The Division alleged that MacDuff and her husband solicited investments from approximately 66 investors totaling over $680,000 in a pooled investment fund. Many of these investors were residents of Kitsap County, Washington. The Division alleged that MacDuff offered or sold these securities without the benefit of registration and violated the anti-fraud provision of the Securities Act of Washington in connection with the sale of such securities. Pursuant to the terms of the Consent Order, MacDuff offered and paid partial restitution to investors in the amount of $225,899.92. MacDuff also agreed not to apply for a license as a securities salesperson or investment adviser representative for a period of one year from the entry of the Consent Order. MacDuff waived her right to a hearing and further proceedings in the matter.
Family First Advanced Estate Planning; Family First Insurance Services; Robert John Mikhail; Thomas Craig Harman - S-02-343-03-SC01 - Statement of Charges
On October 29, 2004, the Securities Division entered a Statement of Charges against Family First Advanced Estate Planning, Family First Insurance Services and Robert John Mikhail and a Statement of Charges and Notice of Intent to Suspend or Revoke a Securities Salesperson Registration against Thomas Craig Harman. The Statement of Charges alleges that during 2002 Respondents each deceived investors, engaged in a scheme to defraud investors and failed to disclose material facts in connection with the sale of securities. The order alleges that Respondents each sold annuities without fully disclosing the costs and features of the annuities and without following the wishes of the investors. Respondents each have the right to request a hearing on the Statement of Charges.
This matter was partially resolved by the entry of a Consent Order on March 23, 2007.
Carson Energy, Inc.; Earl Carter Bills, Jr. and Jerrold S. Rothouse, Respondents - S-03-074-04-CO01 - Consent Order
On October 29, 2004, the Securities Division entered a consent order with Carson Energy, Inc.; Earl Carter Bills, Jr. and Jerrold S. Rothouse. The order requires the Respondents to cease and desist from any violations of the registration provisions of the Securities Act of Washington. Respondents agree that they will file a Form D before selling any securities in Washington and that they will limit any offers and sales of securities to persons or entities whom they reasonably believe are accredited investors. Respondents also paid investigative costs of $2,500.
Metropolitan Investment Securities, Inc. Securities Salespersons: Gordon E. Adams; Suzanne T. Adams; Elizabeth Adams Armstrong; Ross E. Bruner; Steve F. Haug; Gary T. Hundeby; Lori L. Masterson; Ronald H. Mayfield; Michael H. McMillen; Theodore R. Metoyer; Lamar J. Miller; Annette O. Miller; Randal M. Saccomanno; Ronald J. Saccomanno; and Ryan S. Saccomanno, Respondents - S-04-041-04-SC01 - Statement of Charges
On October 27, 2004, the Securities Division entered a Statement of Charges and Notice of Intent To Enter an Order To Cease and Desist, Revoke or Suspend Registrations, Censure, Impose Fines, and Charge Costs against former Metropolitan Investment Securities, Inc. (“MIS”) securities salespersons Gordon E. Adams, Suzanne T. Adams, Elizabeth Adams Armstrong, Ross E. Bruner, Steve F. Haug, Gary T. Hundeby, Lori L. Masterson, Ronald H. Mayfield, Michael H. McMillen, Theodore R. Metoyer, Lamar J. Miller, Annette O. Miller, Randal M. Saccomanno, Ronald J. Saccomanno, and Ryan S. Saccomanno. The Division alleges that Respondents made unsuitable recommendations of securities offered by Metropolitan Mortgage and Securities Co., Inc. (“Metropolitan”) and Summit Securities, Inc. (“Summit”) to Pacific Northwest investors who were seeking low risk investments to sustain them in their retirement years, thereby improperly concentrating the limited assets of these investors in Metropolitan and Summit. The Division also alleges that some of the Respondents misled investors about the risks of these securities and falsified account information in order to secure approval for sales to investors that would have otherwise been prohibited by MIS. The Division stated its intent to revoke or suspend the securities licenses of Respondents Gordon E. Adams, Suzanne T. Adams, Ross E. Bruner, Steve F. Haug, Ronald H. Mayfield, Theodore R. Metoyer, Randal M. Saccomanno, Ronald J. Saccomanno, and Ryan S. Saccomanno, as well as order them to cease and desist from violating the anti-fraud provisions of the Securities Act. The Division also stated its intent to censure Respondents Elizabeth Adams Armstrong, Gary T. Hundeby, Lori L. Masterson, Michael H. McMillen, Lamar J. Miller, and Annette O. Miller, to fine all Respondents, and to charge costs to all Respondents. The Respondents have a right to request a hearing in this matter.
This matter was resolved as to Ross E. Bruner by entry of a Final Order S-04-041-07-FO01.
City Escrow, Inc.; Frances D. Buck, Respondent - S-03-182-04-CO01 - Consent Order
On October 26th, 2004, the Securities Division entered a Consent Order and Order Vacating Order No. C-03-182-03-SC01, with Respondents City Escrow Inc., located in University Place, and Frances D. Buck, its owner and designated escrow officer (DEO). The Division alleged that, and Respondents admitted to, commingling trust and personal funds, keeping inadequate records relating to the trust account, making trust disbursements without adequate written instructions and in amounts exceeding client deposits, and not being expeditious in performing required acts. The Division ordered, and Respondents agreed, to cease and desist from these violations of the Escrow Agent Registration Act; that Respondents’ escrow agent and DEO licenses be suspended from October 29, 2003, until the date this Consent Order is entered; that Respondents institute certain escrow and trust recordkeeping procedures; and that Respondents pay $6,000 in fines and $6,000 in investigative costs. Respondents waived their rights to a hearing and further proceedings in the matter.
Financial & Estate Strategies, Inc.; Randall T. Becker - S-02-316-03-SC01 - Summary Order
On October 25, 2004, the Securities Division entered a Statement of Charges against Financial & Estate Strategies, Inc. (FES), of Bellevue, and its sole officer and director, Randall T. Becker, of Sammamish. The Division alleges that Becker, a registered investment adviser representative, violated the registration and anti-fraud provision of the Securities Act by selling unregistered securities issued by Health Maintenance Centers and Cascade Point, LLC. In addition to giving notice of the Division’s intent to order FES and Mr. Becker to Cease and Desist from future violations of the Securities Act, the Statement of Charges provides notice of the Division's intent to revoke the securities registrations of both FES and Mr. Becker, to impose $250,000 in fines, and to impose $75,000 in costs. Both FES and Mr. Becker will have the opportunity to contest the charges in an administrative hearing on this matter.
Let’s Dish!, Inc., Respondent – S-04-202-04-CO01 - Consent Order
On October 25, 2004, the Securities Division entered into a Consent Order with Let’s Dish!, Inc. The Division alleged that the company sold a franchise in the state of Washington prior to filing a registration application with the Securities Division and that it had not complied with disclosure document requirements. The franchise involves the operation of kitchen centers where retail customers may book sessions for the assembly of dinner entrees that they then take home to serve at a later time. The Respondent agreed in the order to comply with the registration and disclosure document provisions of the Franchise Investment Protection Act in the future and also agreed to reimburse the Securities Division $300 for its costs of investigation in the matter. The Respondent also waived its right to a hearing or other further proceedings in this matter.
Culinary Communion, LLC, Gabriel Claycamp, and Heidi Kenyon, Respondents - S-04-026-04-CO01 - Consent Order
On October 21, 2004, the Securities Division entered a Consent Order with Culinary Communion, LLC, Gabriel Claycamp, and Heidi Kenyon ("Respondents"), who operate a school for the culinary arts in Seattle, Washington. The Division alleged that the Respondents violated the registration and anti-fraud provisions of the Securities Act of Washington by offering unregistered convertible promissory notes to at least one Washington resident and by misrepresenting and failing to disclose material facts, including the risk involved in the investment. In the Consent Order, the Respondents neither admitted nor denied the allegations, but agreed to cease violating the Securities Act in the future. Respondents agreed to reimburse the Division $500 for the cost of investigating this matter. Respondents waived the right to a hearing or further proceedings in this matter.
Nanny’s, Inc., Kenneth L. Stephens and Nanette M. Stephens, Respondents - S-03-233-04-CO01 - Consent Order
On October 21, 2004, the Securities Division entered into a Consent Order with Nanny’s, Inc. and Kenneth L. and Nanette M. Stephens. The Division alleged that the respondents sold three franchises in the state of Washington prior to filing a registration application with the Securities Division. The franchise involves a home-based childcare business opportunity. The Respondent agreed in the order to comply with the registration and disclosure document provisions of the Franchise Investment Protection Act in the future and agreed to reimburse the Securities Division $400 for its costs of investigation in the matter. The Respondents also waived their rights to a hearing or other further proceedings in this matter.
Taxback, LLC, Shawn D. Hull and Lindsay J. Hull, Respondents - S-04-183-04-CO01 - Consent Order
On October 12, 2004, the Securities Division entered a Consent Order with Respondents Taxback, LLC, Shawn D. Hull and Lindsay J. Hull. The Division alleged that Respondents, who sell an income tax review business opportunity, made offers and sales of its business opportunity prior to the effective date of registration. The Division also alleged that Respondents failed to provide the purchasers the required seven-day cancellation period in the Purchase Agreement. In the Consent Order, the Respondents neither admit nor deny the allegations, agree to cease and desist from future violations of any provision of the Business Opportunity Fraud Act of Washington, agree to pay the Securities Division $1,500 for the cost of the investigation and waive their rights to a hearing and further proceedings in the matter.
Staci D. McFadden, Respondent, - S-04-198-04-SC01 - Statement of Charges
On October 11, 2004, the Securities Division entered a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist and to Prohibit Participation in the Escrow Industry for alleged violations of the Escrow Agent Registration Act. The Division alleged that McFadden, a former employee of Priority Escrow, Inc. in Lynnwood, wrote forged checks from Priority Escrow's trust account in 2001, and violated the Act's prohibitions against fraud, unfair or deceptive practices, and obtaining property by fraud or misrepresentation. McFadden pled guilty in Snohomish County to one count of theft. McFadden has the right to request a hearing in this matter.
Arthur A. DeLuca, Respondent, - S-04-157-04-TO01 - Summary Order
On September 28, 2004, the Securities Division entered a Summary Order to Cease and Desist against Arthur A. DeLuca, a resident of Niagara Falls, New York. The Division alleged that DeLuca violated the registration and anti-fraud provisions of the Securities Act of Washington by offering unregistered securities in the form of promissory notes to at least one investor in Washington and by failing to disclose material facts such as the risk involved in the investment. The Division also alleged that DeLuca was not licensed to sell securities. The Division ordered the DeLuca to cease and desist from violating the anti-fraud, securities registration, and salesperson/broker-dealer registration provisions of the Securities Act of Washington. The Division also gave notice of its intention to collect costs. DeLuca has a right to request a hearing in this matter.
DBH Growth Fund and Donald B. Hoff, Respondents - S-03-147-04-FO01 - Final Order
On September 28, 2004, the Securities Division entered a Final Order to Cease and Desist and imposed a $10,000 fine and $5,000 in costs against the DBH Growth Fund and Donald B. Hoff ("Hoff") based on their failure to request a hearing on a prior summary cease and desist order. The Final Order finds that Hoff purported to be in the business of buying and reselling note receivables. The Respondents violated the registration and anti-fraud provisions of the Securities Act of Washington by offering unregistered securities to investors in Washington and Alaska and by failing to disclose material facts such as the risk involved in the investment. The Respondents may seek judicial review of this Order.
David Lai and Golden Solutions Mortgage, Inc. - S-03-227-04-CO01 - Consent Order
On September 28, 2004, the Securities Division entered into a Consent Order with Respondents David Lai and Golden Solutions Mortgage, Inc. The Securities Division alleged in the Order that Respondents offered and sold securities in the form of promissory notes secured by second or third deeds of trust. The Division also alleged that the Respondents failed to disclose material facts of the investment to investors. Respondents agreed to cease and desist from violations of the anti-fraud provisions of the Securities Act, reimburse the Division $750 for investigative costs and waived their rights to a hearing in the matter.
Jag Enterprises, Cyber Production Consultants and Jon Gentile - S-03-055-04-TO02 - Summary Order
On September 28, 2004, the Securities Division entered a Summary Order to Cease and Desist against Jag Enterprises, Inc., dba Jag Entertainment, Cyber Production Consultants, Jon A. Gentile and John and Jane Doe Respondents 1-100. The Division alleges that from January 2000 and continuing through January 2001 Gentile, through cold call telephone solicitations raised at least $225,000 from Washington residents to invest in the production of a game show called “The Live Auction Show!” The investors were told that the game show would be filmed in Las Vegas, Nevada and that the game shows concept involved traditional game show features but also involved the Internet and the auction style of bidding on goods and services by the public watching from home. The Securities Division further alleges that the profit potential provided to the Washington investors were not substantiated and unrealistic and a past enforcement action against Jon A. Gentile was not disclosed at material information to the investors. Jag Enterprises, Inc., dba Jag Entertainment, Cyber Production Consultants and Jon A. Gentile were ordered to cease and desist from violations of the registration and anti-fraud provisions of the Securities Act, pending a final determination of the matter.
Robert DeGroot - S-03-072-04-CO01 - Consent Order
On September 23, 2004, the Securities Division entered a Consent Order against Robert DeGroot. The Division had entered a Statement of Charges on December 2, 2003, against DeGroot, Equity Programs Corporation, Barton Switzer, Santa Clarita Ventures LP, BSD Real Estate Equities LLC, Wes Development Company, Brenton Rothschild Group Ltd., and Booth Colorado Corporation. The Securities Division alleged that Equity Programs Corporation, a California broker-dealer, offered and sold a series of securities offerings through DeGroot, the branch manager of its Everett, Washington office, by making misleading statements to investors about, among other things, the safety of the investments in question, the existence of collateral backing the investments, and by omitting to advise the investments in later offerings that the investments sold in the earlier offerings were in default. The Securities Division also alleged that DeGroot made unsuitable recommendations of securities to his customers and that he made unauthorized transactions in customer accounts. Pursuant to the terms of the Consent Order, DeGroot was ordered to cease and desist from violations of the registration and anti-fraud provisions of the Securities Act, DeGroot’s securities salesperson license was suspended for a period of one year, and he was ordered to pay a $10,000 fine. DeGroot waived his right to a hearing and further proceedings in the matter.
Laura Kent, Cornerstone Capital Management, Inc., and Cornerstone Investment Circle, LLC - S-00-044-04-CO01 - Consent Order
On September 23, 2004, the Securities Division entered a Consent Order against Respondents Laura Kent, Cornerstone Capital Management, Inc., and Cornerstone Investment Circle, LLC. The Division had entered a Summary Order to Cease and Desist against those Respondents in October 2000. The Division alleges that Kent, doing business as Cornerstone Capital Management, Inc. and representing herself as a federally registered investment adviser, offered and sold to Washington residents unregistered interests in Cornerstone Investment Circle, LLC. Those proceeds were then purportedly used to purchase fictitious securities, i.e., "Prime Bank Instruments." At the time of the offer and sale of the LLC interests and the "Prime Bank Instruments", Kent was not registered as an investment adviser or a securities salesperson, either federally or in any state. Pursuant to the terms of the Consent Order, Kent was ordered to cease and desist from violations of the registration and anti-fraud provisions of the Securities Act. Kent and the other Respondents waived their right to a hearing and further proceedings in the matter.
Michael B. Miller - S-03-204-04-FO01 - Final Order
On September 17, 2004, the Securities Division entered a Final Order to Cease and Desist and Denying Future Registration against Michael B. Miller. The Division had entered a Summary Order to Cease and Desist against Miller on July 19, 2004. The Final Order alleges that Miller, formerly a registered securities salesperson, perpetuated a scheme to defraud an elderly Washington investor. The Division alleges that Miller mislead the investor by telling her that he was owed $100,000 by her recently deceased husband, when in fact no such debt existed. The Division further alleges that to satisfy this fictitious debt, Miller instructed the investor to quit claim her home to him, and later instructed her to sell securities and pay him $55,000 so that she could live on the property the rest of her life. Miller has pled guilty to one count of theft in Thurston County in connection with this conduct. The Division ordered Miller to cease and desist from violations of the anti-fraud provisions of the Securities Act and permanently barred him from being licensed as a securities professional in the state of Washington. Miller may seek judicial review of this Final Order.
Power Internet Terminals - S-04-126-04-TO01 - Summary Order to Cease and Desist
On September 13, 2004, the Securities Division entered a Summary Order to Cease and Desist and an Order Denying Registration against Power Internet Terminals, Inc.; Frank Mineo, Crystal Nadel, Max Bacal, Chantelle Langley, and Tristan Garcia ("Respondents"), who offered and sold a public access internet terminal business opportunity. The Division alleged that the Respondents violated the registration and anti-fraud provisions of the Business Opportunity Fraud Act of Washington by offering and/or selling a unregistered business opportunity to at least two Washington residents and by misrepresenting and failing to disclose material facts such as financial statements of the company. The Division ordered the Respondents to cease and desist from violating the registration and anti-fraud provisions of the Business Opportunity Fraud Act of Washington and denied Power Internet Terminals business opportunity registration application. The Respondents have a right to request a hearing in this matter.
Kevin Gerald Vanhook - S-04-138-04-SC01 - Statement of Charges
On September 9, 2004, the Securities Division entered a Statement of Charges against Kevin Gerald Vanhook ("Vanhook"). The Statement of Charges alleges that during 2002 and 2003, while employed by CLS Financial Services, LLC in Lynnwood, Washington as a non-NASD registered securities salesperson, Vanhook offered and sold securities without disclosing material facts to the investors. The order alleges that Vanhook misrepresented the return on an investment, failed to disclose material facts in the sale of securities and made unauthorized sales of securities. Vanhook has the right to request a hearing on the Statement of Charges.
Dinners Ready, Inc., Respondent - S-04-171-04-CO01 - Consent Order
On August 31, 2004, the Securities Division entered into a Consent Order with Dinners Ready, Inc. The Division alleged that the company sold three franchises in the state of Washington prior to filing a registration application with the Securities Division. The franchise involves the operation of kitchen centers where retail customers may book sessions for the assembly of dinner entrees that they then take home to serve at a later time. The Respondent agreed in the order to comply with the registration and disclosure document provisions of the Franchise Investment Protection Act in the future and agreed to reimburse the Securities Division $700 for its costs of investigation in the matter. The Respondent also waived its right to a hearing or other further proceedings in this matter.
TeraCrush Monster Sports and Paul Boes - S-04-006-04-TO01 - Final Order
On August 30th, 2004, the Securities Division entered a Final Order against TeraCrush MonsterSports (TeraCrush) and Paul Boes. In March 2004 the Division had entered a Statement of Charges alleging that TeraCrush and Boes, who promote monster truck racing from a principal location in Bothell, made materially false statements and omissions relating to an offering of unregistered debt and equity securities in TeraCrush, and also were not licensed sell securities. TeraCrush and Boes failed to request a hearing in the matter, and therefore the Final Order adopts the Findings of Fact and Conclusions of Law set forth in the Statement of Charges. The Division ordered TeraCrush and Boes (1) to cease and desist from violating the anti-fraud, securities registration, and salesperson/broker-dealer registration provisions of the Securities Act of Washington; (2) to pay a fine of $10,000; and (3) reimburse the Securities Division $1,000 in costs. Boes and TeraCrush may seek judicial review of this Final Order.
Rebecca M. Beers and Robert D. Beers, Respondents - S-04-092-04-TO01 - Summary Order to Cease and Desist
On August 25th, 2004, the Securities Division entered a Summary Order to Cease and Desist against Rebecca M. Beers and Robert D. Beers, who reside in Vancouver, Washington. The Division alleged that the Beers violated the registration and anti-fraud provisions of the Securities Act of Washington by offering a promissory note to at least one investor and failing to disclose material information such as Rebecca Beers' conviction for identity theft. The Division also alleged that Rebecca Beers was not licensed to sell securities or act as an investment adviser. The Division ordered the Beers to cease and desist from violating the anti-fraud and registration provisions of the Securities Act of Washington. The Division also gave notice of its intention to impose a $5,000 fine, to impose restitution, and collect costs. The Beers have a right to request a hearing in this matter.
Yakima Brewing and Malting Co., Inc. and Paul C. Brown, Jr. and J. Gregory Tranum - S-04-078-04-TO01 - Summary Order to Cease and Desist
On August 18, 2004, the Securities Division entered a Summary Order to Cease and Desist against Yakima Brewing and Malting Co., Inc., as well as its President, J. Gregory Tranum and its Vice President, Paul C. Brown, Jr. ("Respondents"). Yakima Brewing manufactures beer under the "Grant's" label and operates Grant's Brewery Pub in Yakima, Washington. Brown and Tranum are also officers of Black Bear Brewing Company, which acquired control of Yakima Brewing in January 2002.
The Division alleged that the Respondents violated the registration and anti-fraud provisions of the Securities Act of Washington by offering unregistered preferred stock to hundreds of residents of Washington and other states between 2003 and 2004. In the offering, the Respondents failed to disclose material facts to investors. Among other things, the Respondents did not disclose that, in the midst of the offering, Black Bear defaulted on a $1.6 million promissory note and "gave the brewery back" to International Wine & Spirits, Ltd. The Division also alleged that Tranum and Brown were not licensed sell securities.
The Division ordered the Respondents to cease and desist from violating the anti-fraud, securities registration, and salesperson/broker-dealer registration provisions of the Securities Act of Washington. The Division also gave notice of its intention to impose a fine and to collect costs. The Respondents have a right to request a hearing in this matter.
Insure-Trades.com and Mohammad Younis - S-04-047-04-TO02 - Amended Order
On August 16, 2004, the Department of Financial Institutions entered an Amended Statement of Charges, Temporary Order to Cease and Desist, and Notice of Intent to Impose Fines and Collect Costs, and Order Dismissing Respondent Younis. The Order amends a prior order against Respondents Insure-Trades.com and Mohammad Younis for allegedly having made various false representations relating to online escrow services, including a false claim of being licensed by this Department, in violation of the Escrow Agent Registration Act of Washington. The amended order dismisses Younis, whose identity appears to have misappropriated, from the action without prejudice, summarily orders the remaining John Doe Respondents to cease and desist from violating the anti-fraud provisions of the Act, and gives notice of the Department's intention to impose fines and collect costs. The remaining Respondents in this matter may request a hearing.
The Mainstream Fund Inc., Lamar Thomas - S-04-013-04-TO01 - Summary Order
On August 12, 2004, the Securities Division entered a Summary Order to Cease and Desist and Notice of Intent to Impose Fines and Recover Costs against The Mainstream Fund Inc. and its owner, Lamar Thomas (collectively, "Respondents"). The Division alleged that the Respondents, located in Seattle, promised to acquire Starbucks stock for investors, accepted investor funds, but did not provide the stock, and also offered unregistered securities in the form of equity interests in The Mainstream Fund Inc. The Division alleged that the Respondents employed a scheme or artifice to defraud, made materially false or misleading statements or omissions, offered or sold securities without being registered to do so, and offered to sell unregistered securities. The Division summarily ordered the Respondents to cease and desist from violating the anti-fraud, salesperson/broker-dealer registration, and securities registration provisions of the Securities Act of Washington. The Division also gave the Respondents notice of its intention to impose fines and collect costs. The Respondents each have the right to request a hearing in this matter.
The Minor Group Inc. and Michael Minor - S-03-221-04-CO01 - Consent Order
On August 9, 2004, the Securities Division entered a Consent Order with Respondents The Minor Group Inc. and Michael Minor. The Division alleged that Respondents, who intend to produce marine life-saving products from a principal location in Tacoma, made materially false statements and omissions relating to an offering of unregistered stock in The Minor Group. The Division also alleged that Minor and The Minor Group were not licensed sell securities. In the Consent Order, the Respondents neither admitted nor denied the allegations. The Respondents did agree to cease and desist from future violations of the securities registration, broker-dealer and securities salesperson registration, and anti-fraud provisions of the Securities Act of Washington. The Respondents waived their right to a hearing and to further proceedings in the matter.
Morgan Stanley DW Inc., Arun Sardana, Michael T. Moriarty, Lorenzo D. Ascoli - S-02-030-04-AG01 - Consent Agreement
On July 28, 2004, the Securities Division entered into a Consent Agreement with Morgan Stanley DW Inc., Arun Sardana, Michael T. Moriarty, and Lorenzo D. Ascoli. The Securities Division had entered a Statement of Charges on November 4, 2003 alleging that Sardana and Moriarty, registered securities salespersons with Morgan Stanley, gave their customers unsuitable investment advice, which exposed them to high levels of risk that resulted in substantial financial losses. The Division also alleged that Morgan Stanley and branch manager Ascoli failed to properly supervise Sardana and Moriarty’s activities by failing to act on their knowledge of the high-risk investment strategy that the securities salespersons were offering. The Division further alleged that Morgan Stanley did not have procedures reasonably designed to prevent and detect unsuitable investment recommendations by their securities salespersons, especially with regards to approving and monitoring margin loans. Morgan Stanley filed a civil complaint in Thurston County Superior Court on May 18, 2004 seeking enforcement of an agreement that allegedly arose during negotiations on the Division’s Statement of Charges. On July 30, 2004, a Final Order and Dismissal was entered in that court dismissing the matter with prejudice pursuant to the valid, binding and enforceable agreement of the parties referenced in the last two sentences of paragraph 33 of the May 18, 2004 Complaint. This agreement comprises the Consent Agreement and the letter to be submitted by Morgan Stanley providing supplemental details, specifying certain revisions to its supervisory policies and procedures, and referring to specific pages and lines of the Consent Agreement, which letter Morgan Stanley delivered to the Securities Administrator on July 28, 2004. In the Consent Agreement, Morgan Stanley agreed to revise its supervisory polices and procedures to provide supervisors with additional tools to evaluate the suitability of its clients’ investments, including with respect to margin loans and equity concentrations. Morgan Stanley also agreed to provide training to its financial advisors on making suitable investment recommendations, and pay the following: a donation of $75,000 to the Investor Protection Trust to promote investor education in the state of Washington, $100,000 to reimburse the Division’s investigative costs, and $25,000 to a former customer of Sardana and Moriarty.
Fitts Escrow Company and Donald Emmett Fitts - S-04-049-04-CO0 - Consent Order
On July 12, 2004, the Washington Securities Division entered a Consent Order Prohibiting Participation in the Escrow Industry, Imposing Fines and Vacating a Statement of Charges against Fitts Escrow Company and Donald Emmett Fitts. Fitts Escrow Company and Fitts each agreed to cease and desist from participating in the escrow industry and each paid a fine of $250. An additional fine of $375 each was suspended, based upon continued compliance with the Consent Order. Fitts Escrow Company and Fitts each waived their right to an adjudicative hearing and to judicial review of the Consent Order.
CLS Financial Services, LLC and Gerald Clark Vanhook, Respondents - S-03-187-03-SC01 - Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist and to Impose a Fine
On July 6, 2004 the Securities Division entered a Statement of Charges against CLS Financial Services, LLC and Gerald Clark Vanhook. The Statement of Charges alleges that CLS failed to give written notice of dissenters’ rights when arranging the merger between PSIG-One, LP and CLSFS that became effective on January 1, 2002. The order also alleges that CLS made false or misleading representations about the exchange offer of debentures for Class 2 membership units in CLS that took place at the same time. The order alleges that CLS claimed that debenture holders would receive continued principal and interest payments and that the exchange offer would increase the company’s income by almost ten times. CLS and Vanhook have a right to request a hearing on this matter.
DBH Growth Fund and Donald B. Hoff - S-03-147-04-TO01 - Summary Order To Cease and Desist, and Notice of Intent to Impose Fines and Order Affirmative Relief
On June 29, 2004, the Securities Division entered a Summary Order to Cease and Desist against DBH Growth Fund and Donald B. Hoff ("Respondents"), who purported to be in the business of buying and reselling note receivables. The Division alleged that the Respondents violated the registration and anti-fraud provisions of the Securities Act of Washington by offering unregistered securities to investors in Washington and Alaska, and by failing to disclose material facts such as the risk involved in the investment. The Division also alleged that Hoff was not licensed to sell securities. The Division ordered the Respondents to cease and desist from violating the anti-fraud, securities registration, and salesperson/broker-dealer registration provisions of the Securities Act of Washington. The Division also gave notice of its intention to impose a fine and to collect costs. The Respondents have a right to request a hearing in this matter.
Fred Andrew Hale, Respondent - S-04-056-04-SC01 - Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist and to Impose a Fine
On June 11, 2004, the Securities Division entered a Statement of Charges against Fred Andrew Hale, a Kirkland, Washington resident. The order alleges that from at least 1997 through at least 2002, Hale offered and sold more than $450,000 worth of notes to at least 12 investors. Hale allegedly represented that the proceeds of the notes would be used to fund a cable television network. When offering and selling the investments, Hale allegedly failed to disclose material information to investors, including his inability to repay investors, the amount of money required to fund the business venture, the intended use of proceeds and the financial statements for the venture. Hale has the right to request a hearing in this matter.
Culinary Communion, LLC, Gabriel Claycamp, and Heidi Kenyon, Respondents - S-04-026-04-TO01 - Summary Order to Cease and Desist
On June 11, 2004, the Securities Division entered a Summary Order to Cease and Desist against Culinary Communion, LLC, Gabriel Claycamp, and Heidi Kenyon ("Respondents"), who operate a school for the culinary arts in Seattle, Washington. The Division alleged that Respondents violated the registration and anti-fraud provisions of the Securities Act of Washington by offering unregistered convertible promissory notes to at least one Washington resident and by misrepresenting and failing to disclose material facts, including the risk involved in the investment. The Division also alleged that Claycamp and Kenyon were not licensed sell securities. The Division ordered the Respondents to cease and desist from violating the anti-fraud, securities registration, and salesperson/broker-dealer registration provisions of the Securities Act of Washington. The Division also gave notice of its intention to impose a fine and to collect costs. The Respondents have a right to request a hearing in this matter.
Joe Wells Enterprises, Inc. dba Max Muscle, Respondent - S-04-098-04-CO01 - Consent Order
On June 9, 2004, the Securities Division and Joe Wells Enterprises, Inc. dba Max Muscle entered into a Consent Agreement regarding alleged violations of the State's Franchise Protection Act. The Securities Division alleged that Joe Wells Enterprises offered unregistered franchises and failed to provide prospective purchasers material information regarding the investment. Joe Wells Enterprises agreed to refrain from future violations of the Act and reimburse the Division $500 for the costs of the investigation. Respondent waived further proceedings in this matter.
Dan D. Dyer, Jr., Respondent - S-03-009-04-CO01 - Consent Order
On May 25, 2004, the Securities Division entered into a Consent Order with Dan D. “Duff” Dyer, Jr. (“Dyer”). The Division had entered a Statement of Charges in December 2003 alleging that Dyer, while employed as a securities salesperson for CJM Planning, a New Jersey broker-dealer, offered purported pre-initial public offering shares of Indian Motorcycle Company to at least ten Washington residents, raising a total of approximately $164,375. The Division alleged that Dyer violated the registration provisions of the Securities Act of Washington by offering and selling unregistered securities. The Division also alleged that Dyer violated the anti-fraud provisions of the Securities Act by failing to disclose significant information about the offering. Further, the Division alleged that Dyer engaged in dishonest and unethical sales practices in the securities business by effecting securities transactions not recorded on the regular books and records of CJM Planning without CJM Planning’s prior written authorization. Pursuant to the terms of the Consent Order, Dyer’s securities salesperson license was permanently revoked. In addition, Dyer paid a fine of $10,000. Duff Dyer waived his right to a hearing and further proceedings in the matter.
Omni Systems, Inc. and George McDonald, Respondents - S-04-066-04-TO01 - Summary Order to Cease and Desist
On May 18, 2004, a summary order to cease and desist from violations of the Business Opportunity Fraud Act was issued against Respondents Omni Systems, Inc. and George McDonald of Franklin, Tennessee. Omni Systems, Inc. is in the business of offering and selling vending machine route packages that allow investors to begin a business and make money by operating vending machines at various commercial locations. Respondents sold unregistered business opportunities and failed to provide prospective investors with a disclosure document containing the material facts of the investment, including, but not limited to, the failure to provide a current financial statement
Oxford Micro Devices, Inc.; Boundless Security Systems, Inc. and Steven G. Morton, Respondents - S-04-010-04-TO01 - Summary Order to Cease and Desist
On May 17, 2004, the Washington Securities Division entered a Summary Order to Cease and Desist, Statement of Charges and Notice of Intent to Impose Fines against Oxford Micro Devices, Inc.; Boundless Security Systems, Inc. and Steven G. Morton. The order alleges that Morton sold more than $1.2 million worth of stock and stock warrants in Oxford Micro Devices, Inc. to more than 30 investors and offered more than $500,000 worth of stock in Boundless Security Systems, Inc. to at least three Washington residents. The corporations have their principal place of business in Monroe, Connecticut and purportedly are in the business of developing and marketing security cameras and other security products. Allegedly, Morton represented that Oxford Micro Devices stock would soon go public without disclosing the risks of the investment, without providing the company’s financial statements and without disclosing the use of proceeds from investors. In addition, the order alleges that Morton gave a prospective investor misleading financial projections about Boundless Security and failed to disclose material information about Boundless Security. Respondents have the right to request a hearing in this matter.
Priority Escrow; Jim Fultz, Respondents - S-03-228-03-CO01 - Consent Order
On May 17, 2004, the Securities Division entered a Consent Order with Priority Escrow and its owner, Jim Fultz, for alleged violations of the Escrow Agent Registration Act of Washington. The Division alleged that the Respondents failed to keep adequate trust account records, including monthly reconciliations; failed to make required reports and statements to the director; failed to disclose information or produce documents or records; and were negligent or not expeditious in performing required acts. In the Consent Order, the Respondents neither admitted nor denied the allegations. Mr. Fultz agreed that he is prohibited from participating in the conduct of the affairs of any licensed escrow agent. The Fultz also agreed to pay a $10,000 fine and to pay $5,000 in costs in the event he does not comply in the future with the Order. Respondents agreed to waive their right to a hearing and to further proceedings in the matter.
Troy A. Whitworth (Mark 5), Respondent - S-04-025-04-FO02 - Final Order to Cease and Desist
On May 10, 2004, a final order to cease and desist from violations of the Business Opportunity Fraud Act was issued against Respondent Troy Whitworth of Texas for the sale of an unregistered opportunity to at least one Washington resident. A Summary Order to Cease and Desist was entered earlier on March 30, 2004 against Mark 5, Inc., Robert D. King and Troy Whitworth. Respondent Whitworth, a Mark 5 sales agent, declined to pursue a hearing in the matter. On April 13, 2004, a Final Order to Cease and Desist was also issued to Respondents Mark 5, Inc. and Robert D. King. Mark 5, Inc. is in the business of selling jewelry distributorships that allow investors to begin a business and make money by reselling jewelry. The Company was registered to sell business opportunities in the state from 1998 to 1999. The Securities Division had previously issued a summary order against Mark 5, Inc. and Robert King for offering an unregistered business opportunity in March 2000.
A Consent Order and Order Vacating S-04-025-04-FO02 as to Troy Whitworth was entered on November 3, 2008
Fitts Escrow Company and Donald Emmett Fitts, Respondents - S-04-049-04-SC01 - Order Declining to Renew an Escrow Agent License and Escrow Officer License
On May 11, 2004, the Washington Securities Division entered a Statement of Charges, Notice of Intent to Enter an Order Declining to Renew an Escrow Agent License and Escrow Officer License, to Prohibit Participation in the Escrow Industry and to Impose Fines against Respondents, Fitts Escrow Company and Donald Emmett Fitts. The statement of charges alleges that Respondents, which had done business in Renton, Washington, violated the Escrow Agent Registration Act by failing to provide proof of fidelity bond coverage, by failing to keep adequate records, by failing to maintain proper books and accounts and by making improper disbursements. Respondents have the right to request a hearing in this matter.
Clarine Rodhel Schilling, Respondent - S-02-394-04-TO02 - Summary Order to Cease and Desist
On May 11, 2004, the Securities Division entered a Statement of Charges, Summary Order to Cease and Desist, and Notice of Intent to Impose Fines and Recover Costs against Clarine Rodhel Schilling. The Division alleged that Schilling was a sales agent for Etalon Card Inc., also doing business as Etalon Holdings (collectively, “Etalon”), a company against which the Division has already entered Order Number S-02-394-03-TO01. The Division alleged that Schilling made materially false or misleading statements or omissions relating to the offer or sale of debt and equity securities in Etalon, offered or sold unregistered securities, and was not registered to sell securities. The Division summarily ordered Schilling to cease and desist from violating the anti-fraud, securities registration, and salesperson/broker-dealer registration provisions of the Securities Act of Washington. The Division also gave Schilling notice of its intention to impose fines and collect costs. Schilling has the right to request a hearing in this matter.
Morgan Stanley DW Inc., Arun Sardana, Michael T. Moriarty, Lorenzo D. Ascoli, Respondents - S-02-030-03-SC01 - Statement of Charges
On November 4, 2003, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Suspend Registrations, Impose Fines, Charge Costs, and Order Disgorgement against Morgan Stanley DW Inc. (“Morgan Stanley”), Arun Sardana (“Sardana”), Michael T. Moriarty (“Moriarty”), and Lorenzo D. Ascoli (“Ascoli”). The Division alleges that Sardana and Moriarty, registered securities salespersons with Morgan Stanley, gave their customers unsuitable investment advice, which exposed them to high levels of risk that resulted in substantial financial losses. In addition, the Division alleges that Morgan Stanley and branch manager Ascoli failed to properly supervise Sardana and Moriarty’s activities. The Division alleges that Ascoli failed to act on his knowledge of the high-risk investment strategy that the brokers were offering. The Division further alleges that Morgan Stanley did not have procedures reasonably designed to prevent and detect unsuitable investment recommendations by their brokers, especially with regards to approving and monitoring margin loans. The Division stated its intent to suspend the securities licenses of Sardana and Moriarty and impose fines against Sardana, Moriarty, Ascoli and Morgan Stanley. The Division also intends to order Morgan Stanley to repay fees charged on the accounts, including margin loan interest paid by the customers. Respondents requested a hearing in this matter.
Pacific Coast Investment Company, Respondent - S-03-209-04-CO01 - Consent Order
On May 7, 2004, the Department of Financial Institutions (DFI) entered into a consent agreement with Pacific Coast Investment Company (PCIC), a Seattle investment company, over allegations that the company did not disburse or return investors funds from a trust account in a timely manner; that investors’ security interests in real property were not timely perfected; that the company violated advertising rules and that the company failed to disclose material facts to investors. DFI’s Securities Division had issued, on January 29, 2004, Summary Order to Cease and Desist to PCIC, which notified the company that it might lose its Securities and Broker-Dealer licenses and be ordered to pay a fine. As part of the settlement agreed to with DFI, PCIC paid a fine of $100,000, reimbursed DFI $8,000 for its investigation costs and undertook to make an offer of rescission to investors in one of PCIC's loan participation investments.
David L. Coulter, Respondent - S-01-064-04-CO01 - Consent Order
On April 29, 2004, the Securities Division entered into a Consent Order with David L. Coulter (“Coulter”). The Division had entered a Statement of Charges in January 2004 alleging that Coulter, a registered securities salesperson and investment adviser representative with Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”), engaged in dishonest and unethical practices in the securities business by recommending securities to customers without reasonable grounds to believe that the transactions were suitable for them. Coulter recommended the customers, an elderly couple living on a fixed income, invest $200,000 or approximately 80% of their net worth in two variable annuities. Pursuant to the terms of the Consent Order, Coulter was ordered not to violate RCW 21.20.702, the section of the Securities Act dealing with suitability. In addition, Coulter agreed to undergo three separate training sessions regarding suitability, variable annuities, and regulatory issues. Merrill Lynch also agreed to pay $10,000 as partial reimbursement for the Division’s investigative costs. Coulter waived his right to a hearing and further proceedings in the matter. (Also see S-01-064-03-SC01 - Statement of Charges)
Mark 5, Inc., Robert D. King, Troy A. Whitworth, Respondents - S-04-025-04-FO01 - Final Order to Cease and Desist
On April 13, 2004, a final order to cease and desist from violations of the Business Opportunity Fraud Act was issued to Respondents Mark 5, Inc. and Robert D. King of Texas for the sale of an unregistered opportunity to at least one Washington resident. A Summary Order to Cease and Desist was entered on March 30, 2004 against Mark 5, Inc., Robert D. King and Troy Whitworth. Respondents Mark 5, Inc. and Robert D. King declined to pursue a hearing in the matter. Mark 5, Inc. is in the business of selling jewelry distributorships that allow investors to begin a business and make money by reselling jewelry. The Company was registered to sell business opportunities in the state from 1998 to 1999. The Securities Division had previously issued a summary order against Mark 5, Inc. and Robert King for offering an unregistered business opportunity in March 2000. The Securities Division alleged that the Respondents again violated the Act’s anti-fraud and disclosure provisions in addition to offering without being registered.
Insure-Trades.com, Mohammad Younis, Respondent - S-04-047-04-TO01 - Temporary Order to Cease and Desist
On April 8, 2004, the Department of Financial Institutions entered a Statement of Charges, Temporary Order to Cease and Desist, and Notice of Intent to Impose Fines and Collect Costs against Respondents Insure-Trades.com and Mohammad Younis for alleged violations of the Escrow Agent Registration Act of Washington. The Department alleged that the Insure-Trades.com and Younis, who claim to provide online escrow services, falsely represented that they have certain business partners and that they are licensed by the Department and other states to conduct escrows. The Department alleged that these false representations violate the anti-fraud provisions of the Escrow Act and summarily ordered the Respondents to cease and desist from such violations. The Department also gave Insure-Trades.com and Younis notice of its intention to impose fines and collect costs. Insure-Trades.com and Younis have the right to request a hearing in this matter.
James Majerski, Respondent - S-03-132-04-TO01 - Summary Order to Cease and Desist
On April 1, 2004, the Securities Division entered a Summary Order to Cease and Desist against James Majerski of Tampa, Florida. The Division alleges that from early 2001 and continuing through September 2001 Majerski perpetrated a scheme to defraud three Washington residents of over $277,000. The Securities Division further alleges that Majerski told the he would purchase gold from The Philippines, ship the gold to Switzerland and reprocess the gold. By doing this, he and the investors, they would make a substantial amount of money when they sold the reprocessed gold. Majerski was ordered to cease and desist from violations of the registration and anti-fraud provisions of the Securities Act, pending a final determination of the matter.
TeraCrush Monster Sports; Paul Boes - S-04-006-04-TO01 - Statement of Charges
On March 30, 2004, the Securities Division entered a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist, to Impose Fines, and to Collect Costs against TeraCrush Monster Sports (TeraCrush) and Paul Boes. The Division alleged that TeraCrush and Boes, who promote monster truck racing from a principal location in Bothell, made materially false statements and omissions relating to an offering of unregistered debt and equity securities in TeraCrush. The Division also alleged that TeraCrush and Boes were not licensed sell securities. The Division intends to order TeraCrush and Boes to cease and desist from violating the anti-fraud, securities registration, and salesperson/broker-dealer registration provisions of the Securities Act of Washington. The Division also gave TeraCrush and Boes notice of its intention to impose fines and collect costs. TeraCrush and Boes have the right to request a hearing in this matter.
Mark 5, Inc., Robert D. King, Troy A. Whitworth, Respondents - S-04-025-04-TO01 - Summary Order to Cease and Desist
On March 30, 2004, a summary order to cease and desist from violations of the Business Opportunity Fraud Act was issued against Respondents Mark 5, Inc., Robert D. King and Troy A. Whitworth of Texas for the sale of an unregistered opportunity to at least one Washington resident. Mark 5 is in the business of selling jewelry distributorships that allow investors to begin a business and make money by reselling jewelry.The Company was registered to sell business opportunities in the state from 1998 to 1999. The Securities Division subsequently issued a summary order against Mark 5, Inc. and Robert King for offering an unregistered business opportunity in March 2000. The Securities Division has now alleged that the Respondents again have violated the Act’s anti-fraud and disclosure provisions in addition to offering without being registered.
Aaron Burns, Respondent - S-02-271-04-CO03 - Consent Order
On March 30, 2004, the Securities Division entered into a consent order with Aaron Burns of Spokane in settlement of allegations made by the Securities Division in a statement of charges, order number S-02-271-03-SC01, issued September 2003. The Securities Division alleged that Burns sold viatical settlement investments in violation of the Securities Act of Washington. In the consent order, Burns neither admitted nor denied the Securities Division’s allegations. Burns paid $500 in costs and $2,500 in fines to the Securities Division in connection with the consent order. He also agreed to cease and desist from the antifraud provision of the Securities Act of Washington. He waived his right to a hearing in this matter.
Escrow Integrity, Kristin Doohan, Respondents - S-03-212-04-CO01 - Consent Order
On March 24, 2004, the Securities Division entered a Consent Order with Respondents Escrow Integrity and Kristin Doohan for alleged violations of the Escrow Agent Registration Act of Washington. The Division alleged that the Respondents conducted escrow transactions without a valid escrow agent license, escrow officer license, and designated escrow officer license. In the Consent Order, the Respondents neither admitted nor denied the allegations. The Respondents did agree to cease and desist from future violations of the Act, to pay a $2,500 fine, and to pay $500 in investigative costs. The Respondents waived their right to a hearing and to further proceedings in the matter.
Terrence R. Sprague, Respondent - S-01-039-03-CO01 - Consent Order
On March 23, 2004, the Securities Division entered into a Consent Order with Terrence R. Sprague, formerly of Seattle, Washington. The Consent resolved a case initiated August 1, 2001, when the Division issued charges alleging violations of the Securities Act in the sale of brokered certificates of deposit. Mr. Sprague, a representative with US Bancorp, sold "callable" CDs to investors, who later complained of misrepresentations and failure to disclose. In particular, complainants alleged that Sprague misrepresented the similarity of callable CDs to regular CDs, failed to disclose that the callable CDs did not mature for 20 years, and made unsuitable investment recommendations.
In the Consent Order, Sprague does not admit to the violations, but agreed to cooperate in related investigations. Sprague agreed to injunctive relief prohibiting future violations, to a six-month bar from registration, and to payment of a $50,000 fine, with the entire amount suspended based on future compliance with the Order.
Click on the link to see the Statement of Charges and Notice of Intent to Issue an Order Suspending Registration and Imposing Fines SDO-048-01
Lilac City Closing & Escrow LLC, Sheila Reimer, Cathy Patrick, Respondents - C-03-136-03-CO01 - Consent Order
On March 23, 2004, the Securities Division entered a Consent Order with Respondents Lilac City Closing & Escrow LLC, Sheila Reimer, and Cathy Patrick for alleged violations of the Escrow Agent Registration Act of Washington. The Division alleged that the Respondents conducted escrow transactions without a valid escrow agent license, escrow officer licenses, and designated escrow officer license. In the Consent Order, the Respondents neither admitted nor denied the allegations. The Respondents did agree to cease and desist from future violations of the Act, to pay a $3,000 fine, and to pay $2,000 in investigative costs. The Respondents waived their right to a hearing and to further proceedings in the matter.
Northwest Best Direct, Inc., Vincent E. and Emily G. Bozzi, Respondents - S-03-115-04-CO01 - Consent Order
On March 18, 2004, the Securities Division entered into a Consent Order with Northwest Best Direct, Inc. and its owners, Vincent E. and Emily G. Bozzi of Spokane. In a Statement of Charges issued last December, the Division alleged that the Respondents had violated an existing Order of the Division by violating the anti-fraud provision of the Securities Act, by selling unregistered securities, and by acting as unregistered broker-dealers and/or securities salespersons
In the Consent Order, Vincent E. Bozzi admitted to the violations, and all three respondents agreed to injunctive relief and to the permanent revocation of certain exemptions. In addition, the respondents agreed to pay $30,000 in restitution, $10,000 in fines, and $4,000 in costs. An additional $20,000 in fines remains suspended to ensure compliance with the Orders.
To see the Statement of Charges issued in this case, go to S-03-115-03-SC01.
Copies of the earlier orders are available at SDO-095-01 (Summary Order issued November 20th, 2001) and SDO-108-01 (Final Order to Cease and Desist entered December 19, 2001).
Peter Woodbridge (Mid-America Foundation), Respondent - S-01-128-03-CO06 - Consent Order
On March 15, 2004, the Securities Division entered into consent order number S-01-128-03-CO06 with Peter Woodbridge. This consent order settled, as to Woodbridge, the matters alleged by the Securities Division in Summary Order to Cease and Desist, Notice of Intent to Suspend or Revoke Securities Salesperson Registration, and Notice of Intent To Impose Fines order number S-01-128-03TO01, which related to sales of charitable gift annuities offered by Mid-America Foundation of Arizona. The Securities Division alleged that investors were told that the Mid-America Foundation charitable gift annuities were safe investments that would provide steady income and tax benefits. The investors’ funds were to be invested by qualified professionals in safe investments. The Securities Division alleged that investors’ funds were instead used to pay current expenses and to finance the lavish lifestyle of Robert Dillie, the Executive Director of Mid-America Foundation. In October 2001, investors were told that Mid-America Foundation had disbanded and would be making no further annuity payments to its investors. In the consent order, Woodbridge neither admitted nor denied the Securities Division’s allegations. Woodbridge paid $17,500 in restitution to investors in connection with the consent order, which will be distributed on a pro rata basis to the investors who purchased Mid-America Foundation charitable gift annuities from him. In addition, he agreed to cease and desist from violations of the Securities Act of Washington and waived his right to a hearing in this matter.
Mark Robison; The Havenhurst Group; Dennis Cope; Green Gables Group; Karen Thurston; Cambio Corporation; Millennium Group International, Inc.; FIIK Investment & Holdings, Inc.; Partner Bank, AD; Edgar Bias; Aaron Mace; and Charles Covell, Respondents - S-03-085-03-TO01 - Summary Order to Cease and Desist
On February 20, 2004 the Securities Division entered a Summary Order to Cease and Desist and Notice of Intent to Impose Fines against Mark Robison; The Havenhurst Group; Dennis Cope; Green Gables Group; Karen Thurston; Cambio Corporation; Millennium Group International, Inc.; FIIK Investment & Holdings, Inc.; Partner Bank, AD; Edgar Bias; Aaron Mace; and Charles Covell in connection with the offer and sale of investments in a series of programs which involved pooling of funds in order to invest in various high profit investment opportunities. These investments were offered primarily by personal solicitations to members of the Mormon church but were also offered through a website maintained by Millennium Group International, Inc. of Mesa, Arizona. Once investors had invested in Millennium Group International, Inc. they were offered a purported rescission of their investments but instead received substitute investments in various other entities. The Securities Division alleges that the offers and sales of the investments were made through the use of misleading statements, that the investments were not registered as securities and that the persons and firms soliciting the investments were not registered as securities salespersons or broker-dealers in Washington. Respondents have a right to a hearing on the Order and matters alleged.
Joyce Cherry, Respondent - S-03-020-04-CO01 - Consent Order
On February 19, 2004, the Securities Division entered into a Consent Order with Joyce Cherry (“Cherry”). The Division had entered a Statement of Charges in August 2003 alleging that Cherry, a registered securities salesperson with WM Financial Services Inc. at the time of the conduct, violated the Securities Act of Washington and engaged in dishonest and unethical practices in the securities business. The Division alleges that Cherry made unsuitable investment recommendations to at least two Washington residents, misrepresented information on new account forms, and misrepresented material facts concerning recommended investments in a variable annuity and a mutual fund. Cherry neither admits nor denies the Division’s allegations. Pursuant to the terms of the Consent Order, Cherry paid restitution to one of the customers in the amount of $14,354, as well as $646 for the Division’s investigative costs. In addition, Cherry’s securities salesperson license will be suspended for a period of 30 days. Cherry waived her right to a hearing and further proceedings in the matter.
William Arthur Hitsman, Jr., Respondent - S-03-111-04-FO01- Final Order to Cease and Desist
On February 17, 2004, the Washington Securities Division entered a Final Order to Cease and Desist and imposed a $5,000 fine against William Arthur Hitsman, Jr. (“Hitsman”) based on his failure to request a hearing on a prior summary cease and desist order. The Final Order finds that Hitsman held himself out as the vice president of DRDATA Inc., a company that was supposed to market software for analyzing organizational costs. Hitsman violated the registration and anti-fraud provisions of the Securities Act of Washington by offering and selling unregistered securities and by misrepresenting material facts and failing to disclose significant risks about the securities. Hitsman may seek judicial review of this Order.
Pacific Coast Investment Company, Respondent - S-03-209-03-SC01 - Statement of Charges
On January 28, 2004, the Securities Division entered a Statement of Charges and Notice of Intent to Enter Order Suspending or Revoking Securities and Broker-Dealer Registrations, Requiring Independent Escrow Agent, and Imposing Fines against Pacific Coast Investment Company (PCIC). The Division alleged that PCIC, located principally in Seattle, made misleading statements relating to its sale of fractionalized “participation interests” in over $5,270,000 in mortgages registered with the Division as mortgage paper securities. The Division also alleged that PCIC violated rules limiting how long it can hold investor funds in escrow and requiring it to properly record assignments of mortgage before disbursing escrowed investor funds. The Division gave PCIC notice of its intention to suspend or revoking its securities and broker-dealer registrations, require it to use and independent escrow agent, and imposing fines. PCIC has the right to request a hearing in this matter.
Archer, Lonzo, Respondent - S-03-029-04-FO01 - Final Order
On January 27, 2004, the Securities Division entered a Final Order against Lonzo Archer (“Archer”). The Division had entered a Statement of Charges in December 2003 (S-03-029-03-SC01) alleging that Archer, a registered securities salesperson, recommended securities to customers without reasonable grounds to believe that the transactions were suitable for them, and excessively traded the customers’ accounts to generate commissions. Archer recommended that the customers, an elderly couple, invest their individual retirement accounts (IRAs) in low priced small capitalization stocks. Archer, currently employed by First Montauk Securities Corp, was employed by Mantis Securities, Inc. at the time of the transactions at issue in this matter. The Division alleges that as a result of Archer’s recommendations, the couple paid at least $35,000 in commissions while sustaining losses of approximately $118,300. Archer failed to request a hearing in the matter, and therefore the Final Order adopts the Findings of Fact and Conclusions of Law set forth in the Statement of Charges. The Division revoked Archer’s license. The Division also ordered him to pay a fine of $20,000 and to repay his commissions to the customers. Archer may seek judicial review of this Final Order.
Seattle Capital Group, Seattle Capital Group LLC, Seacap Fund LP, The Sovereign Enterprise, Jae H. Pak, Luz Valdez and Paul M. Franklin, Respondents - S-03-002-03-TO02 - Amended Summary Order to Cease and Desist
On January 26, 2004, the Securities Division entered an Amended Summary Order to Cease and Desist and Notice of Intent to Impose Fines and Order Affirmative Relief against Seattle Capital Group, Seattle Capital Group LLC, Seacap Fund LP, The Sovereign Enterprise, Jae H. Pak, Luz Valdez and Paul M. Franklin for alleged violations of the Securities Act of Washington. The Division alleges that from at least June 2000 through May 2001, the Respondents offered and sold securities and offered investment advice and services for a fee to at least 23 investors, raising over $2.9 million. Pak, Valdez and Franklin solicited investments and then began to conduct high volume day trading using investor’s funds. Other funds received from investors were used to pay business expenses, salaries and personal expenses. The Securities Division alleges that the Respondents acted as unregistered investment advisers, investment adviser representatives, broker-dealers and/or securities salespersons. The Division also alleges that the offer and sale of securities by Respondents violated the anti-fraud provisions of the Securities Act of Washington. The Respondents were ordered to cease and desist from violation of the registration and anti-fraud provisions of the Securities Act pending a final determination in the matter. Pak and Valdez have requested a hearing in this matter pursuant to the Division’s summary order issued June 20, 2003. The other Respondents have a right to request a hearing in this matter.
This matter was resolved as to Luz Valdez by the entry of a Consent Order on May 22, 2006.
This matter was resolved as to Jae H. Pak by the entry of a Consent Order on November 6, 2006.
Imergent, Inc. d/b/a StoresOnline, Inc., Respondent - S-03-010-03-CO01 - Consent Order
On January 19, 2004, the Securities Division and Respondents, Imergent, Inc., StoresOnline, Inc., John J. Poelman, Brandon Lewis, Donald Danks, and Charles Andrews entered into Consent Order number S-03-010-03-CO01. The Division alleged that Imergent and StoresOnline were in the business of selling Internet merchant packages, which allowed investors to begin a business and make money by acquiring a presence on the Internet and by marketing their products through the Internet. The Division alleged that Respondents violated the Business Opportunity Fraud Act’s registration and anti-fraud provisions. Allegations included failure to register and failure to provide the required contract language and disclosures. Respondents neither admit nor deny the Findings of Fact or Conclusions of Law, but agree to cease and desist from violations of the registration and anti-fraud provisions of the Business Opportunity Fraud Act. Respondents waived their rights to a hearing and judicial review of this matter.
Ryan P. Stearns and Stearns Asset Management, LLC, Respondents - S-03-189-04-CO01 - Consent Order
On January 23, 2004, the Securities Division entered into a Consent Order with Ryan P. Stearns (“Stearns”) and Stearns Asset Management, LLC (“SAM”). The Division had entered a Statement of Charges in October 2003 alleging that Stearns, on behalf of SAM, filed a false or misleading application for investment adviser registration. Since July 24, 2000, Stearns has been the subject of an investigation by the New York Stock Exchange Division of Enforcement (“NYSE”) for causing shares of initial public offerings (“IPOs”) to be allocated to customer accounts and sharing in profits of those IPOs. Stearns failed to disclose the NYSE investigation in his investment adviser application filed with the Division. On September 5, 2003, the NYSE censured Stearns and barred him for a period of eight years from membership, allied membership, approved person status, and from employment or association in any capacity with any NYSE member organization. Pursuant to the terms of the Consent Order, Stearns paid a fine of $500 and agreed not to apply for a license as a securities salesperson or investment adviser representative for a period of ten years. Stearns and SAM waived their right to a hearing and further proceedings in the matter.
John D. Fagan, Respondent - S-02-284-03-FO01 - Final Order
On January 21, 2004, the Securities Division entered a Final Order against John D. Fagan (“Fagan”). The Division had entered a Statement of Charges in October 2003 (S-02-284-03-SC01) alleging that Fagan, a registered securities salesperson with D.A. Davidson & Co. at the time of the violation, engaged in dishonest and unethical practices in the securities business. The Division’s allegations include that Fagan recommended securities to two customers without reasonable grounds to believe that the transactions were suitable for them, and excessively traded their accounts to generate commissions. Both of the customers were elderly women living on fixed incomes. As a result of Fagan’s sales practices, the Division alleges that the customers lost $374,000. Fagan submitted a statement in lieu of a hearing requesting that the conclusions of law be reconsidered. After consideration of Fagan’s statement, the Division ordered that Fagan be barred from being licensed as securities professional for a period of ten years. The Division also ordered Fagan to pay a fine of $20,000. Fagan may seek judicial review of this Final Order.
John A. Erickson, Respondent - S-03-083-03-CO01 - Consent Order
On January 14, 2004, the Securities Division entered into a Consent Order with John A. Erickson (“Erickson”). The Division had entered a Statement of Charges in October 2003 (S-03-083-03-SC01E) alleging that Erickson, a registered securities salesperson and investment adviser representative with Morgan Stanley DW, Inc. (“MSDW”), engaged in dishonest and unethical practices in the securities business by recommending securities to a customer without reasonable grounds to believe that the transactions were suitable for her. Erickson sold the customer, an elderly widow, a series of medium-term debt securities of MSDW that were redeemable at maturity for shares of common stock in companies such as Oracle Corporation, JDS Uniphase Corporation, and Yahoo! Inc. As a result of Erickson’s recommendations, the Division alleges that the customer lost over $34,000. During the Division’s investigation, MSDW agreed to compensate the customer for her losses. Pursuant to the terms of the Consent Order, Erickson paid a fine of $10,000 as well as $2,000 for the Division’s investigative costs. Erickson waived his right to a hearing and further proceedings in the matter.
Great Northern Financial Services, Inc; Anthony Horpel; Timothy Burke; Douglas Fry; Great Northern Financial Securities, Inc., Respondents - S-02-271-03-CO02 - Consent Order
The Securities Administrator entered into a consent order on January 5, 2004, with a Veradale, Washington firm and three of the firm’s officers over allegations relating to sales of viatical settlement investments in the late 1990s in Eastern Washington. Those allegations included unlawful sale of unregistered securities and misrepresentations in the sale of securities. The firm, Great Northern Financial Services, Inc., is now the parent company of a Veradale, Washington broker-dealer, Great Northern Financial Securities, Inc. As part of the settlement, Anthony Horpel, president of Great Northern Financial Services, Inc., agreed to pay a fine of $50,000, of which half was suspended. Timothy Burke and Douglas Fry agreed to pay fines of $5,000, with half the amounts suspended. Great Northern Financial Services, Inc. and the officers named also agreed to pay $5,000 to the Investor Protections Trust. Great Northern Financial Services, Inc. and its officers also agreed to make improvements to the compliance system of its broker-dealer subsidiary, Great Northern Financial Securities, Inc. These improvements include hiring a compliance officer who is to be given broad supervisory powers, as well as an agreement to allow the Securities Division to conduct annual compliance examinations for the next three years. As part of the settlement, the Securities Division is being reimbursed for $12,500 in investigative costs as well as for the expenses it will incur in conducting the additional compliance examinations. The Securities Division is continuing to negotiate with other firms and persons involved in the sale of the viatical settlement investments named in the Securities Division’s September 8, 2003, statement of charges. Some of those firms or persons have requested hearings on the allegations.