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IN THE MATTER OF: (Collectively, "Respondents") * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER |
I. PRELIMINARY STATEMENT
WHEREAS, 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;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking (“Department”), conducted an investigation pursuant to Section 36b-26(a) of the Act into the activities of the Respondents to determine whether they have violated, were violating or were about to violate provisions of the Act;
WHEREAS, as a result of the investigation, on September 22, 2016, the Commissioner acting pursuant to Section 36b-27 of the Act, issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (collectively, “Notice”) (Docket No. CRF-16-8209-S) against Respondents, which Notice is incorporated by reference herein;
WHEREAS, on October 11, 2016, Respondents requested a hearing on the matters alleged in the Notice;
WHEREAS, on October 13, 2016, the Commissioner issued a Notification of Hearing and Designation of Hearing Officer appointing Attorney Stacey Serrano as Hearing Officer, wherein the Commissioner scheduled the hearing on the matters alleged in the Notice for November 30, 2016 (“Hearing”);
WHEREAS, on November 10, 2016, Hearing Officer Serrano continued the Hearing at the mutual request of all parties so that settlement negotiations could continue;
WHEREAS, Section 36b-31(a) of the Act provides, in relevant part, that “[t]he commissioner may from time to time make . . . such . . . orders as are necessary to carry out the provisions of sections 36b-2 to 36b-34, inclusive”;
WHEREAS, Section 36b-31(b) of the Act provides, in relevant part, that “[n]o . . . order may be made . . . unless the commissioner finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of sections 36b-2 to 36b-34, inclusive”;
WHEREAS, an administrative proceeding initiated under Sections 36b-27 of the Act would constitute a “contested case” within the meaning of Sections 4-166(4) and 4-177(c) of the General Statutes of Connecticut;
WHEREAS, Section 4-177(c) of the General Statutes of Connecticut and Section 36a-1-55(a) of the Regulations provide that a contested case may be resolved by consent order, unless precluded by law;
WHEREAS, Section 36b-27(f) of the Act provides, in relevant part, that “[a]ny time after the issuance of an order or notice provided for in subsection (a), (b) or . . . subdivision (1) of subsection (d) of this section, the commissioner may accept an agreement by any respondent named in such order or notice to enter into a written consent order in lieu of an adjudicative hearing”;
WHEREAS, Respondents and the Commissioner now desire to resolve the matters alleged in the Notice without the need for further administrative proceedings;
WHEREAS, Respondents maintain that two agents, since deceased, facilitated the sale of securities described in the Notice;
WHEREAS, the Commissioner finds that the entry of this Consent Order is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the Act;
WHEREAS, Respondents expressly consent to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order;
WHEREAS, Respondents have provided to the Division evidence that they have extended a rescission offer of approximately $214,895 to sixteen investors who held interests in Evans Technology Holding Company, and that Respondents have paid approximately $200,258 in restitution to those investors electing to accept the rescission offer;
WHEREAS, the Commissioner factored in the amount of restitution remitted to investors by Respondents in determining not to pursue the maximum fine that might have been ordered as a result of the Notice or as a term of this Consent Order pursuant to Section 36b-27(f) of the Act;
AND WHEREAS, Respondents, through their execution of this Consent Order, specifically assure the Commissioner that none of the violations alleged in this Consent Order or in the Notice shall occur in the future.
II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, Respondents, through their execution of this Consent Order, voluntarily waive the following rights:
| 1. | To be afforded notice and an opportunity for a hearing within the meaning of Section 36b-27 of the Act and Section 4-177(a) of the General Statutes of Connecticut; |
| 2. | To present evidence and argument and to otherwise avail themselves of Section 36b-27 of the Act and Section 4-177c(a) of the General Statutes of Connecticut; |
| 3. | To present their respective positions in a hearing in which each is represented by counsel; |
| 4. | To have a written record of the hearing made and a written decision issued by a hearing officer; and |
| 5. | To seek judicial review of, or otherwise challenge or contest, the matters described herein, including the validity of this Consent Order. |
III. ACKNOWLEDGEMENT OF THE COMMISSIONER'S ALLEGATIONS
WHEREAS, Respondents, through their execution of this Consent Order, acknowledge the allegations of the Commissioner in the Notice, without admitting or denying them, yet admit that, if proven, sufficient evidence exists for the Commissioner to issue: (a) a permanent order to cease and desist against Respondents; (b) an order directing Respondents to make restitution; and (c) an order imposing upon Respondents a maximum administrative fine of one hundred thousand dollars ($100,000) per violation of the Act, or any regulation, rule or order adopted or issued thereunder;
WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting Respondents an opportunity for a hearing;
AND WHEREAS, Respondents acknowledge the possible consequences of an administrative hearing and voluntarily agree to consent to the entry of the sanctions described below.
IV. CONSENT TO ENTRY OF SANCTIONS
WHEREAS, Respondents, through their execution of this Consent Order, consent to the Commissioner’s entry of an order imposing on them the following sanctions:
| 1. | Respondents shall cease and desist from directly or indirectly violating the provisions of the Act or any rule, regulation or order under the Act, including, without limitation, engaging in any activity in or from Connecticut that violates Sections 36b-16, 36b-4 or 36b-6(b) of the Act; |
| 2. | For a period of three (3) years commencing on the date this Consent Order is entered by the Commissioner, Respondents shall be BARRED from: (a) transacting business in or from Connecticut as an agent, broker-dealer, broker-dealer agent, investment adviser or investment adviser agent as such terms are defined in the Act, and notwithstanding any definitional exclusion that might otherwise be available under the Act; (b) maintaining a direct or indirect ownership interest in a broker-dealer or investment adviser registered or required to be registered in Connecticut; and c) acting in any other capacity which requires a license or registration under laws administered by the Commissioner; and |
| 3. | No later than the date this Consent Order is entered by the Commissioner, Respondents shall jointly and severally remit to the Department, by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut,” the sum of five thousand dollars ($5,000) as an administrative fine. |
V. CONSENT ORDER
NOW THEREFORE, the Commissioner enters the following:
| 1. | The Sanctions set forth above be and are hereby entered; |
| 2. | Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Respondents based upon a violation of this Consent Order or the matters underlying its entry if the Commissioner determines that compliance with the terms herein is not being observed; |
| 3. | Nothing in this Consent Order shall be construed as limiting the Commissioner’s ability to take enforcement action against Respondents based upon evidence of which the Division was unaware on the date hereof relating to a violation of the Act or any regulation or order under the Act; |
| 4. | Respondents shall not take any action or make or permit to be made any public statement, including in regulatory filings or otherwise, denying, directly or indirectly, any allegation referenced in this Consent Order or create the impression that this Consent Order is without factual basis; |
| 5. | Respondents shall not take any position in any proceeding brought by or on behalf of the Commissioner, or to which the Commissioner is a party, that is inconsistent with any part of this Consent Order. However, nothing in this Consent Order affects Respondents’ testimonial obligations or right to take any legal or factual position in litigation, arbitration, or other legal proceedings in which the Commissioner is not a party; and |
| 6. | This Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut, | ____/s/_____________ | |
| this 2nd day of January 2018. | Jorge L. Perez | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, John W. Evans, state that I have read the foregoing Consent Order; that I know and fully understand its contents; that I agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that I consent to the entry of this Consent Order.
| ____/s/________ | |
| John W. Evans |
State of: Connecticut
County of: Litchfield
On this the 21st day of December 2017, before me, the undersigned officer, personally appeared John W. Evans, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same for the purposes therein contained.
In witness whereof I hereunto set my hand.
| ____/s/________________________ |
| Notary Public |
| Date Commission Expires: 1/31/22 |
CONSENT TO ENTRY OF ORDER
I, Bonnie A. Evans, state that I have read the foregoing Consent Order; that I know and fully understand its contents; that I agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that I consent to the entry of this Consent Order.
| ______/s/______ | |
| Bonnie A. Evans |
State of: Connecticut
County of: Litchfield
On this the 21st day of December 2017, before me, the undersigned officer, personally appeared Bonnie A. Evans, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that she executed the same for the purposes therein contained.
In witness whereof I hereunto set my hand.
| ____/s/________________________ |
| Notary Public |
| Date Commission Expires: 1/31/22 |