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FLORIDEL, LLC * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER DOCKET NO. CO-15-8110-S |
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, conducted an investigation pursuant to Section 36b-26(a) of the Act into the activities of Floridel, LLC (“Floridel”) to determine if it violated, had violated or was about to violate provisions of the Act or Regulations (“Investigation”);
WHEREAS, as a result of the Investigation, on June 22, 2015, 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-15-8110-S) against Floridel, which Notice is incorporated by reference herein;
WHEREAS, on July 20, 2015, Floridel requested a hearing on the matters alleged in the Notice;
WHEREAS, on July 28, 2015, the Commissioner issued a Notification of Hearing and Designation of Hearing Officer, wherein the Commissioner scheduled the hearing on the matters alleged in the Notice for September 1, 2015 (“Hearing”);
WHEREAS, on August 28, 2015, the designated Hearing Officer granted a continuance of the Hearing to October 20, 2015;
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 Section 36b-27 of the Act would constitute a “contested case” within the meaning of Section 4-166(4) of the General Statutes of Connecticut;
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, Section 4-177(c) of the General Statutes of Connecticut and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by consent order, unless precluded by law;
WHEREAS, Floridel and the Commissioner now desire to resolve the matters alleged in the Notice without the need for further administrative proceedings;
WHEREAS, the Commissioner finds that the issuance 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, Floridel expressly consents to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order;
WHEREAS, Floridel acknowledges its obligation to pay full restitution to the investors referenced in paragraph 21 of the Notice;
WHEREAS, on September 21 and 22, 2015, Floridel filed with the Division a confidential sworn Summary Financial Disclosure Statement, with related attachments (collectively, the “Financial Documentation”), which Financial Documentation is incorporated by reference herein, indicating that Floridel is currently financially unable to pay any restitutionary amount and/or fine that might have been ordered as a result of the Notice or as a term of the Consent Order pursuant to Sections 36b-27(b) and 36b-27(d) of the Act, respectively;
AND WHEREAS, Floridel specifically assures the Commissioner that none of the violations alleged in the Notice shall occur in the future.
II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, Floridel, through its execution of this Consent Order, voluntarily waives the following rights with respect to the Notice:
| 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 itself of Section 36b-27 of the Act and Section 4-177c(a) of the General Statutes of Connecticut; |
| 3. | To present its position in a hearing in which it 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, Floridel, through its execution of this Consent Order, acknowledges the following allegations of the Commissioner and admits evidence exists for the Commissioner to issue a permanent order to cease and desist, a permanent order to make restitution, and an order imposing 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 under the Act:
| 1. | Floridel violated Section 36b-16 of the Act through the offer and sale of securities in or from Connecticut to at least one investor, which securities were not registered in Connecticut under the Act, nor were they exempt from registration under Section 36b-21 of the Act, nor were they the subject of an exemption claim or claim of covered security status; |
| 2. | Floridel violated Section 36b-6(b) of the Act by engaging an unregistered agent of issuer; and |
| 3. | Floridel violated Section 36b-4(a) of the Act by, in connection with the offer, sale or purchase of any security, directly or indirectly employing a device, scheme or artifice to defraud, making an untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in an act, practice or course of business which operates or would operate as a fraud or deceit upon any person; |
WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting Floridel an opportunity for a hearing;
AND WHEREAS, Floridel acknowledges the possible consequences of an administrative hearing and voluntarily agrees to consent to the entry of the sanctions described below.
IV. CONSENT TO ENTRY OF SANCTIONS
WHEREAS, Floridel, through its execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing on it the following sanctions:
| 1. | Floridel shall cease and desist from engaging in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act, either directly or through any person, organization or other device, including without limitation, violating Sections 36b-16, 36b-6(b) and 36b-4(a) of the Act, and shall comply with the Act, its regulations and any order under the Act; |
| 2. | Based on the contents of the Financial Documentation submitted to the Division, enforcement of the Order to Make Restitution contained in the Notice shall be temporarily stayed against Floridel or its successors and assigns for three years from the date this Consent Order is entered by the Commissioner, provided that such stay shall no longer be in force and effect, and Floridel and/or its successors and assigns will be obligated to immediately pay restitution, if the Commissioner ascertains at any time that (a) Floridel or its successors and assigns are able to pay restitution to affected investors; or (b) Floridel failed to disclose any material asset, materially misstated the value of any asset or made any other material misstatement or omission in the Financial Documentation or any update to the Financial Documentation filed with the department. For so long as the temporary stay referenced in this paragraph remains in effect, Floridel or its successors and assigns shall file with the agency at least annually updated financial documentation demonstrating their continuing eligibility for the relief provided in this paragraph and supplementing such filing with information on restitutionary payments, if any, made to affected investors by Floridel or by any other third party identified by Floridel that has made such payments. Floridel, through its execution of this Consent Order, knowingly, wilfully and voluntarily waives its right to notice and an administrative hearing in conjunction with the implementation of this paragraph; provided, however, that, prior to invoking any enforcement measures contemplated by this paragraph, the Commissioner shall provide Floridel with an informal opportunity to demonstrate its compliance with this Consent Order. |
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 Floridel based upon a violation of this Consent Order if the Commissioner determines that compliance with the terms herein is not being observed or if any representation made by Floridel and reflected herein is subsequently determined to be untrue; |
| 3. | Nothing in this Consent Order shall be construed as limiting the Commissioner’s ability to take enforcement action against Floridel 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; and |
| 4. | This Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut, | _____/s/____________ | |
| this 15th day of October 2015. | Jorge L. Perez | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Steve Ruff, state on behalf of Floridel, LLC, that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of Floridel, LLC; that Floridel, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Floridel, LLC consents to the entry of this Consent Order.
| Floridel, LLC | |
| By: | ___/s/_________ |
| Steve Ruff | |
| Managing Member |
State of: Florida
County of: Seminole
On this the 13 day of October 2015, before me, the undersigned officer, personally appeared Steve Ruff, who acknowledged himself to be the Managing Member of Floridel, LLC and that he, as such Managing Member, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the entity by himself as the Managing Member.
In witness whereof I hereunto set my hand.
| ____/s/____________________________________ |
| Sarah J. Hart |
| Notary Public |
| Date Commission Expires: 06/20/2017 |