Securities and Business Investments Division
Securities Bulletin

Vol. XXVI  No. 1 - Spring 2012

Features

• Quarterly Statistical Summaries

• Administrative Orders and Notices 
• Consent Orders
• Stipulation and Agreements

Eric Wilder, Director
Cynthia Antanaitis, Assistant Director 

 
ADMINISTRATIVE ORDERS AND NOTICES

Stephen P. Pazdar – Order to Cease and Desist and Notice of Intent to Fine Issued 

On March 27, 2012, the Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CF-12-7943-S) against Stephen P. Pazdar of 64 Addison Road, Apartment 103, Glastonbury, Connecticut and 2077 Main Street, Glastonbury, Connecticut.  The action alleged that that 1) in April or May 2008, Stephen Pazdar approached two Connecticut residents to invest with Michael S. Goldberg, member of Michael S. Goldberg, LLC d/b/a Acquisitions Unlimited Group; and 2) Goldberg told investors that Acquisitions Unlimited Group liquidated distressed assets obtained from JP Morgan Chase Bank, thus enabling Goldberg to pay investors returns of up to 20% over the short term.  The two Connecticut residents ultimately invested $400,000 in total with Goldberg, and Stephen P. Pazdar received a $25,000 referral fee in connection with their investments.  Goldberg was ultimately charged with allegedly devising and executing a scheme to defraud investors of over $100 million over a 12 year period.  Goldberg pleaded guilty to three counts of wire fraud and was sentenced on May 16, 2011 to 120 months in prison on each count, the sentence to be served concurrently (United States v. Michael S. Goldberg, D. Conn., Criminal No. 3:10 CR192 (JCH)).

The action also alleged that Stephen Pazdar offered and/or sold unregistered securities in violation of Section 36b-16 of the Connecticut Uniform Securities Act and transacted business as an unregistered agent of issuer in violation of Section 36b-6 of the Act.

Stephen Pazdar was provided with an opportunity to request a hearing on the Order to Cease and Desist and Notice of Intent to Fine.

Point Stratford Development, LLC f/k/a Hollywood East/Area 51, LLC Fined $100,000; Order to Cease and Desist Made Permanent

On March 7, 2012, the Commissioner entered an Order Imposing Fine (Docket No. CF-11-7743-S) against Point Stratford Development, LLC f/k/a Hollywood East/Area 51, LLC of 550 Main Street, Stratford, Connecticut.  The company was a purported digital media and real estate development firm that sought investment capital to acquire a former military aircraft assembly plant in Stratford that was being auctioned off by the U.S. General Services Administration.  The action had been preceded by a December 12, 2011 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing alleging that respondent Point Stratford Development, LLC sold unregistered Hollywood East securities to investors in violation of Section 36b-16 of the Connecticut Uniform Securities Act.  The December 12, 2011 action had also alleged that Point Stratford Development, LLC violated the antifraud provisions in Section 36b-4(a) of the Act by failing to provide investors with any financial information concerning the respondent; failing to disclose the unregistered status of Hollywood East’s agents; failing to disclose that the Hollywood East securities would be sold to individuals who were not accredited investors; and failing to disclose the estimated cash proceeds of the securities offering.  The December 12, 2012 action had further alleged that respondent Point Stratford Development, LLC failed to disclose specific risks to investors, including risks related to the investment and acquisition of the proposed site from the federal government, including remediation costs; the risk that an economic development bond to fund the project might not be procured; the risk that Hollywood East’s property bid and deposit would be submitted in the name of an unrelated entity; and the risk that Hollywood East, if successful on the bid, would be unable to secure funds for the full purchase price, leading to a default and the forfeiture of Hollywood East’s $1 million deposit.

Since Point Stratford Development, LLC did not request a hearing on the Order to Cease and Desist, the Order to Cease and Desist became permanent on December 29, 2011.  In fining the respondent $100,000, the Commissioner incorporated as findings the facts set forth in the December 12, 2011 action.  Point Stratford Development, LLC did not appear or contest the imposition of the fine.

Hector Natera Fined $100,000; Order to Cease and Desist Made Permanent

On March 7, 2012, the Commissioner entered an Order Imposing Fine (Docket No. CF-11-7743-S) against Hector Natera, managing member of Point Stratford Development, LLC f/k/a Hollywood East/Area 51, LLC of 550 Main Street, Stratford, Connecticut.  Hollywood East/Area 51, LLC was a purported digital media and real estate development company that sought investment capital to acquire a former military aircraft assembly plant in Stratford, Connecticut that was being auctioned off by the U.S. General Services Administration.  The action had been preceded by a December 12, 2011 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing alleging that, during 2007 and 2008, respondent Natera sold unregistered Hollywood East securities to investors in violation of Section 36b-16 of the Connecticut Uniform Securities Act and transacted business as an unregistered agent of issuer in violation of Section 36b-6 of the Act.  The December 12, 2011 action had also alleged that respondent Natera violated the antifraud provisions in Section 36b-4(a) of the Act by failing to provide investors with any financial information concerning the Point Stratford Development, LLC; failing to disclose the unregistered status of Hollywood East’s agents; failing to disclose that the Hollywood East securities would be sold to individuals who were not accredited investors; and failing to disclose the estimated cash proceeds of the securities offering.  The action had further alleged that respondent Natera failed to disclose specific risks to investors, including risks related to the investment and acquisition of the proposed site from the federal government, including remediation costs; the risk that an economic development bond to fund the project might not be procured; the risk that Hollywood East’s property bid and deposit would be submitted in the name of an unrelated entity; and the risk that Hollywood East, if successful on the bid, would be unable to secure funds for the full purchase price, leading to a default and the forfeiture of Hollywood East’s $1 million deposit.

Since respondent Natera did not request a hearing on the Order to Cease and Desist, the Order to Cease and Desist became permanent on February 2, 2012.  In fining respondent Natera $100,000, the Commissioner incorporated as findings the facts set forth in the December 12, 2011 action.  Hector Natera  did not appear or contest the imposition of the fine.

Yvette Cuccaro Fined $10,000; Order to Cease and Desist Made Permanent

On March 7, 2012, the Commissioner entered an Order Imposing Fine (Docket No. CF-11-7743-S) against Yvette Cuccaro  of North Haven, Connecticut.  The action had been preceded by a December 12, 2011 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing against respondents Cuccaro, Point Stratford Development, LLC f/k/a Hollywood East/Area 51, LLC and Hector Natera.  Hollywood East/Area 51, LLC was a purported digital media and real estate development company that sought investment capital to acquire a former military aircraft assembly plant in Stratford, Connecticut that was being auctioned off by the U.S. General Services Administration.  The December 12, 2011 action had alleged that, during 2007 and 2008, the respondents sold unregistered Hollywood East securities to investors in violation of Section 36b-16 of the Connecticut Uniform Securities Act, and that respondent Cuccaro transacted business as an unregistered agent of issuer in violation of Section 36b-6 of the Act.

Since respondent Cuccaro did not request a hearing on the Order to Cease and Desist, the Order to Cease and Desist became permanent on February 2, 2012.

In fining respondent Cuccaro $10,000, the Commissioner incorporated as findings the facts relating to respondent Cuccaro contained in the December 12, 2011 action.  Yvette Cuccaro did not appear or contest the imposition of the fine.

Movies for a Better World, LLC Fined $50,000; Order to Make Restitution and Order to Cease and Desist Become Permanent

On March 5, 2012, the Banking Commissioner issued a Certification rendering permanent an October 28, 2011 Order to Cease and Desist and Order to Make Restitution (Docket No. CRF-11-7852-S) issued against Movies for a Better World, LLC.  The October 28, 2011 action had also included a Notice of Intent to Fine.  Movies for a Better World, LLC is a purported film, music and literary development company located at 1 Glenville Street, Greenwich, Connecticut.  The October 28, 2011 action had alleged that, in 2009, the Movies for a Better World, LLC and its president, Michael J. Martineau, offered and sold unregistered securities in violation of Section 36b-16 of the Connecticut Uniform Securities Act, and that Michael J. Martineau transacted business as an unregistered agent of issuer.  In addition, the action had alleged that the respondents violated the antifraud provisions of the Act by failing to disclose to investors any risk factors related to the investment; financial information relating to the issuer or the performance of its prior development projects; financial or background information on the issuer’s principals; compensation paid to the issuer’s principals and affiliates; the estimated cash proceeds of the offering; how the offering proceeds would be applied; and material litigation involving the principals of the issuer.

Since Movies for a Better World, LLC did not request a hearing on the Order to Cease and Desist and the Order to Make Restitution, each of those orders became permanent on November 17, 2011.  The restitutionary order obligated Movies for a Better World, LLC to provide the Commissioner with documentation concerning the identities of affected investors, the amounts invested and refunds made to any of the investors.  The restitutionary order also obligated Movies for a Better World, LLC to reimburse investors sums invested plus interest for the period  from August 1, 2009 to November 17, 2011.

On March 7, 2012, the Commissioner entered an Order Imposing Fine against Movies for a Better World, LLC.  Incorporating as findings the facts set forth in the October 28, 2011 action, the Commissioner fined the firm $50,000.  Movies for a Better World, LLC did not appear or contest the imposition of the fine.

Michael J. Martineau Fined $50,000; Order to Make Restitution and Order to Cease and Desist Become Permanent

On March 5, 2012, the Banking Commissioner issued a Certification rendering permanent an October 28, 2011 Order to Cease and Desist and Order to Make Restitution (Docket No. CRF-11-7852-S) issued against Michael J. Martineau, president of Movies for a Better World, LLC.  The October 28, 2011 action had also included a Notice of Intent to Fine.  Movies for a Better World, LLC is a purported film, music and literary development company located at 1 Glenville Street, Greenwich, Connecticut.  The October 28, 2011 action had alleged that, in 2009, the Movies for a Better World, LLC and its president, Michael J. Martineau, offered and sold unregistered securities in violation of Section 36b-16 of the Connecticut Uniform Securities Act, and that Michael J. Martineau transacted business as an unregistered agent of issuer.  In addition, the action had alleged that the respondents violated the antifraud provisions of the Act by failing to disclose to investors any risk factors related to the investment; financial information relating to the issuer or the performance of its prior development projects; financial or background information on the issuer’s principals; compensation paid to the issuer’s principals and affiliates; the estimated cash proceeds of the offering; how the offering proceeds would be applied; and material litigation involving the principals of the issuer.

Since Michael J. Martineau did not request a hearing on the Order to Cease and Desist and the Order to Make Restitution, each of those orders became permanent on February 2, 2012.  Mailings of the orders were returned to the department as unclaimed.  The restitutionary order obligated respondent Martineau to provide the Commissioner with documentation concerning the identities of affected investors, the amounts invested and refunds made to any of the investors.  The restitutionary order also obligated respondent Martineau to reimburse investors sums invested plus interest for the period  from August 1, 2009 to February 2, 2012.

On March 7, 2012, the Commissioner entered an Order Imposing Fine against Michael J. Martineau.  Incorporating as findings the facts set forth in the October 28, 2011 action, the Commissioner fined respondent Martineau $50,000.  Michael J. Martineau did not appear or contest the imposition of the fine.

Southridge Investment Group LLC f/k/a Greenfield Capital Partners LLC (CRD # 45531) Fined $250,000, Broker-dealer Registration Revoked

On February 9, 2012, the Banking Commissioner issued an Order to Cease and Desist, Order to Revoke Registration as Broker-dealer and Order Imposing Fine (Docket No. RCF-2009-7741-S) against Southridge Investment Group LLC, a broker-dealer located at 90 Grove Street, 2nd Floor, Ridgefield, Connecticut.  The firm did not appear or contest the Commissioner’s action which followed an October 20, 2009 Order to Cease and Desist, Notice of Intent to Revoke Registration as Broker-dealer, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. RCF-2009-7741-S).

In revoking the firm’s registration, rendering the October 20, 2009 Order to Cease and Desist permanent and fining the firm $250,000, the Commissioner adopted the conclusions reached in the October 20, 2009 Notice.  The Commissioner determined that the firm violated Sections 36b-14, 36b-16 and 36b-23 of the Connecticut Uniform Securities Act as well as Sections 36b-31-6f and 36b-31-15e of the Regulations.  In particular, the Commissioner noted that the firm:  1) violated Section 36b-16 of the Connecticut Uniform Securities Act by selling unregistered securities; 2) violated National Association of Securities Dealers’ Registration Rule 1021 by allowing one Stephen Murray Hicks (CRD No. 1248222) to act as an unregistered principal of the firm; 3) failed to protect material, non-public information and therefore failed to establish a system for applying written supervisory procedures that would reasonably be expected to prevent and detect regulatory violations; 4) failed to maintain business-related e-mails in contradiction of the firm’s Supervisory Manual; and 5) failed to submit fingerprints to the Attorney General of the United States for identification and processing in contradiction of the firm’s Supervisory Manual.

Wadsworth Investment Co., Inc. (CRD # 5844) and William F. Wadsworth, Sr. (CRD # 456251) - Sanctions Imposed Following Administrative Hearing

On February 7, 2012, the Banking Commissioner entered Findings of Fact, Conclusions of Law and an Order (Docket No. CFNR-10-7779-S) against Wadsworth Investment Co., Inc., a registered broker-dealer located at 879 Church Street, Route 68, Wallingford, Connecticut, and William F. Wadsworth, Sr., a control person of the firm.  The Respondents, together with Portfolio Timing Service d/b/a PTS Asset Management (CRD # 111047) and William F. Wadsworth, Jr. (CRD # 1987068), had been the subject of a June 1, 2011 Amended and Restated Order to Cease and Desist, Notice of Intent to Revoke Registration as a Broker-dealer, Notice of Intent to Revoke Registration as a Broker-dealer Agent, Notice of Intent to Revoke Registration as an Investment Adviser Agent and Notice of Intent to Fine (Docket No. CFNR-10-7779-S).

The allegations relating to Respondents Portfolio Timing Service d/b/a PTS Asset Management and William F. Wadsworth, Jr. were resolved in two separate consent orders entered on September 19, 2011.

In the February 7, 2012 action, the Commissioner determined that Wadsworth Investment Co., Inc. 1) failed to maintain books and records, particularly e-mail records, in wilful violation of Section 36b-14(a) of the Connecticut Uniform Securities Act and Section 36b-31-14a of the Regulations under the Act; 2) wilfully violated Section 36b-14(d) of the Act and Section 36b-31-14f of the Regulations by failing to make required books and records, particularly corporate records, available to the Commissioner; 3) wilfully violated Section 36b-31-6f of the Regulations by failing to establish, enforcement and maintain an adequate supervisory system, notably with respect to the firm's use of signature guarantees, allowing an unregistered individual to act as principal and failing to establish a policy to monitor electronic communications; 4) together with William F. Wadsworth, wilfully violated the antifraud provisions in Section 36b-4(a) of the Act by omitting material information in encouraging clients to switch from Oppenheimer funds to AIM funds; 5) together with William F. Wadsworth, wilfully engaged in dishonest or unethical practices by using signature guarantees in a manner that was inconsistent with industry standards, including guaranteeing the signature of a deceased individual; 6) engaged in dishonest or unethical practices by maintaining blank pre-signed forms and utilizing false names to mutual fund companies; 7) wilfully violated Section 36b-31-14e(a) of the Regulations by failing to update its registration to reflect a change in ownership of the firm; and 8) wilfully violated Section 36b-31-15e of the Regulations by failing to provide the agency with evidence that one of the firm's managers had passed the principal's examination.  The Commissioner also found that William F. Wadsworth wilfully violated Section 36b-23 of the Act by misrepresenting to the department that there had never been a complaint against him.

The February 7, 2012 Order directed that Wadsworth Investment Co., Inc.'s broker-dealer registration be revoked ninety days following entry of the Order, subject to the firm complying with certain restrictions, in which case revocation would be forestalled.  Specifically, the Order required the firm to take the following measures within the 90 day time frame:  1) designate a new president and full-time chief compliance officer to replace William F. Wadsworth.  For a three year period, the Commissioner's approval would be required to appoint any successor president or chief compliance officer; 2) submit to the department a plan permanently divesting William F. Wadsworth's ownership interest in the firm, permanently relocating the firm's offices to a location other than William F. Wadsworth's residence and notifying clients of changes to the firm's organizational structure and the existence of the February 7, 2012 Order; and 3) supply the department with evidence that the firm had complied with all requirements of the Order and had remedied all underlying conduct causing or contributing to the violations described in the Order.  After the expiration of the 90 day period, the Order directed the firm to ensure that William F. Wadsworth no longer 1) acted in any capacity for the firm, whether on a compensated or uncompensated basis; and 2) exercised direct or indirect control of the firm, including participating in corporate governance matters, training personnel and supervising the firm's daily operations, sales practices and compliance aspects.

The February 7, 2012 Order also revoked William F. Wadsworth's registrations as a broker-dealer agent and an investment adviser agent under the Act.  William F. Wadsworth, however, would be permitted, for a period of 60 days, to wind down his Connecticut business by liquidating transactions, transferring accounts, forwarding received checks, responding to regulatory inquiries and otherwise fielding client telephone calls for account servicing or document requests.

In addition, the February 7, 2012 Order fined Wadsworth Investment Co., Inc. $250,000 and also imposed a $200,000 fine against William F. Wadsworth, with payments due no later than 45 days following entry of the Order.

Finally, the Order rendered permanent the Amended and Restated Order to Cease and Desist issued against Wadsworth Investment Co., Inc. and William F. Wadsworth.

CONSENT ORDERS

Tatyana Andreyeva (CRD # 2875136) Fined $2,500 for Prior Unregistered Agent Activity

On March 27, 2012, the Commissioner entered a Consent Order (No. CO-12-7994-S) with respect to Tatyana Andreyeva, a New York resident.  The Consent Order alleged that Tatyana Andreyeva violated Section 36b-6(a) of the Connecticut Uniform Securities Act by transacting business as an unregistered broker-dealer agent of Westrock Advisors, Inc. (CRD number 114338) in February 2008 and as an unregistered broker-dealer agent of Aegis Capital Corp. (CRD number 15007) in October 2010.  Tatyana Andreyeva is currently registered as a broker-dealer agent of John Carris Investments LLC in Connecticut.

The Consent Order fined Tatyana Andreyeva $2,500 in resolution of the matter.

Michael H. Clinton Barred from Connecticut Securities Activity for Seven Years; Fined $7,500

On March 21, 2012, the Commissioner entered a Consent Order (No. CO-12-7990-S) with respect to Michael H. Clinton.  The Consent Order alleged that 1) Michael H. Clinton referred at least 19 Connecticut residents to invest with Michael S. Goldberg, member of Michael S. Goldberg, LLC d/b/a Acquisitions Unlimited Group; and 2) Goldberg told investors that Acquisitions Unlimited Group liquidated distressed assets obtained from JP Morgan Chase Bank, thus enabling Goldberg to pay investors returns of up to 20% over the short term.  Goldberg was ultimately charged with allegedly devising and executing a scheme to defraud investors of over $100 million over a 12 year period.  Goldberg pleaded guilty to three counts of wire fraud and was sentenced on May 16, 2011 to 120 months in prison on each count, the sentence to be served concurrently (United States v. Michael S. Goldberg, D. Conn., Criminal No. 3:10 CR192 (JCH)).  Goldberg is also involved in two Chapter 7 bankruptcy proceedings through which restitution to investors will be sought.

On September 13, 2010, the Bankruptcy Trustee and Michael H. Clinton entered into a Settlement Stipulation and Order following an action by the Bankruptcy Trustee against Clinton in the U.S. Bankruptcy Court, District of Connecticut, Hartford Division (James Berman, Chapter 7 Trustee v. Michael H. Clinton et al., Adv. Pro. No. 10-02-095 (ASD)).  Pursuant to the Settlement Stipulation and Order, Clinton, would pay $785,000 in settlement of the claims asserted by the Bankruptcy Trustee against Clinton.

The agency’s Consent Order also alleged that Michael H. Clinton violated Sections 36b-6(a) and 36b-16 of the Connecticut Uniform Securities Act by offering unregistered securities and transacting business as an unregistered agent.

The Consent Order barred Michael H. Clinton from transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent for seven years, and directed him to cease and desist from regulatory violations.  In addition, the Consent Order fined Michael H. Clinton $7,500 and required that he consult with Connecticut securities counsel regarding any future securities related activities.

Attilio Anthony Foschini (CRD # 1410327) Fined $2,500 for Alleged Ethical Irregularities

On February 17, 2012, the Banking Commissioner entered a Consent Order (No. CO-11-7811-S) with respect to Attilio Anthony Foschini, a registered broker-dealer agent and investment adviser agent under the Connecticut Uniform Securities Act.  The Consent Order alleged that three former clients contacted Attilio Foschini to sell securities in their accounts at Foschini’s previous broker-dealer; that Foschini, acting on behalf of those clients, placed calls on three occasions to his former firm and identified himself as the former clients in order to execute securities sales in the former clients’ accounts at the former firm; and that, at the time such conduct occurred, Foschini was not registered as a broker-dealer agent or an investment adviser agent under the Act.  The Consent Order stated that Foschini did not derive any financial gain from the transactions and believed that he had the clients’ consent to place the calls.  The Consent Order directed Foschini to cease and desist from regulatory violations and fined him $2,500.

STIPULATION AND AGREEMENTS

Fleming, Perry & Cox, Inc. (CRD # 119664) Assessed $2,050 for Engaging Two Unregistered Investment Adviser Agents

On March 9, 2012, the Commissioner entered into a Stipulation and Agreement (No. ST-12-7964-S) with Fleming, Perry & Cox, Inc., a Connecticut-registered investment adviser located at Two Stamford Plaza, 281 Tresser Boulevard, 4th Floor, Stamford, Connecticut.  The Stipulation and Agreement alleged that, from at least January 2008 through December 2010, the firm engaged two unregistered agents.  Since that time, one of the individuals became registered as an investment adviser agent of the firm under the Connecticut Uniform Securities Act and the other individual ceased to be an investment adviser agent of the firm.  The Stipulation and Agreement required the firm to refrain from violative conduct and to remit $2,050 to the department.  Of that amount, $1,500 constituted an administrative fine and $550 would be applied to reimburse the department for past due investment adviser agent registration fees.

STATISTICAL SUMMARY