T he analysis is a summary only. See the order for the complete analysis and holding




ARIZONA CORPORATION COMMISSION—SECURITIES DIVISION


DECISION DIGEST (1986-present)



Docket Nbr

Judge

Decision Nbr

Date

Security

Respondents

Analysis/Holding

(The analysis is a summary only. See the order for the complete analysis and holding.)

S-03584A-05-0000

Stern

68159

9-23-05

Stock

Investment Contracts

Centenarios Gold, Inc.

Robert T he analysis is a summary only. See the order for the complete analysis and holding Timothy Watt aka Tim Watt

44-1841, 44-1842

Commission found that respondents were engaged in a public offering of securities by openly advertising in a newspaper of general circulation and via the internet. The securities were “founders shares T he analysis is a summary only. See the order for the complete analysis and holding” of stock or some form of an investment contract termed a “grub stake arrangement” in a gold mining scheme. The unregistered offering was conducted by an unregistered dealer and/or salesman. A violation T he analysis is a summary only. See the order for the complete analysis and holding of the Securities Act neither requires an intentional act by the violator nor the offer to be in well-defined form. The Commission found no evidence that any sales of securities were T he analysis is a summary only. See the order for the complete analysis and holding мейд to any investors. The Commission ordered respondents to cease and desist from future violations and to pay administrative penalties.

S-03580A-04-0000

Stern

67931

6-9-05

Promissory notes

Investment Contracts

John E. Hannon and Rebecca F. Shannon

Gary T he analysis is a summary only. See the order for the complete analysis and holding R. Shannon

44-1841, 44-1842, 44-1991

Notes and contracts used to raise capital for an entity engaged in the business of purchasing and leasing back automobiles held to be securities; Promissory notes and interests in automobile T he analysis is a summary only. See the order for the complete analysis and holding sale-lease-back programs held to be securities; securities and dealer registration violations found and antifraud violations found through omissions and misrepresentations of material fact, including: misrepresentation of the financial health of T he analysis is a summary only. See the order for the complete analysis and holding the business, failure to disclose inherent risks, failure to disclose past criminal convictions of the company’s business manager, misrepresentation of liquidity of investment, misrepresentation of credentials of business management and employees, misrepresentation T he analysis is a summary only. See the order for the complete analysis and holding of use of proceeds from sales of securities, and use of investor money to repay earlier investors.

S-03557A-04-0000

Stern

67776

5-2-05

Salesman revocation

Lonzo Archer

44-1962(A)(8)

Respondent was subject to an order of an administrative T he analysis is a summary only. See the order for the complete analysis and holding tribunal revoking his registration as a broker for at least six months. On January 27, 2004, the state of Washington entered a final order that revoked Mr. Archer’s registration as a securities salesman in T he analysis is a summary only. See the order for the complete analysis and holding Washington. While respondent may have had meritorious defenses to the state of Washington’s claims, he could not raise them in Arizona to defend against revocation pursuant to 44-1962(A)(8).

S-03435A T he analysis is a summary only. See the order for the complete analysis and holding-01-0000

Dion

66649

12-22-03

Salesman revocation

James T.M. Verbic

44-1962(A)(10), R14-4-130(15)

Respondent borrowed money or attempted to borrow money from a customer, who was neither a relative nor a person in the business of lending funds at the time T he analysis is a summary only. See the order for the complete analysis and holding of the loans. Registration was automatically suspended on January 3, 2000, when employment with dealer ended. Commission has authority to bring action and suspend or revoke salesman registration under 44-1963(D) and 44-1947(D). A T he analysis is a summary only. See the order for the complete analysis and holding registered or licensed individual is responsible for knowing and complying with the law applicable to his profession. Attempting to obtain loan from customer is dishonest or unethical conduct.

S-03450A T he analysis is a summary only. See the order for the complete analysis and holding-02-0000

Dion

66614

12-9-03

Salesman revocation

Philip William Merrill

44-1962, 44-1991

Respondent мейд unauthorized and unsuitable transactions in customer accounts constituting a fraud or deceit upon his clients. Omissions along with a failure to diversify investments held to be material omissions and T he analysis is a summary only. See the order for the complete analysis and holding misstatements. A high concentration of a specific security in a portfolio held to be unsuitable. Due to pattern and practice of making unauthorized and unsuitable transactions, registration as securities salesman revoked.

S T he analysis is a summary only. See the order for the complete analysis and holding-03415A-01-0000

Dion

65162

8-29-02

Promissory notes

Investment contracts

Easy Money Auto Leasing, Inc.

Superior Financial Services, Inc.

James Anthony Cicerelli

David P. French

44-1841, 44-1842, 44-1991

Promissory notes and interests in automobile sale-lease-back programs held to be securities; securities and T he analysis is a summary only. See the order for the complete analysis and holding dealer registration violations found and antifraud violations found through omissions and misrepresentations of material fact, including: promissory notes were secured by adequate collateral, investments liquid and insured against loss, no risk associated with T he analysis is a summary only. See the order for the complete analysis and holding investments, financial condition, business experience, market competition, investor funds used to pay personal expenses, use of proceeds, expected investor returns, criminal record of key personnel, and securities industry experience. Commission found T he analysis is a summary only. See the order for the complete analysis and holding enterprise was a ponzi scheme.

S-03184A-97-0000

Wolfe

65160

8-29-02

Procedural order

Robert Shakman

Healthcare Purchasing Alliance, Inc.

44-2036(C), R14-3-112

Commission does not divest itself of jurisdiction to modify an order after the Commission has filed the T he analysis is a summary only. See the order for the complete analysis and holding order with the superior court. To modify a past order, the Commission must make a determination that modification would serve the public interest. The Commission has no authority to T he analysis is a summary only. See the order for the complete analysis and holding recognize/enforce private contracts between defrauded investors.

S-00329A-01-0000

Dion



64849

5-03-02

Investments in medical clinic



Early Detection Centers

Johnathon Roberts, Inc.

David Hitzig

Paul C. Woodcock


44-1841, 44-1842, 44-1991

Investments in a medical clinic held to be securities; securities and dealer registration found and T he analysis is a summary only. See the order for the complete analysis and holding antifraud violations found through omissions and misrepresentations of material fact, including failure to disclose risk factors, information regarding key personnel, capitalization, plan of distribution, use of proceeds, tax consequences T he analysis is a summary only. See the order for the complete analysis and holding, and redemptions. Restitution ordered and administrative fine imposed.



S-03438A-00-0000

Stern

64672

3-26-02

Certificates of deposit, Viatical settlements

Investment contracts

The Chamber Group, Inc.

Joseph L. Hiland

Tyson J. Hiland

Travis D. Hiland

44-1841, 44-1842, 44-1991, 44-1999, 44-3151

Securities registration violations, broker-dealer registration violations T he analysis is a summary only. See the order for the complete analysis and holding, and investment adviser licensure violations found. The burden of proof regarding the applicability of an exemption rests with the party making the claim of exemption. Sale of brokered certificates of deposit were not T he analysis is a summary only. See the order for the complete analysis and holding exempt from registration requirements of the Securities Act. Commission has adopted test for investment contracts set forth in S.E.C. v. W.J. Howey. Tax lien certificates and money voucher machine programs found T he analysis is a summary only. See the order for the complete analysis and holding to be investment contracts. Citing Siporin v. Carrington, the Commission found viatical settlements were investment contracts and therefore securities, regardless of when Arizona Securities Act was amended to specifically T he analysis is a summary only. See the order for the complete analysis and holding define viatical settlements as securities. Evidence that one party: мейд sales presentations, trained personnel in sales presentation, created marketing material, and sold securities for respondent company was insufficient to find control person liability. Decision upheld T he analysis is a summary only. See the order for the complete analysis and holding on appeal to superior court. See CV 2002-008296.

S-03439A-00-0000

Stern

64559

2-22-02

Dealer/salesman revocation

Tower Equities, Inc.

Philip A. Lehman

444-1961(A)(9), 44-1962(A)(8), 44-1961(B) (currently reordered as subsection C)

Revocation of dealer and salesman registration T he analysis is a summary only. See the order for the complete analysis and holding under A.R.S. §§ 44-1961(A)(9), 44-1961(B), and 44-1962(A)(8) based upon SEC order to cease and desist violation of federal securities laws. Despite no Arizona investors, Commission stated that Arizona law is clear T he analysis is a summary only. See the order for the complete analysis and holding in favoring investor protection. Commission found SEC cease and desist order equivalent to a dealer being permanently enjoined by an administrative tribunal as required under A.R.S. § 44-1961(A)(9), citing National Labor Relations Board T he analysis is a summary only. See the order for the complete analysis and holding v. Colten, which found that a cease and desist order of NLRB, an administrative agency, was of the nature of an injunction.

S-03353A-00-0000

Rodda

64284

12-28-01

Promissory notes

Charles Ray Stedman

Wendell T T he analysis is a summary only. See the order for the complete analysis and holding. Decker, Jr.

Oxford Development, LLC

Profutura, LLC

CNT Family Fun Outlets, Inc.

Charles W. Testino, Jr.

Arizona Investment Advisors, Inc.

Keith B. “Skip” Davis

Keith B. Davis, Inc.

Spy Glass Enterprises, LLC

44-1841, 44-1842, 44-1991

Promissory notes issued by real estate development T he analysis is a summary only. See the order for the complete analysis and holding firm held to be securities; securities and dealer registration violations found and antifraud violations found through omissions and misrepresentations of material fact, including failure to disclose the terms and security of the T he analysis is a summary only. See the order for the complete analysis and holding notes, the use of proceeds, the risks of the investment, an inability to pay on previous notes, the background and financial condition of the principals, specifically a previous bankruptcy, a NASD T he analysis is a summary only. See the order for the complete analysis and holding censure and bar, termination of employment because of the sale of the subject notes, and that the notes were securities and were being sold to unaccredited investors.

S-03280A-00-0000

Stern

64005

8-30-01

Investment contracts

Certificates of participation T he analysis is a summary only. See the order for the complete analysis and holding in profit sharing agreement

Joseph Michael Guess, Sr.

Progressive Financial Management

James Douglas Sherriffs

Richard Gordon Davis

RGD

RGD Enterprises, Inc.

Ira Joe Patterson

Randall Wayne Smith, Jr.

Bally Overseas Trading Inc.

44-1841, 44-1842, 44-1991, 44-2032, 44-3101, 44-3151, 44-3241, A.A.C T he analysis is a summary only. See the order for the complete analysis and holding. R14-4-308.

Securities, salesman, and investment adviser registration and licensure violations found. Antifraud violations found through misrepresentation of material fact, including misrepresenting that a trading market existed for European discounted debt instruments from T he analysis is a summary only. See the order for the complete analysis and holding major banks guaranteeing a high rate of interest, investor funds would be invested in such a market, invested monies were guaranteed and such an investment was “safe”, payments to investor were interest or T he analysis is a summary only. See the order for the complete analysis and holding returns on investment when in fact the monies came from later investors, and invested funds were used for respondents’ personal expenses. Additionally, respondents failed to disclose their financial conditions to investors.

S T he analysis is a summary only. See the order for the complete analysis and holding-03361A-00-0000

Stern

63873

7-25-01

Stock


Calumet Slag, Inc.

Gareth N. Patton

Jeffrey G. Crawford

Matthew Hunziger

44-1841, 44-1842, 44-1991

Shares of common stock in slag mine held to be securities; securities and dealer registration violations found; antifraud violations found through omissions T he analysis is a summary only. See the order for the complete analysis and holding and misrepresentations of material fact, including failure to disclose a mechanics lien against company; pending litigation, the financial position of company, stock being purchased was respondent Patton’s personal shares in company, risks of T he analysis is a summary only. See the order for the complete analysis and holding investment in the company, investor funds were being used to pay respondent Patton’s personal expenses; and overstatement of the value of the company’s primary asset. Decision affirmed on appeal to T he analysis is a summary only. See the order for the complete analysis and holding superior court, February 25, 2003, CV 2001-017336. Decision affirmed on appeal to court of appeals, Memorandum Decision, February 26, 2004, 1 CA-CV 03-0419.


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