DOB: News Bulletin 2071 - October 31, 2003

The Department of Banking News Bulletin

Bulletin # 2071
Week Ending October 31, 2003

This bulletin constitutes the only official notification you will receive from this office concerning any of the following applications. Any observations you may have are solicited. Any comments should be in writing to John P. Burke, Commissioner of Banking, at the Connecticut Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800 or via E-mail to john.burke@ct.gov. Written comments will be considered only if they are received within ten days from the date of this bulletin.


CHECK CASHING SERVICE LICENSE ACTIVITY

On October 14, 2003, pursuant to Section 36a-581 of the Connecticut General Statutes, City Check Cashing, Inc. filed an application to operate a check cashing service general facility at 575 Talcottville Road, Unit C, Vernon, Connecticut.

On October 31, 2003, pursuant to Section 36a-581(d) of the Connecticut General Statutes, Connecticut State Check Cashing Service, Inc. filed an application to relocate its licensed check cashing service general facility from 201 Thomaston Avenue, Waterbury, Connecticut, to 95 Thomaston Avenue, Waterbury, Connecticut.

SECURITIES AND BUSINESS INVESTMENTS DIVISION
Order to Cease and Desist, Notice of Intent to Fine Issued
in Connection With Sale of Bogus Real Estate Limited Partnership Interests

On October 22, 2003, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing against Robert J. Kaczorowski of 439 Thoreau Street, Branford, Connecticut. The action alleged that, from at least December 20, 2003 to June 3, 2001, while registered as a broker-dealer agent of Jefferson Pilot Securities Corporation, 1) the respondent sold a promissory note as well as limited partnership interests in One Concept Park Limited Partnership and Tuscany Corners Limited Partnership to a Florida resident; 2) the promissory note and the limited partnership interests were sold absent registration under Section 36b-16 of the Connecticut Uniform Securities Act; and 3) the respondent failed to comply with Section 36b-31-6e of the Regulations under the Act governing private securities transactions by brokerage personnel. The action also claimed that the respondent violated the antifraud provisions of the Act by 1) not disclosing to the investor that the One Concept Park Limited Partnership interests and the Tuscany Corners Limited Partnership interests were fictitious; 2) representing that the limited partnership investments would be used to finance the purchase of commercial real estate when the funds were used by the respondent to pay his own living expenses; 3) forging the fictitious name "George Milano" to the investment acknowledgement letters; and 4) directing the investor to address investment checks to the respondent's girlfriend, since the investments were purportedly limited to Connecticut investors.

Respondent was afforded an opportunity to request a hearing on the Order to Cease and Desist. A hearing on the Notice of Intent to Fine has been set for December 18, 2003.

Order Conditioning Withdrawal of Broker-dealer Agent Application Issued

On October 22, 2003, the Banking Commissioner entered an Order conditioning the withdrawal of James Wilder Korth as an applicant for broker-dealer agent registration. On September 4, 2003, the Commissioner had issued a Notice of Intent to Deny the respondent's pending registration as a broker-dealer agent of J.W. Korth & Company. The Notice of Intent to Deny had alleged that, on January 21, 1998, the United States District Court for the Southern District of Florida found that James Wilder Korth violated Sections 17(a)(1) and 17(b) of the Securities Exchange Act of 1934 as well as Rule 17a-4(j) thereunder in refusing to provide the SEC with access to books and records required by law, and that the court had permanently enjoined the respondent from violating the federal securities laws (Securities and Exchange Commission v. J.W. Korth & Co., et al., 991 F.Supp. 1468; 1473-1474 (1998)).  In lieu of contesting the allegations in the Notice of Intent to Deny, the respondent sought to withdraw his application, and represented to the agency that he had transacted no securities business with Connecticut residents. The Order conditioning the respondent's withdrawal rendered that withdrawal effective as of October 22, 2003 subject to certain conditions: 1) for thirty-six months, the respondent would not reapply for registration in Connecticut as an agent of a broker-dealer or issuer, an investment adviser agent, a broker-dealer or an investment adviser; 2) during the thirty-six month period, the respondent would not rely on any definitional exclusion or exemption that would otherwise excuse registration by a person transacting business in Connecticut as a broker-dealer agent, an agent of an issuer, an investment adviser agent, a broker-dealer or an investment adviser; 3) at the conclusion of the thirty-six month period, the respondent could apply for registration as long as he furnished a written submission stating that he had not been the subject of any securities-related complaint, action or proceeding since the entry of the conditioning Order and had been in compliance with the conditioning Order; and 4) the respondent would not violate the Connecticut Uniform Securities Act or any rule, regulation or order under the Act. The conditioning Order also withdrew the September 4, 2003 Notice of Intent to Deny Registration.

Order Conditioning Withdrawal of Broker-dealer Application Issued

On October 22, 2003, the Banking Commissioner entered an Order conditioning the withdrawal of J.W. Korth & Company as an applicant for broker-dealer registration. On September 4, 2003, the Commissioner had issued a Notice of Intent to Deny the respondent's pending registration as a broker-dealer. The firm maintains its principal office at 32841 Middlebelt Road, Suite 400, Farmington Hills, Michigan. The Notice of Intent to Deny had alleged that, on January 21, 1998, the United States District Court for the Southern District of Florida found that the firm and its managing general partner, James Wilder Korth, violated Sections 17(a)(1) and 17(b) of the Securities Exchange Act of 1934 as well as Rule 17a-4(j) thereunder in refusing to provide the SEC with access to books and records required by law, and that the court had permanently enjoined J.W. Korth & Company from violating the federal securities laws (Securities and Exchange Commission v. J.W. Korth & Co., et al., 991 F.Supp. 1468; 1473-1474 (1998)). In lieu of contesting the allegations in the Notice of Intent to Deny, the respondent sought to withdraw its application, and represented to the agency that it had transacted no securities business with Connecticut residents. The Order conditioning the respondent's withdrawal rendered that withdrawal effective as of October 22, 2003 subject to certain conditions: 1) for thirty-six months, the respondent would not reapply for registration in Connecticut as a broker-dealer or investment adviser; 2) during the thirty-six month period, the respondent would not rely on any definitional exclusion or exemption that would otherwise excuse registration by a person transacting business in Connecticut as a broker-dealer or investment adviser; 3) at the conclusion of the thirty-six month period, the respondent could apply for registration as long as it furnished a written submission stating that it had not been the subject of any securities-related complaint, action or proceeding since the entry of the conditioning Order and had been in compliance with the conditioning Order; and 4) the respondent would not violate the Connecticut Uniform Securities Act or any rule, regulation or order under the Act.

The conditioning Order also withdrew the September 4, 2003 Notice of Intent to Deny Registration.

Barbara Alexis Blassingame Fined $20,000 for
Misleading Statements, Sale of Unregistered Securities

On October 28, 2003, the Banking Commissioner entered an Order Imposing Fine against Barbara Alexis Blassingame, president of Sterling Advance Marketing Inc., a division of Event Media, Inc. The company is located at 195 Carter Drive, Edison, New Jersey. Respondent Blassingame had been the subject of an August 18, 2003 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing issued by the department. The Order to Cease and Desist, being uncontested, had become permanent on September 19, 2003. In fining the respondent $20,000, the Commissioner found that 1) from at least March 2001 forward, respondent Blassingame sold unregistered, non-exempt securities in the form of Capital Contribution Agreements to Connecticut investors in violation of Section 36b-16 of the Connecticut Uniform Securities Act; and 2) respondent Blassingame violated the Act's antifraud provisions by misleading investors concerning the prospect of a) quarterly dividends, b) investors receiving a $500 gift in Enviro Foam, an affiliate of the respondent; and c) gifts of unspecified value in "The Power to Dream, Inc." as well as in an unnamed affiliate of the respondent. The same conduct had prompted the entry of the August 18, 2003 Order to Cease and Desist. The respondent did not contest the imposition of the fine.

New Jersey Firm Fined $20,000 for
Selling Unregistered Securities, Making Misleading Statements

On October 28, 2003, the Banking Commissioner entered an Order Imposing Fine against Sterling Advance Marketing, Inc., a division of Event Media, Inc. of 195 Carter Drive, Edison, New Jersey. The action followed an August 18, 2003 Order to Cease and Desist issued against the respondent with respect to the same matter and an August 18, 2003 Notice of Intent to Fine. The Order to Cease and Desist, being uncontested, had become permanent on September 19, 2003. In fining the respondent $20,000, the Commissioner found that 1) from at least March 2001 forward, the respondent sold unregistered, non-exempt securities in the form of Capital Contribution Agreements to Connecticut investors in violation of Section 36b-16 of the Connecticut Uniform Securities Act; and 2) the respondent violated the Act's antifraud provisions by misleading investors concerning the prospect of a) quarterly dividends, b) investors receiving a $500 gift in Enviro Foam, an affiliate of the respondent; and c) gifts of unspecified value in "The Power to Dream, Inc." as well as in an unnamed affiliate of the respondent. The respondent did not challenge the imposition of the fine.

Broker-dealer Fined $1,584,416 for Failing
to Maintain Analyst Independence

On October 28, 2003, the Banking Commissioner entered a Consent Order with respect to Citigroup Global Markets Inc. of 388 Greenwich Street, New York, New York. The firm is registered as a broker-dealer under the Connecticut Uniform Securities Act. The agency investigation culminating in the entry of the Consent Order focused on the firm's research practices for the period 1999 through 2001, and was part of similar investigations conducted by a multi-state task force and a joint task force of the SEC, the New York Stock Exchange and the National Association of Securities Dealers. The global resolution capping the investigations resulted in $150 million allocated to the states; $150 million representing the disgorgement of commissions and fees; $75 million to be earmarked for the procurement of independent research by the respondent; and $25 million to be used for investor education. The respondent also agreed to abide by certain undertakings designed to separate investment banking and research functions. In entering the Consent Order, the Commissioner found that the respondent had 1) violated Section 36b-4(a)(2) of the Act by issuing false and misleading research reports; 2) violated Section 36b-4(b) of the Act by (a) publishing research reports that contained exaggerated or unwarranted statements or claims, (b) failing to maintain procedures designed to prevent the sharing and misuse of material, non-public information between an affiliated person of respondent who served as a director of another company and a research analyst covering that company and (c) allocating hot IPO shares to officers of existing investment banking clients who sold the shares for a substantial profit; 3) violated Section 36b-31-14a of the Regulations under the Act by failing to maintain adequate records to ensure that its distributions of IPO shares were completed before the initiation of secondary market trading; and 4) violated Section 36b-31-6f(b) of the Regulations by failing to supervise employees engaged in "spinning."

The Consent Order mandated that the respondent cease and desist from violating the Connecticut Uniform Securities Act and its regulations and fined the respondent $1,574,416.

Dated: Tuesday, November 4, 2003

John P. Burke
Commissioner