DOB: News Bulletin 2085 - February 6, 2004

The Department of Banking News Bulletin 

Bulletin # 2085
Week Ending February 6, 2004

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.


BRANCH ACTIVITY

Section 36a-145 of the Connecticut General Statutes requires that each application for a branch, or for a limited branch at which loans will be made, be accompanied by a plan detailing how adequate services to meet the banking needs of all community residents will be provided. Plans are submitted when such applications are filed and are available for public inspection and comment at this Department for a period of 30 days. Questions concerning branch activity should be directed to the Financial Institutions Division, (860) 240-8180.
Note: dates are listed in month/day/year format.

State Bank Activity

Date Bank Location Activity
2/02/04 People's Bank
Bridgeport
FROM:  657 Farmington Avenue
           Bristol, CT  06010
TO:      603 Farmington Avenue
           Bristol, CT   06010
approved
to relocate

ACQUISITION

On February 6, 2004, pursuant to Section 36a-412(a)(1) of the Connecticut General Statutes, as amended by Public Act 03-196, Citizens Bank of Rhode Island, a Rhode Island chartered bank, filed an application to acquire a significant part of the assets of Peopleís Bank, a Connecticut bank, which will be effected in accordance with Section 36a-210(b) of the Connecticut General Statutes, as amended by Public Acts 03-196 and 03-259.

MONEY TRANSMITTER LICENSE ACTIVITY

On February 2, 2004, pursuant to Sectioned 36a-600 of the Connecticut General Statutes, Jamaica National Overseas (USA) Inc., Brooklyn, New York, filed an application to engage in the business of money transmission.

On February 2, 2004, VISTA International Remittance, New Britain, Connecticut, which had applied on August 13, 2003, to engage in the business of money transmission, withdrew its application.

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Investment Adviser Registration Denied; Application to Withdraw
Registration Made Effective

On February 2, 2004, the Commissioner entered an Order Effecting Withdrawal of Application for Registration as Investment Adviser and Denying Application for Registration as Investment Adviser. The order was entered against Absolute Capital Management, LLC of 101 Pennsylvania Boulevard, Pittsburgh, Pennsylvania. Absolute Capital Management, LLC had been the subject of a related September 4, 2003 Notice of Intent to Deny Registration issued by the Commissioner. The Notice of Intent to Deny Registration had alleged that respondentís managing director, Phillip Brenden Gebben, had been ordered by the U.S. District Court for the Central District of Illinois to disgorge $10,208.50 in profits and to pay a $10,000 civil penalty for violating the antifraud provisions in Section 10(b) of the Securities Exchange Act of 1934 and Section 17(b) of the Securities Act of 1933 in conjunction with promotional Internet postings and the distribution of certain advisory. The Notice of Intent to Deny Registration had also claimed that such conduct constituted a dishonest or unethical practice in the securities business within the meaning of Section 36b-31-15a(a) of the Regulations under the Connecticut Uniform Securities Act and therefore constituted a basis to deny the firmís investment adviser registration in Connecticut.

The respondent did not contest the denial of its registration.

Notice of Intent to Revoke Registration as Broker-dealer Issued

On February 2, 2004, the Commissioner issued a Notice of Intent to Revoke Registration as Broker-dealer with respect to Indianapolis Securities, Inc. of 4729 North Congress Avenue, Boynton Beach, Florida and 139 North Central Avenue, Suite 4, Valley Stream, New York. Although the firm had filed a request to withdraw its registration on November 4, 2003, Section 36b-15(e)(1) of the Connecticut Uniform Securities Act permits the initiation of revocation proceedings within one year. The Notice of Intent to Revoke Registration as Broker-dealer was based on allegations that: 1) on July 30, 2003, the United States District Court for the District of Columbia had entered a preliminary injunction by consent against the respondent prohibiting it from violating the antifraud provisions of the federal securities laws; 2) on October 29, 2003, the Division of Securities of the Wisconsin Department of Financial Institutions had revoked the respondentís registration as a broker-dealer after finding that the respondent executed orders for the sale of unregistered securities, recommended that a customer engage the services of an unregistered investment adviser, broker-dealer or agent, engaged in unauthorized trading; and made material misrepresentations to, and withheld information from, the Wisconsin Division of Securities; and 3) on November 4, 2003, the NASD suspended the respondent for failing to pay arbitration fees pursuant to NASD Rule 9531. The respondent was afforded an opportunity to request a hearing on the Notice of Intent to Revoke Registration as Broker-dealer.

Notice of Intent to Revoke Registration as Agent Issued

On February 2, 2004, the Commissioner issued a Notice of Intent to Revoke Registration as Agent with respect to Ari Dinov of 1918 East 9th Street, Brooklyn, New York. The respondent was last associated with the securities brokerage firm of Indianapolis Securities, Inc. until his September 4, 2003 request to withdraw his Connecticut agent registration. Section 36b-15(e)(1) of the Connecticut Uniform Securities Act permits the initiation of revocation proceedings within one year. The Notice of Intent to Revoke Registration as Agent was based on allegations that on July 30, 2003, the United States District Court for the District of Columbia had entered a preliminary injunction by consent against the respondent prohibiting him from violating the antifraud provisions of the federal securities laws. The respondent was afforded an opportunity to request a hearing on the Notice of Intent to Revoke Registration as Agent.

Notice of Intent to Deny Registration as Broker-dealer,
Order to Cease and Desist and Notice of Intent to Fine Issued

On February 4, 2004, the Commissioner issued a Notice of Intent to Deny Registration as Broker-dealer, Order to Cease and Desist and Notice of Intent to Fine with respect to Schoff & Baxter, Inc. of 203 Washington Street, Burlington, Iowa. Although the firm had filed a request to withdraw its registration application, Section 36b-15(e)(1) of the Connecticut Uniform Securities Act permits the initiation of denial proceedings within one year following the effective date of the withdrawal. The action was based on allegations that 1) at various times between November 1997 and at least February 2002, the respondent transacted business as a broker-dealer absent registration in violation of Section 36b-6(a) of the Act and employed at least one unregistered agent in violation of Section 36b-6(b) of the Act; 2) the respondent violated Section 36b-23 of the Act by filing with the Commissioner a false or misleading statement concerning the scope of its prior unregistered activity in Connecticut; 3) on January 11, 2001, the Superior Court of the State of California, County of Los Angeles, permanently enjoined the respondent from violating Californiaís securities laws and fined the respondent $150,505.90 for lapses in supervision; 4) the respondent was the subject of an April 26, 2002 NASD censure based upon alleged supervisory deficiencies; and 5) on March 7, 2003, the NASD fined the respondent $15,000 for permitting registered representatives to perform duties as registered persons while their registration status was inactive due to a failure to complete continuing education requirements. The respondent was afforded an opportunity to request a hearing on the Order to Cease and Desist and the Notice of Intent to Deny Registration as Broker-dealer. A hearing on the Notice of Intent to Fine has been set for April 27, 2004.

Pennsylvania Man Permanently Barred from the Securities Business;
Order to Cease and Desist Becomes Permanent

On February 5, 2004, the Commissioner entered a Consent Order resolving the allegations in the agencyís November 19, 2003 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing against Jan Lewandowski a/k/a Jan Lewan of 685 Grand Street, Hazelton, Pennsylvania. The Order to Cease and Desist and Notice of Intent to Fine had alleged that from June 1992 to April 5, 2002, the respondent sold unregistered non-exempt promissory notes of Jan Lewan Show Gifts, Inc. and J.R.D. Productions, Inc. to Connecticut investors in violation of Section 36b-16 of the Connecticut Uniform Securities Act, and, in so doing, transacted business as an unregistered agent of issuer. Respondent Lewandowski was the president of both Jan Lewan Show Gifts, Inc. and J.R.D. Productions, Inc. In entering the Consent Order, the Commissioner observed that 1) the respondent had demonstrated economic hardship and was incapable of paying a fine; 2) the respondent had pled guilty to racketeering, theft, sale of unregistered securities, sale of securities by an unregistered agent and securities fraud relating to note sales in the state of Delaware for which he had been sentenced to five years in prison; and 3) the respondent had pled guilty to charges of mail and wire fraud in the U.S. District Court for the Middle District of Pennsylvania, and, as part of that plea, had agreed to make restitution to note investors, including those in Connecticut. The Consent Order permanently barred the respondent from transacting business in Connecticut as an agent, investment adviser agent, broker-dealer or investment adviser. In addition, the Consent Order rendered the November 19, 2003 Order to Cease and Desist permanent as of February 5, 2003 and withdrew the November 19, 2003 Notice of Intent to Fine.

Order to Cease and Desist, Notice of Intent to Revoke Registrations as Agent and Investment Adviser Agent and Notice of Intent to Fine Issued in Conjunction With Sales of Hedge Fund Interests

On February 5, 2004, the Commissioner issued an Order to Cease and Desist, Notice of Intent to Revoke Registrations as Agent and Investment Adviser Agent and Notice of Intent to Fine against Wilder Douglas Carnes of 150 A Hanover Road, Newtown, Connecticut. The respondent is registered as an agent and investment adviser agent of Quick & Reilly, Inc. in Southbury, Connecticut. The respondent was also the co-manager of Criterion Investment Capital LLC, an entity that acted as the general partner of the Criterion Investment Fund I L.P., a Connecticut-based hedge fund. Criterion Investment Fund I L.P. was co-managed by the respondent and by Eddie Papic. The action alleged that, in connection with offers and sales of hedge fund interests effected from at least January 2001 to January 2002, the respondent violated the antifraud provisions in Section 36b-4 of the Connecticut Uniform Securities Act by 1) not disclosing that, contrary to representations made to prospective investors, hedge fund interests were being sold for less than $500,000 to non-accredited investors; 2) not disclosing that, although the offering circular represented that the hedge fundís objective was to achieve long term appreciation, the average investment was only 19 days in duration; 3) not disclosing that, contrary to representations made in the offering circular, hedge fund trading focused on options; and 4) failing to disclose the respondentís 1999 bankruptcy. In addition, the action claimed that the respondent 1) violated Section 36b-31-14e(a) of the Regulations under the Act by failing to update his Form U-4 to disclose the departmentís pending investigation; and 2) contravened Section 36b-6(c) of the Act by transacting business as an unregistered investment adviser agent in conjunction with his hedge fund activities.

The respondent was afforded an opportunity to request a hearing on the Order to Cease and Desist and the Notice of Intent to Revoke Registrations as Agent and Investment Adviser Agent. A hearing on the Notice of Intent to Fine has been scheduled for May 4, 2004.

 Order to Cease and Desist and Notice of Intent to Fine Issued
in Conjunction With Sales of Hedge Fund Interests

On February 5, 2004, the Commissioner issued an Order to Cease and Desist and Notice of Intent to Fine against Eddie Papic of 58 Camp Avenue, Darien, Connecticut. The respondent was the co-manager of Criterion Investment Capital LLC, an entity that acted as the general partner of the Criterion Investment Fund I L.P., a Connecticut-based hedge fund. Criterion Investment Fund I L.P. was co-managed by the respondent and by Wilder Douglas Carnes. The action alleged that, in connection with offers and sales of hedge fund interests effected from at least January 2001 to January 2002, the respondent violated the antifraud provisions in Section 36b-4 of the Connecticut Uniform Securities Act by 1) misrepresenting the performance of the hedge fund to prospective investors; 2) misrepresenting the amount of total deposits in the fund; 3) not disclosing that, contrary to representations made to prospective investors, hedge fund interests were being sold for less than $500,000 to non-accredited investors; 4) not disclosing that, although the offering circular represented that the hedge fundís objective was to achieve long term appreciation, the average investment was only 19 days in duration; 5) not disclosing that, contrary to representations made in the offering circular, hedge fund trading focused on options; and 6) failing to disclose the respondentís 1998 bankruptcy. In addition, the action claimed that the respondent violated Section 36b-6(c) of the Act by transacting business as an unregistered investment adviser agent in conjunction with his hedge fund activities.

The 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 scheduled for May 4, 2004.

Hedge Fund Manager Ordered to Cease and Desist
from Violating Antifraud Provisions; Notice of Intent to Fine Issued

On February 5, 2004, the Commissioner issued an Order to Cease and Desist and Notice of Intent to Fine against Criterion Investment Capital LLC of One Lafayette Place, Greenwich, Connecticut. The respondent, which was run by Eddie Papic and Wilder Douglas Carnes, is the general partner of Criterion Investment Fund I L.P., a Connecticut-based hedge fund. The action alleged that, in connection with offers and sales of hedge fund interests effected from at least January 2001 to January 2002, the respondent violated the antifraud provisions in Section 36b-4 of the Connecticut Uniform Securities Act by 1) not disclosing that, contrary to representations made to prospective investors, hedge fund interests were being sold for less than $500,000 to non-accredited investors; 2) not disclosing that, although the offering circular represented that the hedge fundís objective was to achieve long term appreciation, the average investment was only 19 days in duration; 3) not disclosing that, contrary to representations made in the offering circular, hedge fund trading focused on options; 4) misrepresenting the hedge fundís performance; 5) misrepresenting the fundís total deposits; and 5) failing to disclose the past bankruptcies of Eddie Papic and Wilder Douglas Carnes. In addition, the action claimed that the respondent violated Section 36b-6(c) of the Act by transacting business as an unregistered investment adviser and by employing Eddie Papic and Wilder Douglas Carnes as unregistered investment adviser agents.

The 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 scheduled for May 4, 2004.

Dated: Tuesday, February 10, 2004

John P. Burke
Commissioner