DOB: News Bulletin 2401 - February 26, 2010

 
The Department of Banking News Bulletin 

Bulletin # 2401
Week Ending February 26, 2010

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 Howard F. Pitkin, Banking Commissioner, at the Connecticut Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800 or via E-mail. Written comments will be considered only if they are received within ten days from the date of this bulletin.


 
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Modification to Order Imposing Fine Issued

On February 24, 2010, the Banking Commissioner issued a Modification to Order Imposing Fine with respect to Carlos E. Conde.  Respondent Conde, together with Commonwealth Exploration Corporation of 2002 Summit Boulevard, Suite 1225, Atlanta Georgia, and Derek M. Lofton had been the subject of a June 30, 2009 Order to Cease and Desist and Notice of Intent to Fine.  The Order to Cease and Desist, being, uncontested, had become permanent against Carlos E. Conde on August 7, 2009.  A hearing on the Notice of Intent to Fine was held on August 11, 2009.  Respondent Conde did not appear at the hearing.  On December 3, 2009, the Commissioner adopted the hearing officer’s Findings of Fact and Conclusions of Law resolving certain allegations in the Notice of Intent to Fine.  The Findings of Fact and Conclusions of Law had stated that a fine against respondent Conde was not supported.  On December 18, 2009, counsel for the Division filed with the Commissioner a Petition for Reconsideration which was subsequently granted.
 
The February 24, 2010 Modification to Order Imposing Fine concluded that respondent Conde had committed three violations of Section 36b-16 of the Connecticut Uniform Securities Act; three violations of Section 36b-4(a) of the Act; and one violation of Section 36b-6(b) of the Act.  The Modification to Order Imposing Fine also concluded that, although the facts did not support the imposition of the maximum fine against respondent Conde, a fine of $85,000 was appropriate.
 
Order to Cease and Desist, Notice of Intent to Fine
and Notice of Right to Hearing Issued
 
On February 26, 2010, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing against Forman Financial Services, LLC of 60 Gillett Street, Suite 204, Hartford, Connecticut, and Rogers Forman, III of 125 Seymour Avenue, West Hartford, Connecticut and 201 Bingham Street, New Britain, Connecticut.  The action alleged that from at least December 21, 2007 through April 8, 2008, Forman Financial Services, LLC, through Rogers Forman, III. sold unregistered promissory note securities in contravention of Section 36b-16 of the Connecticut Uniform Securities Act.  The action also alleged that, in effecting the sales, Rogers Forman, III transacted business as an unregistered agent of issuer in violation of Section 36b-6(a) of the Act, and that Forman Financial Services, LLC employed Rogers Forman, III in that capacity in violation of Section 36b-6(b) of the Act.  The respondents were afforded an opportunity to request a hearing on the Order to Cease and Desist and the Notice of Intent to Fine.
 
Order to Cease and Desist, Notice of Intent to Fine
and Notice of Right to Hearing Issued
 
On February 26, 2010, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing against Nicholas Alexander Smirnow a/k/a Nick Smirnow of 2635 Hwy. #117, P.O. Box 66, Baysville, Ontario, Canada POB 1AO and 1013 Fairy Falls Road, Baysville, Ontario, Canada POB 1AO.  Respondent Smirnow purportedly did business under the names P-2-P Network and Pathway-2-Prosperity.  The action alleged that, from at least 2008, the respondent offered and sold unregistered membership interests in the Pathway-2-Prosperity high yield investment program in contravention of Section 36b-16 of the Connecticut Uniform Securities Act.
 
The Pathway-2-Prosperity  program allegedly offered four separate investment plans:  1) a 7 Day Plan whereby members could earn a net profit/dividend of 1.5% daily for the 7 days, on top of their initial deposit, resulting in a return of 10.5% over and above the initial deposit; 2) a 15 Day Plan whereby members could earn a net profit/dividend of 1.75% daily for the 15 days, on top of their initial deposit, resulting in a return of 26.25% over and above the initial deposit; 3) a 30 Day Plan whereby members could earn a net profit/dividend of 2% daily for the 30 days, on top of their initial deposit, resulting in a return of 60% over and above the initial deposit; and 4) a 60 Day Plan whereby members could earn a net profit/dividend of 2.67% daily for the 60 days, on top of their initial deposit, resulting in a return of 160.2% over and above the initial deposit.  In addition, the Pathway-2-Prosperity program allegedly represented to investors that the program “guarantee[d] every external deposit you make into ‘P-2-P Network’” and that returns were derived from the “piggy-backing” of Pathway-2-Prosperity’s “Personal & Private Portfolio.”
 
The action also alleged that respondent Smirnow violated the antifraud provisions in Section 36b-4(a) of the Act in that no meaningful explanation was offered to investors concerning how the Pathway-2-Prosperity program achieved the represented returns for each investment plan level; no meaningful explanation was offered to investors concerning the basis for the program’s claim that investor principal was guaranteed against loss; no disclosures were made to program members concerning exactly how member funds would be invested or the composition of Respondent’s personal and private portfolio; and no disclosures were made to program members concerning the identities of those persons managing program funds or any background information on the P-2-P Network.
 
Respondent Smirnow was afforded an opportunity to request a hearing on the Order to Cease and Desist and the Notice of Intent to Fine.

 
       Dated:  Tuesday, March 2, 2010
 
       Howard F. Pitkin
       Banking Commissioner