DOB: Bulletin 2480 - Sept. 2, 2011

The Department of Banking News Bulletin 

Bulletin # 2480
Week Ending September 2,  2011

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.


 
CONSUMER CREDIT DIVISION ACTIVITY
Consent Orders
 
On July 14, 2011, the Commissioner entered into a Consent Order with Gold Coast Mortgage LLC (“Gold Coast Mortgage”).  The Consent Order was based on an examination by the Consumer Credit Division.  As a result of such examination, the Commissioner alleged that Gold Coast Mortgage employed or retained, during the period of May 4, 2009 through February 3, 2010, one (1) individual as a mortgage loan originator who was not licensed, in violation of Section 36a-486(b) of the Connecticut General Statutes.  As part of the Consent Order, Gold Coast Mortgage paid $1,000 as a civil penalty.
 
On July 20, 2011, the Commissioner entered into a Consent Order with Flaherty Funding Corporation d/b/a Mortgage Force d/b/a Compass Financial (“Flaherty Funding”).  The Consent Order was based on an examination by the Consumer Credit Division.  As a result of such examination, the Commissioner alleged that Flaherty Funding employed or retained, during the period of April 17, 2007 through December 16, 2009, nine (9) individuals as originators or mortgage loan originator without first registering them, or without such individuals being licensed, in violation of Sections 36a-486(b) and 36a-511(b) of the then applicable Connecticut General Statutes.  As part of the Consent Order, Flaherty Funding paid $9,000 as a civil penalty.
 

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Order Imposing Fine Issued
 
On August 26, 2011, the Banking Commissioner issued an Order Imposing Fine against CherryHomes Joint Venture of 3609 Williams Drive, Suite 105, Georgetown, Texas.  CherryHomes Joint Venture was formed for the purported purpose of oil and gas development in Texas.  The Order Imposing Fine had been preceded by a February 16, 2011 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing alleging that unregistered CherryHomes Joint Venture units had been sold to at least one elderly Connecticut investor by unregistered agents Lance David Brooks (CRD number 2111084) and Thomas C. Hanscome, and that insufficient disclosure was made concerning the material terms of the offering, including its risks.
 
In fining CherryHomes Joint Venture $100,000, the Commissioner found that the entity violated Sections 36b-4(a), 36b-4(b), 36b-6(b) and 36b-16 of the Connecticut Uniform Securities Act.  CherryHomes Joint Venture did not appear or contest the imposition of the fine.
 

Order Imposing Fine Issued
 
On August 26, 2011, the Banking Commissioner issued an Order Imposing Fine against Regal Royalty Resource of 10695 Wild Rose Court, McKinney, Texas.  The Order Imposing Fine had been preceded by a February 16, 2011 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing alleging that Regal Royalty Resource was an investment vehicle whose purpose was to enable investors to acquire precious metals, and that Regal Royalty Resource and Lance David Brooks sold unregistered securities to at least one elderly Connecticut investor while Brooks was not registered to sell securities in Connecticut.  According to the February 16, 2011 action, investors received no disclosures concerning the investment risks involved or Regal Royalty Resource’s ability to make the precious metals purchases, nor did investors receive independent credible evidence that the purchases had, in fact, been made.

In fining Regal Royalty Resource $100,000, the Commissioner found that the concern violated Sections 36b-4(a), 36b-4(b), 36b-6(b) and 36b-16 of the Connecticut Uniform Securities Act.  Regal Royalty Resource did not appear or contest the imposition of the fine.
 

Order Imposing Fine Issued
 
On August 26, 2011, the Banking Commissioner issued an Order Imposing Fine against Lance David Brooks of 10695 Wild Rose Court, McKinney, Texas.  The Order Imposing Fine had been preceded by a February 16, 2011 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing alleging that, starting in 2006, Brooks sold unregistered units in Texas-based CherryHomes Joint Venture and in Air-Byrd/River Joint Venture to at least one elderly Connecticut investor at a time when Brooks was not registered as an agent of issuer or in any other capacity under the Connecticut Uniform Securities Act.  The February 16, 2011 action had also alleged that insufficient disclosure was made to investors concerning investment risks.  In addition, the summary offering memorandum for Air-Byrd/River Joint Venture purportedly failed to disclose that, on January 7, 2005, the Commonwealth of Pennsylvania announced that it had entered a Summary Order to Cease and Desist against Brooks for violations of that state’s securities laws stemming from Brooks’ cold-calling Pennsylvania residents to invest in a separate joint venture.  The February 16, 2011 action had also alleged that Brooks, acting in an unregistered capacity, sold unregistered securities of Regal Royalty Resource, a precious metals investment vehicle, to one or more elderly Connecticut investors without providing investors with material disclosures concerning the investment.
 
In fining respondent Brooks $100,000, the Commissioner found that Brooks violated Sections 36b-4(a), 36b-4(b), 36b-6 and 36b-16 of the Act.  Respondent Brooks did not appear or contest the imposition of the fine.
 

Order Imposing Fine Issued
 
On August 26, 2011, the Banking Commissioner issued an Order Imposing Fine against Air-Byrd Operations LLC, the joint venture manager of Air-Byrd/River Joint Venture, a McKinney, Texas-based entity formed for the purported purpose of oil and gas development in Kansas.  The Order Imposing Fine had been preceded by a February 16, 2011 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing alleging that, from at least 2006, Air-Byrd Operations LLC made multiple sales of unregistered joint venture units to at least one elderly Connecticut investor absent material disclosures.
 
In fining Air-Byrd Operations LLC $100,000, the Commissioner found that the respondent violated Sections 36b-4(a), 36b-4(b) and 36b-16 of the Connecticut Uniform Securities Act, and materially aided Lance David Brooks' violations of Sections 36b-6(a) and 36b-16 of the Act.  Respondent Brooks was the president of Air-Byrd/River Joint Venture.
 
Air-Byrd Operations LLC did not appear or contest the imposition of the fine.
 

Order Imposing Fine Issued
 
On August 26, 2011, the Banking Commissioner issued an Order Imposing Fine against Air-Byrd/River Joint Venture, a McKinney, Texas-based entity formed for the purported purpose of oil and gas development in Kansas.  The Order Imposing Fine had been preceded by a February 16, 2011 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing alleging that the respondent sold unregistered securities to at least one elderly Connecticut investor, failed to provide material disclosures to investors and employed one Lance David Brooks as an unregistered agent of issuer.
 
In fining Air-Byrd/River Joint Venture $100,000, the Commissioner found that the respondent violated Sections 36b-4(a), 36b-4(b), 36b-6(b) and 36b-16 of the Connecticut Uniform Securities Act.
 
Air-Byrd/River Joint Venture did not appear or contest the imposition of the fine.


Order Imposing Fine Issued
 
On August 26, 2011, the Banking Commissioner issued an Order Imposing Fine against MidAmerica Resources, Inc. a/k/a MA Resources, Inc. of 3943 Irvine Boulevard, Suite 439, Irvine, California.  MidAmerica Resources, Inc. is or was the Joint Venture Manager and Joint Venture Operator of CherryHomes Joint Venture, an entity purportedly formed to develop oil and gas in Texas.  The Order Imposing Fine had been preceded by a February 16, 2011 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing alleging that, beginning in 2006, MidAmerica Resources, Inc., Thomas C. Hanscome, president of MidAmerica Resources, Inc., and Lance David Brooks sold unregistered CherryHomes Joint Venture units to at least one elderly Connecticut resident at a time when neither Brooks nor Hanscome was registered as an agent of issuer under the Connecticut Uniform Securities Act.  The February 16, 2011 action had also alleged that insufficient disclosure was made concerning the material terms of the offering, including its risks.
 
In fining MidAmerica Resources, Inc. $100,000, the Commissioner found that the respondent violated Sections 36b-4(a), 36b-4(b) and 36b-16 of the Act, and materially aided Brooks' and Hanscome's violations of Sections 36b-6(a) and 36b-16 of the Act.
 
MidAmerica Resources, Inc. did not appear or contest the imposition of the fine.
 
       Dated:  Wednesday, September 7, 2011
 
       Howard F. Pitkin
       Banking Commissioner