DOB: Tax Recovery Group - CD-NOIF

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IN THE MATTER OF:

TAX RECOVERY GROUP, INC.

    ("Respondent")


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ORDER TO CEASE AND DESIST

NOTICE OF INTENT TO FINE

AND

NOTICE OF RIGHT TO HEARING

DOCKET NO. CF-2006-818-B


I.  PRELIMINARY STATEMENT

1. The Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672c of the Connecticut General Statutes, the Connecticut Business Opportunity Investment Act (“Act”) pursuant to Section 36b-70 of the Act.
2.
Pursuant to Section 36b-71(a) of the Act, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, has conducted an investigation into the activities of Respondent, its officers, agents, representatives and employees to determine if any of them have violated, are violating or are about to violate provisions of the Act.  Section 36b-71(a) of the Act provides, in pertinent part:
Subject to the provisions of the Freedom of Information Act, . . . the commissioner may:  (1) Make such public or private investigations within or outside of this state as he deems necessary to determine whether any person has violated or is about to violate any provision of sections 36b-60 to 36b-80, inclusive, . . . or to aid in the enforcement of said sections . . . .  
3. As a result of the investigation by the Division, the Commissioner has reason to believe that Respondent has violated a provision of the Act.
4.
As a result of the investigation by the Division, the Commissioner has the authority to issue a cease and desist order against Respondent pursuant to Section 36b-72(a) of the Act, which provides, in pertinent part:
Whenever it appears to the commissioner that any person or persons are violating or are about to violate any of the provisions of sections 36b-60 to 36b-80, inclusive, . . . or that a further sale or offer to sell would constitute a violation of said sections, . . . the commissioner may in his discretion order the person or persons to cease and desist from the violations of the provisions of said sections . . . or from further sale or offering to sell business opportunities constituting or which would constitute a violation of the provisions of said sections . . . .  After such order is issued, the person or persons named in such order may, within fourteen days after receipt of the order, file a written request for a hearing.  Such hearing shall be held in accordance with the provisions of chapter 54.
5.
As a result of the investigation by the Division, the Commissioner has the authority to impose a fine on Respondent pursuant to Section 36b-72(b) of the Act, which provides, in pertinent part:
(1)  Whenever it appears to the commissioner that any person or persons have violated any of the provisions of sections 36b-60 to 36b-80, inclusive, . . . the commissioner may send a notice to such person or persons by certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt.  Any such notice shall include:  (A) A reference to the title, [or] chapter . . . alleged to have been violated; (B) a short and plain statement of the matter asserted or charged; (C) the maximum fine that may be imposed for such violation; and (D) the time and place for the hearing.  Such hearing shall be fixed for a date not earlier than fourteen days after the notice is mailed.

(2)  The commissioner shall hold a hearing upon the charges made unless such person or persons fail to appear at the hearing.  Such hearing shall be held in accordance with the provisions of chapter 54.  After the hearing if the commissioner finds that the person or persons have violated any of the provisions of sections 36b-60 to 36b-80, inclusive, . . . the commissioner may, in the commissioner’s discretion and in addition to any other remedy authorized by said sections, order that a fine not exceeding ten thousand dollars per violation be imposed upon such person or persons.  If such person or persons fail to appear at the hearing, the commissioner may, as the facts require, order that a fine not exceeding ten thousand dollars per violation be imposed upon such person or persons.  The commissioner shall send a copy of any order issued pursuant to this subsection by certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to any person or persons named in such order.


II.  RESPONDENT
 
6. Respondent is, at all times relevant hereto, a Colorado corporation with its principal place of business at 1880 Office Club Point, #2FLSW, Colorado Springs, Colorado 80920.
 

III.  STATEMENT OF FACTS
 
7. Respondent sells supplies and services necessary to enable purchasers to start a business marketing Respondent’s tax review services, tax amendment services and tax audit protection services and includes:  marketing material including brochures, consumer videos, consumer CD/ROMs and consumer lists; customer support; training manuals; and personalized client forms (“TRG Business”).  Respondent enters into marketing agreements with purchasers, appointing such purchasers as “corporate partners” to market Respondent’s services.
8. Respondent represents to prospective purchasers, in written materials, that the “partnership” with Respondent consists of, inter alia, “[a]n easy to follow, complete training package . . . [o]ngoing home office support . . . [p]rofessional sales and marketing materials . . . [a] dedicated marketing company committed to your success”. 
9. From at least April 2004 to the present, Respondent offered and sold the TRG Business to at least one Connecticut purchaser.
10. At the time such offer and sale was made, the TRG Business was not registered as a business opportunity in Connecticut and no registration for the TRG Business as a business opportunity had been made effective by order of the Commissioner under Section 36b-62 of the Act.
11. At the time such offer and sale was made, the sale of the TRG Business was not in conjunction with the licensing of a registered trademark or service mark.
 
 
IV.  STATUTORY BASIS FOR ORDER TO CEASE AND DESIST AND
ORDER IMPOSING FINE AGAINST RESPONDENT

a.  TRG Business Offered and Sold by Respondent is a Business Opportunity

12. Paragraphs 1 through 11, inclusive, are incorporated and made a part hereof as if more fully set forth herein.
13. The TRG Business constitutes a “business opportunity” as defined in Section 36b-61(6) of the Act in that it involves “the sale . . . or offer for sale . . . of any . . . supplies or services which are sold or offered for sale to the purchaser-investor for the purpose of enabling the purchaser-investor to start a business, and in which the seller represents . . . (D) that the seller will provide a sales program or marketing program to the purchaser-investor . . . ”.
14. Respondent is a “seller” within the meaning of 36b-61(4) of the Act, in that it “engaged in the business of selling . . . business opportunities . . . .”
15. The TRG Business consists of supplies and services to enable the purchaser-investor to start a business, as more fully described in paragraphs 7 and 8.
16. Respondent provides the purchaser-investor with a sales program, as more fully described in paragraphs 7 and 8.
17. The Connecticut purchaser is a “purchaser-investor” within the meaning of Section 36b-61(3) of the Act, in that he or she is “a person who has purchased . . . a business opportunity”.


b.  Violation of Section 36b-67(1) of the Act –
Offer or Sale of an Unregistered Business Opportunity
 
18. Paragraphs 1 through 17, inclusive, are incorporated and made a part hereof as if more fully set forth herein. 
19. Section 36b-67 of the Act provides, in pertinent part, that “[n]o person shall in connection with the sale or offer for sale of a business opportunity:  (1) Sell or offer for sale a business opportunity in this state or from this state unless it has first been registered with the commissioner and declared effective by the commissioner in accordance with the provisions of section 36b-62”. 
20. Respondent offered and sold the TRG Business, as more fully described in paragraph 9.  The offer and sale of such a business opportunity absent registration and absent the Commissioner having declared the business opportunity effective, as more fully described in paragraph 10, constitutes a violation of Section 36b-67(1) of the Act, which forms a basis for an order to cease and desist to be issued against Respondent under Section 36b-72(a) of the Act, and for the imposition of a fine against Respondent under Section 36b-72(b) of the Act.
 

V.  ORDER TO CEASE AND DESIST AND NOTICE OF RIGHT TO HEARING
 
AS A RESULT OF THE INVESTIGATION BY THE DIVISIONS, THE COMMISSIONER FINDS that, with respect to the transactions described herein, Tax Recovery Group, Inc., has violated Section 36b-67(1) of the Act, and that further offers to sell or sales of such business opportunities in Connecticut would constitute violations of Section 36b-67(1) of the Act.

THE COMMISSIONER THEREFORE ORDERS
that Tax Recovery Group, Inc., CEASE AND DESIST from directly or indirectly violating the provisions of the Act and from the further sale or offer to sell business opportunities constituting or which would constitute a violation of the provisions of the Act, including, without limitation, offering or selling unregistered business opportunities.

THE COMMISSIONER FURTHER ORDERS that, pursuant to Section 36b-72(a) of the Act, Tax Recovery Group, Inc., will be afforded an opportunity for a hearing on the allegations set forth above.
 
A hearing will be granted to Tax Recovery Group, Inc., if a written request for a hearing is received by the Department of Banking, Legal Division, 260 Constitution Plaza, Hartford, Connecticut 06103 1800 within fourteen (14) days following its receipt of this Order.  The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address.  If Tax Recovery Group, Inc., will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”.  Once a written request for a hearing is received, the Commissioner may issue a notification of hearing and designation of hearing officer that acknowledges receipt of a request for a hearing, designates a presiding officer and sets the date of the hearing in accordance with Section 4-177 of the Connecticut General Statutes and Section 36a-1-21 of the Regulations of Connecticut State Agencies.  If a hearing is requested, the hearing will be held on July 20, 2006, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.

The hearing will be held in accordance with the provisions of Chapter 54 of the Connecticut General Statutes.  At such hearing, Tax Recovery Group, Inc., will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.

This Order shall remain in effect and become permanent if Tax Recovery Group, Inc., does not request a hearing within the prescribed time period.
 

VI.  NOTICE OF INTENT TO FINE RESPONDENT AND NOTICE OF HEARING
 
WHEREAS, the Commissioner finds as a result of an investigation by the Division that Respondent has violated Section 36b-67(1) of the Act;

WHEREAS,
the Commissioner believes that the imposition of a fine upon Respondent would be in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act;

AND WHEREAS,
notice is hereby given to Respondent that the Commissioner intends to impose a fine not to exceed Ten Thousand Dollars ($10,000) per violation, or a maximum fine of Ten Thousand Dollars ($10,000).

NOW THEREFORE,
a hearing will be held in accordance with Section 36b-72(b)(2) of the Act and Chapter 54 of the Connecticut General Statutes.

The hearing will be held on July 20, 2006, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.

At the hearing, Respondent will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law relating to the allegations stated herein.  If Respondent fails to appear at such hearing, the Commissioner may order that the maximum fine be imposed upon Respondent.
 
 
Dated at Hartford, Connecticut
this 19th day of May 2006.                 ________/s/_________
                                                     John P. Burke
                                                     Banking Commissioner
 
 
 
 
 
CERTIFICATION

I hereby certify that on this 22nd day of May 2006, the foregoing Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing was sent by certified mail, return receipt requested, to Tax Recovery Group, Inc., 1880 Office Club Point, #2FLSW, Colorado Springs, Colorado 80920, certified mail no. 70031680000085235512; and Tax Recovery Group, Inc., c/o Eugene Barber Brace, Registered Agent, 1880 Office Club Point, Colorado Springs, Colorado 80920, certified mail no. 70031680000085235529.


________/s/_________
Jesse B. Silverman
Prosecuting Attorney

 


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