DOB: Java's Brewin - CD-NOIF

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IN THE MATTER OF:

JAVA'S BREWIN DEVELOPMENT, 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-2008-845-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, as defined in section 1-200, 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 certain provisions 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, after an investigation, that any person or persons have violated, 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 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 any 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 the commissioner finds as the result of an investigation 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, chapter, regulation, rule or order 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 addition to any other remedy authorized by said sections, order that a fine not exceeding one hundred 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 one hundred 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, and at all times relevant hereto was, a Massachusetts corporation with its principal place of business at 290 Turnpike Road, Suite 6, #367, Westborough, Massachusetts 01581-2843.
 

III.  STATEMENT OF FACTS

7. From at least October 16, 2006 to January 26, 2007, Respondent, through its agents, sold to least three Connecticut purchasers a coffee franchise that included training in merchandising, operations product assembly and other areas, site selection, pre- and post-opening assistance, an advertising program, specifications for equipment and décor, and specifications and required sources for supplies necessary to enable such prospective purchasers to begin a coffee shop and retail store (“Coffee Franchise”).
8.
At the time such sales were made, the Coffee Franchise was not registered as a business opportunity in Connecticut and no registration for the Coffee Franchise as a business opportunity had been made effective by order of the Commissioner under subsections (a) and (d) of Section 36b-62 of the Act.
9. On May 23, 2007, Respondent filed a postsale registration application for the Coffee Franchise.
10. On June 20, 2007, the Division sent a deficiency letter to Respondent indicating that the postsale registration application was materially incomplete and requested additional information.
11. On September 28, 2007, the Division received a letter from Christopher Gregoris, President/CEO (“Gregoris”) of Respondent, stating that Respondent “is no longer offering franchises for sale in Connecticut until we have been able to properly register”.  The letter further indicated that documents were being revised to include the changes required by the Division.
12.
On November 7, 2007, the Division sent a letter to Gregoris stating that since Respondent failed to provide the requested information within the prescribed time period, Respondent’s application had been deemed abandoned.
 

IV.  STATUTORY BASIS FOR ORDER TO CEASE AND DESIST AND
ORDER IMPOSING FINE AGAINST RESPONDENT

a.  The Coffee Franchise Offered by Respondent is a Business Opportunity

13. Paragraphs 1 through 12, inclusive, are incorporated and made a part hereof as if more fully set forth herein.
14.
The three Connecticut purchasers are “purchaser-investor[s]” within the meaning of Section 36b-61(3) of the Act, in that they are “person[s] who . . . [had] purchased . . . a business opportunity”.
15.  Respondent is a “seller” within the meaning of Section 36b-61(4) of the Act, in that it “engaged in the business of . . . offering for sale business opportunities . . .”.
16.
The Coffee Franchise constitutes a “business opportunity” as defined in Section 36b-61(6) of the Act in that it involves “the offer for sale . . . of any products, equipment, supplies or services which are . . . 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 . . .”.
 

b.  Violation of Section 36b-67 of the Act –
Sales of an Unregistered Business Opportunity

17. Paragraphs 1 through 16, inclusive, are incorporated and made a part hereof as if more fully set forth herein.
18.
Section 36b-67 of the Act provides, in pertinent part, that “[n]o person shall in connection with the sale . . . of a business opportunity:  (1) Sell . . . 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”.
19.
Respondent sold the Coffee Franchise to three Connecticut purchaser-investors, as more fully described in paragraphs 7 and 8.  The offer for sale of such a business opportunity absent registration and absent the Commissioner having declared the business opportunity effective 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.  Section 36b-72(b) of the Act authorizes the Commissioner to impose a fine upon Respondent in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.  The Commissioner intends to impose a fine upon Respondent in an amount not to exceed Thirty Thousand Dollars ($30,000), subject to Respondent’s right to a hearing on the allegations set forth above.
 

V.  ORDER TO CEASE AND DESIST AND NOTICE OF RIGHT TO HEARING

AS A RESULT OF THE INVESTIGATION BY THE DIVISION, THE COMMISSIONER FINDS that, with respect to the transactions described herein, Java’s Brewin Development, Inc., has violated Section 36b-67(1) of the Act, and that further offers to sell or sales of business opportunities in Connecticut would constitute violations of Section 36b-67(1) of the Act.
 
THE COMMISSIONER THEREFORE ORDERS that Java’s Brewin Development, 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, Java’s Brewin Development, Inc., will be afforded an opportunity for a hearing on the allegations set forth above.
 
A hearing will be granted to Java’s Brewin Development, 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 Java’s Brewin Development, 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 15, 2008, at 9 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, Java’s Brewin Development, 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 Java’s Brewin Development, 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 Thirty Thousand Dollars ($30,000).
 
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 15, 2008, at 9 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 30th day of May 2008.  

________/s/_________
Howard F. Pitkin
Banking Commissioner

 

CERTIFICATION

I hereby certify that on this 2nd day of June 2008, 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 Java’s Brewin Development, Inc., 290 Turnpike Road, Suite 6, #367, Westborough, Massachusetts 01581-2843, certified mail no. 70031680000085235352.

________/s/_________
Nirja Savill
Prosecuting Attorney
 


Administrative Orders and Settlements