DOB: Lofton, Derek - FINE - CD Perm

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IN THE MATTER OF:


DEREK M. LOFTON

("Respondent")




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ORDER TO CEASE AND DESIST

AND

ORDER IMPOSING FINE
 
DOCKET NO. CF-2008-7560-S

I.  PRELIMINARY STATEMENT

WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (“Act”), and Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies (“Regulations”) promulgated under the Act;

WHEREAS, the Commissioner, through the Securities and Business Investments Division of the Department of Banking (“Department”), conducted an investigation into the activities of Respondent, pursuant to Section 36b-26(a) of the Act, to determine if Respondent had violated, was violating or was about to violate provisions of the Act or Regulations;

WHEREAS, on June 30, 2009, the Commissioner, acting pursuant to Sections 36b-27(a) and 36b-27(d) of the Act, issued an Order to Cease and Desist (“Order”), Notice of Intent to Fine (“Fine Notice”) and Notice of Right to Hearing against, among others, Respondent (collectively “Notice”), which Notice is incorporated by reference herein;

WHEREAS, in the Order the Commissioner ordered that Respondent cease and desist from directly or indirectly violating the provisions of the Act, including without limitation:  (1) offering and selling unregistered securities in violation of Section 36b-16 of the Act; (2) in connection with the offer, sale or purchase of any security, employing any device, scheme or artifice to defraud or omitting to state material facts necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in any act, practice or course of business which operates as a fraud or deceit upon any person in violation of Section 36b-4(a) of the Act; and (3) acting as an agent of issuer absent registration in violation of Section 36b-6(a) of the Act;

WHEREAS, in the Order the Commissioner notified Respondent he could request a hearing concerning the allegations set forth in the Order;

WHEREAS, the Commissioner found in the Fine Notice, with respect to the activity described therein, that Respondent committed three separate violations of Sections 36b-16, 36b-4(a) and 36b-6 of the Act;

WHEREAS, the Fine Notice stated that the Commissioner intended to impose a fine against Respondent, that a hearing would be held on the matters alleged in the Fine Notice on August 11, 2009 (“Fine Hearing”), and that if Respondent failed to appear at the Fine Hearing, the Commissioner may order that a maximum fine of Nine Hundred Thousand Dollars ($900,000) be imposed upon Respondent;

WHEREAS, on July 1, 2009, the Notice was sent by registered mail, return receipt requested, to Respondent (registered mail no. RB027869237US);

WHEREAS, by letter dated August 7, 2009, Respondent requested a hearing on the Order, which request was received by the Division on August 10, 2009;

WHEREAS, on August 11, 2009, the Commissioner issued a Notification of Hearing and Designation of Hearing Officer stating that the hearing would be held on August 11, 2009, at 10 a.m. (“Hearing”), at the Department of Banking and appointing Attorney Doniel Kitt as Hearing Officer;

WHEREAS, by letter dated August 13, 2009, Hearing Officer Kitt granted Respondent’s request for a continuance of the Hearing and Fine Hearing and rescheduled the Hearing and Fine Hearing to October 1, 2009, at 10 a.m.;

WHEREAS, Attorney Paul A. Bobruff represented the Department at the Hearing and Fine Hearing;

WHEREAS, on October 1, 2009, Respondent failed to appear at the Hearing and Fine Hearing;

WHEREAS, Section 36a-1-31(b) of the Regulations of Connecticut State Agencies provides, in pertinent part, that “[w]hen a party fails to appear at a scheduled hearing, the allegations against the party may be deemed admitted.  Without further proceedings or notice to the party, the presiding officer shall submit to the commissioner a proposed final decision containing the relief sought in the notice, provided the presiding officer may, if deemed necessary, receive evidence from the department, as part of the record, concerning the appropriateness of the amount of any . . . fine . . . sought in the notice”;

WHEREAS, Section 36b-27(d)(2) of the Act provides, in pertinent part, that “[i]f such person fails 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”;

WHEREAS, Section 36b-31(a) of the Act provides, in pertinent part, that “[t]he commissioner may from time to time make . . . such . . . orders as are necessary to carry out the provisions of sections 36b-2 to 36b-33, inclusive”;

AND WHEREAS, Section 36b-31(b) of the Act provides, in pertinent part, that “[n]o . . . order may be made . . . unless the commissioner finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of sections 36b-2 to 36b-33, inclusive.”

  
II.  FINDINGS OF FACT AND CONCLUSIONS OF LAW
1.
The facts as set forth in paragraphs 6 and 8 through 13, inclusive, of the Notice with respect to Respondent shall constitute findings of fact within the meaning of Section 4-180(c) of the Connecticut General Statutes, and the conclusions set forth in paragraphs 14 through 19, inclusive, of the Notice with respect to Respondent shall constitute conclusions of law within the meaning of Section 4-180(c) of the Connecticut General Statutes and Section 36a-1-52 of the Regulations of Connecticut State Agencies.
       
2. The Commissioner finds that Respondent committed three violations of Section 36b-16 of the Act, three violations of Section 36b-4(a) of the Act and three violations of Section 36b-6(a) of the Act.
      
3.
The Commissioner finds that the facts require the issuance of a permanent order to cease and desist against Respondent.
      
4. The Commissioner finds that the facts require the imposition of a fine against Respondent; however, based upon the nature of Respondent’s actions in violation of the Act, the facts do not require the imposition of the maximum fine against Respondent.
        
5.
The Commissioner complied with Sections 36b-27(a) and 36b-27(d) of the Act and Section 4-177 of the Connecticut General Statutes.
       
6.
This Order to Cease and Desist and Order Imposing Civil Penalty is necessary and appropriate in the public interest and for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of Sections 36b-2 to 36b-33, inclusive, of the Act.

III.  ORDER

Having read the record, I hereby ORDER, pursuant to Sections 36b-27(a) and 36b-27(d) of the Act, that:
 
1.   The Order to Cease and Desist issued against Derek M. Lofton on June 30, 2009, be and is hereby made PERMANENT;
    
2.   A fine of One Hundred Thousand Dollars ($100,000) be imposed against Derek M. Lofton, to be remitted to the Department of Banking by cashier’s check, certified check or money order, made payable to “Treasurer, State of Connecticut”, no later than 45 days from the date the Order is mailed; and
    
3. This Order shall become effective when mailed.


Dated at Hartford, Connecticut                _______/s/_____________
this 22nd day of January 2010.                Howard F. Pitkin 
                  Banking Commissioner 



This Order was sent by registered mail,
return receipt requested, to Respondent
on January 25, 2010.

Derek M. Lofton 
1174 Paramount Drive
McDonough, GA 30253
Registered Mail No. RB028036932US


Administrative Orders and Settlements