DOB: Blackwelder, Julius - Final CD-Rest-Fine

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IN THE MATTER OF:

JULIUS BLACKWELDER d/b/a
FRIEND'S INVESTMENT GROUP


("Respondent")

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ORDER TO CEASE AND DESIST

ORDER TO MAKE RESTITUTION

AND

ORDER IMPOSING FINE

DOCKET NO. CRF-11-7806-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, 2011, the Commissioner, acting pursuant to Sections 36b-27(a), 36b-27(b) and 36b-27(d) of the Act, issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing against Respondent (collectively “Notice”), which Notice is incorporated by reference herein;

WHEREAS, in the Notice, the Commissioner ordered that Respondent cease and desist from directly or indirectly violating the provisions of the Act and Regulations, 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, directly or indirectly employing any device, scheme or artifice to defraud, making an untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in an act, practice or course of business which operates or would operate as a fraud or deceit upon any person in violation of Section 36b-4(a) of the Act; and (3) in connection with the offer, sale or purchase of any security, directly or indirectly engaging in dishonest or unethical practices in violation of Section 36b-4(b) of the Act;

WHEREAS, in the Notice, the Commissioner ordered that Respondent make restitution of any sums obtained as a result of Respondent’s violations of Sections 36b-4(a) and 36b-4(b) of the Act, plus interest at the legal rate set forth in Section 37-1 of the Connecticut General Statutes;

WHEREAS, in the Notice, the Commissioner found with respect to the activity described therein, that Respondent committed at least one violation of Section 36b-16 of the Act, at least one violation of Section 36b-4(a) of the Act and at least one violation of Section 36b-4(b) of the Act, and that the Commissioner intended to impose a maximum fine upon Respondent not to exceed One Hundred Thousand Dollars ($100,000) per violation;

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

WHEREAS, on June 30, 2011, the Notice was sent by certified mail, return receipt requested, to Respondent, and such Notice was delivered on July 6, 2011;

WHEREAS, by facsimile dated July 20, 2011, Respondent requested a hearing on the Notice;

WHEREAS, on July 25, 2011, the Commissioner issued a Notification of Hearing and Designation of Hearing Officer stating that the hearing would be held on August 23, 2011, at 10 a.m. (“Hearing”), at the Department and appointing Attorney Stacey Serrano as Hearing Officer;

WHEREAS, by e-mail dated August 22, 2011, Hearing Officer Serrano granted Respondent’s request for a continuance of the Hearing and rescheduled the Hearing to October 6, 2011, at 10 a.m.;

WHEREAS, on October 6, 2011, Attorney Paul A. Bobruff represented the Department at the Hearing and Respondent failed to appear at the 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 or restitution 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-34, 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-34, inclusive.”

II. FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. The facts as set forth in paragraphs 8 through 25, inclusive, of the Notice 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 27, 29 and 31 of the Notice 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 one violation of Section 36b-16 of the Act, one violation of Section 36b-4(a) of the Act and one violation of Section 36b-4(b) 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 sum of $430,553 was obtained by Respondent from four (4) Connecticut investors, specifically identified in Exhibit A attached hereto, in violation of Sections 36b-4(a) and 36b-4(b) of the Act and finds that the facts require the issuance of a permanent order to make restitution against Respondent with respect to such Connecticut investors.
5.
The Commissioner finds that the facts require the imposition of a fine against Respondent.
6. The Commissioner complied with Sections 36b-27(a), 36b-27(b) and 36b-27(d) of the Act and Section 4-177 of the Connecticut General Statutes.
7. Based upon the nature of Respondent’s actions in violation of the Act and the absence of mitigating factors in the record regarding Respondent’s violations of the Act that justify lesser sanctions in this case, the Commissioner finds that the issuance of an order to cease and desist, order to make restitution and imposition of the maximum fine against Respondent 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-34, inclusive, of the Act.

III. ORDER

Having read the record, I hereby ORDER, pursuant to Sections 36b-27(a), 36-27(b) and 36b-27(d) of the Act, that:

1. The Order to Cease and Desist issued against Julius Blackwelder d/b/a Friend’s Investment Group on June 30, 2011, shall be and is hereby made PERMANENT;
2. The Order to Make Restitution issued against Julius Blackwelder d/b/a Friend’s Investment Group on June 30, 2011, shall be and is hereby made PERMANENT as follows:

a.   Within thirty (30) days from the date this Order to Make Restitution becomes permanent, Respondent shall provide the Securities and Business Investments Division (“Division”) with a written disclosure which covers the period from January 1, 2001 to the date this Order to Make Restitution becomes permanent and which contains (1) the name and address of each Connecticut investor, (2) the amount Respondent collected from each Connecticut investor, (3) the amount of any refunds of principal or purported interest payments Respondent made to each Connecticut investor;
b.    Within forty-five (45) days from the date this Order to Make Restitution becomes permanent, Respondent shall reimburse each Connecticut investor identified in Exhibit A attached hereto in the amounts identified in Exhibit A, plus interest at the legal rate set forth in Section 37-1 of the Connecticut General Statutes.  Such restitution shall be made by certified check, and shall be sent by certified mail, return receipt requested, to each such Connecticut investor; and
c.   Within ninety days (90) days from the date this Order to Make Restitution becomes permanent, Respondent shall provide the Division with proof in the form of copies of the certified checks and the return receipts required by paragraph b. above that Respondent has reimbursed each Connecticut investor identified in Exhibit A in accordance with paragraph b. above.
3. A fine of Three Hundred Thousand Dollars ($300,000) be imposed against Julius Blackwelder d/b/a Friend’s Investment Group, 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 forty-five (45) days from the date this Order is mailed; and
4. This Order shall become effective when mailed.

Dated at Hartford, Connecticut,       ________/s/________ 
this 5th day of December 2011.   Howard F. Pitkin 
    Banking Commissioner 


This Order was sent by certified mail,
return receipt requested, to Respondent
on December 5, 2011.

Julius Blackwelder 
d/b/a Friend’s Investment Group
1310 Jeff Davis Drive
Tyler, Texas 75703-5542
Certified Mail No. 7011 0470 0002 2573 1567

Julius Blackwelder 
d/b/a Friend’s Investment Group
5621 South Broadway, Suite 317
Tyler, Texas 75703
Certified Mail No. 7011 0470 0002 2573 1574 


Administrative Orders and Settlements