DOB: Clinton, Michael H. - Consent Order

 
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IN THE MATTER OF: 

MICHAEL H. CLINTON

("Clinton")

 
  
   

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CONSENT ORDER

No. CO-12-7990-S

I. PRELIMINARY STATEMENT

WHEREAS, the Banking Commissioner (the "Commissioner") is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (the "Act") and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies promulgated under the Act (the "Regulations");
 
WHEREAS, the Commissioner, through the Securities and Business Investments Division ("Division") of the Department of Banking, conducted an investigation pursuant to Section 36b-26(a) of the Act into the activities of Clinton, to determine whether Clinton had violated, was violating or was about to violate any provision of the Act or Regulations;
 
WHEREAS, as a result of the investigation, the Division obtained evidence that Clinton referred at least nineteen (19) Connecticut residents to invest with Michael S. Goldberg ("Goldberg"), member of Michael S. Goldberg, LLC d/b/a Acquisitions Unlimited Group ("AUG");
 
WHEREAS, Goldberg represented to investors that AUG liquidated distressed assets obtained from JP Morgan Chase Bank ("Chase Asset Deals").  This purportedly enabled Goldberg to pay investors a return on capital of up to 20 percent in a short period of time, typically 90 days;
 
WHEREAS, Goldberg was arrested and charged with allegedly devising and executing a scheme to defraud investors of more than one hundred million dollars ($100,000,000) over an approximately 12-year period.  Goldberg pleaded guilty to three counts of wire fraud, and on May 16 2011, was sentenced to a term of imprisonment of 120 months on each count, to be served concurrently (United States v. Michael S. Goldberg, D. Conn., Criminal No. 3:10 CR192 (JCH));
 
WHEREAS, Goldberg is in the custody of the Federal Bureau of Prisons, with a projected release date of April 2, 2020.  Goldberg is involved in two Chapter 7 bankruptcy proceedings; the bankruptcy trustee will be the vehicle through which restitution is made to the victims of Goldberg's scheme;
 
WHEREAS, following an inquiry by the Division pursuant to Section 36b-26 of the Act, with full and complete cooperation, Clinton voluntarily provided documentation indicating that from 2008 to 2009, approximately nineteen (19) Connecticut individuals invested in Goldberg's Chase Asset Deals, in part, as a result of Clinton's referrals; and that Clinton had received referral fees for some of the referrals;
 
WHEREAS, (a) on November 18, 2009, certain petitioning creditors filed an involuntary petition for relief under Chapter 7 of the Bankruptcy Code against Michael S. Goldberg, L.L.C. and Michael S. Goldberg, which petition was subsequently granted by the United States Bankruptcy Court for the District of Connecticut on November 24, 2009; (b) on February 26, 2010, the United States Bankruptcy Court for the District of Connecticut consolidated the bankruptcy actions involving Michael S. Goldberg for joint administration only (Case No. 09-23370 (ASD); Case No. 09-23371 (ASD)); (c) on or about July 2, 2010 the Bankruptcy Trustee commenced an action against Clinton in the United States Bankruptcy Court, District of Connecticut, Hartford Division (James Berman, Chapter 7 Trustee v. Michael H. Clinton et al., Adv. Pro. No. 10-02095 (ASD)); and (d) on September 13, 2010, the Bankruptcy Trustee and Clinton entered into a Settlement Stipulation and Order (Adv. Proc. No. 10-2095) pursuant to which Clinton would pay seven hundred eighty-five thousand dollars ($785,000) in settlement of the claims asserted by the Bankruptcy Trustee against Clinton.  In compliance with the Settlement Stipulation and Order, Clinton represents that he has complied with each term therein;
 
WHEREAS, the Commissioner alleges that, at the time the Connecticut sales of the Goldberg Chase Asset Deals were made, Clinton was not registered as an agent under Section 36b-6 of the Act;
 
WHEREAS, the securities Clinton offered were not registered under Section 36b-16 of the Act nor had an exemption claim or claim of covered security status been filed under Section 36b-21 of the Act for the securities offering;
 
WHEREAS, Section 36b-31(a) of the Act provides, in relevant 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";
 
WHEREAS, Section 36b-31(b) of the Act provides, in relevant 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";
 
WHEREAS, Clinton's alleged violation of Sections 36b-6 and 36b-16 of the Act would support the initiation of administrative proceedings against Clinton pursuant to Section 36b-27 of the Act;
 
WHEREAS, an administrative proceeding initiated under Section 36b-27 of the Act would constitute a "contested case" within the meaning of Section 4-166(2) of the General Statutes of Connecticut;
 
WHEREAS, Section 4-177(c) of the General Statutes of Connecticut and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by consent order, unless precluded by law;
 
WHEREAS, without holding a hearing and without trial or adjudication of any issue of fact or law, and prior to the initiation of any formal proceeding, the Commissioner and Clinton reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
 
WHEREAS, the issuance of this Consent Order 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 the Act;
 
WHEREAS, Clinton agrees to the language in this Consent Order;
 
AND WHEREAS, Clinton, through his execution of this Consent Order, specifically assures the Commissioner that none of the violations alleged in this Consent Order shall occur in the future;

II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS

WHEREAS, Clinton, though his execution of this Consent Order, voluntarily waives the following rights:

1. To be afforded notice and an opportunity for a hearing within the meaning of Section 36b-27 of the Act and Section 4-177(a) of the General Statutes of Connecticut;
2. To present evidence and argument and to otherwise avail himself of Section 36b-27 of the Act and Section 4-177c(a) of the General Statutes of Connecticut;
3. To present his position in a hearing in which he is represented by counsel;
4. To have a written record of the hearing made and a written decision issued by a hearing officer; and
5. To seek judicial review of, or otherwise challenge or contest the matters described herein, including the validity of this Consent Order.

III. ACKNOWLEDGEMENT OF THE COMMISSIONER'S ALLEGATIONS

WHEREAS, Clinton, through his execution of this Consent Order, acknowledges the following allegations of the Commissioner, without admitting or denying them, yet admits that sufficient evidence exists for the Commissioner to issue an order to cease and desist and an order imposing a maximum administrative fine of one hundred thousand dollars ($100,000) per violation of the Act, or any regulation, rule or order adopted or issued thereunder:

1. Clinton violated Section 36b-6(a) of the Act by transacting business in Connecticut absent registration as an agent; and
2. Clinton violated Section 36b-16 of the Act by offering and/or selling securities that were not registered under the Act to at least nineteen (19) Connecticut investors.

IV. CONSENT TO ENTRY OF SANCTIONS

WHEREAS, Clinton, through his execution of this Consent Order, consents to the Commissioner's entry of a Consent Order imposing on him the following sanctions:

1. Clinton shall cease and desist from engaging in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act, either directly or through any person, organization or other device;
2. For a period of seven (7) years commencing on the date this Consent Order is entered by the Commissioner, Clinton is barred from transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent, as such terms are defined in the Act, including acting as a finder for compensation, splitting commissions, or receiving referral fees, directly or indirectly, in connection with any recommendation, sale or purchase of securities;
3. Clinton shall consult with Connecticut legal counsel sufficiently experienced in state and federal securities law to discuss any future securities related activities to ensure compliance with applicable securities laws;
4. No later than the date this Consent Order is entered by the Commissioner, Clinton shall remit to the department by certified bank check payable to "Treasurer, State of Connecticut" the sum of seven thousand five hundred dollars ($7,500) as an administrative fine: [sic] and
5. Nothing in this Consent Order shall preclude Clinton, upon a showing of good cause, from applying in writing for relief from the provisions of paragraph 2 of Section IV Consent to Entry of Sanctions of this Consent Order after five (5) years have elapsed from the entry hereof.  The grant of such relief shall be in the sole discretion of the Division.

V. CONSENT ORDER

NOW THEREFORE, the Commissioner enters the following:

1. The Sanctions set forth above be and are hereby entered;
2. Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Clinton based upon a violation of this Consent Order or the matters underlying its entry, if the Commissioner determines that compliance with the terms herein is not being observed or if any representations made by Clinton and reflected herein are subsequently discovered to be untrue; and
3. This Consent Order shall become final when entered.



So ordered at Hartford, Connecticut       _______/s/____________
this 21st day of March, 2012.     Howard F. Pitkin 
         Banking Commissioner 
 

VI. CONSENT TO ENTRY OF ORDER

I, Michael H. Clinton, state that I have read the foregoing Consent Order; that I know and fully understand its contents; that I agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that I voluntarily consent to the issuance of this Consent Order, expressly waiving any right to a hearing on the matters described herein.


  
______/s/____________
Michael H. Clinton


Subscribed and sworn to before me
this 16th day of March, 2012.



______________/s/______________________
Commissioner of the Superior Court
Date Commission Expires: [blank in original]


Administrative Orders and Settlements