DOB: Beauchamp, Alfred et al - Findings and Order

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IN THE MATTER OF:

CONNECTICUT FORECLOSURE
DIVISION CORP.
   ("CFDC")

ALFRED R. BEAUCHAMP
   ("Beauchamp")

(collectively "Respondents")

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FINDINGS OF FACT

CONCLUSIONS OF LAW

AND ORDER

DOCKET NO. CRF-12-7754-S

INTRODUCTION*

*The transcript from July 12, 2012, is designated as Transcript 1;
the transcript from September 19, 2012, at 10:00 a.m. is designated as Transcript 2;
and the transcript from September 19, 2012, at 2:30 p.m. is designated as Transcript 3.

The Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a, Sections 36b-1 to 36b-34, inclusive, of the Connecticut General Statutes, the Connecticut Uniform Securities Act (“Act”), and the regulations promulgated thereunder (Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies) (“Regulations”).

The above-referenced matter was initiated upon charges brought by the Commissioner to issue a permanent order to cease and desist against Respondents, to issue a permanent order to make restitution against Respondents, and to a impose fine upon each Respondent.  On May 29, 2012, the Commissioner issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing against Respondents (“Notice”).

After due notice, a hearing was held at the Department of Banking (“Department”) on September 19, 2012.  The hearing was conducted in accordance with Chapter 54 of the Connecticut General Statutes, the “Uniform Administrative Procedure Act”, and the Department’s contested case regulations, Sections 36a-1-19 to 36a-1-57, inclusive, of the Regulations of Connecticut State Agencies.

Having read the entire record, including testimony of the witnesses and documentary evidence, I make the following findings of fact and conclusions of law based on the preponderance of evidence in the record.

FINDINGS OF FACT

1. On May 29, 2012, the Commissioner issued an Order to Cease and Desist (“Order”), Order to Make Restitution (“Restitution Order”), Notice of Intent to Fine (“Fine Notice”) and Notice of Right to Hearing (collectively “Notice”) against Respondents.  (HO Ex. 2.)
2. On May 29, 2012, the Notice was sent by certified mail, return receipt requested, to CFDC at 41-C New London Turnpike, Glastonbury, Connecticut 06033, certified mail no. 7011 0470 0002 2573 4414; and c/o its agent, The Company Corporation, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, certified mail no. 7011 0470 0002 2573 4421.  (HO Ex. 2.)
3. On May 29, 2012, the Notice was sent by certified mail, return receipt requested, to Beauchamp at 77 Ballard Drive, West Hartford, Connecticut 06119, certified mail no. 7011 0470 0002 2573 4438.  (HO Ex. 2.)
4.
The Notice asserted that:
a. CFDC is a purported Delaware corporation with its principal place of business last known to the Commissioner at 41-C New London Turnpike, Glastonbury, Connecticut 06033.
b. Beauchamp is an individual whose address last known to the Commissioner is 77 Ballard Drive, West Hartford, Connecticut 06119.
c. From at least February 6, 2007 to the present, CFDC has been an issuer of securities in the form of promissory notes (“CFDC Notes”).
d. For all relevant periods, Beauchamp was the sole officer, shareholder and manager of CFDC.  CFDC and Beauchamp purported to counsel people who were in financial distress and in danger of losing their homes, and represented that one of their methods of providing assistance was to stop a bank from foreclosing on a home and to sell the home, after obtaining additional time from the bank and the courts.
e. From at least February 6, 2007 to the present, CFDC and Beauchamp offered and sold CFDC Notes in or from Connecticut to at least three investors.
f. On February 6, 2007, Respondents offered and sold a Connecticut investor (“Investor 1”) a promissory note (“CFDC Note 1”) in the sum of $30,000 for a 4-month term for a minimum return of 10% with the ability to roll the note into another 4-month term having a minimum return of 10% on the investment.  The terms of CFDC Note 1 guaranteed that the investor’s principal would be available at the end of the term, even “[i]n a worst case scenario and a deal gone bad.”
g. On June 11, 2007, Respondents offered and sold Investor 1 another CFDC Note (“CFDC Note 2”) in the sum of $30,000 for a 4 to 6-month term for a return of 20% with the ability to roll the note into another 4 to 6-month term having a minimum return of 10% on the investment.  CFDC Note 2 represented a reinvestment of the principal from CFDC Note 1.  The terms of CFDC Note 2 guaranteed that the investor’s principal would be available at the end of the term, even “[i]n a worst case scenario and a deal gone bad.”
h. In connection with the offer and sale of CFDC Note 1 and CFDC Note 2, Beauchamp alone and on behalf of CFDC told Investor 1 that the money would be used for CFDC’s operating expenses, to buy leads and to purchase a property if one were located.
i. On March 5, 2007, Respondents offered and sold another Connecticut investor (“Investor 2”) a promissory note (“CFDC Note 3”) in the sum of $50,000 for a 3 to 4-month term after which Respondents would pay the entire principal balance plus $10,000.
j. On March 14, 2007, Respondents offered and sold Investor 2 another CFDC Note (“CFDC Note 4”) in the sum of $50,000 for a 3 to 4-month term after which Respondents would pay the entire principal balance plus $10,000.
k. In connection with the offer and sale of CFDC Note 3 and CFDC Note 4, Beauchamp alone and on behalf of CFDC told Investor 2 that he was looking for investors to pool funds for the purpose of purchasing foreclosed homes, fixing and reselling them.
l. On June 17, 2007, Respondents offered and sold another Connecticut investor (“Investor 3”) a promissory note (“CFDC Note 5”) in the sum of $50,000 for a 4-month term for a minimum return of 10%.  In connection with the offer and sale of CFDC Note 5, Beauchamp alone and on behalf of CFDC told Investor 3 that CFDC’s business was to help people get out of foreclosure, to save their credit and, if the opportunity arose, to invest in properties that Beauchamp would locate during his interviews with individuals who were in foreclosure.  Beauchamp alone and on behalf of CFDC told Investor 3 that he needed Investor 3’s money for this business purpose.
m. The CFDC Notes offered and sold by Respondents were never registered in Connecticut under Section 36b-16 of the Act, nor were they exempt from registration under Section 36b-21 of the Act, nor were they the subject of a filed exemption claim or claim of covered security status.
n. Respondents used some of the money raised from selling the CFDC Notes to Investor 1, Investor 2 and Investor 3 to pay for the personal and medical expenses of Beauchamp and Beauchamp’s family as well as the business expenses of Beauchamp’s spouse.
o. Respondents failed to pay Investor 1, Investor 2 and Investor 3 all of the money due under the CFDC Notes.
p. Both CFDC and Beauchamp failed to disclose, inter alia, any risk factors related to the investment, any financial information on CFDC or Beauchamp, and/or that Respondents would use part of the investors’ money to pay for the personal, medical and household expenses of Beauchamp and Beauchamp’s family as well as the business expenses of Beauchamp’s spouse.  Each of these omitted items was material to investors and prospective investors of the CFDC Notes.
(HO Ex. 2.)
  
5. The Notice alleges that Respondents offered and sold unregistered securities in or from Connecticut to at least three Connecticut investors, which securities were not registered in Connecticut under the Act.  The offer and sale of such securities absent registration constitutes a violation of Section 36b-16 of the Act, which forms a basis for an order to cease and desist to be issued against Respondents under Section 36b-27(a) of the Act, an order that Respondents make restitution under Section 36b-27(b) of the Act, and for the imposition of a fine against Respondents under Section 36b-27(d) of the Act.  (HO Ex. 2.)
6. The Notice also alleges that the conduct of Respondents constitutes, in connection with the offer, sale or purchase of any security, directly or indirectly employing a 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 as a fraud or deceit upon any person.  Such conduct constitutes a violation of Section 36b-4(a) of the Act, which forms a basis for an order to cease and desist to be issued against Respondents under Section 36b-27(a) of the Act, an order that Respondents make restitution under Section 36b-27(b) of the Act, and for the imposition of a fine upon Respondents under Section 36b-27(d) of the Act.  (HO Ex. 2.)
7. In the Order, the Commissioner ordered that CFDC and Beauchamp cease and desist from directly or indirectly violating the provisions of the Act and Regulations, including without limitation, (1) offering and selling unregistered securities, and (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 act, practice or course of business which operates or would operate as a fraud or deceit upon any person.  (HO Ex. 2.)
8. In the Restitution Order, the Commissioner ordered that Respondents make restitution of any sums obtained as a result of Respondents’ violations of Sections 36b-4(a) and 36b-16 of the Act, plus interest at the legal rate set forth in Section 37-1 of the Connecticut General Statutes.  (HO Ex. 2.)
9. The Notice stated that a hearing would be granted to Respondents if a written request for a hearing was received by the Department of Banking (“Department”), Securities and Business Investments Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800, within fourteen (14) days following each Respondent’s receipt of the Order.  (HO Ex. 2.)
10. By facsimile dated June 15, 2012, the Department received two Appearances and Requests for Hearing signed by Beauchamp and dated June 15, 2012.  Beauchamp listed his address as 18 Camp Street, Basement Apartment, Meriden, Connecticut 06451.  (HO Ex. 4.)
11. On June 20, 2012, the Commissioner issued a Notification of Hearing and Designation of Hearing Officer appointing Stacey Serrano as Hearing Officer and setting July 12, 2012, as the hearing date in the matter.  (Dept. Ex. 1.)
12. On July 12, 2012, the Hearing Officer continued the hearing to September 12, 2012, to allow the Department and Respondents additional time to pursue settlement.  (Tr. 1  at 5.)
13. On September 5, 2012, the Hearing Officer continued the hearing to September 19, 2012, at 10 a.m.  (HO Ex. 3.)
14. On September 19, 2012, the hearing was held at the Department.  (Tr. 2.)
15. Beauchamp appeared at the hearing on behalf of himself and CFDC.  (Tr. 2 at 7.)
16. Attorney Paul Bobruff appeared at the hearing on behalf of the Department.  (Tr. 2 at 6-7.)
17. CFDC was a Delaware corporation with offices at 41-C New London Turnpike, Glastonbury, Connecticut.  (Dept. Ex. 2, Dept. Ex. 5.)
18. Beauchamp, on behalf of CFDC, entered into an agreement with Investor 1, which stated that $30,000 would be invested by Investor 1, a Connecticut resident, for a 4-month term from February 6, 2007, for a return of 10% minimum for a total of $33,000 due (CFDC Note 1).  CFDC Note 1 also stated that “[i]n a worst-case scenario and a deal gone bad” a minimum return of $30,000 shall be available.  (Tr. 2 at 46-47; Dept. Ex. 5.)
19. Investor 1 rolled the proceeds from CFDC Note 1 into a second agreement with Beauchamp that stated that Investor 1 would invest $30,000 in CFDC for a 4-6 month term from June 11, 2007, for a return of 20% for a total of $36,000 (CFDC Note 2).  CFDC Note 2 also stated that “[i]n a worst-case scenario and a deal gone bad” a minimum return of $30,000 shall be available.  (Tr. 2 at 47-48; Dept. Ex. 6.)
20. Investor 1 received one payment of $3,580 from CFDC by check dated June 11, 2007, as a result of her investment in CFDC. (Tr. 2 at 67; Dept. Ex. 10.)
21. Beauchamp, on behalf of CFDC, via a “Fixed Rate Balloon Note” promised to pay Investor 2, a Connecticut resident, the amount of $60,000, including $10,000 in interest, for $50,000 received from Investor 2 (CFDC Note 3).  CFDC Note 3 was dated March 5, 2007, and stated that the full amount would be repaid within three to four months.  (Tr. 2 at 54-55; Dept. Ex. 7.)
22. Beauchamp, on behalf of CFDC, via a “Fixed Rate Balloon Note”, promised to pay Investor 2 the amount of $60,000, including $10,000 in interest, for $50,000 received from Investor 2 (CFDC Note 4).  CFDC Note 4 was dated March 14, 2007, and stated that the full amount would be repaid within three to four months.  (Tr. 2 at 56-57; Dept. Ex. 8.)
23. Investor 2 received one payment of $10,000 from CFDC by check dated August 3, 2007, and one payment of $10,000 from CFDC by check dated September 21, 2007, as a result of her investments in CFDC.  (Tr. 2 at 56-57; Dept. Ex. 11.)
24. Beauchamp, on behalf of CFDC, entered into an agreement with Investor 3, a Connecticut resident, which stated that $50,000 would be invested by Investor 3 for a 4-month term from June 7, 2007, for a return of 10% minimum for a total of $55,000 due October 7, 2007 (CFDC Note 5).  (Tr. 2 at 57-58; Dept. Ex. 9; Resp. Ex. 2.)
25. Beauchamp, on behalf of CFDC, received $30,000 from Investor 1, $100,000 from Investor 2 and $50,000 from Investor 3, which amounts were deposited into CFDC’s bank account.  (Tr. 2 at 61-62, 66.)
26. The CFDC Notes were never registered as securities in Connecticut, nor were any exemption or notice filings made with the Department concerning CFDC.  (Tr. 2 at 42, 61; Dept. Ex. 4.)
27. No additional informational documents, other than the CFDC Notes, were provided to investors concerning CFDC.  (Tr. 2 at 48, 57, 59, 95, 115-116.)
28. Investor 2 did not communicate with Beauchamp directly, but instead communicated to Beauchamp through her daughter.  (Tr. 3 at 141-142.)  Beauchamp told Investor 2, through her daughter, that the monies invested would be pooled and used for the purpose of purchasing, fixing and reselling homes.  (Tr. 3 at 142, 147.)  Investor 2 provided monies to CFDC not as a loan, but for investment purposes.  (Tr. 3 at 153-154.)  No additional information or risk disclosure concerning CFDC, other than the CFDC Notes, was provided to Investor 2, either directly or through her daughter.  (Tr. 1 at 57; Tr. 3 at 148-150, 152-153.)
29. Beauchamp entered into agreements to repay $33,000 to Investor 1 and $50,000 to Investor 3.  (Resp. Exs. 1, 2; Tr. 3 at 175-176.)
30. CFDC is no longer in business.  (Tr. 3 at 187-188.)
31. Beauchamp represents that he has very limited means and hardly any assets.  (Tr. 3 at 189, 200, 201-202.)
32. On January 23, 2013, the Hearing Officer requested that Beauchamp produce a financial affidavit to be considered in the matter.  Beauchamp failed to respond to such request.  (Email to Paul Bobruff and Beauchamp from Stacey Serrano dated January 23, 2013.)

CONCLUSIONS OF LAW

I.  Violation of Section 36b-16 of the Act -
Offer and Sale of Unregistered Securities

Section 36b-16 of the Act provides that:

No person shall offer or sell any security in this state unless (1) it is registered under sections 36b-2 to 36b-34, inclusive, (2) the security or transaction is exempted under section 36b-21, or (3) the security is a covered security provided such person complies with any applicable requirements in subsections (c), (d) and (e) of section 36b-21.

Section 36b-3(19) of the Act defines the term “security” to mean, in pertinent part:

[A]ny note . . . bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, . . . investment contract . . . or, in general, any interest or instrument commonly known as a “security” . . . .

The record establishes that during 2007, Respondents sold CFDC Notes to three Connecticut residents.  The CFDC Notes constitute securities within the meaning of Section 36b-3(19) of the Act.  The definition provided by Section 36b-3(19) is very broad and inclusive of investment vehicles such as the CFDC Notes, including notes and evidences of indebtedness.  Moreover, while there is a dearth of Connecticut case law construing this definition, Connecticut courts have repeatedly considered promissory notes to be securities, see, e.g., Lehn v. Dailey, 77 Conn. App. 621 (Conn. App. Ct. 2003), Miller v. Inverness Corp. 2000 Conn. Super. LEXIS 2771 (Conn. Super. Ct. Oct. 18, 2000), and a recent Connecticut decision has held that notes used for investment purposes are securities, considering both “the parties’ motivation in entering the transaction” and the “reasonable expectations of the investing public.” See Desteph v. Commissioner, Connecticut Department of Banking, 2012 Conn. Super LEXIS 585 (Conn. Super.Ct. February 29, 2012) at *9-10.  In all five transactions discussed herein, the monies provided to CFDC by Connecticut residents were provided for investment purposes and investors reasonably expected a certain return on the monies within a matter of months.

In addition, the record establishes that the CFDC Notes were not registered in Connecticut under the Act and no evidence has been produced by Respondents supporting a claim of exemption or exclusion.  Section 36b-21(g) of the Act provides, in pertinent part, that “the burden of proving an exemption, preemption, exclusion or an exception from a definition is upon the person claiming it.”  Accordingly, such conduct by Respondents constitutes a violation of Section 36b-16 of the Act by each Respondent.


II.  Violation of Section 36b-4(a) of the Act -
Fraud in Connection with the Offer and Sale of any Security

Section 36b-4(a) of the Act provides that:

No person shall, in connection with the offer, sale or purchase of any security, directly or indirectly:  (1) Employ any device, scheme or artifice to defraud; (2) make any untrue statement of a material fact or omit 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 (3) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.

The record establishes that in connection with the sale of CFDC Notes, Respondents failed to disclose any risk factors related to the investment and any financial information on CFDC or Beauchamp.  Investors were promised that amounts invested would be repaid with interest within the term evidenced by the CFDC Notes, and the possibility and factors causing the amounts not to be repaid were never discussed.  In fact, two of the CFDC Notes expressly state that in “a worst-case scenario and a deal gone bad” the principal would be repaid.  Investor 2 had also thought the investment was guaranteed.  (Tr. 3 at 154.)  No additional documentation had been provided to investors, and as of the date of the hearing, no investor had been repaid the entire amount of his or her investment.  In construing Section 36b-4(a) of the Act, the Connecticut Appellate Court has stated:

“A material fact is a fact that ‘a reasonable investor would have considered significant in making investment decisions.’  Ganino v. Citizens Utilities Co., 228 F.3d 154, 161 (2d Cir. 2000).  A fact need not be outcome determinative for it to be material.  See id., 161-62; Folger Adam Co. v. PMI Industries, Inc., 938 F.2d 1529, 1533-34 (2d Cir.), cert. denied, 502 U.S. 983, 112 S. Ct. 587, 116 L. Ed. 2d 612 (1991).  On the other hand, ‘[a]n omitted fact may be immaterial if the information is trivial . . . or is so basic that any investor could be expected to know it . . . .’  (Citations omitted; internal quotation marks omitted.)  Ganino v. Citizens Utilities Co., supra, 162; see also Levitin v. PaineWebber, Inc., 159 F.3d 698, 702 (2d Cir. 1998), cert. denied, 525 U.S. 1144, 119 S. Ct. 1039, 143 L. Ed. 2d 47 (1999).”  Lehn v. Dailey, supra, 77 Conn. App. 628-29. . . .

Papic v. Burke, 113 Conn. App. 198, 212 n.9 (Conn. App. Ct. 2009).

Risk factors and financial information repeatedly have been held to be material facts.  See, e.g., Connecticut National Bank v. Giacomi, 242 Conn. 17, 50 (Conn. 1997); SEC v. Hasho, 784 F. Supp. 1059, 1109 (S.D.N.Y. 1992).  The failure by Respondents to provide such information concerning the CFDC Notes while making statements indicating that the investments were practically guaranteed, constitutes, in connection with the sale of a security, directly or indirectly, making an untrue statement of a material fact or omitting to state a material fact necessary in order to make the statement made, in the light of the circumstances under which it was made, not misleading, in violation of Section 36b-4(a) of the Act.


III.  Authority to Issue Order to Cease and Desist,
Order to Make Restitution and Impose Fine

Section 36b-27(a) of the Act provides, in pertinent part, that:

Whenever it appears to the commissioner after an investigation that any person has violated, is violating or is about to violate any of the provisions of sections 36b-2 to 36b-34, inclusive, . . . the commissioner may, in the commissioner’s discretion, order (1) the person . . . to cease and desist from the violations . . . .  After such an order is issued, the person named in the order may, within fourteen days after receipt of the order, file a written request for a hearing.  Any such hearing shall be held in accordance with the provisions of chapter 54.

Section 36b-27(b) of the Act provides, in pertinent part, that:

Whenever it appears to the commissioner, after an investigation, that any person has violated any of the provisions of sections 36b-2 to 36b-34, inclusive, . . . the commissioner may, in addition to any other remedy under this section, order the person to (1) make restitution of any sums shown to have been obtained in violation of any of the provisions of said sections . . . plus interest at the legal rate set forth in section 37-1 . . . .  After such an order is issued, the person named in the order may, not later than fourteen days after receipt of the order, file a written request for a hearing.  Any such hearing shall be held in accordance with the provisions of chapter 54.

Section 36b-27(d) of the Act provides, in pertinent part, that:

(1)  Whenever the commissioner finds as the result of an investigation that any person has violated any of the provisions of sections 36b-2 to 36b-34, inclusive, . . . the commissioner may send a notice to (A) such person . . . .  The notice shall be deemed received by the person on the earlier of the date of actual receipt or the date seven days after the date on which such notice was mailed or sent.  Any such notice shall include:  (i) A reference to the title, chapter, regulation, rule or order alleged to have been violated; (ii) a short and plain statement of the matter asserted or charged; (iii) the maximum fine that may be imposed for such violation; (iv) a statement indicating that such person may file a written request for a hearing on the matters asserted not later than fourteen days after receipt of the notice; and (v) the time and place for the hearing.

(2)  If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the charges made unless such person fails to appear at the hearing.  Any such hearing shall be held in accordance with the provisions of chapter 54.  After the hearing if the commissioner finds that the person has violated, caused a violation or materially aided in the violation of any of the provisions of sections 36b-2 to 36b-34, 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 one hundred thousand dollars per violation be imposed upon such person.  If 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.  The commissioner shall send a copy of any order issued pursuant to this subsection by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to any person named in such order.

The record establishes that Respondents have violated Sections 36b-16 and 36b-4(a) of the Act and have obtained monies from Connecticut residents as a result of such violations, necessary to order Respondents to cease and desist pursuant to Section 36b-27(a) of the Act, to make restitution pursuant to Section 36b-27(b) of the Act and to impose a fine pursuant to Section 36b-27(d) of the Act.  However, I will not impose a fine as a result of the financial hardship that has been demonstrated by Beauchamp, the fact that CFDC is no longer in business, and the desire to direct any monies available to Respondents towards making restitution to the harmed Connecticut investors.

IV.  Notice and Public Interest

Section 4-177 of the Connecticut General Statutes provides, in pertinent part, that:

(a)  In a contested case, all parties shall be afforded an opportunity for hearing after reasonable notice.

(b)  The notice shall be in writing and shall include:  (1) A statement of the time, place, and nature of the hearing; (2) a statement of the legal authority and jurisdiction under which the hearing is to be held; (3) a reference to the particular sections of the statutes and regulations involved; and (4) a short and plain statement of the matters asserted.

The Notice issued by the Commissioner complied with the Sections 36b-27(a), 36b-27(b) and 36b- 27(d) of the Act and Section 4-177 of the Connecticut General Statutes.

Section 36b-31(b) of the Act provides, in pertinent part, that:

No . . . 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.

Section 36b-31(b) of the Act requires that the Commissioner find that an 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 sections 36b-2 to 33b-34, inclusive.  In this case, Respondents’ actions in violation of the Act involved failing to register a security in violation of Section 36b-16 of the Act, and in connection with the sale of such unregistered security, directly or indirectly, making an untrue statement of material fact or omitting to state a material fact necessary in order to make the statement made, in light of the circumstances under which it was made, not misleading, in violation of Section 36b-4(a) of the Act.  Future harm to Connecticut residents will be deterred through the issuance of an order to cease and desist against Respondents and, for those Connecticut residents who have already suffered financial loss as a result of Respondents’ conduct, an order to make restitution will serve to lessen such losses.

I conclude that the issuance of an order to cease and desist and an order to make restitution are 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.

ORDER

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

1. The Order to Cease and Desist issued against Connecticut Foreclosure Division Corp. on May 29, 2012, be made PERMANENT;
2. The Order to Cease and Desist issued against Alfred R. Beauchamp on May 29, 2012, be made PERMANENT;
3.
The Order to Make Restitution issued against Connecticut Foreclosure Division Corp. and Alfred R. Beauchamp on May 29, 2012 be made PERMANENT as follows:
  
(a)   No later than March 15, 2013, Alfred R. Beauchamp, on behalf of Connecticut Foreclosure Division Corp. and himself, shall provide a written affidavit to the Director of the Securities and Business Investments Division of the Department of Banking attesting to the amounts repaid in connection with the sale of CFDC Note 1, CFDC Note 2, CFDC Note 3, CFDC Note 4 and CFDC Note 5, as defined herein, either in principal or interest, since February 1, 2007, to Investor 1, Investor 2 and Investor 3 identified in Exhibit A;
(b) Connecticut Foreclosure Division Corp. and Alfred R. Beauchamp shall continue to repay:  (1) Investor 1 the sum of $33,000 in accordance with the agreement entered as Respondent’s Exhibit 1 during the hearing, and (2) Investor 3 the sum of $50,000 in accordance with the agreement entered as Respondent’s Exhibit 2 during the hearing; and
(c) Connecticut Foreclosure Division Corp. and Alfred R. Beauchamp shall repay Investor 2 the sum of $60,000, to be paid in sixty (60) equal monthly installments of One Thousand Dollars ($1,000) due the first day of each month, commencing on April 1, 2013.  Such payments shall be made by cashier’s check, certified check or money order, sent by certified mail, to Investor 2 at such investor’s last known address.  No later than the tenth day of each month commencing in April 2013, and continuing for a period of fifty-nine (59) months thereafter, a copy of each check or money order and certified mailing made to Investor 2 shall be provided to the Director of the Securities and Business Investments Division of the Department of Banking.
4. This Order shall become effective when mailed.



Dated at Hartford, Connecticut       _______/s/____________
this 20th day of February 2013.      Howard F. Pitkin 
         Banking Commissioner 



This Order was sent by certified mail,
return receipt requested, to
Alfred R. Beauchamp, on behalf
of both Respondents, on
February 20, 2013.

Alfred R. Beauchamp
18 Camp Street, Basement Apt.
Meriden, CT 06451
Certified Mail No. 7011 0470 0002 2572 9656


Administrative Orders and Settlements