ADMINISTRATIVE PROCEEDING BEFORE THE SECURITIES COMMISSIONER OF MARYLAND CONSENT ORDER

Transcription

1 ADMINISTRATIVE PROCEEDING BEFORE THE SECURITIES COMMISSIONER OF MARYLAND IN THE MATTER OF: * Arnold M. Hecht * Case No Respondent. * * * * CONSENT ORDER WHEREAS, the Securities Division of the Office of the Attorney General (the "Securities Division") initiated an investigation into the activities of Arnold M. Hecht ( Respondent ); and WHEREAS, the Maryland Securities Commissioner (the "Securities Commissioner") has found that grounds exist to allege that Respondent violated the Maryland Securities Act, contained at Md. Code Ann., Corps. and Ass'ns, et seq. (2007 Repl. Vol. and 2008 Cum. Supp.) (the Securities Act ), by engaging in acts or practices constituting violations of the Securities Act; and WHEREAS, before the holding of a hearing, without trial or final adjudication of any issue of fact or law, and prior to the issuance of a final order in this proceeding, the Securities Commissioner and Respondent have reached an agreement whereby Respondent, without admitting or denying the Statement of Facts and Findings of Fact and Conclusions of Law contained herein, consents to the terms of this Order: - 1 -

2 I. JURISDICTION 1. The Securities Commissioner has jurisdiction in this proceeding pursuant to of the Securities Act. II. RESPONDENT 2. Respondent is and at all times relevant to the facts contained in this Order has been a Maryland resident. 3. Respondent is not now, nor has he ever been, registered in Maryland as a brokerdealer agent, investment adviser, investment adviser representative, or issuer agent. III. STATEMENT OF FACTS 4. Respondent, after meeting Maryland resident Timothy Hancock at a local gym, solicited him to invest in various investment schemes. 5. In the Summer of 2004, Respondent offered and sold Mr. Hancock an investment called Vietnam purportedly referring to a telecommunications portal that was being routed. 6. Respondent described the investment to Mr. Hancock as very safe. Respondent advised Mr. Hancock that the return was $1, per month; at the end of 12 months you can opt to get out and the initial $15k will be returned

3 7. In that same , Respondent advised that... in 12 months you make $12, with the ability to get your principle back... that is a[n] 80% return on investment in 12 months.... Let me know if you want this opportunity. 8. During that same month, Respondent solicited Mr. Hancock to invest, also, in a Cuba venture. Respondent advised that [w]e will be placing equipment in Brazil; minutes will go from our equipment in NYC to Brazil and then forwarded to Cuba. 9. In that same , Respondent advised Mr. Hancock that [y]ou will make $.0125 per minute; based on 600,000 to 900,000 minutes per month we estimate that your return is between $7, to $11, per month. 10. Mr. Hancock invested in both the Vietnam and the Cuba investment opportunities through Respondent. He also invested in other investment opportunities through Respondent, in what was described as Jordan, Diesel and Nepal. 11. Altogether, Mr. Hancock invested a total of $130,000 through Respondent in various investment schemes. In each case, Mr. Hancock was led to believe that by investing money through Respondent, he would make significant profits. 12. Respondent did not provide Mr. Hancock with any disclosure documents describing or relating to his investments or how his investment monies would be used. Nor did Respondent provide Mr. Hancock with any regular updates or statements of account regarding his investments. 13. Mr. Hancock s role as an investor was purely passive. He did not have any experience in the telecommunications industry, nor was there any expectation that he would play an active role in the investments he made through Respondent. 14. Mr. Hancock was directed by Respondent to wire his investment monies to a bank - 3 -

4 account at Citibank, N.A. To date, Respondent paid Mr. Hancock $19,800 in returns on his investment monies. 15. The Securities Division s records reflect that there is no record of any securities registration, or claim of exemption or status as federal-covered securities issued under the name Arnold Hecht, Vietnam, Cuba, Diesel or Nepal, or just under the name Jordan. The Securities Division s records reflect an exemption for investments beginning with the term Jordan, i.e., Jordan Capital LP and Jordan Prospect #1/Ampak Oil, however those companies appear to have no affiliation with Respondent and Respondent did not provide Mr. Hancock with any information regarding those companies. IV. CONCLUSIONS OF LAW The Securities Commissioner concludes that: 16. In connection with the facts described in the Statement of Facts contained herein, Respondent violated (2) and (3), and of the Securities Act with respect to the offer and sale of the investments described in this Consent Order. V. CONSENT TO CEASE AND DESIST AND OTHER RELIEF 17. NOW, THEREFORE, IT IS HEREBY ORDERED, and Respondent expressly consents and agrees that: - 4 -

5 a. Respondent is fined $25,000, however, in light of Respondent s agreement to pay restitution in this matter, and in reliance upon the financial statement filed by Respondent with the Securities Division (referenced below), the fine is waived. b. Respondent shall pay $35,000 in restitution to the State of Maryland, as Assignee to the Assignment of the foregoing referenced investments, dated May 21, 2009, by Assignor Timothy K. Hancock (the Assigned Investments ), which payment of restitution shall satisfy Respondent s obligations to the Assignee as to the Assigned Investments, except that in the event that any of the Assigned Investments, from the date of the issuance of this Consent Order, provide a monetary payout or payouts to Respondent in excess of $35,000 (the Excess Payout(s) on Assigned Investments ), then Respondent shall immediately provide notice thereof to the Securities Division, and within 15 days of receiving such payment or payments shall make payment to the Securities Division by check made payable to Office of the Attorney General. The proceeds of any Excess Payout(s) on Assigned Investments owing to the Office of the Attorney General hereunder shall not exceed the amount of $70,000. As to the $35,000 in restitution referenced above, Respondent shall make such payment contemporaneous with the issuance of this Consent Order by check made payable to Office of the Attorney General. c. Respondent shall cease and desist from engaging in activities in violation of the Securities Act. d. Respondent is permanently barred from the securities and investment advisory business in Maryland, including by acting as a principal or consultant in any entity so engaged. Act. e. Respondent shall in all future activities in Maryland comply with the Securities VI. RELIANCE ON REPRESENTATIONS 18. Respondent has provided the Securities Commissioner with a sworn financial statement dated September 16, 2009, and the Securities Commissioner has relied upon that statement in establishing the terms of and agreeing to enter into this Consent Order. If the Securities Commissioner receives information that the information contained in that financial statement is false in any material respect, the Securities Commissioner may reopen these - 5 -

6 proceedings and seek such further relief as is appropriate, including the collection of the monetary penalty imposed above. VII. SCOPE OF SETTLEMENT 19. This Consent Order relates only to the Securities Commissioner and Respondent. This Consent Order does not waive or relinquish the Securities Commissioner s right to take any action against any other persons, including but not limited to any of the Companies. Nor does this Consent Order prevent the Securities Commissioner from bringing any action against Respondent relating to any acts or omissions not specifically raised in this Consent Order. VIII. JURISDICTION RETAINED 20. Jurisdiction shall be retained by the Securities Commissioner for such further orders and directions as may be necessary or appropriate for the construction or enforcement of the Consent Order. 21. If Respondent fails to comply with any term of this Consent Order, the Securities Commissioner may institute administrative or judicial proceedings against Respondent to seek to enforce this Consent Order and/or to sanction Respondent for violating an Order of the Securities Commissioner, and may take any other action authorized under the Securities Act or under any other applicable law, including the issuance of fines or penalties as provided by the Securities Act. In any such proceeding in which, after an opportunity for a hearing, the Securities - 6 -

7 Commissioner or the court finds that Respondent has violated this Consent Order or made any material misrepresentations in his dealings with the Securities Division, the Securities Division may also seek other sanctions for the violations that initiated this matter. For the purpose of determining those sanctions, the Findings of Fact and violations of the Securities Act set forth in this Consent Order shall be deemed admitted, and may be introduced into evidence against Respondent. 22. In the event that judicial intervention in this matter is sought by the Securities Commissioner or Respondent, subject matter jurisdiction will lie in the Circuit Court for Baltimore City pursuant to of the Securities Act. Respondent agrees that that Court will have personal jurisdiction over Respondent, and that venue will be properly in that Court. 23. The terms of this Consent Order may only be vacated or modified by a subsequent order issued by the Securities Commissioner. DATE OF THIS ORDER: December 1, 2009 SO ORDERED: Commissioner s Signature is on File with Original Document Melanie Senter Lubin Securities Commissioner CONSENTED TO: November 23, 2009 /S/ Arnold M. Hecht On this day of, 200, personally appeared Arnold M. Hecht, signer of the foregoing Consent Order, who did duly acknowledge his signature to be his free act and deed. Notary Public My Commission Expires: Seal: - 7 -