ADMINISTRATIVE PROCEEDING BEFORE THE SECURITIES COMMISSIONER OF MARYLAND

Transcription

1 ADMINISTRATIVE PROCEEDING BEFORE THE SECURITIES COMMISSIONER OF MARYLAND IN THE MATTER OF: * KEVIN T. FORRESTER D/B/A * Case No FORRESTER FINANCIAL GROUP * Respondent. * * * * * * * FINAL CONSENT ORDER WHEREAS, the Securities Division of the Office of the Maryland Attorney General (the Division ), pursuant to the authority granted by Section of the Maryland Securities Act, Corporations and Associations Article, Title 11, Annotated Code of Maryland (2007 Repl. Vol.) (the Act ), conducted an investigation and examination of the respondent, Kevin T. Forrester d/b/a Forrester Financial Group ( respondent or Forrester ); and WHEREAS, on the basis of that investigation and examination the Maryland Securities Commissioner (the Commissioner ) determined that respondent may have engaged in acts or practices constituting violations of Sections , and of the Act; and WHEREAS, on May 24, 2007, respondent and the Commissioner entered into a Interim Consent Order that revoked his securities and investment adviser representative registrations and required him to turn over the proceeds of certain assets to the Commissioner; and WHEREAS, the Commissioner has now determined that respondent has engaged in acts or practices constituting violations of Sections , and of the Act; and WHEREAS, without holding a hearing, and without trial or adjudication of any issue of fact - 1 -

2 or law the Commissioner and respondent have reached a final agreement to resolve this matter; and WHEREAS, respondent, without admitting or denying any conclusion of law, except that respondent expressly consents to the Commissioner s jurisdiction in this proceeding pursuant to Section of the Act, to the Commissioner s findings of fact, and to the terms of this Order; and WHEREAS, the Commissioner has determined that it is in the public interest to issue this Consent Order. NOW, THEREFORE, THE COMMISSIONER FINDS: I. JURISDICTION 1. The Securities Commissioner has jurisdiction in this proceeding pursuant to Section of the Securities Act. II. RESPONDENT 2. Forrester resides and works in Phoenix, Maryland. He was a registered investment adviser representative and broker-dealer agent of Kovack Advisors, Inc and Kovack Securities, Inc. ( Kovack ) from October 26, 2006 until March 16, Forrester was a registered broker-dealer agent and an investment adviser representative of Linsco/Private Ledger Corp. ( Linsco ) from December 16, 2004 until October 10, 2006; a registered broker-dealer agent of NYLife Securities, Inc. from May 25, 2004 until January 6, 2005; and a registered broker-dealer agent and investment adviser representative with Lincoln Financial Advisers Corporation from July 2000 until April 30, Forrester Financial Group is a d/b/a that Forrester used in connection with his schemes to defraud investors

3 III. FINDINGS OF FACT 3. Beginning in 2003, Forrester offered and sold interests in Private Funding Group ( PFG ) to 21 Maryland investors in the amount of $2,219,975. Investors relied on Forrester s position as a broker-dealer agent and investment adviser representative and his promises that PFG provided safe, fixed returns. 4. PFG is a name used by respondent to solicit funds from client, but is not a legal entity. PFG never had any meaningful business or investment activity. Respondent told investors that their funds would be invested in PFG. 5. Forrester instructed investors in PFG to make their investment checks payable to him personally or to his d/b/a Forrester Financial Group. Forrester then deposited the investor funds into his personal bank account at Provident Bank or a Forrester Financial Group bank account at Bank of America. 6. Forrester sent investors statements he fabricated showing that their investments were profitable when, in fact, Forrester spent investor funds on business and personal expenses, including a luxury home, decorations and improvements to his home, private school tuition, expensive vacations, and leases for luxury vehicles. 7. Forrester never filed a securities registration in Maryland on behalf of PFG, and PFG is neither exempt from registration in Maryland nor a federally covered security. 8. Forrester did not make any risk disclosures to investors in PFG or offer them any kind of disclosure document. IV. CONCLUSIONS OF LAW THE COMMISSIONER, THEREFORE, CONCLUDES AS A MATTER OF LAW: - 3 -

4 9. The investments sold by respondent in PFG are investment contracts and, therefore, securities as defined by Section (r) of the Act. 10. Respondent violated Section of the Act by offering and selling securities that were neither registered nor exempt from registration in Maryland and that were not federal covered securities. 11. Respondent violated Sections and of the Act by engaging in an act, practice or course of conduct which operated as a fraud on investors in connection with the sale of securities and providing investment advice. V. SANCTIONS Respondent, on behalf of himself, his successors, assigns and all persons acting or purporting to act on his behalf or by his authority, does consent and it is hereby ORDERED: A. Respondent shall pay a civil monetary penalty in the amount of $2,219,975. This penalty will be offset by restitution to be made to investors in the amount of $2,219,975. In light of the restitution order in the criminal matter in Baltimore County related to these proceedings and Respondent s payment of $156,766 in restitution, collection of the civil monetary penalty is waived to allow funds collected to be available for restitution to investors pursuant to this case and the criminal sentencing restitution order. B. Respondent is permanently barred from the investment advisory and securities business in Maryland. C. Respondent shall in all future activities in Maryland comply fully with the Act and regulations promulgated thereunder

5 VI. CONSEQUENCES OF VIOLATING CONSENT ORDER 12. If respondent fails to comply with any term of this Consent Order, the Division may institute administrative or judicial proceedings against respondent to enforce this Consent Order or to sanction the respondent for violating an Order of the Commissioner, and may take any other action authorized under the Act or any other applicable law, including the issuance of fines or penalties as provided by the Act. For the purpose of determining those sanctions, the Findings of Fact and violations of the Act set forth in this Consent Order shall be deemed admitted, and may be introduced into evidence against respondent. VII. MODIFICATION OF CONSENT ORDER 13. The terms of this Consent Order may only be modified by a subsequent order issued by the Commissioner. DATE OF THIS ORDER: August 28, 2008 SO ORDERED, (Commissioner s Signature is on File w/original Document) Melanie Senter Lubin Securities Commissioner CONSENTED TO: (Signature is on File w/original Document) Name: Kevin T. Forrester On this _25th day of August, 2008, personally appeared Kevin T. Forrester signer of the foregoing Consent Order, who did duly acknowledge his signature to be his free act and deed. (Signature is on File w/original Document) Notary Public My Commission Expires: _01/09/12-5 -

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