STATE OF MAINE
121 STATE HOUSE STATION
AUGUSTA, ME 04333
CEASE AND DESIST ORDER 01-040
EDWARD W. KNIPPING, EDWARD W.
KNIPPING D/B/A TIME TRADERS,
TIME TRADERS INVESTMENT GROUP,
AND TIME TRADERS INVESTMENT
REFERRED TO AS "TIME TRADERS"),
AND ALL EMPLOYEES,
COORDINATORS, MANAGERS AND
RECRUITERS OF TIME TRADERS
INCLUDING, BUT NOT LIMITED TO,
DANIEL COSTA, JESS R. MEDINA, JR.,
CHARLES THOMPSON, JOHN
THOMPSON, BRIAN LAPPAN, DAVID
RUBRIGHT, JIM PRICE, HANK
HOEKSTRA, BECKY RITCHIE AND
FINDINGS OF FACTS AND CONCLUSIONS OFLAW
- Edward W. Knipping ("Knipping") is a resident of Maine, living
in Boothbay. Time Traders Investment Incorporated was incorporated in December,
2000 pursuant to the laws of Maine and uses a post office box in Boothbay
Harbor as its business address. Time Traders, Time Traders Investment Group
and Time Traders Investment Incorporated (hereinafter collectively referred
to as "Time Traders") are all entities created and which at all
times have been controlled by Knipping while residing in Maine.
- On or about April 25, 2001, the Securities Administrator of the Securities
Division for the State of Maine ("the Securities Division"), received
information from the State of Arizona Securities Commission regarding Knipping
and monies wired to an account of his at a bank in Maine ("the Packard
Account"). The Securities Administrator was informed at this time that
monies in Knipping’s Packard account had emanated from a ponzi-like scheme
set up in Arizona and that these monies amounted to approximately 1.5 million
- Several months prior to this telephone conversation, in or about November
of last year, the Securities Division received information that a Maine resident
received a solicitation in the mail to invest funds in "Time Traders".
This letter refers to a "Mr. Edward Nepplete of Boothbay Harbor"
as the "founder of Time Traders".
- The Securities Division was able to ascertain that the "Edward Neplette"
referred to in the solicitation letter was, in fact, Knipping.
- The Securities Division’s review of Knipping’s bank records revealed that
Knipping has three accounts, the Packard Account, referred to above, a business
checking account ("the Time Traders Account"), and a business savings
account (which is largely dormant). Knipping’s Packard Account is a joint
personal account in the name of Knipping and his wife, and the two business
accounts are in the name of "Edward W. Knipping doing business as Time
- A review of Knipping’s bank records indicated numerous deposits from individuals
in many states amounting to several million dollars. Some of the checks deposited
noted that the monies were for the purposes of investment. The deposits into
the Time Traders Account are in the form of large numbers of money orders,
cashier’s checks and personal checks from individuals around the country,
and include several Maine residents.
- On May 1, 2001, an employee of the Securities Division spoke to a Texas
resident who confirmed that he had invested in Time Traders and identified
Knipping as the person responsible for investing his funds. The Texas investor’s
understanding was that Knipping traded groups of investors’ monies in the
- On May 15, 2001, Knipping was interviewed by the FBI and representatives
of the Securities Division.
- Prior to being questioned, Knipping was informed that he was not compelled
to answer any questions, that his attendance was voluntary, and that he was
free to leave at any time.
- During this interview, Knipping stated that his current occupation is running
Time Traders which he had established himself. Knipping said that he is the
sole officer of Time Traders.
- Knipping stated that he came up with the concept of Time Traders in order
to help those who would not otherwise have enough monies to invest. Knipping
said that, through Time Traders, he would invest Time Traders Investors’ monies
as a group in index futures. Knipping said that he would do all the trading
on behalf of Time Traders investors.
- Knipping further stated that he is not a licensed broker-dealer, nor has
he ever been.
- Knipping further stated that Time Traders is organized as a network of investment
groups and that within these groups there are "coordinators", "managers"
and "recruiters" who receive a percentage of monies from Knipping’s
investment profits for their services.
- Knipping agreed to provide a number of documents relating to Time Traders
in his interview.
- As a result of Knipping’s admissions made during his interview and the Securities
Division’s review and findings of Knipping’s bank records, the Securities
Division wrote to Knipping by letter dated May 17, 2001, informing him that
it was unlawful for him to continue running Time Traders. The Securities Division
also asked for his immediate written assurance that he would cease all trading
activity unless and until all transactions were in compliance with Maine law.
- In the letter of May 17, 2001, the Securities Division also asked for the
documents which Knipping had agreed to provide during the interview.
- By letter dated May 24, 2001, Knipping’s attorney wrote to the Securities
Division denying the Securities Division’s request for Knipping’s documents
on the grounds that producing them may be self-incriminating. Knipping’s attorney
further wrote that his client was now asserting his privilege against self-incrimination
with respect to the Securities Division’s request for Knipping’s written assurance
that he cease trading unless and until such transactions were in compliance
with Maine law, but stated that Knipping is not engaged in any trading activity
whatsoever. Knipping’s attorney did not give any assurance to the Securities
Division that Knipping would cease violating Maine law. Furthermore, no assurance
was given by Knipping’s attorney that Knipping’s future activities would be
in compliance with Maine law.
- The solicitation and pooling of investors’ monies with the expectation that
the investors will receive a return on their monies as a result of Knipping’s
and Time Traders’ trading activity constitutes an investment contract. An
investment contract is a security under 32 M.R.S.A. §10501 (18).
- It is unlawful for Knipping, Time Traders or any employee, manager, coordinator
or recruiter of Time Traders to offer or sell any security in Maine unless
the security is registered, is exempt from registration or is a federal covered
security under 32 M.R.S.A. §10401.
- The Securities Division has no record that Knipping’s or Time Traders’ security
has been registered for offer or sale in Maine; nor is the Securities Division
aware of any applicable exemption from registration for which Knipping’s or
Time Traders’ security might qualify.
- In receiving investors’ monies for investment in a pool to be invested in
index futures, Knipping and Time Traders are transacting business as a broker-dealer
under 32 M.R.S.A. § 10501(1).
- It is unlawful for any person to transact business in Maine as a broker-dealer
in Maine unless the broker-dealer is licensed or exempt from licensing under
32 M.R.S.A. §10301(2). The Securities Division has no record that either Knipping
or Time Traders is licensed as a broker-dealer in Maine. Knipping admitted
that neither he nor Time Traders is licensed as a broker-dealer during the
- It is unlawful for any person to transact business in Maine as a sales representative
unless licensed or exempt from licensing under 32 M.R.S.A. § 10301 (2). In
receiving investors’ monies and effecting purchases of interests in index
futures on behalf of Time Traders, Knipping, and the employees, managers,
coordinators and recruiters of Time Traders are acting as sales representatives
under 32 M.R.S.A. § 10501(16). The Securities Division has no record that
Knipping, the employees, managers, coordinators and recruiters of Time Traders
are licensed as sales representatives in Maine nor is it aware of any applicable
exemption from licensing for which they might qualify.
- It is unlawful for any broker-dealer to employ or contract with a person
as a sales representative in Maine unless the sales representative is licensed
or exempt from licensing.
- For the reasons stated above, the Securities Administrator reasonably believes
that Knipping, Time Traders, and the employees, managers, coordinators and
recruiters of Time Traders, including, but not limited to, Daniel Costa, Jess
R. Medina, Jr., Charles Thompson, John Thompson, Brian Lappan, David Rubright,
Jim Price, Hank Hoekstra, Becky Ritchie and Jason Calabrese, have engaged,
are engaging or are about to engage in acts or practices constituting violations
of the Revised Maine Securities Act.
- On June 13, 2001, the Securities Administrator issued a Notice of Intent
to Issue a Cease and Desist Order. The Notice gave respondents thirty (30)
days to request a hearing on the matter. To date, no hearing has been requested.
Now, therefore, it is ORDERED that Knipping, Time Traders and the employees,
managers, coordinators and recruiters of Time Traders, including, but not limited
to, Daniel Costa, Jess R. Medina, Jr., Charles Thompson, John Thompson, Brian
Lappan, David Rubright, Jim Price, Hank Hoekstra, Becky Ritchie and Jason Calabrese,
immediately CEASE AND DESIST from violating any provisions of the Revised Maine
Pursuant to 32 M.R.S.A. § 10708, this is a final order, entered after notice
and opportunity for hearing. Pursuant to 32 M.R.S.A. § 10709, a party to this
order may obtain judicial review of the order in Kennebec County Superior Court
by filing a petition, within thirty (30) calendar days after receipt of the
order, in accordance with 5 M.R.S.A. § 11001 et sq. and Rule 80C of the Maine
Rules of Civil Procedure.
Christine A. Bruenn