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STATE OF
OFFICE OF SECURITIES
121 STATE HOUSE
STATION
AUGUSTA, ME 04333
CEASE AND DESIST ORDER
No. 00-027
FINDINGS OF FACT
AND CONCLUSIONS OF LAW
Pursuant to 32 M.R.S.A. §§ 10602 and 10708, the Securities Administrator finds and orders as follows:
1.
Web Booth, Inc., also known as The Web Booth
Corporation ("Web Booth"), is a foreign business entity with a last
known business address of 1800 Century Park East, Sixth Floor,
2.
Waterstones, Ltd. ("Waterstones") is a
foreign business entity with a last known business address of 1800 Century Park
East, Sixth Floor,
3.
Future Communications Marketing, Inc.
("FCMI") is a foreign business entity with a last known business
address of
4. John E. Perry ("Perry") is an individual who at all times relevant to this matter has been the President of Waterstones and has controlled or been affiliated with both Web Booth and FCMI.
5.
Brian S. Wright ("Wright") is an individual
who at all times relevant to this matter has been the President and sole
director of FCMI and has been affiliated with Web Booth and Waterstones. His last known residential address is
6.
Timothy E. Grant, Sr. ("Grant") is an
individual who at all times relevant to this matter acted as a sales
representative for Web Booth, Waterstones, and FCMI. Grant was formerly a resident of
7.
Robert H. Edmunds, III ("Edmunds"), is an
individual who at all times relevant to this matter acted as a sales
representative for Web Booth, Waterstones, and FCMI. Edmunds' last known business address is Planning
Services of Maine,
8.
The Web Booth investment program worked in the
following way with respect to
9. On information and belief, by late 1999 or early 2000, Web Booth and Waterstones were essentially acting as one company in the same office location.
10.
From approximately September 1999 to March 2000, Grant
and Edmunds sold the Web Booth investment program to at least fifteen (15)
11.
Grant marketed and sold to the Web Booth investment
program to
12.
13.
On information and belief,
14. Grant received a commission from FCMI of 15% for his sales to investors. On information and belief, Edmunds earned a similar commission.
15. In connection with the marketing, sale, and leasing of the kiosks, Grant dealt directly and regularly with Perry, who acted for both Web Booth and Waterstones.
16. At all relevant times, Grant was also a licensed sales representative of Pruco Securities Corporation ("Pruco") and sold the Web Booth investment program to Pruco clients without Pruco's actual knowledge. Grant attempted to hide the activity from Pruco because he knew that Pruco would not allow him to both work for Pruco and sell the Web Booth investment program.
17. In accord with FMCI's advice, Grant had his wife -- who otherwise had no involvement in the program -- sign all Web Booth-related documents, so as to falsely make it appear as if she was the sales agent.
18. Grant also had his clients arrange to transfer their funds away from Pruco and into the Web Booth investment program in a manner designed to disguise how the funds were being reinvested. Specifically, rather than have client funds transferred directly from a Pruco account into the program, Grant would instruct the client to withdraw funds from Pruco by making a written request for a check. The funds would then be deposited into the client's bank account and later withdrawn in order to invest in the program.
19. Pruco terminated Grant's employment in March 2000 upon learning of his unauthorized sales of the Web Booth investment program. In September 2001, the National Association of Securities Dealers permanently barred Grant from associating with any member firm in any capacity.
20. At all relevant times, Edmunds was also a licensed sales representative of Investors Capital Corporation. His employment there ended in May 2000.
21.
On
22. On information and belief, Web Booth, Waterstones, and FCMI are now out of business.
23.
On
24.
The Web Booth investment program involves the sale of
investment contracts to consumers. An
investment contract is a security under 32 M.R.S.A. § 10501(18). The Web Booth investment program therefore
involves the sale of securities under the Act.
25. Pursuant to 32 M.R.S.A. § 10401, a person may not offer or sell any security in Maine unless the security is registered under the Revised Maine Securities Act ("the Act") or the security or transaction is exempt from registration under the Act.
26.
The Web Booth investment program has never been
registered under the Act for offer and sale in
27.
All respondents violated 32 M.R.S.A. § 10401 by
offering and selling unregistered securities in
28. Perry is also liable as a control person of Web Booth and Waterstones pursuant to 32 M.R.S.A. § 10602(3).
29. Wright is liable as a control person of FCMI pursuant to 32 M.R.S.A. § 10602(3).
30.
On
31. For the reasons stated above, the Securities Administrator reasonably believes that respondents have engaged, are engaging, or are about to engage in acts or practices constituting violations of the Act.
FINAL ORDER
NOW, THEREFORE, it is ORDERED that respondents immediately CEASE AND DESIST from violating any provisions of the Revised Maine Securities Act, including the prohibition in 32 M.R.S.A. § 10401 against offering or selling unregistered securities.
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 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 seq. and Rule 80C of the Maine Rules of Civil Procedure.
Date:
Christine A. Bruenn
Securities Administrator
Approved by:
Date:
Bonnie E. Russell
Supervisor of Enforcement
Presented by:
Date:
Michael W. Atleson
Staff Attorney
(licensed in NY and MA, pending in ME)