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SECURITIES ADMINISTRATOR, )
v. ) COMPLAINT
ROBERT H. EDMUNDS, III, )
1. The State of Maine and Securities Administrator (hereinafter collectively referred to as “the State”) bring this action against Robert H. Edmunds, III (“Edmunds”) for violations of the Revised Maine Securities Act, 32 M.R.S.A. §§ 10101-10713 (1999 and Supp. 2002) in that he sold unregistered securities, in violation of 32 M.R.S.A. § 10401 (1999); sold securities without a license, in violation of 32 M.R.S.A. § 10301 (1999); and made material omissions of fact in connection with the sale of securities, in violation of 32 M.R.S.A. § 10201 (1999).
2. This Court has jurisdiction pursuant to 32 M.R.S.A. §§ 10602-10603 (1999 and Supp. 2002).
Edmunds is an adult individual residing in
From September of 1999 through February of 2000, Edmunds sold investments in
Web Booth Internet kiosks to
6. The investments involved a lease-back arrangement. As represented by Edmunds in selling the investments, the investors’ funds would be used to purchase Internet kiosks -- machines capable of providing public Internet access in exchange for fees or in conjunction with the generation of advertising revenue -- which the investors immediately would lease back to the investment issuers in exchange for a promised 17% rate of return on the investment. The arrangement was structured so that the investors never took delivery of kiosks, specific kiosks were not identified with particular investors, and the investors had no role in the success or failure of the kiosk business beyond providing capital. Accordingly, the Web Booth investments constituted investment contracts and thus fit within the statutory definition of securities. 32 M.R.S.A. § 10501(18) (1999).
7. At no time were the Web Booth investments registered as securities with the Maine Office of Securities.
8. Edmunds did not inform ICC that he was selling the Web Booth investments and did not obtain ICC’s approval.
selling the investments, Edmunds made various representations to the
companies that issued the Web Booth securities, Web Booth, Inc., Waterstones,
Ltd., and Future Communications Marketing, Inc., subsequently went out of
business, and the
made more than $50,000 in commissions on the Web Booth sales to the
Act prohibits the offer or sale of securities that are not registered in
Act further prohibits any person from transacting business in
15. Also under the Act, a person shall not, in connection with the offer, sale, or purchase of any security, directly or indirectly: (a) employ any device, scheme, or artifice to defraud; (b) make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading; or (c) engage in any act, practice, or course of business that operates as a fraud or deceit upon any person. 32 M.R.S.A. § 10201 (1999).
16. The Securities Administrator may refer violations of the Act to the Attorney General for enforcement, and the Attorney General may initiate a civil action in the Superior Court. 32 M.R.S.A. § 10602(1)(D) (1999).
17. In an enforcement action under the Act, the Court may grant a variety of legal and equitable remedies, including injunctions, civil penalties, restitution to investors and disgorgement. 32 M.R.S.A. § 10603 (1999).
18. The State repeats and realleges paragraphs 1 through 17 as if set forth fully herein.
19. By selling the Web Booth investments, Edmunds violated the prohibition in 32 M.R.S.A. § 10401 against the sale of unregistered securities.
20. The State repeats and realleges paragraphs 1 through 19 as if set forth fully herein.
selling the Web Booth investments without the knowledge or approval of his
broker-dealer employer, ICC, Edmunds violated the prohibition in 32 M.R.S.A. §
10301 (1999) against transacting business in
22. The State repeats and realleges paragraphs 1 through 21 as if set forth fully herein.
23. By omitting to state material facts necessary to make the statements made, in light of the circumstances under which they were made, not misleading, in connection with the offer and sale of securities, Edmunds violated 32 M.R.S.A. § 10201.
REQUEST FOR RELIEF
WHEREFORE, the State requests that this Honorable Court grant the following relief:
1. An order requiring Edmunds to make full restitution to each of the victims identified above by returning all monies to them plus interest;
2. An order requiring Edmunds to disgorge all commissions or other compensation he received in connection with the securities transactions set forth above;
injunction prohibiting Edmunds from offering or selling unregistered securities
in the State of
4. A civil penalty of $10,000 against Edmunds for each violation of the Act; and
5. Such other and further relief as this Court deems appropriate.
/s/ Michael J. Colleran
MICHAEL J. COLLERAN
Assistant Attorney General
6 State House Station
Tel. (207) 626-8800
Bar. No. 9247
Attorney for Plaintiffs