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IN THE MATTER OF: ERIC KIPPERMAN * * * * * * * * * * * * * * * * * |
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CONSENT ORDER No. CO-10-7685-S |
PRELIMINARY STATEMENT
WHEREAS, the Banking Commissioner (the “Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (the “Act”), and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies promulgated under the Act (the “Regulations”);
WHEREAS, CRF Group, LLC (“CRF”) is a Connecticut limited liability company formed on October 17, 2007 and having its principal office at 335 Kettletown Road, Southbury, Connecticut;
WHEREAS, Eric Kipperman (“Kipperman”) is the managing member of CRF;
WHEREAS, CRE Capital Corporation is a Georgia corporation incorporated on March 26, 2007 and having its last known address at 3700 Mansell Road, Suite 220, Alpharetta, Georgia;
WHEREAS, on January 15, 2009, the Securities and Exchange Commission (the “SEC”) filed a civil suit (Civil Action File No. 1 09-CF-0114) in the United States District Court for the Northern District of Georgia, Atlanta Division, against CRE Capital Corporation and its president James G. Ossie (SEC v CRE Capital Corporation). The action alleged that the defendants violated the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 in connection with the defendants’ offering of “30 Day Currency Trading Contracts” (the “CRE Currency Trading Contracts”) promising a guaranteed ten percent return;
WHEREAS, also on January 15, 2009, the court in SEC v CRE Capital Corporation entered an Order Granting Permanent Injunction, Freezing Assets, Appointing a Receiver and Ordering Other Ancillary Relief (the “Receivership Proceeding”);
WHEREAS, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking, has conducted an investigation (the “Investigation”) pursuant to Section 36b-26(a) of the Act into the activities of CRF and Kipperman to determine if they, or either of them, had violated, were violating or were about to violate any provision of the Act or the Regulations;
WHEREAS, as a result of the Investigation, the Division obtained evidence, as more fully described in the Findings herein, that would support the initiation of administrative proceedings under Section 36b-27 of the Act seeking the entry of an order to cease and desist and/or an order imposing an administrative fine against Kipperman, CRF or both;
WHEREAS, an administrative proceeding under Section 36b-27 of the Act would constitute a “contested case” within the meaning of Section 4-166(2) of the Connecticut General Statutes;
WHEREAS, Section 4-177(c) of Chapter 54 of the Connecticut General Statutes provides that “[u]nless precluded by law, a contested case may be resolved by stipulation, agreed settlement, or consent order or by the default of a party”;
WHEREAS, Section 36b-31(a) of the Act provides, in part, that: “The Commissioner may from time to time make, amend and rescind such . . . orders as are necessary to carry out the provisions of Sections 36b-2 to 36b-33, inclusive [of the Connecticut Uniform Securities Act]”;
WHEREAS, without holding a hearing and without trial or adjudication of any issue of fact or law, and prior to the initiation of any formal proceeding, the Commissioner, Kipperman and CRF reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
WHEREAS, Kipperman and CRF, without admitting or denying any of the Commissioner’s allegations or findings, expressly consent to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order; and
WHEREAS, Kipperman and CRF, through their execution of this Consent Order, each represent and agree that none of the violations alleged in this Consent Order shall occur in the future;
WHEREAS, the Commissioner has determined that no fine will be imposed on Kipperman based on Kipperman’s demonstrated inability to pay;
CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, Kipperman and CRF, through their execution of this Consent Order, voluntarily waive the following rights:
| 1. | To receive prior written notice within the meaning of Sections 36b-27(a), 36b-27(d) and 4-177(b) of the Connecticut General Statutes; |
| 2. | To present evidence and argument and to otherwise avail themselves of Section 4-177c(a) of the Connecticut General Statutes; |
| 3. | To present their respective positions in a hearing in which each is represented by counsel; |
| 4. | To have a written record of the hearing made and a written decision issued by a hearing officer; and |
| 5. | To seek judicial review of, or otherwise challenge or contest, the matters described herein, including the validity of this Consent Order. |
CONSENT TO ENTRY OF FINDINGS
WHEREAS, Kipperman and CRF, through their execution of this Consent Order, accept and consent to the entry of the following Findings by the Commissioner:
| 1. | The entry of this Consent Order is necessary or appropriate in the public interest and for the protection of investors, and consistent with the purposes fairly intended by the policy and provisions of the Act; |
| 2. | From May 2008 through December 2008, Kipperman and CRF violated Section 36b-16 of the Act by offering and selling unregistered CRE Currency Trading Contracts to one or more Connecticut investors. The CRE Currency Trading Contracts were not exempt from registration under Section 36b-21 of the Act, nor did they constitute a “covered security” as defined in Section 36b-3(7) of the Act; |
| 3. | At no time was Kipperman registered as an agent under Section 36b-6(a) of the Act nor was CRF registered as a broker-dealer under Section 36b-6(a) the Act. |
CONSENT TO ENTRY OF SANCTIONS
WHEREAS, Kipperman and CRF, through their execution of this Consent Order, consent to the Commissioner issuing an order imposing on them the following sanctions:
| 1. | For a period of ten (10) years commencing on the date this Consent Order is entered by the Commissioner, Kipperman is BARRED from transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent, as such terms are defined in Section 36b-3 of the Act; |
| 2. | Kipperman and CRF shall cease and desist from engaging in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act; and |
| 3. | In the event that Kipperman or CRF should recover any funds as a result of the Receivership Proceeding or from any other source relating to the CRE Currency Trading Contracts, Kipperman shall notify the Division Director in writing within five business days following receipt of the funds. Following notification to the Division Director of receipt of any such funds, Kipperman shall, in a plan approved by the Division Director, distribute those funds pro rata to each Connecticut investor to whom Kipperman and/or CRF sold CRE Currency Trading Contracts and who sustained investment losses. |
CONSENT ORDER
NOW THEREFORE, the Commissioner enters the following:
| 1. | The Findings and Sanctions set forth above be and are hereby entered; |
| 2. | Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Kipperman, CRF or both based upon a violation of this Consent Order or the matters underlying its entry if the Commissioner determines that compliance with the terms herein is not being observed or if any representations made by Kipperman and/or CRF and reflected herein are subsequently discovered to be untrue; and |
| 3. | This Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut | _______/s/____________ | |
| this 12th day of April 2010. | Howard F. Pitkin | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Eric Kipperman, state on behalf of CRF Group, LLC that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of CRF Group, LLC; that CRF Group, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that CRF Group, LLC voluntarily consents to the entry of this Consent Order, expressly waiving any right it may have to a hearing on the matters described herein.
| CRF Group, LLC | |
| By | ______/s/____________ |
| Eric Kipperman | |
| Managing Member |
On this 31 day of March 2010, personally appeared Eric Kipperman, signer of the foregoing Consent Order, who, being duly sworn, did acknowledge to me that he was authorized to execute the same on behalf of CRF Group, LLC, a limited liability company, and acknowledged the same to be his free act and deed, before me.
_______________/s/______________________
Notary Public/Commissioner of the Superior Court
My Commission Expires: July 31, 2013
I, Eric Kipperman, state that I have read the foregoing Consent Order; that I know and fully understand its contents; that I agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that I voluntarily consent to the entry of this Consent Order, expressly waiving any right I may have to a hearing on the matters described herein.
| ______/s/_____ |
| Eric Kipperman |
| (Individually) |
Subscribed and sworn to before me
this 31 day of March, 2010.
___________/s/____________________________
Notary Public/Commissioner of the Superior Court
My Commission Expires: July 31, 2013