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IN THE MATTER OF: ROLL-A-COVER, LLC MICHAEL P. MORRIS * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER DOCKET NO. CF-2006-820-B |
I. PRELIMINARY STATEMENT
WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672c of the Connecticut General Statutes, the Connecticut Business Opportunity Investment Act (“Act”);
WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, conducted an investigation pursuant to Section 36b-71(a) of the Act into the activities of RAC, its officers, agents, representatives and employees, and Morris, his agents, representatives and employees, to determine if they, or any of them have violated, are violating or are about to violate any provisions of the Act (“Investigation”);
WHEREAS, as a result of the Investigation, the Division alleges that Respondents: (1) sold an unregistered business opportunity on at least one occasion to a purchaser-investor in violation of Section 36b-67(1) of the Act; and (2) failed to provide the required written disclosure document to the purchaser-investor in connection with the sale of a business opportunity in violation of Section 36b-63(a) of the Act;
WHEREAS, on October 18, 2006, the Commissioner, acting pursuant to Section 36b-72 of the Act, as amended by Public Act 06-75, issued an Order to Cease and Desist (“Order”), Notice of Intent to Fine (“Fine Notice”) and Notice of Right to Hearing against Respondents (collectively “Notice”), which Notice is incorporated by reference herein;
WHEREAS, the Fine Notice stated that the Commissioner intended to impose a fine against Respondents; that a hearing would be held on December 5, 2006, on the matters alleged in the Fine Notice (“Fine Hearing”); and that if Respondents failed to appear at the hearing, the Commissioner may order that a maximum fine of Twenty Thousand Dollars ($20,000) be imposed upon each Respondent;
WHEREAS, on October 21, 2006, the Notice was received by RAC;
WHEREAS, on October 30, 2006, counsel for Respondents requested a hearing on the matters alleged in the Order (“Hearing”);
WHEREAS, the designated Hearing Officer granted various motions to continue the Hearing and the Fine Hearing;
WHEREAS, the Hearing and Fine Hearing are currently scheduled for February 15, 2007;
WHEREAS, Respondents have represented that they have made only one sale of unregistered business opportunities from Connecticut;
WHEREAS, on November 19, 2004, RAC filed an application for a federal trademark covering the business opportunity and since February 7, 2006, RAC has held a federal trademark covering the business opportunity;
WHEREAS, Section 36b-72(d) of the Act provides, in relevant part, that “[a]ny time after the issuance of an order or notice provided for in subsection (a) or (b) of this section, the commissioner may accept an agreement by any respondent named in such order or notice to enter into a written consent order in lieu of an adjudicative hearing”;
WHEREAS, Section 4-177(c) of the Connecticut General Statutes provides, in relevant part, that “[u]nless precluded by law, a contested case may be resolved by . . . consent order”;
WHEREAS, Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provides, in relevant part, that “[p]ursuant to subsection (c) of section 4-177 of the Connecticut General Statutes, unless precluded by law, any contested case may be resolved by . . . consent order”;
WHEREAS, Respondents and the Commissioner now desire to resolve the matters alleged in the Notice;
WHEREAS, Respondents agree that the Notice may be used in construing the terms of this Consent Order and agree to the language in this Consent Order.
CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, Respondents, through their execution of this Consent Order, voluntarily waive the following rights:
| 1. | To be afforded an opportunity for a hearing within the meaning of Sections 36b-72(a) and 36b-72(b) of the Act, and Section 4-177(a) of the Connecticut General Statutes; |
| 2. | To present evidence and argument and to otherwise avail themselves of Sections 36b-72(a) and 36b-72(b) of the Act, and Section 4-177c(a) of the Connecticut General Statutes; |
| 3. | To present their position in a hearing in which they are 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.
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ACKNOWLEDGEMENT OF THE COMMISSIONER’S ALLEGATIONS
WHEREAS, RAC, through its execution of this Consent Order, acknowledges and admits the following allegations of the Commissioner:
| 1. | The entry of this Consent Order is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the Act; |
| 2. | RAC, through its agent Morris, as President of RAC, sold unregistered business opportunities in violation of Section 36b-67(1) of the Act, which constitutes a basis for an order to cease and desist pursuant to Section 36b-72(a) of the Act, as amended, and an order imposing fine pursuant to Section 36b-72(b) of the Act effective prior to October 1, 2006; |
WHEREAS, RAC, through its execution of this Consent Order, acknowledges that the Commissioner has made the following allegation, without admitting or denying it: RAC failed to provide the required written disclosure document to prospective purchaser-investors in violation of Section 36b-63(a) of the Act, which constitutes a basis for an order to cease and desist pursuant to Section 36b- 72(a) of the Act, as amended, and an order imposing fine pursuant to Section 36b-72(b) of the Act effective prior to October 1, 2006;
WHEREAS, Morris, through his execution of this Consent Order, acknowledges that the Commissioner has made the following allegations, without admitting or denying them:
| 1. | The entry of this Consent Order is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the Act; |
| 2. | Morris sold unregistered business opportunities in violation of Section 36b- 67(1) of the Act, which constitutes a basis for an order to cease and desist pursuant to Section 36b-72(a) of the Act, as amended, and an order imposing fine pursuant to Section 36b-72(b) of the Act effective prior to October 1, 2006; |
| 3. | Morris failed to provide the required written disclosure document to prospective purchaser-investors in violation of Section 36b-63(a) of the Act, which constitutes a basis for an order to cease and desist pursuant to Section 36b-72(a) of the Act, as amended, and an order imposing fine pursuant to Section 36b-72(b) of the Act effective prior to October 1, 2006; |
WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting Respondents an opportunity for a hearing;
WHEREAS, Respondents acknowledge the possible consequences of an administrative hearing and voluntarily agree to consent to the entry of the sanctions described below.
CONSENT TO ENTRY OF SANCTIONS
WHEREAS, Respondents, through their execution of this Consent Order, consent to the Commissioner’s entry of a Consent Order imposing on them the following sanctions:
| 1. | The Order to Cease and Desist set forth in the Notice shall become permanent; |
| 2. | No later than the date this Consent Order is issued by the Commissioner, Respondents shall each remit to the Department of Banking, by certified or cashier’s check made payable to “Treasurer, State of Connecticut”, the sum of Five Thousand Dollars ($5,000) as an administrative fine; |
AND WHEREAS, Respondents specifically assure the Commissioner that none of the violations alleged in the Notice shall occur in the future.
CONSENT ORDER
NOW THEREFORE, the Commissioner enters the following:
| 1. | The 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 RAC, its officers, agents, representatives and employees, and Morris, his agents, representatives and employees, 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 Respondents and reflected herein are subsequently discovered to be untrue; and |
| 3. | This Consent Order shall become final when issued. |
Issued at Hartford, Connecticut
this 16th day of February 2007. ________/s/_________
Howard F. Pitkin
Banking Commissioner
CONSENT TO ENTRY OF ORDER
I, Michael P. Morris, state on behalf of Roll-A-Cover, 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 Roll-A-Cover, LLC; that Roll-A-Cover, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Roll-A-Cover, LLC voluntarily consents to the issuance of this Consent Order, expressly waiving any right to a hearing on the matters described herein.
By: ________/s/_________
Michael P. Morris
Managing Member and President
Roll-A-Cover, LLC
State of: Connecticut
County of: New Haven
On this the 14th day of February 2007, before me, Patricia Scranton, the undersigned officer, personally appeared Michael P. Morris, who acknowledged himself to be the Managing Member and President of Roll-A-Cover, LLC, a limited liability company, and that he, as such Managing Member and President, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself as Managing Member and President.
In witness whereof I hereunto set my hand.
________/s/_________
Notary Public
Date Commission Expires: June 30, 2008
CONSENT TO ENTRY OF ORDER
I, Michael P. Morris, 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 I consent to the issuance of this Consent Order, expressly waiving any right to a hearing on the matters described herein.
By: ________/s/_________
Michael P. Morris
State of: Connecticut
County of: New Haven
On this the 14th day of February 2007, before me, Patricia Scranton, the undersigned officer, personally appeared Michael P. Morris, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same for the purposes therein contained.
In witness whereof I hereunto set my hand.
________/s/_________
Notary Public
Date Commission Expires: June 30, 2008