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STATE OF
OFFICE OF SECURITIES
121 STATE HOUSE STATION
AUGUSTA, ME 04333
CEASE AND DESIST ORDER 02-130
FINDINGS OF FACT
AND CONCLUSTIONS OF LAW
1.
B.I.Z. Holdings, Inc. ("BIZ") is a foreign
business entity with a last known business address of 1140 Kane Concourse,
Fifth Floor, Bay Harbor Islands, Florida 33154-2045. BIZ was incorporated in
2.
Schlecht Group, Inc. ("Schlecht Group") is a
foreign business entity with a last known business address of 1140 Kane
Concourse, Fifth Floor, Bay Harbor Islands, Florida 33154-2045. Schlecht Group was incorporated in
3.
Metals Group International Corp. (“MGI”) was
incorporated in
4.
As recently as May 2002, U.S. Metals[1]
has used
5.
Arthur Schlecht ("Schlecht") is an individual
who at all relevant times has been the sole officer and director of Schlecht
Group. His last known business address
is 1140 Kane Concourse, Fifth Floor,
6.
Bernard I. Zeff ("Zeff") is an individual who
at all relevant times has been the sole officer and director of BIZ. His last known business address is 1140 Kane
Concourse, Fifth Floor,
7.
Martin Jainchill (“Jainchill”) is an individual who at
all relevant times has acted as an agent of U.S. Metals and is also the sole
officer and director of MGI. According
to information received by the Office of Securities, Jainchill operated and
managed U.S. Metals. His last known
business address is
8.
Roberta Couri ("Couri") in an individual who
at all relevant times has acted as an agent of U.S. Metals. Her last known business address is
9.
In or about May 2002, an individual residing in
10.
As a result of these telephone solicitations, the
11.
After each purchase, the
12.
Despite requests by the
13.
In or about August 2002, a U.S. Metals representative
contacted the
14.
U.S. Metals has not delivered any silver to the
15.
The
16.
At the time of these transactions, the
17.
Pursuant to 32 M.R.S.A. §§ 11201(2) and 11201(12),
silver is a "precious metal" and is therefore a commodity for
purposes of the Maine Commodity Code.
18.
As the
19.
Respondents' offer and sale of silver to the
20.
At the time of these transactions, neither U.S. Metals,
Jainchill, nor Couri was registered or temporarily licensed with the Commodity
Futures Trading Commission ("CFTC").
The Office of Securities is not aware of any exemption for which U.S.
Metals, Jainchill and Couri would qualify.
21. By offering and selling silver to the Maine investor, respondents engaged in unlawful commodity activities pursuant to 32 M.R.S.A. § 11205, which prohibits persons from engaging in commodity trade or business without either being registered or temporarily licensed by the CFTC, or being exempt from such registration.
22.
In failing to deliver any silver to the Maine investor,
refusing to return his funds, and in misrepresenting whether administration fees
would be charged, respondents have cheated or defrauded, or have employed a
device, scheme or artifice to defraud, the Maine investor in violation of 32
M.R.S.A. § 11206(1).
23.
In failing to deliver any silver to the Maine investor,
refusing to return his funds, and in misrepresenting whether administration
fees would be charged, respondents have made untrue statements of material facts,
or have misled the Maine investor through omission of material facts, in
violation of 32 M.R.S.A. § 11206(2).
24. In failing to deliver any silver to the Maine investor, refusing to return his funds, and in misrepresenting whether administration fees would be charged, respondents have engaged in transactions, acts, practices, or a course of business that operated as a fraud or deceit upon the Maine investor, in violation of 32 M.R.S.A. § 11206(3).
25.
In failing to deliver any silver to the Maine investor
and in refusing to return his funds, respondents have misappropriated or converted
the Maine investor’s funds, in violation of 32 M.R.S.A. § 11206(4).
26.
Pursuant to 32 M.R.S.A. § 11207(1), the acts,
omissions, or failures of Jainchill, Couri, and other agents of U.S. Metals are
deemed the acts, omissions, or failures of BIZ and Schlecht Group.
27.
As sole officer and director of BIZ, Zeff directly or
indirectly controlled U.S. Metals and its agents, including Jainchill and Couri. Therefore, pursuant to 32 M.R.S.A. §
11207(2), Zeff is jointly and severally liable to the same extent as the other
respondents.
28. As sole officer and director of Schlecht Group, Schlecht directly or indirectly controlled U.S. Metals and its agents, including Jainchill and Couri Therefore, pursuant to 32 M.R.S.A. § 11207(2), Schlecht is jointly and severally liable to the same extent as the other respondents.
29. For the reasons stated above, the Securities Administrator believes that respondents have engaged or are about to engage in acts or practices constituting violations of the Maine Commodity Code.
30. Pursuant to 32 M.R.S.A. § 11302(1), the Securities Administrator may, after notice and opportunity for hearing, issue a cease and desist order against any person whom the Securities Administrator believes has engaged or is about to engage in any act or practice constituting a violation of the Maine Commodity Code.
31.
On
FINAL ORDER
Now,
therefore, it is ORDERED that respondents immediately CEASE AND DESIST from
violating any of the provisions of the Maine Commodity Code, 32 M.R.S.A. §
11201 et seq.
Pursuant
to 32 M.R.S.A. § 11311, this is a final order, entered after notice and
opportunity for hearing. 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. § 1101 et
seq. and Rule 80C of the Maine Rules of Civil Procedure.
Date:
Christine
A. Bruenn
Securities
Administrator
Reviewed by:
Date:
Bonnie
E. Russell
Supervisor
of Enforcement
Presented by:
Date: November 24 , 2003 /s/ Christian
Van Dyck
Christian
Van Dyck
Investigator/Examiner