Monday, October 22, 2007
Lyn Iverson, Director of Communications
PH 360.902.8731 email@example.com
Mike Stevenson, Director of Securities
Brad Williamson, Director of Banks
FOR IMMEDIATE RELEASE:
DFI Enforcement Results In Restitution - Federal Savings, LLC To Pay More Than $4.7 Million Owed To Investors
OLYMPIA, WA - As a result of an enforcement action brought by the Department of Financial Institutions (DFI), checks are going out now to investors who purchased fraudulent investments from Federal Savings, LLC. More than 200 investors in 37 states will receive checks totaling more than $4.77 million including $145,000 of interest.
In January of this year, Federal Savings began raising money by offering investments over the internet promising six month certificates earning an annual percentage rate between 6.25 and 8.85. Investors learned of the investment while searching on the internet for CD rates. They thought that the investment was FDIC insured based upon misleading information on the Federal Savings websites. By March 2007 Federal Savings received over $4.6 million from over 200 investors.
On March 8, 2007, DFI ordered Federal Savings and related parties to stop offering the investment in the state. On March 21, 2007, DFI sued Federal Savings in King County Superior Court to freeze Federal Savings’ bank accounts and to return the money to investors. DFI alleged that Federal Savings was violating the state securities act by offering investments while not being registered and with violating the states securities anti-fraud laws.
“The Federal Savings case was different than most investigations because a bank notified DFI of the matter soon after Federal Savings began offering investments. This enabled DFI to take swift action to freeze the bulk of the funds shortly after investors made their investments,” said Michael Stevenson, Director of DFI’s Securities Division. “This should serve as a reminder that investors need to research any investment decision they make. In this case, if the investor had contacted banking and securities regulators before they invested, they would have learned that Federal Savings was not FDIC insured, was not a depository financial institution, and was not registered to sell securities in the state.”
Brad Williamson, Director of DFI’s Banks Division said, “DFI’s efforts to halt this illegal activity protects Washington’s consumers by halting a marketing practice that was confusing and could have resulted in many individuals obtaining high-risk investments instead of federally insured bank deposits. I am happy that the Division of Banks and the Division of Securities could once again work together to protect Washington’s citizens.”
About DFI www.dfi.wa.gov • (360) 902-8700 • (877) 746-4334
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders, and securities brokers and dealers. The department has won numerous awards for its financial literacy and outreach programs developed to protect consumers from financial fraud. In addition to posting information about licensees and administrative actions, the DFI’s Web site features consumer tips on a variety of financial fraud-related topics.
The mission statement of the Securities Division is "To protect the investing public and promote confidence in the capital markets."
This mission is accomplished through a variety of regulatory and enforcement tools, including:
- Reviewing securities, franchises, and business opportunity offerings
- Licensing and examining Broker/Dealers, Investment Advisers, and their representatives
- Providing technical assistance to small business
- Responding to customer complaints, investigating and bringing appropriate administrative, civil and criminal cases and
- Providing information and investor education.
The Division of Banks (DOB) regulates more than 90 Washington State-chartered commercial banks, stock savings banks, mutual savings banks, alien banks, savings and loan associations, and independent trust companies. The DOB charters new banks, business development corporations, trust companies, foreign banks, and savings & loan associations. Also, the division authorizes new branches and branch closures; and approve mergers & acquisitions. The division works directly with the institutions it regulates through examination and supervisory activity to be sure they provide adequate and proper services to the public. DOB seeks to ensure the protection of the interests of depositors, borrowers, shareholders, and consumers.
The division’s mission is to support economic stability and growth in the State of Washington through efficient regulation and by providing an open market for competitiveness of state-chartered and multi-state financial institutions.