Washington State Department of Financial Institutions

2009 Administrative Orders

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Iris Data Communications Corporation and David Kilpatrick - S-09-280-09-SC01 – Statement of Charges

On December 23, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist, Impose Fines, and Charge Costs (“Statement of Charges”) against Respondents, Iris Data Communications Corporation (“Iris Data”) and David Kilpatrick (“Kilpatrick”). Iris Data purportedly offered voice over the internet services. The Statement of Charges alleges that Iris Data and Kilpatrick offered and sold Iris Data stock to at least 16 investors. The Statement of Charges alleges that the Respondents offered unregistered securities, acted as unregistered broker-dealers or securities salespersons, and violated the anti-fraud provisions of the Securities Act of Washington. The Securities Division intends to order the Respondents to cease and desist from violating the Securities Act of Washington, and gave notice of its intent to impose a fine and charge costs. The Respondents have the right to request a hearing on the Statement of Charges.

A Consent Order was entered in this matter on September 1, 2010.


Laguna S.A., Jill Jensen Ames, Katherine Swanberg, Jeff Finch - S-09-133-09-SC01 – Statement of Charges

On December 23, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist, Impose Fines, and Recover Costs (“Statement of Charges”) against Laguna S.A., Jill Jensen Ames, Katherine Swanberg, and Jeff Finch (collectively “Respondents”). The Statement of Charges alleges that Respondents raised $820,000 by offering an investment contract involving land in Nicaragua to 15 investors, most of whom were Washington residents. The Statement of Charges alleges that Respondents offered unregistered securities, acted as unregistered broker-dealers or securities salespersons, and violated the anti-fraud provisions of the Securities Act of Washington. The Securities Division intends to order Respondents to cease and desist from violating the Securities Act of Washington, and gave notice of its intent to collect fines and recover costs. Respondents have a right to request a hearing on the Statement of Charges.

A Consent Order as to Katherine Swanberg was issued on March 9, 2010.

A Consent Order as to Jill Jensen Ames was entered on March 25, 2014.


TD Ameritrade, Inc. - S-08-239-09-CO01 - Consent Order

On December 21, 2009, the Securities Division entered into a Consent Order with TD Ameritrade, Inc. (“TD Ameritrade”) to settle allegations that TD Ameritrade misled investors in connection with the sale of auction rate securities (“ARS”). TD Ameritrade settled without admitting or denying the Division’s allegations. Although marketed and sold to investors as safe, liquid, and cash-like investments, ARS are actually long-term investments subject to a complex auction process. The auction process failed in early 2008, leading to illiquidity and lower interest rates for some investors. The Securities Division alleged that TD Ameritrade failed to adequately inform customers of the risks associated with ARS. The Consent Order requires TD Ameritrade to complete its repurchase of ARS from Washington customers. The Consent Order represents a settlement negotiated by a multistate task force of state regulators formed by the North American Securities Administrators Association (NASAA). TD Ameritrade waived its right to a hearing and judicial review of the matter.


Sant Ambrozic LLC; Jason Scott Sant, now known as Jim Brick; Tyler Thomas Ambrozic - S-07-574-09-SC01 - Statement of Charges

On December 18, 2009 the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist and to Charge Costs against Respondents, Sant Ambrozic LLC; Jason Scott Sant, now known as Jim Brick; and Tyler Thomas Ambrozic. Respondents held themselves out as real estate developers. During 2007 and 2008, the Respondents did business in Kent, Washington. The Securities Division alleges that Respondents offered and sold at least $275,000 worth of promissory note and deed of trust investments to at least three Washington investors. The Securities Division alleges that Respondents each violated the anti-fraud provisions of the Securities Act of Washington by misrepresenting or by omitting material facts when offering and selling securities. The Securities Division gave notice of its intent to enter an order to cease and desist against each Respondent and to charge costs of $3,000 against Sant and against Ambrozic. Respondents each have the right to request a hearing on the Statement of Charges.

A Final Order was entered as to Sant Ambrozic LLC and Tyler Thomas Ambrozic on March 16, 2010.


Culinary Communion, LLC, Gabriel Claycamp, and Heidi Kenyon - S-06-216-09-SC01 - Statement of Charges

On December 7th, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist, Impose Fines, and to Recover Costs against Culinary Communion, LLC, Gabriel Claycamp, and Heidi Kenyon ("Respondents"), who operated a school for the culinary arts in Seattle, Washington. The Statement of Charges alleges that between 2005 and 2008, the Respondents raised approximately $150,000 by offering and selling convertible promissory notes and other investments to Washington investors. The Respondents were previously subject to a Summary Order to Cease and Desist in 2004, and later entered into a Consent Order in which they agreed to cease violating the Securities Act of Washington. The Statement of Charges alleges that following the Consent Order, the Respondents again violated the registration and anti-fraud provisions of the Securities Act of Washington. The Securities Division intends to order the Respondents to cease and desist from violating the Securities Act of Washington, and gives notice of its intent to impose a fine and recover costs. The Respondents have a right to request a hearing in this matter.

A Final Order was entered in this matter on March 22, 2010.


Carol Dee Aubrey, Progressive Energy Partners LLC, Progressive Energy Partners LLC #1, Progressive Energy Partners LLC #2, Progressive Energy Partners LLC #3, Progressive Energy Partners LLC #4 - S-06-230-09-FO01 – Final Order

On December 7, 2009, the Securities Division entered Final Order against Carol Dee Aubrey, Progressive Energy Partners LLC, Progressive Energy Partners LLC #1, Progressive Energy Partners LLC #2, Progressive Energy Partners LLC #3, and Progressive Energy Partners LLC #4 (collectively “Respondents”). The Securities Division previously had entered a Statement of Charges against the Respondents on October 2, 2009. Respondents offered investments in the form of LLC units in four limited liability companies created and managed by Progressive Energy Partners LLC for the purpose of developing oil and gas wells. Respondents raised at least $1,356,250 from at least 22 Washington residents through sales methods that included cold calling. Respondents offered unregistered securities, acted as unregistered broker-dealers or securities salespersons, and violated the anti-fraud provisions of the Securities Act of Washington. The Securities Division orders Respondents to cease and desist from violating the Securities Act, to pay a fine of $10,000 each, and to pay costs of $1,500. Respondents have the right to request judicial review of the Final Order.


Aria International Corporation, now known as Glow Cosmetics International, Incorporated, and James Joseph McCarthy - S-08-173-09-CO01 - Consent Order

On December 2, 2009, the Securities Division and Respondents, Aria International Corporation and James Joseph McCarthy, entered into a Consent Order. The Securities Division alleged that Respondents each violated the registration provision and the anti-fraud provision of the Securities Act of Washington and that James Joseph McCarthy violated the securities broker-dealer and salesperson provision. Without admitting or denying the allegations, Respondents each agreed to cease and desist from any further violations and McCarthy paid a fine of $5,000. Respondents each waived their right to a hearing and to judicial review of the matter.


Deutsche Bank Securities Inc. - S-09-195-09-CO01 - Consent Order

On December 1, 2009, the Securities Division entered into a Consent Order with Deutsche Bank Securities Inc. (“Respondent”), in order to settle the allegations that Respondents engaged in dishonest and unethical conduct in the sale of auction rate securities (“ARS”), and failed to reasonably supervise its agents in the marketing and sale of ARS. Respondent neither admitted nor denied the allegations. Respondent agreed to buy back at par ARS purchased from DBSI prior to February 13, 2008 that were subject to auctions that were not continuously succeeding between February 13, 2008 and August 31, 2008. Respondent agreed to pay a civil monetary penalty of $154,308.35. Respondent waived its right to a hearing and to judicial review of this matter.


IFT Holdings, Inc., f/k/a Integrated Fuel Technologies, Inc., Robert M. Firebaugh, Michael W. Conrad, Wooly Rhino, LLC, and Adam G. Kremin - S-09-039-09-SC01 - Statement of Charges

On November 24, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist, Impose Fines, and Recover Costs against IFT Holdings, Inc., f/k/a Integrated Fuel Technologies, Inc., Robert M. Firebaugh, Michael W. Conrad, Wooly Rhino, LLC, and Adam G. Kremin (collectively “Respondents”). IFT was in the business of developing emission control technology. The Statement of Charges alleges that between May 2007 and October 2008, approximately $2 million worth of Integrated Fuel Technology common stock was sold to approximately 60 investors, the majority of whom were in Washington. The Statement of Charges alleges that the Respondents violated the registration and anti-fraud provisions of the Securities Act of Washington. The Securities Division intends to order the Respondents to cease and desist from violating the Securities Act of Washington, and gives notice of its intent to impose fines and recover costs. The Respondents have a right to request a hearing on the Statement of Charges.

A Consent Order was entered in this matter on January 25, 2010.

A Final Order was issued January 26, 2010 as to Adam G. Kremin.

A Final Order was issued January 27, 2010 as to Michael W Conrad and Wooly Rhino, LLC.

A Final Order was issued September 23, 2010 as to Robert M Firebaugh.


Spencer Brown, dba Rent-A-Green Box - S-09-156-09-SC01 - Statement of Charges

On November 20, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist against Spencer Brown, doing business as (dba) Rent-A-Green Box. Rent-A-Green Box is in the business of renting moving or storage boxes made from recycled materials. It licenses this concept to individuals who purchase the boxes for the purpose of renting them to the general public. The Statement of Charges alleges that the company offered at least one such opportunity to a Washington resident while not registered under the Franchise Investment Protection Act of Washington (the Act). The Statement of Charges further alleges that Spencer Brown, dba Rent-A-Green Box violated the disclosure document requirement and antifraud provision of the Act. The Securities Division intends to order Spencer Brown, dba Rent-A-Green Box to cease and desist from violating the registration, disclosure document, and antifraud provisions of the Act. Spencer Brown, dba Rent-A-Green Box has the right to request a hearing on the Statement of Charges.

A Consent Order was entered in this matter on May 10, 2010.


EZ Show, Inc. - S-07-044-07-CO02 – Consent Order

On November 9, 2009, the Securities Division entered a Consent Order with EZ Show, Inc. The Securities Division previously had entered a Statement of Charges against EZ Show, Inc., Bernie Day, and Gordon L. Powers Jr. (“Respondents”) on August 20, 2007. The Securities Division entered a Consent Order with Bernie Day on February 25, 2008 and a Consent Order with Gordon L. Powers on July 31, 2008. The Statement of Charges alleged that Respondents offered and sold securities and a franchise opportunity in Washington State. The Statement of Charges further alleged that Respondents violated the registration and anti-fraud provisions of the Securities Act and the Franchise Investment Protection Act and the disclosure provision of the Franchise Investment Protection Act while offering and selling the securities and the franchise opportunity. Respondent EZ Show, Inc. neither admitted nor denied the allegations, but agreed to cease and desist from violating the registration and anti-fraud provisions of the Securities Act and the Franchise Investment Protection Act and the disclosure provision of the Franchise Investment Protection Act, and agreed to pay investigative costs of $1,000. Respondent EZ Show, Inc. waived its right to a hearing and judicial review of the matter.


Pilchuck Investors, LLC and Geoff McPherson - S-08-041-09-CO02 - Consent Order

On November 4, 2009, the Securities Division and Respondents, Pilchuck Investors, LLC and Geoff McPherson, entered into a Consent Order. The Securities Division alleged that Pilchuck Investors, LLC and Geoff McPherson had each violated the anti-fraud provisions of the Securities Act of Washington by offering and selling $370,000 worth of promissory notes and deeds of trust to three Washington investors without disclosing material information about the investments. Without admitting or denying the allegations, Pilchuck Investors, LLC and Geoff McPherson each agreed to cease and desist from any violation of RCW 21.20.010, the anti-fraud section of the Securities Act of Washington. Respondents each waived their right to a hearing and to judicial review of the matter.


South J Street, LLC and Geoff McPherson - S-08-041-09-CO01 - Consent Order

On November 4, 2009, the Securities Division and Respondents, South J Street, LLC and Geoff McPherson, entered into a Consent Order. The Securities Division alleged that South J Street, LLC and Geoff McPherson had each violated the anti-fraud provisions of the Securities Act of Washington by offering and selling notes and deeds of trust totaling $350,000 to finance a four-plex without disclosing material information about the investments. Without admitting or denying the allegations, South J Street, LLC and Geoff McPherson each agreed to cease and desist from any violation of RCW 21.20.010, the anti-fraud section of the Securities Act of Washington. Respondents each waived their right to a hearing and to judicial review of the matter.


Hoss Mortgage Investors, Inc. - S-09-043-09-CO01 - Consent Order

On November 3, 2009, the Securities Division entered into a Consent Order with Hoss Mortgage Investors, Inc. The Securities Division had previously entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist, Revoke Securities Registration, Revoke Securities Broker-Dealer Registration, Revoke Securities Salesperson Registration, Revoke Exemptions, and Impose a Fine on July 8, 2009. The Securities Division had also entered a Superseding Statement of Charges, Stop Order Suspending and Notice of Intent to Revoke Securities Registration, Summary Order to Cease and Desist, Summary Order Revoking Exemptions, Summary Order Suspending and Notice of Intent to Revoke Securities Broker-Dealer and Securities Salesperson Registration, and Notice of Intent to Impose a Fine on August 26, 2009.

The Securities Division alleged that Hoss Mortgage Investors, Inc. had violated the registration section of the Securities Act of Washington by offering and selling unregistered investment loan securities and investments in promissory notes and deeds of trust and investor repayment guarantees. The Securities Division also alleged that Hoss Mortgage Investors, Inc. had violated the anti-fraud section of the Securities Act of Washington by offering and selling the same particular investment to more than one investor; by willfully failing to assign notes and record deeds of trust that were represented to secure the investment; by reconveying deeds of trust that were to secure specific investments without repaying the investors; by selling more than 100% of the interests in participation loans; by representing that investors were funding loans to specific borrowers, but the borrowers never received the loan proceeds; and by failing to provide investors with required financial information about their investments, including borrower information and real property title and valuation information for the property that was represented to secure the investment.

Without admitting or denying the allegations, Hoss Mortgage Investors, Inc., through its judicially appointed receiver, agreed to cease and desist from any violation of the registration and anti-fraud sections of the Securities Act of Washington. The securities registration and securities broker-dealer registration of Hoss Mortgage Investors, Inc. was permanently revoked. The exemptions for Hoss Mortgage Investors, Inc. under RCW 21.20.320(1), RCW 21.20.320(5), RCW 21.20.320(8), RCW 21.20.320(9), RCW 21.20.320(11), and RCW 21.20.320(17) were permanently revoked. Hoss Mortgage Investors, Inc. waived its right to a hearing and to judicial review of the matter.

For the latest on the Hoss Mortgage Investors and Todd Allan Hoss case visit our Hoss Mortgage Investors News and Updates webpage.


Dickson V. Lee; L&L International Holdings, Inc. - S-07-002-09-CO01 - Consent Order

On October 26, 2009, the Securities Division entered into a Consent Order, S-07-002-09-CO01, with Dickson V. Lee and L&L International Holdings, Inc. (collectively “Respondents”). The Securities Division had previously entered a Statement of Charges and Notice of Intent to Issue an Order to Cease and Desist, Impose Fines, and Recover Costs, S-07-002-08-SC01, against the Respondents on April 22, 2009. The Securities Division alleged that Respondents raised approximately $2.3 million dollars by selling common stock and warrants. At least $26,252 of the funds came from Washington residents. The funds were purportedly raised so Respondents could purchase state owned enterprises in China and then employ U.S. consultants with the skills to quickly make the businesses profitable. The Securities Division alleged that Respondents violated the anti-fraud provision of the Securities Act of Washington by misrepresenting to investors the percentage of the gross proceeds of the offering that certain retained referral agents and brokers could receive as a commission for their services. The Securities Division further alleged that Respondents offered unregistered securities. Respondents neither admitted nor denied the allegations, but agreed to cease and desist from violating the anti-fraud and registration provisions of the Securities Act. Respondents agreed to pay a total fine of $10,000 and investigative costs of $5,000. Respondents each waived their right to a hearing and to judicial review of this matter.


Carrington Capital, LLC and Brenda Kay Carrington – S-08-386-09-CO01 – Consent Order

On October 21, 2009, the Securities Division entered into a Consent Order with Respondents, Carrington Capital, LLC and Brenda Kay Carrington. The Securities Division alleged that Respondents each offered three investment opportunities and that Respondents each offered and sold a $10,000 promissory note investment without disclosing material information about the investment, including the specific intended use of funds, the risks of the investment, and the operating history of Carrington Capital, LLC. Respondents each failed to give the investor a financial statement for Carrington Capital, LLC, the issuer of the promissory note. Without admitting or denying the Findings of Fact and Conclusions of Law, Respondents each agreed to cease and desist from violating RCW 21.20.140, the securities registration section of the Securities Act of Washington, and RCW 21.20.010, the anti-fraud section of the Securities Act of Washington. Respondents each waived their rights to a hearing and to judicial review of the matter.


Soup House Organics Inc. and Christopher R. McGrath - S-09-053-09-CO01 – Consent Order

On October 13, 2009, the Securities Division entered into a Consent Order with Soup House Organics Inc. and Christopher R. McGrath (“Respondents”). The Securities Division had previously entered a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist, to Impose Fines, and Recover Costs, on June 22, 2009. The Securities Division alleged that the Respondents offered and sold unregistered stock in Soup House, which operated restaurants in Olympia and Lacey, Washington. The Securities Division alleged that the Respondents violated the registration and anti-fraud provisions of the Securities Act of Washington. In settling the matter, the Respondents neither admitted nor denied the allegations, but agreed to cease and desist from violating the Securities Act. The Respondents agreed to pay investigative costs of $1,000. The Respondents waived their right to a hearing and judicial review of the matter.


Aria International Corporation, now known as Glow Cosmetics International, Incorporated, and James Joseph McCarthy - S-08-173-09-SC01 – Statement of Charges

On October 7, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist, to Impose a Fine, and to Charge Costs (“Statement of Charges”) against Respondents, Aria International Corporation (“Aria”) and James Joseph McCarthy (“McCarthy”). From July 2003 through at least May, 2007, Aria was a Washington corporation that did business in Everett, Washington. The Statement of Charges alleges that Aria and McCarthy offered and sold more than $800,000 worth of Aria stock to more than 50 investors. The Statement of Charges alleges that each Respondent violated the anti-fraud provision of the Securities Act of Washington by making untrue statements of material fact and by failing to disclose material information when offering and selling Aria stock. The Statement of Charges also alleges that each Respondent violated the securities registration provisions of the Securities Act by offering and selling unregistered securities and that McCarthy violated the securities broker-dealer and salesperson provisions of the Securities Act by not being registered as a securities broker-dealer or salesperson. The Securities Division intends to order the Respondents to each cease and desist from violating the Securities Act of Washington, to impose a fine of $10,000 against McCarthy, and to charge investigative costs of $5,000 against McCarthy. Respondents each have the right to request a hearing on the Statement of Charges.

A Consent Order was entered in this matter on December 02, 2009.


Leslie M. Collins dba Payright Merchant Services-Seattle and James H. Liddell - S-09-112-09-SC01 - Statement of Charges

On October 5, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist and to Impose Fines against James H. Liddell and Leslie Collins dba Payright Merchant Services-Seattle. The Securities Division alleges that since 2005 Liddell and Collins, through Payright Merchant Services-Seattle, have raised over $3,750,000 through the sale of promissory notes and loan agreements to at least seven Washington residents and at least one Oregon resident in violation of the Washington State Securities Act. The Securities Division further alleges that Liddell and Collins orchestrated a Ponzi scheme by paying back investors with other investors’ money. The Statement of Charges alleges these activities violate the registration and anti-fraud provisions of the Securities Act, and gives notice of the Securities Division’s intent to enter an Order to Cease and Desist and to impose fines of $25,000. The Respondents have a right to a hearing in this matter.

A Consent Order as to Leslie Collins was entered on September 9, 2010.

A Consent Order as to James H. Liddell was entered on September 9, 2010.


Carol Dee Aubrey, Progressive Energy Partners LLC, Progressive Energy Partners LLC #1, Progressive Energy Partners LLC #2, Progressive Energy Partners LLC #3, Progressive Energy Partners LLC #4 - S-06-230-09-SC01 – Statement of Charges

On October 2, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist, Impose Fines, and Recover Costs against Carol Dee Aubrey, Progressive Energy Partners LLC, Progressive Energy Partners LLC #1, Progressive Energy Partners LLC #2, Progressive Energy Partners LLC #3, and Progressive Energy Partners LLC #4 (collectively “Respondents”). Respondents offered investments in the form of LLC units in four limited liability companies created and managed by Progressive Energy Partners LLC for the purpose of developing oil and gas wells. The Statement of Charges alleges that Respondents raised at least $1,356,250 from at least 22 Washington residents through sales methods that included cold calling. The Statement of Charges alleges that these sales were part of nationwide sales of more than $9 million in securities. The Statement of Charges alleges that Respondents offered unregistered securities, acted as unregistered broker-dealers or securities salespersons, and violated the anti-fraud provisions of the Securities Act of Washington. The Securities Division intends to order Respondents to cease and desist from violating the Securities Act of Washington, and gives notice of its intent to collect fines and recover costs. Respondents have a right to request a hearing on the Statement of Charges.

A Final Order was entered on December 07, 2009.


Michael R. Mastro – Statement of Charges - S-09-038-09-SC01

On October 1, 2009, the Securities Division entered Order #S-09-038-09-SC01, Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist, to Revoke Exemptions, and to Impose a Fine, against Michael R. Mastro (“Mastro”).

The Statement of Charges alleges that Mastro violated the Securities Act of Washington by offering and selling more than $100 million of unregistered securities to more than 175 investors. The Statement of Charges alleges that Mastro offered and sold investments in the form of demand promissory notes that were issued by Mastro and were used to raise capital for his business as a real estate lender and developer. The Statement of Charges also alleges that Mastro violated the anti-fraud provisions of the Securities Act of Washington by making untrue statements of material fact or by omitting to state material facts when offering and selling the investments. The Statement of Charges gives notice that the Securities Division intends to enter a permanent order to cease and desist against Mastro, to permanently revoke Mastro’s exemptions for offering and selling securities under RCW 21.20.320(1), RCW 21.20.320(9), RCW 21.20.320(11), and RCW 21.20.320(17), and to impose a $100,000 fine. Mastro has the right to request a hearing on the Statement of Charges.

A Consent Order was issued in this matter on January 08, 2010.


Michael D. Montgomery - S-08-129-09-FO01 - Final Order

On September 23, 2009, the Securities Division entered a Final Order against Michael D. Montgomery (“Montgomery”). The Securities Division had previously issued a Statement of Charges and Notice of Intent to Revoke Securities Salesperson and Investment Adviser Representative Registration against Montgomery on June 30, 2009. The Securities Division finds that Montgomery engaged in dishonest and unethical practices while working as a securities salesperson and investment adviser representative. The Securities Division finds that Montgomery collected fees for power of attorney and trustee services provided to an elderly client; that Montgomery signed promissory notes in 2003 and 2004 in which he borrowed up to $546,000 from the same client; that between January and August of 2006, Montgomery wrote $105,070 in checks to himself from the client’s accounts, purportedly for Power of Attorney services; that following the client’s death in July 2006, Montgomery wrote $225,982 in checks to himself from the client’s accounts, purportedly for estate services; and that Montgomery failed to disclose these activities to his employing firms as required by NASD Conduct Rule 3030. The Securities Division finds that these activities are dishonest and unethical business practices under WAC 460-22B-090 and RCW 21.20.110(1)(g). The Final Order revokes Montgomery’s securities salesperson and investment adviser representative registrations. Montgomery has a right to judicial review of the Final Order.


Slade E. Barnett, Jr. and Capital Plus Advantage Group, LLC, d/b/a Equity Plus Homes - S-06-043-07-SC01 - Statement of Charges

On September 22, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist, Impose Fines, and Recover Costs against Slade E. Barnett, Jr. and Capital Plus Advantage Group, LLC, d/b/a Equity Plus Homes (collectively “Respondents”). The Statement of Charges alleges that in 2004, the Respondents raised at least $190,000 by offering and selling promissory notes and representing to investors that they would earn returns of 36% per year through their investment program which featured foreign currency trading (forex). The Statement of Charges alleges that the Respondents violated the registration and anti-fraud provisions of the Securities Act of Washington. The Securities Division intends to order the Respondents to cease and desist from violating the Securities Act of Washington, and gives notice of its intent to impose a fine and to recover costs. The Respondents have a right to request a hearing on the Statement of Charges.

A Consent Order was entered in this matter on November 24, 2010.


Kevin George Healy; Domlex Destiny Five Limited Liability Company; Domlex Destiny Five Group Limited Liability Company – S-08-360-09-SC01 – Statement of Charges

On September 8, 2009, the Securities Division entered a Statement of Charges against Respondents, Kevin George Healy (“Healy”), Domlex Destiny Five Limited Liability Company (“Domlex”) and Domlex Destiny Five Group Limited Liability Company (“Domlex Group”). The Statement of Charges alleges that from at least 2006 until 2008, Respondents did business in Bellevue, Washington and that Healy offered and sold to at least ten Washington investors more than $3 million worth of promissory notes issued by Healy and his companies, Domlex and Domlex Group. Respondents were allegedly in the business of purchasing and renovating apartments and rental houses. The Statement of Charges alleges that Respondents each violated the registration provisions of the Securities Act. The Statement of Charges also alleges that Repondents each violated the anti-fraud provision of the Securities Act by misrepresenting or by failing to disclose material information about the investments. The Securities Division is seeking a fine of $50,000 against Healy. Respondents each have the right to request a hearing on the Statement of Charges.

A Final Order was entered regarding this matter on May 13, 2013.


Douglas E. Brenton - S-08-367-09-SC01 – Statement of Charges

On September 8, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist and to Impose a Fine against Respondent, Douglas E. Brenton (“Brenton”). The Statement of Charges alleges that Brenton offered and sold a $150,000 investment in the form of a promissory note and deed of trust. The Statement of Charges alleges that Brenton represented that the investor would have a second position deed of trust to secure the investment. The Statement of Charges alleges that Brenton altered a title insurance commitment letter and failed to disclose that there was already a $440,000 second position deed of trust recorded against the property that was supposed to secure the investment. The Statement of Charges alleges that Brenton violated the anti-fraud provision of the Securities Act of Washington. Brenton has the right to request a hearing on the Statement of Charges.


RBC Capital Markets Corporation – S-09-167-09-CO01 – Consent Order

On August 31, 2009, the Securities Division entered into a Consent Order with RBC Capital Markets Corporation (“Respondent”), in order to settle the allegations that Respondent engaged in dishonest or unethical practices in the sale of auction rate securities (“ARS”), and failed to supervise reasonably its salespersons and employees in the marketing and sale of ARS. Respondent neither admitted nor denied the allegations. Respondent agreed to buy back at par ARS that failed at auction at least once between October 3, 2008 and June 30, 2009 from investors who purchased the ARS from or through Respondent prior to February 11, 2008 into an account maintained in the custody of Respondent. Respondent agreed to cease and desist from violating the Securities Act of Washington and pay a civil penalty of $41,042.35. Respondent waived its right to a hearing and to judicial review of this matter.


Hoss Mortgage Investors, Inc. and Todd Allan Hoss - S-09-043-09-TO02 - Superseding Statement of Charges

On August 26, 2009, the Securities Division entered Order #S-09-043-09-TO02, a Superseding Statement of Charges, Stop Order Suspending and Notice of Intent to Revoke Securities Registration, Summary Order to Cease and Desist, Summary Order Revoking Exemptions, Summary Order Suspending and Notice of Intent to Revoke Securities Broker-Dealer and Securities Salesperson Registration, and Notice of Intent to Impose a Fine (“Superseding Statement of Charges and Order”) against Respondents, Hoss Mortgage Investors, Inc. (“HMI”) and Todd Allan Hoss (“Hoss”). The Superseding Statement of Charges and Order replaces Order #S-09-043-09-SC01, a prior Statement of Charges.

The Superseding Statement of Charges and Order immediately suspends HMI’s securities and broker-dealer registrations, along with Hoss’s salesperson registration. The Superseding Statement of Charges and Order gives notice of intent to revoke those registrations and intent to impose a $100,000 fine against Hoss. The Superseding Statement of Charges and Order alleges that Respondents, HMI and Hoss, have each violated the registration provisions of the Securities Act of Washington (“Securities Act”) by offering and selling unregistered investment loan securities and investments in promissory notes and deeds of trust and investor repayment guarantees.

In addition, the Superseding Statement of Charges and Order alleges that Respondents, HMI and Hoss, have each violated the anti-fraud provisions of the Securities Act by offering and selling the same particular investment to more than one investor; by willfully failing to record deeds of trust that were represented to secure the investments; by reconveying deeds of trust that were to secure specific investments without repaying the investors; by selling more than 100% of the interests in participation loans; and by representing that investors were funding loans to specific borrowers, but the borrowers never received the loan proceeds. The Superseding Statement of Charges and Order alleges that HMI and Hoss have each misrepresented or have failed to disclose how investor funds were to be used and that HMI and Hoss have each failed to provide investors with required financial information about their investments, including information about the borrower, the title to real property, and the valuation of the property that should secure the investment. HMI and Hoss also are each charged with engaging in dishonest and unethical practices in the securities business.

The Respondents, HMI and Hoss, have each made a timely hearing request and they each have the right to a hearing on the Superseding Statement of Charges and Order.

For the latest on the Hoss Mortgage Investors and Todd Allan Hoss case visit our Hoss Mortgage Investors News and Updates webpage.


Robert Storseth - S-07-303-08-CO01 - Consent Order

On August 13, 2009, the Securities Division entered into a Consent Order with Robert Storseth. The Securities Division previously had issued a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist, Impose Fines, and Recover Costs against Valkyrie, Inc. and Robert Storseth (“Storseth”) on August 26, 2008. The Securities Division entered a Final Order as to Valkyrie, Inc. on June 30, 2009. The Securities Division alleged that Respondent Storseth raised at least $257,000 by selling stock in Valkyrie, Inc. to at least 8 Washington residents, purportedly to raise funds to purchase oil licensing rights. The Securities Division further alleged that Respondent Storseth offered unregistered securities, acted as an unregistered broker-dealer or securities salesperson, and violated the anti-fraud provisions of the Securities Act of Washington. In settling the matter, Respondent Storseth neither admitted nor denied the allegations, but agreed to cease and desist from violating the Securities Act of Washington. Respondent Storseth agreed to pay a fine of $2,500 and investigative costs of $1,000. Respondent Storseth waived his right to a hearing and judicial review of the matter.


Merrill Lynch, Pierce, Fenner & Smith, Inc. - S-08-236-09-CO01 – Consent Order

On July 14, 2009, the Securities Division entered into a Consent Order with Merrill Lynch, Pierce, Fenner & Smith, Inc. (“Merrill Lynch”) to settle allegations that Merrill Lynch misled investors and failed to supervise reasonably its salespersons in connection with the sale of auction rate securities (“ARS”). Although marketed and sold to investors as safe, liquid, and cash-like investments, ARS are actually long-term investments subject to a complex auction process. The auction process failed in early 2008, leading to illiquidity and lower interest rates for some investors. The Securities Division alleged that Merrill Lynch engaged in dishonest and unethical practices by failing to adequately inform customers of the risks associated with ARS. The Securities Division further alleged that Merrill Lynch failed to adequately supervise its salesperson by failing to train them on the risks associated with ARS. The Consent Order requires Merrill Lynch to complete its repurchase of ARS from Washington customers. The order also requires Merrill Lynch to pay a $1,021,622.95 fine to the State of Washington. Merrill Lynch will pay $100,000 of the $1,021,622.95 fine to the Investor Protection Trust for investor education in Washington State. The fine represents Washington’s pro-rata share of a $125 million settlement negotiated by a multistate task force of state regulators formed by the North American Securities Administrators Association (NASAA). Merrill Lynch waived its right to a hearing and judicial review of the matter.


Emerald Coin LLC, Emerald Coin Vending, Inc., Jason Nelson - S-07-220-08-CO01 - Consent Order

On July 13, 2009, the Securities Division entered into a Consent Order with Emerald Coin LLC, Emerald Coin Vending, Inc., and Jason Nelson (collectively “Respondents”). The Securities Division had previously entered a Statement of Charges against Respondents on June 5, 2008, and issued an Amended Statement of Charges against Respondents on April 24, 2009. Respondents offered and sold a business opportunity to operate a vending business. The Securities Division alleged that Respondents sold at least six business opportunities in the State of Washington during a period of time in which Respondents were not licensed under the Business Opportunity Fraud Act of Washington. The Securities Division further alleged that Respondents committed unlawful acts when they filed documents with the Securities Division that failed to disclose these sales; filed a Disclosure Document with the Securities Division that failed to disclose material information concerning litigation and restrictive orders issued against the Respondents; filed a renewal application which omitted material information; and failed to amend the Disclosure Documents on file with the Securities Division to reflect changes in material information. In settling the matter, Respondents neither admitted nor denied the allegations, but agreed to cease and desist from violating the Business Opportunity Fraud Act. The Respondents agreed to pay investigative costs of $1,500. The Respondents waived their right to a hearing and judicial review of the matter.


Hoss Mortgage Investors, Inc.; HMI 1 LLC; Todd Allan Hoss - S-09-043-09-SC01 - Statement of Charges

On July 8, 2009, the Securities Division entered a Statement of Charges against Respondents, Hoss Mortgage Investors, Inc. and Todd Allan Hoss. The Statement of Charges alleges that Hoss Mortgage Investors, Inc. and Todd Allan Hoss have each offered and sold investment loan securities and investments in promissory notes and deeds of trust without disclosing that some of the investments were not recorded or secured by deeds of trust as represented by Hoss Mortgage Investors, Inc. and Todd Allan Hoss. The Statement of Charges alleges that Hoss Mortgage Investors, Inc. and Todd Allan Hoss have failed to provide investors with required financial information about their investments, including information about the borrower, the title to real property, and the valuation of the property that should secure the investment. The Statement of Charges alleges that Hoss Mortgage Investors, Inc. and Todd Allan Hoss have misrepresented or have failed to disclose how some investor funds were to be used. The Statement of Charges alleges that Hoss Mortgage Investors, Inc. and Todd Allan Hoss have each engaged in dishonest and unethical practices in the securities business. The Statement of Charges gives notice of the Securities Division’s intent to revoke Hoss Mortgage Investors, Inc. securities offering registration; to revoke Hoss Mortgage Investors, Inc. securities broker-dealer registration; to revoke Todd Allan Hoss’s securities salesperson registration; to revoke exemptions for Hoss Mortgage Investors, Inc. and for Todd Allan Hoss; and to impose a $100,000 fine against Todd Allan Hoss. Respondents have each requested a hearing on the Statement of Charges.

For the latest on the Hoss Mortgage Investors and Todd Allan Hoss case visit our Hoss Mortgage Investors News and Updates webpage.


Citigroup Global Markets Inc - S-08-237-09-CO01 – Consent Order

On July 8, 2009, the Securities Division entered into a Consent Order with Citigroup Global Markets Inc. (“Citigroup”) to settle allegations that Citigroup misled investors and failed to supervise its salespersons in connection with the sale of auction rate securities (“ARS”). Although marketed and sold to investors as safe, liquid, and cash-like investments, ARS are actually long-term investments subject to a complex auction process. The auction process failed in early 2008, leading to illiquidity and often to lower interest rates for investors. The Securities Division alleged that Citigroup engaged in dishonest and unethical practices by failing to adequately inform customers of the risks associated with ARS. The Securities Division further alleged that Citigroup failed to adequately supervise its salespersons by failing to train them on the risks associated with ARS. The Consent Order requires Citigroup to complete its repurchase of ARS from Washington customers. The order also requires Citigroup to pay a $1,019,965.66 fine to the State of Washington. The fine represents Washington’s pro-rata share of a $50 million settlement negotiated by a multistate task force of state regulators formed by the North American Securities Administrators Association (NASAA). Citigroup waived its right to a hearing and judicial review of the matter.


Shawn E. Stoller, FA Monitors, Inc. - S-09-193-09-TO01 - Summary Order

On July 2, 2009, the Securities Division entered a Summary Order Suspending Investment Adviser and Investment Adviser Representative Registration and Notice of Intent to Revoke Registration and Order to Cease and Desist (“Summary Order”) against Shawn E. Stoller and FA Monitors, Inc. Shawn E. Stoller (“Stoller”) is an investment adviser representative and president of investment adviser FA Monitors, Inc. The Summary Order tentatively finds that Stoller engaged in dishonest or unethical practices when he obtained control of $800,000 from his elderly clients for the purposes of making a three-year business investment on their behalf, and instead of making the investment, converted $650,000 of the funds for his personal use. The Summary Order suspends the investment adviser representative registration of Stoller and the investment adviser registration of FA Monitors, Inc. The Summary Order gives notice that the Securities Division intends to revoke the registrations, and gives notice that the Securities Division intends to order Stoller to cease and desist from violating the anti-fraud provision of the Securities Act of Washington. Respondents have a right to request a hearing on the Summary Order.

A Consent Order was entered in this matter on August 4, 2010.


Michael D. Montgomery - S-08-129-09-SC01 – Statement of Charges

On June 30, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Revoke Securities Salesperson and Investment Adviser Representative Registration against Michael D. Montgomery (“Montgomery”). The Statement of Charges alleges that Montgomery engaged in dishonest and unethical practices while working as a securities salesperson and investment adviser representative, and that these practices are grounds for revocation of his registrations. The Statement of Charges alleges that Montgomery collected fees for power of attorney and trustee services provided to an elderly client; that Montgomery signed promissory notes in 2003 and 2004 in which he borrowed up to $546,000 from the same client; that between January and August of 2006, Montgomery wrote $105,070 in checks to himself from the client’s accounts, purportedly for Power of Attorney services; that following the client’s death in July 2006, Montgomery wrote $225,982 in checks to himself from the client’s accounts, purportedly for estate services; and that Montgomery failed to disclose these activities to his employing firms as required by NASD Conduct Rule 3030. The Statement of Charges alleges that these activities are dishonest and unethical business practices under WAC 460-22B-090 and RCW 21.20.110(1)(g), and gives notice of the Securities Division’s intent to revoke the registrations. The Respondent has a right to request a hearing on the Statement of Charges.

A Final Order was issued in this matter on September 23, 2009.


Dennis C. Healey, Spellbinder Funding LLC - S-08-221-09-FO01 - Final Order

On June 30, 2009, the Securities Division entered a Final Order against Dennis C. Healey and Spellbinder Funding, LLC (collectively “Respondents”). On March 23, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist, Impose Fines, and Charge Costs against Respondents. Respondents offered and sold investment units in a Las Vegas magic production via unsolicited phone calls. Respondents offered unregistered securities, acted as unregistered broker-dealers or securities salespersons, and violated the anti-fraud provisions of the Securities Act of Washington. The Securities Division orders Respondents to cease and desist from violating the Securities Act of Washington, and orders Respondents to pay investigative costs of $1,000. The Securities Division further orders Respondents Dennis C. Healey and Spellbinder Funding, LLC each to pay a fine of $10,000. Respondents have a right to request judicial review of the Final Order.


Valkyrie, Inc. - S-07-303-09-FO01 – Final Order

On June 30, 2009, the Securities Division entered a Final Order as to Valkyrie, Inc. The Securities Division previously had issued a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist, Impose Fines, and Recover Costs against Valkyrie, Inc. and Robert Storseth on August 26, 2008. Respondent Valkryie, Inc. raised at least $257,000 by selling its stock to at least 8 Washington residents, purportedly to raise funds to purchase oil licensing rights. Respondent Valkryie, Inc. offered unregistered securities and violated the anti-fraud provisions of the Securities Act of Washington. The Securities Division orders Respondent Valkyrie, Inc. to cease and desist from violating the Securities Act of Washington, and to pay a fine of $10,000. Respondent Valkyrie, Inc. has a right to request judicial review of the Final Order. The charges are still pending as to Robert Storseth.


Pilchuck Investors, LLC and Geoff McPherson - S-08-041-09-SC02 - Statement of Charges

On June 29, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist against Pilchuck Investors, LLC and Geoff McPherson. The Statement of Charges alleges that Pilchuck Investors, LLC was formed to short plat a lot on Fox Island and to build homes on the lots and sell them for a profit. The Statement of Charges alleges that Respondents offered and sold a total of $370,000 worth of promissory notes and deeds of trust to three Washington investors. The Statement of Charges alleges that the Respondents each violated the anti-fraud provisions of the Securities Act. The Securities Division intends to order the Respondents to each cease and desist from violating the Securities Act of Washington. The Respondents each have the right to request a hearing on the Statement of Charges.

A Consent Order was entered in this matter on November 4, 2009.


Brothers Northwest Investments, Inc.; South J Street, LLC; Bruce Schmidt; Jared Smidt; and Geoff McPherson - S-08-041-09-SC01 - Statement of Charges

On June 29, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist and to Impose a Fine against Respondents, Brothers Northwest Investments, Inc.; South J Street, LLC; Bruce Schmidt; Jared Smidt; and Geoff McPherson. The Statement of Charges alleges that Brothers Northwest, a company in Tacoma, Washington, was in the business of real estate development and that Brothers Northwest, Schmidt and Smidt offered and sold to four investors more than $200,000 worth of promissory notes and deeds of trust to finance home construction and failed to disclose material information about the investments. The Statement of Charges also alleges that Bruce Schmidt and Brothers Northwest Investments, Inc. offered and sold a $150,000 promissory note and deed of trust to finance the construction of a four-plex without disclosing material information, including the failure to disclose that Brothers Northwest did not own the property that was subject to the deed of trust. The Statement of Charges also alleges that South J Street, Schmidt, Smidt and McPherson offered and sold notes and deeds of trust totaling $350,000 to finance a four-plex without disclosing material information about the investments. The Statement of Charges alleges that Respondents each violated RCW 21.20.010, the anti-fraud provision of the Securities Act. The Securities Division intends to order the Respondents each to cease and desist from violating the Securities Act of Washington and to order Bruce Schmidt to pay a fine of $10,000. Respondents each have the right to request a hearing on the Statement of Charges.

A Consent Order was entered in this matter on November 4, 2009.

A Consent Order with regard to Jared Smidt was issued January 25, 2010.

A Consent Order with regard to Bruce Schmidt was issued January 04, 2010.


Soup House Organics Inc. and Christopher R. McGrath - S-09-053-09-SC01 - Statement of Charges

On June 22, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist, Impose Fines, and Recover Costs against Soup House Organics Inc. and its founder Christopher R. McGrath (collectively “Respondents”). The Statement of Charges alleges that between 2005 and 2006, the Respondents raised at least $185,000 by offering and selling stock in Soup House to investors. During the period of the offering, Soup House operated restaurants in Olympia and Lacey, Washington. The Statement of Charges alleges that the Respondents violated the registration and anti-fraud provisions of the Securities Act of Washington. The Securities Division intends to order the Respondents to cease and desist from violating the Securities Act of Washington, and gives notice of its intent to impose a fine and recover costs. The Respondents have a right to request a hearing on the Statement of Charges.

A Consent Order was entered in this matter on October 13, 2009


Prosper Marketplace, Inc. - S-06-210-09-CO01 - Consent Order

On June 22nd, 2009, the Securities Division entered into a Consent Order with Respondent, Prosper Marketplace, Inc. The Securities Division tentatively found that Respondent offered and sold investments in the form of small loans through its website. Approximately 1,860 Washington State residents invested $6,452,422 in these loans. The Securities Division tentatively found that Respondent violated RCW 21.20.010, the anti-fraud provision of the Securities Act of Washington, by failing to disclose material facts of the investment, including details of the company’s business model and the risks of the investment. Without admitting or denying the allegations, Respondent Prosper Marketplace agreed to cease and desist from violating RCW 21.20.010. Respondent Prosper Marketplace waived its right to a hearing and to judicial review of this matter and pay a $36,025 fine.


United Business Solutions, Inc. dba UBS Group, Inc.; Johnathan Ahlf - S-07-244-09-FO02 - Final Order

On June 18, 2009, the Securities Division entered a Final Order to Cease and Desist against United Business Solutions, Inc. dba UBS Group, Inc. (“United Business Solutions, Inc.”). The Division previously entered an Amended Statement of Charges against United Business Solutions, Inc. dba UBS Group, Inc. and Johnathan Ahlf on March 10, 2008, which amended the Statement of Charges entered on October 8, 2007. The Securities Division finds that Respondent United Business Solutions, Inc. sold an unregistered tax recovery and related business services franchise opportunity to two Washington State residents. In addition, the Securities Division finds that Respondent United Business Solutions, Inc. failed to provide the residents with a Uniform Franchise Offering Circular that contained material information about the franchise. The Securities Division orders Respondent United Business Solutions, Inc. to cease and desist from violating the registration and disclosure document provisions of the Franchise Investment Protection Act of Washington. Respondent United Business Solutions, Inc. has the right to request judicial review of this matter.


William Larry Doman - S-06-085-09-CO01 - Consent Order

On June 18, 2009, the Securities Division entered a Consent Order with William Larry Doman. The Securities Division had previously entered an Amended Statement of Charges, S-06-085-09-SC02, on May 19, 2009 and a Statement of Charges, S-06-085-07-SC01, on March 13, 2008, against Mr. Doman. The Amended Statement of Charges alleged that in a two year period Mr. Doman offered and sold to customers, some of whom were elderly, variable annuities through the means of unsuitable recommendations and misrepresentations of facts. It was also alleged that Respondent failed to disclose true and complete information on variable annuity product applications and annuity replacement forms. The Amended Statement of Charges alleged that Mr. Doman violated the licensing, suitability, and anti-fraud provisions of the Securities Act while offering these securities. Mr. Doman neither admitted nor denied the allegations, but agreed to not violate the suitability, anti-fraud provisions, and dishonest or unethical practices sections of the Securities Act. Additionally, Mr. Doman agreed to reimburse the Securities Division $5,000 in investigative costs and to not make application to the Securities Division for a securities salesperson, broker-dealer, investment adviser and/or investment adviser representative license for three years and that any registration by Mr. Doman during this period will be denied by the Securities Division. Mr. Doman waived his right to a hearing and judicial review of this matter.


The Investment Management Group, LLC; Donald Rae Hathaway; Laura Lynn Hathaway - S-08-256-09-CO01 - Consent Order

On May 28, 2009, the Securities Division entered into a Consent Order with Respondents, The Investment Management Group, LLC; Donald Rae Hathaway; and Laura Lynn Hathaway. The Securities Division tentatively found that Respondents offered and sold two promissory notes and deeds of trust totaling more than $500,000 to a Washington investor. The Securities Division tentatively found that Respondents violated RCW 21.20.010, the anti-fraud provision of the Securities Act of Washington, by failing to disclose material facts about the two investments. Without admitting or denying the allegations, Respondents each agreed to cease and desist from violating RCW 21.20.010. Respondents each waived their right to a hearing and to judicial review of this matter.


William “Larry” Doman - S-06-085-09-SC02 - Amended Statement of Charges

On May 19, 2009, the Securities Division entered an Amended Statement of Charges and Notice of Intent to Enter Order to Suspend Securities Salesperson License, to Impose Fines, and to Charge Costs, which amended Statement of Charges, S-06-085-07-SC01 entered on March 13, 2008, against William “Larry” Doman. The Amended Statement of Charges alleges that in a two year period Mr. Doman offered and sold to customers, some of whom were elderly, variable annuities through the means of unsuitable recommendations and misrepresentations of facts. It is also alleged that Respondent failed to disclose true and complete information on variable annuity product applications and annuity replacement forms. The Amended Statement of Charges alleges that Mr. Doman violated the licensing, suitability, and anti-fraud provisions of the Securities Act while offering these securities. Respondent has a right to request a hearing on the Statement of Charges.

A Consent Order was entered on June 18, 2009.


Bruce White - S-08-381-09-FO01 – Final Order

On May 12, 2009, the Securities Division entered a Final Order against Bruce White (“Respondent”). On March 6, 2009, the Securities Division had entered a Statement of Charges and Notice of Intent to Order to Cease and Desist, to Impose Fines, and to Charge Costs against Respondent. Respondent offered an investment in a real estate development in Hawaii. Respondent offered unregistered securities, acted as an unregistered broker-dealer or securities salesperson, and violated the anti-fraud provisions of the Securities Act of Washington. The Securities Division orders Respondent to cease and desist from violating the Securities Act of Washington and orders Respondent to pay investigative costs of $1,500. The Securities Division further orders Respondent to pay a fine of $5,000. Respondent has a right to request judicial review of the Final Order.


Quest Holdings, Inc.; Craig T. Jolly; Kerry Miller - S-08-329-09-FO01 – Final Order

On May 8, 2009, the Securities Division entered a Final Order against Quest Holdings, Inc., Craig T. Jolly, and Kerry Miller (“Respondents”). On February 24, 2009, the Securities Division had entered a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist, to Charge Costs, and to Impose Fines against the Respondents. Respondents were involved in the offer and sale of investments in the form of a “Lenders Agreement” through the website EarnByLoaning.com. Respondents Quest and Jolly offered unregistered securities and Respondent Jolly acted as an unregistered broker-dealer or securities salesperson. Respondents violated the anti-fraud provisions of the Securities Act of Washington. The Securities Division orders Respondents to cease and desist from violating the Securities Act of Washington, and orders Respondents to pay investigative costs of $4,000. The Securities Division further orders Respondent Craig T. Jolly to pay a fine of $40,000. The Respondents have a right to request judicial review of the Final Order.


Private Funding Group NW, LLC; PFG NW, Inc.; and Melvin Laverne Johnson Jr. - S-08-152-09-SC01 – Statement of Charges

On May 5, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist, to Impose a Fine, and to Charge Costs against Respondents, Private Funding Group NW, LLC (“Private Funding Group”); PFG NW, Inc. (“PFG”); and Melvin Laverne Johnson Jr. (“Johnson”) of Bothell, Washington. The Statement of Charges alleges that Private Funding Group and Johnson each offered and sold $130,000 worth of investments during 2007 in the form of participation interests in a promissory note and deed of trust. The Statement of Charges alleges that PFG and Johnson each offered and sold more than $2 million worth of investments during 2004 through 2006 in the form of promissory notes and deeds of trust or participation interests in promissory notes and deeds of trust. The Statement of Charges alleges that Private Funding Group and PFG were not registered to sell their securities in the State of Washington. The Statement of Charges alleges that from 2004 through 2008, Johnson was not registered as a securities broker-dealer or a securities salesperson in the State of Washington. The Statement of Charges also alleges that Respondents each violated the registration provisions and the anti-fraud provisions of the Securities Act of Washington. The Securities Division intends to order the Respondents each to cease and desist from violating the Securities Act of Washington. The Securities Division intends to order Melvin Laverne Johnson to pay a fine of $35,000 and to pay investigative costs of $5,000. Respondents each have the right to request a hearing on the Statement of Charges.


The Christmas Light Pros, Inc. - S-06-194-08-CO01 - Consent Order

On May 1, 2009, the Securities Division entered into a Consent Order with The Christmas Light Pros, Inc. (Consent Order No. S-06-194-08-CO01) in settlement of a prior Statement of Charges and Notice of Intent to Issue an Order to Cease and Desist entered on August 14, 2008. The Christmas Light Pros, Inc. is the seller of an opportunity to operate a Christmas light hanging business. The Division had alleged in the Statement of Charges that the company had failed to comply with the registration, disclosure document, and antifraud provisions of the Franchise Investment Protection Act. The Christmas Light Pros, Inc. agreed, without admitting or denying findings of fact, to cease offering or selling franchises in violation of those provisions. The Christmas Light Pros, Inc., among other things, agreed to reimburse the Securities Division $750 for its costs of investigation. The Christmas Light Pros, Inc. also waived its right to a hearing or other further proceedings in the matter.


Marc A. Boyd - S-06-131-09-CO02 - Consent Order and Order Vacating S-06-131-07-SC01 as to Marc A. Boyd

On April 30, 2009, the Securities Division entered into a Consent Order with Marc A. Boyd (“Boyd”). The Consent Order vacated Order #S-06-131-07-SC01 as to Marc A. Boyd. Without admitting or denying the Findings of Fact and Conclusions of Law, Boyd agreed to cease and desist from registration and anti-fraud violations of the Securities Act of Washington. Boyd agreed not to apply for registration as a securities salesperson in the State of Washington and not to engage in the business of offering or selling notes or evidences of indebtedness in Washington for a period of ten years. Boyd waived his right to a hearing and to judicial review of this matter.


Boyd Real Estate Investments, Inc. and Kevin G. Boyd - S-06-131-09-CO01 | Consent Order and Order Vacating S-06-131-07-SC01 as to Kevin G. Boyd and Boyd Real Estate Investments, Inc.

On April 30, 2009, the Securities Division entered into a Consent Order with Boyd Real Estate Investments, Inc. (“BREI”) and Kevin G. Boyd (“Boyd”). The Consent Order vacated Order #S-06-131-07-SC01 as to BREI and Boyd. Without admitting or denying the Findings of Fact and Conclusions of Law, BREI and Boyd each agreed to cease and desist from registration and anti-fraud violations of the Securities Act of Washington. Boyd agreed not to apply for registration as a securities salesperson in the State of Washington and not to engage in the business of offering or selling notes or evidences of indebtedness in Washington for a period of ten years. Boyd paid a fine of $5,000. BREI and Boyd each waived their right to a hearing and to judicial review of this matter.


Emerald Coin LLC, Emerald Coin Vending, Inc., Jason Nelson - S-07-220-09-SC03 - Amended Statement of Charges

On April 24, 2009, the Securities Division entered an Amended Statement of Charges and Notice of Intent to Issue an Order to Cease and Desist (“Amended Statement of Charges”), which amended the Statement of Charges previously issued against Emerald Coin LLC, Emerald Coin Vending, Inc., Jason Nelson (collectively “Respondents”). The Statement of Charges was amended to include additional purchasers of the Emerald Coin business opportunity. The Amended Statement of Charges alleges that Respondents sold at least six business opportunities in the State of Washington during a period of time in which Respondents were not licensed under the Business Opportunity Fraud Act of Washington. The Amended Statement of Charges further alleges that Respondents committed unlawful acts when they filed documents with the Securities Division that failed to disclose these sales; filed a Disclosure Document with the Securities Division that failed to disclose material information concerning litigation and restrictive orders issued against the Respondents; filed a renewal application which omitted material information; and failed to amend the Disclosure Documents on file with the Securities Division to reflect changes in material information. The Securities Division intends to order Respondents to cease and desist from violating the registration and unlawful acts and provisions of the Business Opportunity Fraud Act of Washington. Respondents have a right to request a hearing on these matters.

A Final Order was entered in this matter on July 13, 2009.


Dickson V. Lee; L&L International Holdings, Inc. - S-07-002-08-SC01 - Statement of Charges

On April 22, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Issue an Order to Cease and Desist, Impose Fines, and Recover Costs against Dickson V. Lee and L&L International Holdings, Inc. (collectively “Respondents”). The Statement of Charges alleges that Respondents raised approximately $2.3 million dollars by selling common stock and warrants. At least $26,252 of the funds came from Washington residents. The funds were purportedly raised so Respondents could purchase state owned enterprises in China and then employ U.S. consultants with the skills to quickly make the businesses profitable. The Statement of Charges alleges that Respondents violated the anti-fraud provision of the Securities Act of Washington by misrepresenting to investors the percentage of the gross proceeds of the offering that certain retained referral agents and brokers could receive as a commission for their services. The Statement of Charges further alleges that Respondents offered unregistered securities. The Securities Division ordered Respondents to cease and desist from violating the securities registration and anti-fraud provisions of the Securities Act of Washington. The Securities Division gave notice of its intent to impose fines and charge costs. Respondents have a right to request a hearing on the Statement of Charges.

A Consent Order was entered in this matter on October 26, 2009.


Stat Investment Strategies, Corp. – Entry of Finds of Fact and Conclusions of Law and Final Order to Revoke Investment Adviser Registration – S-08-371-09-FO01

On April 13, 2009, the Securities Division entered a Final Order to Revoke Investment Adviser Registration against Stat Investment Strategies, Corp. Stat Investment Strategies, Corp. was registered with the Securities Division as an investment adviser. The order alleges that the company has failed to file a year-end balance sheet with the Division dated December 31, 2007 or later and it also has not filed an updated Form ADV with the Investment Adviser Registration Depository (IARD) since September 14, 2005 as required. Respondent has the right to request judicial review of the Final Order.


Kirk Capital Management Inc. - S-08-370-09-FO01 - Final Order

On April 9, 2009, the Securities Division entered a Final Order Revoking Investment Adviser Registration against Kirk Capital Management, Inc. Kirk Capital Management, Inc. was registered with the Securities Division as an investment adviser. The order alleged that Kirk Capital Management failed to file financial statements with the Division and it also failed to file an updated Form ADV with the Investment Adviser Registration Depository (IARD) since February 21, 2007 as required. Respondent has the right to seek judicial review of the Final Order.


Clarion Trust Company, Hutchins Development Project, Hutchins Associates, Inc, and American Providence Financial Corp., Randy Maine, Dennis Sharp and Wayne James - Consent Order - S-06-178-08-CO01

On April 8, 2009, the Securities Division entered a Consent Order with Dennis Sharp. The Securities Division had previously entered a Statement of Charges against Clarion Trust Company, Hutchins Development Project, Hutchins Associates, Inc, American Providence Financial Corp., Randy Maine, Dennis Sharp and Wayne James, on May 7, 2008. The Statement of Charges alleged that from June 1996 and continuing through May 2006, Maine, Sharp and James, solicited investors for real estate development in Washington and Texas in the companies named above. Maine was securities salesperson with PFS Investments, Inc. from 1994 to 1996 and Sharp was a securities salesperson with PFS Investments, Inc. from 1991 to 2006. The Statement of Charges alleges that the Respondents offered unregistered securities, acted as unregistered broker-dealers or securities salespersons, and violated the anti-fraud provisions of the Securities Act of Washington. Respondent Sharp neither admitted nor denied the allegations, but agreed to cease and desist from violating the registration and anti-fraud provisions of the Securities Act. Sharp waived his right to a hearing and judicial review of this matter.


Steven Ray Mandak, Bio Renewable Energy of Washington, and S & B Energy Spokane, LLC - Statement of Charges - S-08-153-08-SC01

On March 31, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist, to Impose a Fine, and to Charge Costs (“Statement of Charges”) against Respondents, Steven Ray Mandak (“Mandak”), Bio Renewable Energy of Washington (“Bio Renewable”), and S & B Energy Spokane, LLC (“S & B”). The Statement of Charges alleges that Mandak offered and sold an investment of $40,000 in Bio Renewable and an investment of $50,000 in S & B. The Statement of Charges alleges that both companies were supposed to fund the construction of an ethanol plant. The Statement of Charges alleges that each Respondent violated the anti-fraud provision of the Securities Act of Washington by making untrue statements of material fact and by failing to disclose material information when offering and selling the investments. The Securities Division intends to order the Respondents to each cease and desist from violating the Securities Act of Washington and to impose a fine of $5,000 and charge costs of $2,500 against Mandak. Respondents each have the right to request a hearing on the Statement of Charges.


Fairfield Energy Inc. TM4500 Rig Acquisition Joint Venture, LLC; Fairfield Energy Inc.; Brian Sullivan - S-07-351-09-SC01 - Statement of Charges

On March 30, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Issue an Order to Cease and Desist, Impose Fines, and Charge Costs against Fairfield Energy Inc. TM4500 Rig Acquisition Joint Venture, LLC; Fairfield Energy Inc.; and Brian Sullivan (collectively “Respondents”). The Statement of Charges alleges that Respondents offered for sale to a Washington resident an unregistered interest in the revenue from the leasing of an oil drilling rig. The Statement of Charges further alleges that certain Respondents acted as unregistered broker-dealers and/or securities salespersons, and that Respondents violated the anti-fraud provision of the Securities Act of Washington. The Securities Division intends to order Respondents to cease and desist from violating the securities registration, broker-dealer and/or securities salesperson registration and anti-fraud provisions of the Securities Act of Washington. The Securities Division gave notice of its intent to collect fines and charge costs. Respondents have a right to request a hearing on the Statement of Charges.

A Final Order was entered in this matter on May 11, 2011.


Wachovia Securities, LLC; Wachovia Capital Markets, LLC - S-08-229-09-CO01 - Consent Order

On March 24, 2009, the Securities Division entered into a Consent Order with Wachovia Securities, LLC and Wachovia Capital Markets, LLC (collectively “Respondents”), in order to settle the allegations that Respondents had engaged in dishonest and unethical conduct in the marketing and sale of auction rate securities (“ARS”), and failed to reasonably supervise their salespersons in the sale of ARS. Respondents neither admitted nor denied the allegations, but agreed to cease and desist from violating the Securities Act of Washington. Respondents agreed to offer to purchase at par ARS that are subject to unsuccessful auctions and that are not subject to current calls or redemptions, from investors who purchased ARS from Respondents on or before February 13, 2008, into accounts maintained with Respondents. Respondents agreed to pay $491,556.71 as a civil monetary penalty. Respondents each waived their right to a hearing and to judicial review of this matter.


Dennis C. Healey, Spellbinder Funding LLC - S-08-221-08-SC01 - Statement of Charges

On March 23, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist, Impose Fines, and Charge Costs against Dennis C. Healey and Spellbinder Funding, LLC (collectively “Respondents”). The Statement of Charges alleges that Respondents offered and sold investment units in a Las Vegas rock music and magic production via unsolicited phone calls. The Statement of Charges alleges that Respondents offered unregistered securities, acted as unregistered broker-dealers or securities salespersons, and violated the anti-fraud provisions of the Securities Act of Washington. The Securities Division intends to order Respondents to cease and desist from violating the Securities Act of Washington, and gives notice of intent to collect fines and charge costs. Respondents have a right to request a hearing on the Statement of Charges.

A Final Order was issued June 30, 2009, against Dennis C. Healey and Spellbinder Funding, LLC.


Majestic Diamonds & Metals, Inc - S-09-032-09-RS01 - Order Vacating Summary Order Denying Exemption

On March 23, 2009, the Securities Division entered an Order Vacating Summary Order Denying Exemption in connection with the withdrawal of the Notice of Exempt Offering of Securities filed by Majestic Diamonds & Metals, Inc. and representations it made to the Division.


Bruce White - S-08-381-09-SC01 – Statement of Charges

On March 6, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist, to Impose Fines, and to Charge Costs against Bruce White (“Respondent”). The Statement of Charges alleges that Respondent offered an investment in a real estate development in Hawaii through the Seattle Craigslist. The Statement of Charges alleges that Respondent offered unregistered securities, acted as an unregistered broker-dealer or securities salesperson, and violated the anti-fraud provisions of the Securities Act of Washington. The Securities Division intends to order Respondent to cease and desist from violating the Securities Act of Washington, and gave notice of its intent to impose fines and charge costs. The Respondent has a right to request a hearing on the Statement of Charges.

A Final Order was issued in this matter on May 12, 2009.


Bernard L. Madoff, Bernard L. Madoff Investment Securities LLC - S-08-429-09-FO01 – Final Order

On March 5, 2009, the Securities Division entered a Final Order against Bernard L. Madoff and Bernard L. Madoff Investment Securities LLC (collectively “Respondents”). The Securities Division had previously issued a Summary Order Suspending Securities Salesperson and Broker-Dealer Registration and Notice of Intent to Revoke Registration on December 30, 2008. The Securities Division finds that Bernard L. Madoff engaged in dishonest and unethical practices by operating a ponzi scheme through Bernard L. Madoff Investment Securities LLC in which investors lost billions of dollars. In addition, the Securities Division finds that Bernard L. Madoff Investment Securities LLC is insolvent and failed to supervise its securities salesperson Bernard L. Madoff. The Final Order revokes the registrations of Bernard L. Madoff and Bernard L. Madoff Investment Securities LLC. The Respondents have a right to judicial review of the Final Order.


Quest Holdings, Inc.; Craig T. Jolly - S-08-329-08-SC01 – Statement of Charges

On February 24, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist, to Charge Costs, and to Impose Fines against Quest Holdings, Inc., Craig T. Jolly, and Kerry Miller (collectively “Respondents”). The Statement of Charges alleges that Respondents offered and sold investments in the form of a “Lenders Agreement” through the website EarnByLoaning.com. The Statement of Charges alleges that Respondents offered unregistered securities, acted as unregistered broker-dealers or securities salespersons, and violated the anti-fraud provisions of the Securities Act of Washington. The Securities Division intends to order Respondents to cease and desist from violating the Securities Act of Washington, and gave notice of its intent to charge costs and impose fines. The Respondents have a right to request a hearing on the Statement of Charges.

A Final Order was entered in this matter on May 8, 2009.


Michael J. Devine, International Consulting LLC, Down Under Seafoods LLC, Kimberley Investments, Inc. - S-08-045-09-FO01 – Final Order

On January 26, 2009, the Securities Division entered a Final Order against Michael J. Devine, International Consulting LLC, Down Under Seafoods LLC, and Kimberley Investments, Inc. (collectively “Respondents”). On December 9, 2008, the Securities Division had entered a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist, Impose Fines, and Recover Costs against the Respondents. Respondents offered and sold investments in the form of promissory notes and equity interests while based out of Kirkland, Washington. Respondents raised at least $278,000 between 2005 and 2008 to finance various businesses, including an iron ore mining venture, a seafood store and fish and chips restaurant, and a real estate investment company. Respondents offered unregistered securities, acted as unregistered broker-dealers or securities salespersons, and violated the anti-fraud provisions of the Securities Act of Washington. The Securities Division orders Respondents to cease and desist from violating the Securities Act of Washington, and orders Respondents to pay investigative costs of $1,500. The Securities Division further orders Respondent Michael J. Devine to pay a fine of $15,000. Respondents have a right to request judicial review of the Final Order.


SoccerTots, Incorporated; Edward Kent Gold - S-07-471-08-CO01 - Consent Order

On January 26, 2009, the Securities Division entered into a Consent Order with SoccerTots, Incorporated and Edward Kent Gold (collectively “Respondents”). The Securities Division had previously entered a Statement of Charges against the Respondents, S-07-471-08-SC01, on October 23, 2008. Respondents operate SoccerTots and SoccerTouch, which are soccer based child development programs. The Division alleged that Respondents offered and sold a franchise to operate the SoccerTots and SoccerTouch programs to a Washington resident while not registered under the Franchise Investment Protection Act of Washington. The Statement of Charges further alleges that Respondents violated the anti-fraud and disclosure document provisions of the Franchise Investment Protection Act of Washington in connection with the offer of the franchise. Respondents neither admitted nor denied the Findings of Fact and Conclusions of Law, but agreed to cease and desist from violating the registration, anti-fraud, and disclosure document provisions of the Franchise Investment Protection Act of Washington. Respondents each waived their right to a hearing and to judicial review of the matter.


Michelle Catherine Merceri - S-08-122-08-CO01 - Consent Order

On January 16, 2009, the Securities Division entered into a Consent Order with Michelle Catherine Merceri (“Merceri”). The Securities Division alleged that Merceri, a resident of Hunts Point, Washington, was the managing member of Avere Capital Finance, LLC, a company that was in the business of financing commercial and business loans secured by real estate. The Securities Division found that Merceri offered and sold investments totaling approximately $228,000 to a Washington investor without disclosing material risks about the investments. Merceri neither admitted nor denied the Findings of Fact and Conclusions of Law set forth in the Consent Order, but agreed to pay $1,500 for investigative costs. Merceri also waived her rights to an administrative hearing and to judicial review of the matter.


Energy Automation Systems, Inc.; Joseph Merlo; Paul Bleiweis - S-07-480-08-SC01 - Statement of Charges

On January 5, 2009, the Securities Division entered a Statement of Charges and Notice of Intent to Enter Order to Cease and Desist against Energy Automation Systems, Inc.; Joseph Merlo; and Paul Bleiweis (collectively “Respondents”). Respondents represent that they operate a business that sells energy saving systems and products to office buildings and other businesses. The Statement of Charges alleges that Respondents offered and sold business opportunities to distribute Energy Automation Systems, Inc. products to various Washington Residents while not registered under the Business Opportunity Fraud Act of Washington, RCW 19.110. The Statement of Charges further alleges that Respondents failed to provide disclosure documents regarding the business opportunity and caused to be filed with the director a document which contained untrue or misleading information. The Securities Division intends to order the Respondents to cease and desist from violating the provisions of the Business Opportunity Fraud Act of Washington. Respondents have a right to request a hearing on the Statement of Charges.

A Consent Order was entered in this matter on March 17, 2010.

DFI