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News Release: 03-05
GRAY DAVIS, Governor
Date: 04/25/03
DEMETRIOS A. BOUTRIS, Commissioner
Department of Corporations Sues Insurance Agent Involved in Nationwide Ponzi Scheme
Enforcement Action is Part of a Statewide Sweep Targeting Insurance Agents Selling Unlawful and Fraudulent Securities
Sacramento, April 25, 2003 — California Corporations Commissioner Demetrios A. Boutris today announced that the Department of Corporations has filed a civil complaint resulting from an ongoing statewide enforcement sweep of insurance agents selling unlawful and fraudulent securities. The lawsuit, filed in the Superior Court of Fresno County against Jeffrey Nickel, a life insurance agent, and RateNet, LLC, seeks restitution to investors and civil penalties of up to $4.5 million.
"This case provides a clear and unmistakable warning to California consumers," said Commissioner Boutris. "The allure of big commissions has enticed some insurance agents into abusing the trust they've established with their clients by selling bogus securities to them. Californians should always contact the Department of Corporations to check up on any investments they are considering and the company or individual who is offering them."
Jeffrey Nickel and his associates, none of whom were licensed to sell securities in California, did business as RateNet, LLC, selling over $8,400,000 in unqualified, nonexempt promissory notes, real estate investment agreements and investment contracts issued by TLC Investment & Trade Co. (TLC) to more than 180 Californians. The Securities and Exchange Commission took action against TLC in October 2000 for operating a Ponzi scheme that took in more than $156 million from approximately 1,800 investors nationwide. Approximately 100 individuals, the majority of whom are insurance agents, sold TLC investments in California. These agents are the initial targets of the Department's continuing enforcement sweep.
The Department of Corporations is California's Investment and Financing Authority, reporting to the Business, Transportation and Housing Agency and the Governor. The Department is responsible for the regulation, enforcement and licensing of securities, franchises, off-exchange commodities, investment and financial services, independent escrows, consumer and commercial finance lending and residential mortgage lending. For further information or to obtain a complaint form, see the Department's Web site at www.corp.ca.gov or call 1-866-ASK-CORP (1-866-275-2677).
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