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News Release: 03-10
GRAY DAVIS, Governor
Date: 10/02/03
DEMETRIOS A. BOUTRIS, Commissioner
Department of Corporations Takes Enforcement Action Against Insurance Agents Involved in Nationwide Ponzi Scheme
Subtitle
Sacramento, October 2, 2003 — The Davis Administration today announced that the Department of Corporations has issued Desist and Refrain orders against 34 individuals, most of whom are insurance agents, involved in the offer and sale of unlawful and fraudulent securities. The action is part of an ongoing statewide enforcement sweep of insurance agents selling unqualified securities.
"These agents sold more than $28 million worth of bad securities to at least 360 California consumers," said California Corporations Commissioner Demetrios A. Boutris. "This case demonstrates once again that Californians should always contact the Department of Corporations to check up on any investments they are considering, no matter what their relationship is to the person or business offering them."
The agents who were served with Desist and Refrain orders sold unqualified, nonexempt promissory notes, real estate investment agreements and investment contracts issued by TLC Investment & Trade Co. (TLC). None of the individuals was licensed to sell securities in California.
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. A receiver has been appointed in that case for the purpose of returning commissions collected by the agents to the victims of the scheme.
Another 35 individuals who sold TLC investments were served with Desist and Refrain orders by the Department of Corporations earlier this year. The Department also filed a civil complaint on March 21, 2003, against Jeffrey Nickel and RateNet, LLC, for selling more than $8,400,000 in TLC securities.
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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