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STATE OF
OFFICE OF SECURITIES
121 STATE HOUSE STATION
AUGUSTA, ME 04333
NOTICE OF INTENT TO ISSUE A CEASE AND DESIST ORDER 02-130
ALLEGATIONS
1.
B.I.Z. Holdings, Inc. ("BIZ") is a foreign
business corporation with a last known business address of 1140 Kane Concourse,
Fifth Floor, Bay Harbor Islands, Florida 33154-2045. BIZ was incorporated in
2.
Schlecht Group, Inc. ("Schlecht Group") is a foreign business corporation
with a last known business address of 1140 Kane Concourse, Fifth Floor, Bay
Harbor Islands, Florida 33154-2045. Schlecht Group was incorporated in
3.
As recently as May 2002, U.S. Metals[1]
has used
4.
Arthur Schlecht ("Schlecht") is an individual who at all relevant times
has been the sole officer and director of Schlecht
Group. His last known business address
is 1140 Kane Concourse, Fifth Floor,
5.
Bernard I. Zeff ("Zeff") is an individual who at all relevant times has
been the sole officer and director of BIZ.
His last known business address is 1140 Kane Concourse, Fifth Floor,
6.
Martin Jainchill (“Jainchill”) is an individual who at all relevant times has
acted as an agent of U.S. Metals and is also the sole officer and director of MGI. According to information received by the
Office of Securities, Jainchill operated and managed
U.S. Metals. His last known business
address is
7.
Roberta Couri ("Couri") in an individual who at all relevant times has
acted as an agent of U.S. Metals. Her
last known business address is
8.
In or about May 2002, an individual residing in
9.
As a result of these telephone solicitations, the
10.
After each purchase, the
11.
Despite requests by the
12.
In or about August 2002, a U.S. Metals representative
contacted the
13.
U.S. Metals has not delivered any silver to the
14.
The
15.
In or about November 2002, a company, Metals Group
International Corp. (“MGI”), was incorporated in Florida. In corporate filings, MGI lists its business
address as 9130 South Dadeland Boulevard, Suite 1609,
Miami, Florida 33156, which is an attorney's office and which also is the last
known business address of Jainchill and Couri. According to
information received by the Office of Securities, the address at which MGI
actually conducts business is 4101 Ravenswood Road, Suite 307, Dania, Florida
33312, an address also used by U.S. Metals.
In addition, both MGI and U.S. Metals have used the same telephone
number. Schlecht
is also employed by or otherwise associated with MGI and is represented as a
senior director of MGI on MGI’s website. Furthermore, according to information received
by the Office of Securities, Couri now works as an
agent of MGI.
16.
At the time of these transactions, the
17.
Pursuant to 32 M.R.S.A. §§ 11201(2) and 11201(12),
silver is a "precious metal" and is therefore a commodity for
purposes of the Maine Commodity Code.
18.
As the
19.
Respondents' offer and sale of silver to the
20.
At the time of these transactions, neither U.S. Metals,
Jainchill, nor Couri was
registered or temporarily licensed with the Commodity Futures Trading
Commission ("CFTC"). The
Office of Securities is not aware of any exemption for which U.S. Metals, Jainchill and Couri would
qualify.
21.
By offering and selling silver to the Maine investor, respondents
engaged in unlawful commodity activities pursuant to 32 M.R.S.A. § 11205, which
prohibits persons from engaging in commodity trade or business without either being
registered or temporarily licensed by the CFTC, or being exempt from such registration.
22.
In failing to deliver any silver to the Maine investor,
refusing to return his funds, and in misrepresenting the cost of the silver and whether administration fees would be
charged, respondents have cheated or defrauded, or have employed a device,
scheme or artifice to defraud, the Maine investor in violation of 32 M.R.S.A. §
11206(1).
23.
In failing to deliver any silver to the Maine investor,
refusing to return his funds, and in
misrepresenting the cost of the silver and whether administration fees would be
charged, respondents have made untrue statements of material facts, or have
misled the Maine investor through omission of material facts, in violation of
32 M.R.S.A. § 11206(2).
24.
In failing to deliver any silver to the Maine investor,
refusing to return his funds, and in misrepresenting the cost of the silver and
whether administration fees would be charged, respondents have engaged in transactions,
acts, practices, or a course of business that operated as a fraud or deceit
upon the Maine investor, in violation of 32 M.R.S.A. § 11206(3).
25.
In failing to deliver any silver to the Maine investor
and in refusing to return his funds, respondents have misappropriated or
converted the Maine investor’s funds, in violation of 32 M.R.S.A. § 11206(4).
26.
Pursuant to 32 M.R.S.A. § 11207(1), the acts,
omissions, or failures of Jainchill, Couri, and other agents of U.S. Metals are deemed the acts,
omissions, or failures of BIZ and Schlecht Group.
27.
As sole officer and director of BIZ, Zeff directly or indirectly controlled U.S. Metals and its
agents, including Jainchill and Couri. Therefore, pursuant to 32 M.R.S.A. §
11207(2), Zeff is jointly and severally liable to the
same extent as the other respondents.
28.
As sole officer and director of Schlecht
Group, Schlecht directly or indirectly controlled
U.S. Metals and its agents, including Jainchill and Couri Therefore,
pursuant to 32 M.R.S.A. § 11207(2), Schlecht is
jointly and severally liable to the same extent as the other respondents.
29.
For the reasons stated above, the Securities
Administrator believes that respondents have engaged or are about to engage in acts
or practices constituting violations of the Maine Commodity Code.
30.
Pursuant to 32 M.R.S.A. § 11302(1), the Securities
Administrator may, after notice and opportunity for hearing, issue a cease and
desist order against any person whom the Securities Administrator believes has
engaged or is about to engage in any act or practice constituting a violation
of the Maine Commodity Code.
NOTICE
Pursuant
to 32 M.R.S.A. §11310(1), notice is hereby given that the Securities
Administrator intends to issue an Order to Cease and Desist, pursuant to 32
M.R.S.A. §11302, against all respondents, to prohibit further violations of the
Maine Commodity Code.
Pursuant
to 32 M.R.S.A. § 11310(2), interested parties have thirty (30) calendar days
from the entry of this notice of Intent to file a written request for a hearing.
Date:
Christine
A. Bruenn
Securities
Administrator
Reviewed by:
Date:
Bonnie
E. Russell
Assistant
Securities Administrator
Presented by:
Date:
Christian
D. Van Dyck
Investigator/Examiner