Spring 2022 Securities Bulletin

State of Connecticut
Department of Banking

Securities and Business Investments Division Securities Bulletin

Vol. XXXVI No. 1 - Spring 2022

Features

Quarterly Statistical Summaries

Enforcement and Other Highlights

Administrative Actions

Consent Orders

Conditional Registrations

---

Administrative Actions

J.A.G. Capital, LLC and Joseph Richard Bozzi (CRD No. 6140946)

On February 18, 2022, the Banking Commissioner issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Matter No. CRF-22-8398-S) against J.A.G. Capital, LLC and its founding member and manager, Joseph Richard Bozzi. J.A.G. Capital, LLC, a Connecticut limited liability company, maintains its principal offices at 33 South Cherry Street, Wallingford, Connecticut and 43 Bayberry Drive, Wallingford, Connecticut.

The action alleged that, beginning in April 2016, Bozzi, individually and on behalf of J.A.G. Capital, LLC, sold interests in an investment vehicle to at least seven Connecticut residents, promising that investor funds would be pooled and that Bozzi would make all investment decisions. Rather than benefiting investors, Bozzi purportedly commingled investor funds with his own money, diverted investor funds for his personal use and provided at least one Connecticut investor with a falsified brokerage statement.

The action alleged that the Respondents violated the Connecticut Uniform Securities Act by 1) selling unregistered securities in contravention of Section 36b-16 of the Act; 2) engaging in conduct prohibited by the antifraud provisions in Section 36b-4(a) of the Act; 3) engaging in dishonest or unethical practices in violation of Sections 36b-4(b) and 36b-5(f) of the Act; 4) engaging in fraudulent investment advisory activity in contravention of Section 36b-5(a) of the Act; and 5) violating Section 36b-23 of the Act by filing materially false or misleading documents with the Commissioner. The action also alleged that Bozzi, individually and under the auspices of J.A.G. Capital, LLC, transacted business as an investment adviser while unregistered in violation of Section 36b-6(c)(1) of the Act.

The Respondents were afforded an opportunity to request a hearing on the allegations in the action.

Ruben Anibal Macedo

On January 27, 2022, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (Matter No. CF-22-8250b-S) against Ruben Anibal Macedo of 155 Northeast 56th Court, Oakland Park, Florida 33334. Respondent Macedo, a former Connecticut resident, was the control person of Douro Capital Inc. (“DCI”) and Guadiana Holdings Inc. (“GHI”).

The action alleged that, between February 2014 and October 2016, Respondent Macedo orchestrated a scheme to defraud market participants, including retail investors in Connecticut, using shares of Latteno Food Corp. (“Latteno”), a low priced OTC pink sheet penny stock.

Using various brokerage accounts, including those established under the names of DCI and GHI, Respondent Macedo made multiple purchases and sales of Latteno securities. Between April 24, 2015 and June 1, 2015, Respondent Macedo also issued at least three separate news releases to attract potential investors to Latteno and to increase the sales price of the Latteno shares. At the time, Latteno had no significant operating history, limited assets, and no significant source of revenue. After the press releases, Latteno’s stock trading volume increased, and Respondent Macedo proceeded to sell off his Latteno holdings. The action alleged that, from at least February 2014 to October 2016, while Respondent Macedo resided in Connecticut, Macedo used the brokerage accounts he established to facilitate the sale of 2.86 billion shares of Latteno stock into the public market, and that, during this period, he generated approximately $1 million in profits from the sales. Respondent Macedo then transferred the proceeds to his personal and business bank accounts.

The action alleged that Respondent Macedo 1) violated the antifraud provisions in Section 36b-4(a) of the Connecticut Uniform Securities Act; 2) engaged in dishonest or unethical practices in violation of 36b-4(b) of the Act; and 3) violated Section 36b-23 of the Act by making materially false or misleading statements to the Commissioner in connection with an agency investigation.

Respondent Macedo was afforded an opportunity to request a hearing on the Order to Cease and Desist and Notice of Intent to Fine.

Pusser’s Holdings Investment LLC, Harbor Cap Partners LLC and Stuart Jamieson

On January 5, 2022, the Banking Commissioner issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (No. CRF-21-20194440-S) against Pusser’s Holdings Investment LLC (“PHI”) of 649 Fairfield Beach Road, Fairfield, Connecticut; Harbor Cap Partners LLC, manager of PHI; and Stuart Jamieson, managing member of Harbor Cap Partners LLC and the Chief Executive Officer of PHI.

The action alleged that, at various times between 2015 and 2017, the Respondents violated Section 36b-16 of the Connecticut Uniform Securities Act by selling unregistered PHI Class A Units and unregistered PHI securities consisting of warrants and promissory notes to the investing public. Approximately $3.2 million was raised from investors in the two offerings.

The Respondents were afforded an opportunity to request a hearing on the allegations in the action.

Consent Orders

BlockFi Lending LLC

On March 25, 2022, the Banking Commissioner entered a Consent Order (No. CO-22-202213-S) with respect to BlockFi Lending LLC (“Respondent”), a New Jersey-based financial services company that offered and sold interest-bearing digital asset accounts called BlockFi Interest Accounts (“BIAs”) to the public from 2019 through February 2022. Investors would lend digital assets to Respondent in exchange for variable monthly interest payments. The Consent Order was entered in conjunction with a multi-state settlement pursuant to which Respondent agreed to pay up to $50 million to participating jurisdictions.

As of December 8, 2021, Respondent and its affiliates held approximately $10.4 billion in BIA investor assets, and had approximately 572,160 BIA investors, including 391,105 investors in the United States. As of December 31, 2021, Respondent and its affiliates held approximately $94,038,394 in BIA investor assets from Connecticut residents. Respondent ceased selling BIAs to new investors or accepting further BIA investments by current investors nationwide in February 2022.

The Consent Order alleged that Respondent violated Section 36b-16 of the Connecticut Uniform Securities Act by selling unregistered securities to Connecticut residents and that Respondent’s securities offering included a materially misleading website statement concerning Respondent’s collateralization practices in contravention of Section 36b-4 of the Act.

The Consent Order directed Respondent to cease and desist from regulatory violations and to pay a $943,396.22 fine to the agency in four installments. The fine amount represented Connecticut's proportionate share of the multi-state settlement.

Extreme Marketing Alliance LLC, Matt Graham and Orlando Diaz

On January 20, 2022, the Banking Commissioner entered a Consent Order (No. CO-21-202026-B) with respect to Extreme Marketing Alliance LLC, a Nevada limited liability company, and its principals Matt Graham and Orlando Diaz. Respondent Extreme Marketing Alliance LLC was in the business of offering consumers the opportunity to achieve financial freedom by starting their own online businesses through coaching assistance provided by Respondents.

The Consent Order alleged that, from at least April 2019 through August 2020, the Respondents 1) violated Sections 36b-62(a) and 36b-67(1) of the Connecticut Business Opportunity Investment Act by selling unregistered coaching business opportunities to Connecticut purchaser-investors; 2) violated Section 36b-63 of the Act by failing to provide Connecticut purchaser-investors with required disclosures; and 3) violated Section 36b-67(2) of the Act by making earnings claims without including documented data to substantiate those claims.

The Respondents extended a rescission offer to affected Connecticut purchaser-investors. The aggregate amount refunded totaled $116,687.

The Consent Order directed the Respondents to cease and desist from violating the Act and barred them from selling business opportunities in Connecticut for five years. After the expiration of three years, the Consent Order permitted the Respondents to apply for business opportunity registration under the Act. The Consent Order also imposed a $10,000 fine on Respondent Extreme Marketing Alliance LLC.

Conditional Registrations

The Financial Wellness Center LLC (IARD No. 315876)

On January 3, 2022, the Banking Commissioner issued a Conditional Registration as an Investment Adviser (No. COND-21-202133-S) with respect to The Financial Wellness Center LLC of 79 Stony Hill Road, Cheshire, Connecticut 06410. Christopher Thomas Zemaitis is the sole managing member and control person of the firm. The firm had applied for registration as an investment adviser under the Connecticut Uniform Securities Act.

The Conditional Registration noted that the firm did not fulfill the three-year experience requirement set forth in Section 36b-31-7b of the Regulations under the Connecticut Uniform Securities Act. However, the Conditional Registration also acknowledged that Zemaitis held a Masters degree in Business Administration, that he passed the Series 65 examination, that he had no reported disciplinary history and that he was actively pursuing the Certified Financial Planner designation.

The Conditional Registration limited the firm's activities for a three-year period. Specifically, for three years, 1) the firm and Zemaitis would not have custody of client funds or securities; 2) the firm and Zemaitis would not exercise discretionary trading authority over client accounts or charge performance fees; 3) the firm would limit its advice to exchange listed securities, investment company securities, commercial paper, certificates of deposit, corporate debt, governmental securities and insurance products regulated by the Connecticut Insurance Commissioner; and 4) the firm would retain and confer periodically with a compliance consultant to ensure that it adhered to state securities law requirements.

On January 3, 2022, The Financial Wellness Center LLC became registered as an investment adviser in Connecticut and Christopher Thomas Zemaitis became registered as an investment adviser agent of the firm.

Statistical Summary

Licensing At A Glance

at the end of the quarter

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Broker-dealers Registered

2,023

Broker-dealer Agents Registered

190,842

Broker-dealer Branch Offices Registered

2,302

Investment Advisers Registered

457

SEC Registered Advisers Filing Notice

2,446

Investment Adviser Agents Registered

15,690

Exempt Reporting Advisers

162

Agents of Issuer Registered

3

Conditional Registrations

0

Securities and Business
Opportunity Filings

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Year to Date

Offerings Reviewed

33

33

Investment Company Notice Filings

449

449

Exemptions and Exemptive Notices

2,476

2,476

Examinations

Broker-dealers

15

15

Investment Advisers

31

31

Securities Investigations

Opened

19

19

Closed

2

2

Ongoing as of End of Quarter

91

91

Subpoenas issued

12

12

Matters referred from Attorney General

1

1

Matters referred from Other Agencies

4

4

Business Opportunity Investigations

Investigations Opened

0

0

Investigations Closed

1

1

Ongoing as of End of Quarter

1

1

Enforcement: Remedies and Sanctions

Notices of Intent to Deny (Licensing)

0

0

Notices of Intent to Suspend (Licensing)

0

0

Notices of Intent to Revoke (Licensing)

0

0

Denial Orders (Licensing)

0

0

Suspension Orders (Licensing)

0

0

Revocation Orders (Licensing)

0

0

Notices of Intent to Fine

3

3

Orders Imposing Fine

0

0

Cease and Desist Orders

3

3

Notices of Intent to Issue Stop Order

0

0

Activity Restrictions/Bars

1

1

Stop Orders

0

0

Vacating/Withdrawal/ Modification Orders

0

0

Restitutionary Orders and Disgorgement Orders

2

2

Injunctive Relief Obtained

0

0

Proceedings and Settlements

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Year to Date

Administrative Actions

3

3

Consent Orders

2

2

Stipulation and Agreements

0

0

Monetary Relief*

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Year to Date

Monetary Sanctions Imposed

$953,396

$953,396

Portion attributable to settlements

$953,396

$953,396

Attributable to Court-Ordered Penalties

0

0

Financial Literacy Contribution

0

0

Restitution or Other Monetary Relief
( includes rescission offer amounts
)

$116,687

$116,687

Cents eliminated

Securities Referrals

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Year to Date

Criminal Matters

1

1

Civil (Attorney General)

1

1

Other Agency Referrals

1

1