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Press Release: North American Securities Administrators Association (NASAA)
October 3, 2003
Massachusetts Secretary of the Commonwealth William Francis Galvin, Alabama Securities Commission Director Joseph
P. Borg, Oklahoma Department of Securities Administrator Irving Faught and Puerto Rico Commissioner of Financial
Institutions Alfredo Padilla-Cintron announced September 24 that a multi-state task force has begun regulatory
and court actions against the alleged perpetrators of an alleged advance fee scheme which may have violated Securities
Acts in 13 states and Puerto Rico.
The Alabama Securities Commission opened, in August of 2002, an investigation involving an alleged “Advance Fee”
scheme and a “Cash Back Rebate Coupon Program” operating out of Mobile, Alabama, Oklahoma City, Oklahoma, Boston,
Massachusetts and San Juan, Puerto Rico. The Securities Division of the Secretary’s Offi ce in Massachusetts and
the Securities Division of Oklahoma were simultaneously reviewing the operations of related entities.
Securities regulators said the alleged scheme involves the collection of advanced fees from individuals and businesses
needing capital and looking for commercial and residential loans. To obtain a “guaranteed” loan, potential investors
must purchase an “Equity Asset Survey.” In return, the potential borrowers are given a “Cash Back Rebate Coupon”
which was said to mature after 5 years and guarantees that the loan will be paid off in full. Potential clients
are required to pay at least 17% of the loan value to purchase the coupon. This “loan Fee” is given to a related
entity for investment purposes, generally offshore. State authorities said investors have not received the guaranteed
loans and the payments have apparently been misappropriated.
The ongoing investigation has uncovered possible victims in 13 states and Puerto Rico.
The Alabama Securities Commission is acting as the lead of the multi-state task force in its continuing investigation.
The task for is joining with other state and federal authorities across the country. To date, records and computers
have been seized through search warrants issued by the Alabama Securities Commission while the Offi ce of the Secretary
of the Commonwealth of Massachusetts fi led an Administrative Complaint on Joseph Merenda and North American Commercial,
Inc., both of Boston, for violations of the Massachusetts Uniform Securities Act. The Complaint alleges that Merenda
and North American Commercial violated the Massachusetts securities law by offering unregistered securities to
Massachusetts investors without being registered with the Division as a broker-dealer or broker-dealer agent. The
Oklahoma Department of Securities received a Temporary Restraining Order against all respondents and obtained a
Receivership for 5 respondents.
Massachusetts Secretary of the Commonwealth William F. Galvin stated, “The only way to enforce consequences on
nationwide crime that affects Main Street is through states regulatory action which combines resources for a more
effective response. As we have in the past, Massachusetts intends to be on the front line with our fellow regulators
in the fight against white collar crime.”
Alabama Securities Commission Director Joseph P. Borg stated, “By utilizing multistate task forces to leverage
our resources, we can more quickly and effi ciently attack the cause of problems and target individual promoters
behind the scenes using both civil and criminal remedies. State regulators have always been the early warning system
in detecting fraud on Main Street and by combining resources to a new level we bring another weapon in our arsenal
to fight white collar crime.”
A hearing on the Oklahoma Temporary Restraining Order is scheduled for October 8, 2003 in Oklahoma City. The entities
involved in the Oklahoma TRO are: Goldstar Properties, Rebates International, Soloman Brokerage, Sunset Financial
Group, EAS Corporation, Vision Services, Amsterdam Fidelity Business Trust, Betty G. Soloman, Grover H. Phillips,
Emzie Huletty, Terry Mahon, Denver Large, Nicholas Krug, Charles Elliott and Don Wood. Oklahoma Director of Securities
Irving Faught stated “By leveraging our resources, we attack the cause of the problem, target the entities as well
as the individual promoters behind the scenes and we are making it known that the cost of doing business in white
collar crime is going up.”
A large number of victims already identified are located in the Commonwealth of Puerto Rico, which issued a Cease
& Desist Order to Sunset Financial and others for possible violations of the Uniform Securities Act relating
to the sale of unregistered securities and unlicensed agents. The multi-state task force was coordinated as a special
project of the Enforcement Section of the North American Securities Administrators Association (NASAA), the oldest
international organization devoted to investor protection. Alabama Securities Director Joseph P. Borg chairs the
NASAA’s Enforcement Section.
For further information please contact: Alabama Securities Commission Education and Public Affairs Daniel G. Lord Phone: (334) 353-4858 Massachusetts Office of the Secretary of the Commonwealth Communications Director Brian S. McNiff Phone: (617) 727-9180 The Oklahoma Department of Securities Administrator Irving Faught Phone (405) 280-7706 Alfredo Padilla-Cintron Commissioner of Financial Institutions Asdrubal Aponte, Director of Enforcement Phone: (787) 723-8004
SOURCE: North American Securities Administrators Association (NASAA)