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Pretzel Logic
Connecticut, Pennsylvania cite Madison firm for selling securities illegally
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Business New Haven
3/20/2000
By: Michael C. Bingham
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A Madison company has run afoul of Pennsylvania authorities for allegedly selling unregistered securities. But that's only the latest legal travail for Corlogic Corp. and its president and CEO, Theodore W. Russell, also of Madison.
Last month Connecticut state banking officials issued a cease-and-desist order against Corlogic and Russell. The officials charge that, beginning last year, Corlogic sold some $2 million in three- and nine-month promissory notes, some with common stock warrants attached, to multiple investors.
According to state banking officials, the Corlogic notes were not registered under the Connecticut Uniform Securities Act. Further, officials charge that Corlogic violated the antifraud provisions of the same act by failure to disclose the number of shares being offered to investors. They also allege that financial projections of the future value of Corlogic common stock had been “modified.”
State banking officials say they intend to impose fines on Corlogic; a hearing has been scheduled for April 4.
Three weeks later, on March 8, the Pennsylvania Securities Commission issued a summary cease-and-desist order against Corlogic Russell, to halt the offer and sale of unregistered securities by unregistered broker-dealers and unregistered agents in the Keystone State.
Also named in the order were Heavenly Well Corp. of Santa Ana, Calif. and its president, Lloyds Financial Services of Modesto, Calif. and its principal, SafeRate Financial Services and Pacific Coast Capital (PCC), both of San Clemente, Calif., and their respective principals.
According to officials at the Pennsylvania Securities Commission, in December 1998 SafeRate entered into an agreement with an unregistered Pennsylvania agent for the offer and sale of notes issued by Corlogic, which they say is “purportedly” in the business of developing technology for hospitals for the Internet management of cardiovascular diseases and drug-therapy safety.
In March of last year, Heavenly Well and Lloyds through agents sold four nine-month promissory notes issued by Corlogic to at least four Pennsylvania residents for a total of $67,925.
Last November, the Pennsylvania officials say, an unregistered agent was solicited to offer and sell 18- and 36-month promissory notes with common stock warrants issued by Corlogic.
In its order, the securities commission directed the companies and their affiliates to make no further offers or sales of the securities in Pennsylvania. Officials say the nine-, 18-month and three-year notes and warrants issued by the Madison firm are securities which are not registered with the state securities commission, which offers no exemptions from registration.
Pennsylvania securities officials also say that Corlogic and Russell failed to disclose in findings to the securities commission the total amount of sales of Corlogic securities to Pennsylvania residents and the identities of all agents offering and selling the company's notes and warrants.
Reached at his Corlogic office, Russell declined to comment other than to say he was unaware of the Pennsylvania charges.
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