The following are summaries of administrative actions the Texas State Securities Board took from Jan. 1 through March 31, 2019:
Raymond Cui: Fine, Reprimand
Raymond Cui of Houston was reprimanded and fined $5,000 Feb. 19 for violating State Securities Board rules requiring the timely disclosure of certain criminal offenses.
Cui was registered as an investment adviser representative of Invesco Advisors when he was charged with a felony offense in Harris County in October 2016. Cui was required to report the charge to the Securities Commissioner and to his employer within 30 days, but he did not report it until December 2017.
Invesco Advisors terminated Cui shortly thereafter.
The Disciplinary Order that reprimanded and fined Cui also granted his application as an agent of MML Investor Services LLC.
Global Asset Management Group Inc.: Fine, Reprimand
Global Asset Management Group Inc., an investment adviser registered in Florida, was reprimanded and fined $7,500 for doing business in Texas while not registered with the Texas Securities Commissioner.
A Disciplinary Order entered on Feb. 19 found that Global Asset Management was not registered in Texas when it acted as an investment adviser in Texas from February 2017 through October 2018.
The firm had been acting under an exemption from State Securities Board rules that do not require registration if the firm has fewer than six clients who are Texas residents. In February 2017, however, the firm had enough Texas clients to registration, but it continued to do business without being registered.
Concurrent with the reprimand and fine, the order granted Global Asset Management Group’s investment adviser registration in Texas.
Mintage Mining LLC, BC Holdings and Investments LLC DBA Mintage Mining, Social Membership Network Holding LLC, NUI Social LLC, and Darren Olayan: Fine, Rescission Offer
Utah-based firms that illegally sold unregistered cryptocurrency-mining investments paid a $25,000 fine to the State of Texas and will offer Texas residents full repayment of any money they invested.
Under the terms of a Feb. 21 Order, NUI Social LLC, Mintage Mining LLC, and related companies will begin contacting Texas investors with a rescission offer for the full amount of the investment minus any profits that were paid. Darren Olayan of Lehi, Utah, controls the companies.
The order is the first cryptocurrency enforcement action by a state regulator resulting in payment of a fine and a full rescission offer. The order also determines that two of the companies’ cryptocurrency-mining investment offerings are securities under Texas law.
Commissioner Travis J. Iles entered an Emergency Cease and Desist Order against Olayan, NUI Social, and Mintage Mining in July 2018. The order alleged widespread violations of the Texas Securities Act, including making deceptive claims to the public.
Olayan and Mintage Mining were telling investors that Mintage is “in compliance” with securities laws and “works to always stay ahead of cryptocurrency regulation.” Advertisements for Mintage Mining claimed the company could generate returns of up to 250% annually by mining cryptocurrencies.
Neither Olayan nor Mintage Mining and NUI Social were registered to sell securities in Texas, and the investments themselves were not registered for sale or qualified for an exemption from registration.
NUI Social is a multi-level marketing company that attracted investors by signing up “affiliate” individuals who received commissions for recruiting investors to buy cryptocurrency-mining investment contracts.
The order settles a pending case at the State Office of Administrative Hearings and sets aside the 2018 emergency cease and desist order, replacing it with a new agreed order.
Advanced Wellness Services LLC, DBA WellnessTech Health, Recovery Management International and Randall “Randy” Johnson: Emergency Cease and Desist Order
Securities Commissioner Travis J. Iles took emergency action on March 7 to stop Randall Johnson, the president of a Georgetown wellness company, from fraudulently offering investments in a machine that Johnson claims to be “the most advanced early screening system” for primary care physicians.
Johnson is the president of Advanced Wellness Services LLC, which does business as WellnessTech Health. Johnson is offering Texas residents the opportunity to pay $50,000 for an investment tied to the screening equipment, which he variously refers to as the PS-8X, the WellnessTech System, and the WellnessTech Screening System.
Johnson is the vice-president of marketing at Personalized Healthcare Solutions LLC, a Brentwood, Tenn., company that supposedly manages and services the screening equipment. He is also president of Recovery Management International, a debt collection company in Georgetown.
The order alleges that Johnson is selling unregistered securities, making misleading statements and unsubstantiated claims about the screening equipment and the companies, and has tried to obstruct the State Securities Board investigation.
According to the Emergency Cease and Desist Order, Johnson is telling individuals that the investment will return 20% per year over two years, with the returns paid monthly.
On top of that return, Johnson is representing that Advanced Wellness pays an investor $5 each time a medical facility uses the WellnessTech System. These payments can total between $15,000 and $18,000 per year over a term of five years, according to Advanced Wellness.
The Enforcement Division notified Johnson on Feb. 19 that the WellnessTech investments were securities and subject to regulation. Despite telling enforcement staff that he would stop selling the investments, according to the order, Johnson almost immediately “again illegally offered investments tied to the WellnessTech System.”
According to the order, Johnson is not disclosing to investors any financial information about Advanced Wellness and its ability to pay 20% annualized returns over two years. Johnson identifies the company as a limited liability company, but it is not registered with the Texas Secretary of State.
Johnson is also not disclosing any information that backs his claim that a medical facility will use the WellnessTech System to test between 250 and 300 patients per month.