Commerce File No. SE2210119/LMD

15-1005-15306-2

 

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE DEPARTMENT OF COMMERCE

 

In the Matter of the Securities Broker- Dealer License of Discovery Capital Group, Inc.

FINDINGS OF FACT,

CONCLUSIONS AND

RECOMMENDATION

 

          The above-entitled matter came on before Administrative Law Judge Beverly Jones Heydinger (“ALJ”) on April 3, 2003, for a prehearing conference.  The prehearing conference was held pursuant to a Notice of and Order for Hearing, Notice of Prehearing Conference and Statement of Charges, dated February 13, 2003.

Michael J. Tostengard, Assistant Attorney General, 1200 NCL Tower, 445 Minnesota Street, St. Paul, MN 55101-2130, appeared on behalf of the Minnesota Department of Commerce (“Department”).  The Respondent, Discovery Capital Group, Inc., did not appear in person or by counsel.  There were no subsequent submissions.

NOTICE

          This Report is a recommendation, not a final decision.  The Commissioner of Commerce will make the final decision after reviewing the record and may adopt, reject or modify these Findings of Fact, Conclusions, and Recommendations.  Under Minn. Stat. § 14.61, the Commissioner’s decision shall not be made until this Report has been available to the parties to the proceeding for at least ten (10) days.  An opportunity must be afforded to each party adversely affected by this Report to file exceptions and present argument to the Commissioner.  Parties should contact Glenn Wilson, Commissioner, Minnesota Department of Commerce, 85 Seventh Place East, Suite 500, St. Paul, MN 55101, telephone (651) 296-3528 to ascertain the procedure for filing exceptions or presenting argument to the Commissioner.

 

          If the Commissioner fails to issue a final decision within 90 days of the close of the record, this report will constitute the final agency decision under Minn. Stat. § 14.62, subd. 2a.  The record closes upon the filing of exceptions to the report and the presentation of argument to the Commissioner, or upon the expiration of the deadline for doing so.  The Commissioner must notify the parties and the Administrative Law Judge of the date on which the record closes.

 

STATEMENT OF ISSUE

1.               Has the Respondent been permanently enjoined from doing business as a securities broker dealer?

2.               Did the Respondent engage in dishonest or fraudulent practies in the securities business?

3.               Has the Respondent ceased doing business as a broker-dealer?

4.               Is discipline in the public interest?

 

Based upon all of the files, records and proceedings herein, the Administrative Law Judge makes the following:

          FINDINGS OF FACT

1.          On February 19, 2003, a copy of the Notice of and Order for Hearing, Notice of Prehearing Conference, and Statement of Charges was sent via first class mail to Discovery Capital Group, Inc., 2768 North University Drive, Coral Springs, FL 33065, as appears from an Affidavit of Service by First Class Mail on file herein.  The mailing was not returned to the Department.

2.          The Respondent did not appear at the prehearing conference, did not obtain the ALJ’s prior approval to be absent from the prehearing conference, did not file a Notice of Appearance, and did not request a continuance or any other relief.

3.          The Notice of and Order for Hearing, Notice of Prehearing Conference, and Statement of Charges contained the following informational warning:

If Respondent fails to attend or otherwise appear at any prehearing conference or settlement conference or the hearing in this matter without the prior consent of the judge, or fail (sic) to comply with any interlocutory order of the judge after having been served with a copy of this Order, Respondent shall be deemed in default and the allegations or issues set forth herein may be deemed proved and Respondent’s securities license may be revoked or suspended or censure Respondent and/or civil penalties may be imposed against Respondent without further proceedings.

4.          Because Respondent failed to appear, it is in default.

5.          Pursuant to Minnesota Rules, part 1400.6000, the Statement of Facts contained in the Notice of and Order for Hearing, Notice of Prehearing Conference, and Statement of Charges is taken as true and incorporated by reference into these Findings of Fact.

Based upon the foregoing Findings of Fact, the Administrative Law Judge makes the following:

CONCLUSIONS

1.          The Administrative Law Judge and the Commissioner of Commerce are authorized to consider the charges against Respondent under Minn. Stat. §§ 45.027, subd. 1; 45.024; 80A.07, subd. 1; and 14.50 (2002).

2.          Respondent received due, proper and timely notice of the charges against it, and of the time and place of the prehearing conference.  This matter is, therefore, properly before the Commissioner and the Administrative Law Judge.

3.          The Department has complied with all relevant substantive and procedural legal requirements.

4.          Under Minn. R. 1400.6000, a contested case may be decided adversely to a party who defaults.  On default, the allegations of and the issues set out in that Notice of and Order for Hearing or other pleading may be taken as true or deemed proved without further evidence.

5.          Because the United States District Court for the Southern District of Florida has permanently enjoined the Respondent from offering securities for sale, the Respondent is in violation of Minn. Stat. § 80A.07, subd. 1 (4).

6.          Because the Respondent has engaged in dishonest or fraudulent practices in the securities business, it is in violation of Minn. Stat. § 80A.07, subd. 1 (7).

7.          Because the Respondent has ceased to do business as a broker-dealer, its license is subject to revocation pursuant to Minn. Stat. § 80A.07, subd. 4.

8.          The Respondent is in default herein as a result of its failure, without the ALJ’s prior consent, to appear at the prehearing conference.

9.          Disciplinary action against the Respondent is in the public interest.

          Based upon the foregoing Conclusions, the Administrative Law Judge makes the following:

RECOMMENDATION

IT IS HEREBY RECOMMENDED: that the Commissioner of the Minnesota Department of Commerce take adverse action against Respondent’s license, censure Respondent, and/or impose a civil penalty upon Respondent.

 

Dated this 9th day of April, 2003.

 

                                                                

S/ Beverly Jones Heydinger

BEVERLY JONES HEYDINGER

Administrative Law Judge

 

Reported:  Default (no tapes)

 

NOTICE

Under Minn. Stat. § 14.62, subd. 1, the agency is required to serve its final decision upon each party and the Administrative Law Judge by first class mail or as otherwise provided by law.