POST 2 OF 4: CEASE AND DESIST ORDER
Post 1 of 4 previously posted on this date on this SI thread is hereby incorporated into this post and all readers of this post should read Post 1 of 4 prior to reading this post.
BEGINNING OF TEXT OF TEMPORARY CEASE AND DESIST ORDER
BEFORE THE SECURITIES COMMISSIONER
OF THE STATE OF KANSAS
Docket No. 90E053
In the matter of:
ALLEN LEE BURDITT II,
CARLO UGOLINI; CARANCAHUA
RESOURCES, INC.; and
WELLINGTON FUNDING CORPORATION, Respondents
A proceeding pursuant to K.S.A. 17-1266a.
TEMPORARY CEASE AND DESIST ORDER
Now on this 2nd day of April, 1990, the above entitled matter comes on for consideration by the Securities Commissioner of Kansas. Having ordered an investigation of the respondents' activities pursuant to K.S.A. 17-1265 and having been apprised by the Division of Enforcement of this agency of the facts revealed in said investigation, the Commissioner finds that sufficient evidence exists to conclude that the respondents have engaged in, or are engaging in, or are about to engage in acts and practices constituting violations of the Kansas Securities Act, K.S.A. 17-1252 et seq.
FURTHER, the Commission finds for the purpose of K.S.A. 17-1266a(b), that sufficient evidence exists to conclude that a delay in issuing a Permanent Cease and Desist Order will result in the public interest being irreparably harmed and that, therefore, an Emergency Temporary Cease and Desist Order should immediately be issued by the Commissioner.
In support of such order, the Commissioner's staff alleges the following facts:
1. Respondent Carancahua Resources, Inc. ("Carancahua") is a Texas corporation, incorporated on May 27, 1987. Incorporators were Allen L. Burditt, II as president, and Sarah-Maunee Starkie Burditt as vice president and director. No secretary or treasurer are listed with the Secretary of State, Austin, Texas. Carancahua has its office at 8303 Southwest Freeway, Suite 310, Houston, Texas 77074. Carancahua is an active corporation, according to Texas Secretary of State records as of March 27, 1990. Carancahua is engaged in the business of offering and selling undivided fractional interests in oil and gas leases located in Jefferson and San Patricio Counties in Texas.
2. Respondent Wellington Funding Corporation ("Wellington") is a Delaware corporation, qualified in the state of Texas on June 2, 1989. It's resident agent is Sarah Maunee Starkie. As of March 27, 1990, there were no officers designated.
3. Respondent Allen Lee Burditt II ("Burditt") is an individual whose date of birth is (withheld by Offie), and whose Social Security Number is (withheld by Offie). Burditt's last known address was (withheld by Offie).
4. Respondent Carlo Ugolini ("Ugolini") is an individual whose date of birth is (withheld by Offie), and whose Social Security Number is (withheld by Offie). Ugolini told investigators that he is vice president of Carancahua Resources, Inc., but records of the Secretary of State, Austin, Texas, do not list Ugolini as an officer of that corporation. Ugolini resides at (withheld by Offie), and acts as agent for Carancahua.
5. On August 8, 1989, Ronald Louis Kutter, DVM, (address withheld by Offie), purchased, through Ugolini, agent for Carancahua, a 1.325 fractional interest in an oil and gas lease identified as the Broussard #1, located in Jefferson County, Texas. Kutter issued his check for $5088 on August 10, 1989, in full payment of that share in the Broussard #1, which was to be drilled by September 15, 1989.
6. In subsequent correspondence with Carancahua, Kutter received letters signed by Allen L. Burditt II, President, on Wellington Funding Corporation letterhead, address 8303 Southwest Freeway, Suite 310, Houston, Texas 77074, offering him an opportunity to exchange his interest in the Broussard for the Curlee #1 prospect.
7. Upon request of the Office of the Securities Commissioner of Kansas, respondent Starkie, on March 22, 1990, provided the names and addresses of 22 Kansas residents who had invested in Texas oil wells operated by Carancahua. These investors included respondent Ugolini and his wife, Betty Ugolini, but did not include the name of Ronald Kutter, DVM, who had obtained a refund of this investment. By a later correspondence, Starkie provided the names of two additional Kansas investor who had since sold their interests to other individuals.
8. The securities offered for sale in Kansas are ostensibly undivided fractional interests in oil and gas leases and/or investment contracts in leases location in Jefferson and San Patricio Counties, Texas, by respondents Carancahua and Wellington, and are securities within the meaning of K.S.A. 17-1252j. Respondents Carancahua and Wellington are the issuers of said securities within the meaning of K.S.A. 17-1252e. The securities of said respondents have never been and are not now registered with the Securities Commissioner of the state of Kansas pursuant to either K.S.A.'s 17-1256, 17-1257, or 17-1258. Said securities are not exempted from registration by K.S.A. 17-1261, nor the transactions in which they may be sold exempted by K.S.A.'s 17-1262 or 17-1262a. The sale and offer for sale of said unregistered securities in Kansas is in violation of K.S.A. 17-1255.
9. None of the above named respondents have ever been or are now registered as agents or broker-dealers for the sale of securities in the state of Kansas, and are in violation thereof of K.S.A. 17-1254.
10. Such solicitation of investors and/or potential Kansas investors has the potential of causing irreparable harm to the investors. Continued violation of the Kansas Securities Act provides for criminal penalties, civil penalties, and administrative remedies which could cause Kansas residents to lose their investment since respondents might be rendered incapable of carrying out their agreements.
11. The solicitation of Kansas residents could continue to occur until some official action is taken.
IT IS, THEREFORE, ORDERED by the Commissioner that all respondents immediately cease and desist in the state of Kansas from soliciting offers to buy or making offers to sell, or effecting or transacting sales of the securities of Carancahua Resources, Inc., or the securities of any other person or issuer, or directly or indirectly aiding and assisting in the same or attempting to do the same, unless and until such securities have been registered for offer and sale pursuant to the provisions of the Kansas Securities Act, or unless and until such securities are specifically exempt from the registration requirements of the Kansas Securities Act, and unless and until respondents Allen Lee Burditt II, Sarah-Maunee Starkie, and Carlo Ugolini, and all other affiliates, employees, or contractors of the respondents who are to be engaged in such solicitations, offers and sales, first become registered as broker-dealers and their agents or as agents of the issuer pursuant to the provisions of the Kansas Securities Act, and unless and until respondents refrain from all the acts and practices alleged above which constitute violations or are about to constitute violations of the provisions of the Kansas Securities Act.
All respondents take notice that, if they wish to contest the issuance of this order or the facts as alleged herein, pursuant to K.S.A. 17-1266a and K.A.R. 81-11-5 they must file with the Commissioner at his office at 618 South Kansas Avenue, Second Floor, Topeka, Kansas 66603-3804, a written request for a hearing with 30 days of receiving this notice.
IT IS SO ORDERED BY THE COMMISSIONER.
Entered at Topeka, Kansas, this 2nd day of April, 1990.
/s/
M. Douglas Mays
Securities Commissioner
State of Kansas
NOTE:
Pursuant to K.S.A. 17-1267, any willful violation of an order duly entered or issues by the Securities Commissioner of Kansas is a criminal offense punishable as a felony under the provisions of the Kansas Securities Act.
END OF TEXT OF TEMPORARY CEASE AND DESIST ORDER
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