IN THE MATTER OF: JOHN E. DHONAU; MHM COMPANY, INC.
CEASE AND DESIST ORDER
State of Ohio
DEPARTMENT OF COMMERCE
DIVISION OF SECURITIES
COLUMBUS, OHIO 43215
Order No. 98-195
IN THE MATTER OF: JOHN E. DHONAU; MHM COMPANY, INC.
CEASE AND DESIST ORDER
DIVISION ORDER
WHEREAS, the Ohio Division of Securities (hereinafter "the Division") is charged with the responsibility of protecting investors and finds that this order is necessary or appropriate in the public interest or for the protection of investors, and is consistent with the purposes of the Ohio Securities Act, Chapter 1707 of the Ohio Revised Code; and
WHEREAS, the Division has conducted an investigation into the activities of John E. Dhonau and MHM Company, Inc., whose last known address was 8731 Cincinnati-Columbus Road, West Chester, Ohio 45069, and as a result of said investigation, the Division finds as follows:
(1) John "Ed" Dhonau (hereinafter "Dhonau") is a natural person who conducted business in the State of Ohio.
(2) Dhonau is the president and CEO of MHM Company, Inc.
(3) MHM Company, Inc. is an Ohio corporation currently in good standing with the Ohio Secretary of State's Office.
(4) Thomas Witt (hereinafter "Witt") is a natural person and a resident of Hamilton, Ohio.
(5) David Ledford (hereinafter "Ledford") is a natural person and a resident of Hamilton, Ohio.
(6) Charles Harmon (hereinafter "Harmon") is a natural person and a resident of Miamisburg, Ohio.
(7) Marvin Cornett (hereinafter "Cornett") is a natural person and a resident of Tipp City, Ohio.
(8) Witt, Ledford, Harmon and Cornett were solicited by salesmen for MHM Company, Inc. to invest in a venture through MHM Company, Inc. to finance expenses involved in a divestiture/acquisition transaction involving assets of a multinational oil company.
(9) Witt, Ledford, Harmon and Cornett were informed by salesmen for MHM Company, Inc. that funds given for the above-referenced venture would be returned within thirty days with a return of 20 to 1, i.e. an investor would be repaid $200,000.00 for a $10,000.00 investment.
(10) Witt, Ledford, Harmon and Cornett were also told by the MHM Company, Inc. salesmen that they would be issued a promissory note for any money given, to be secured by the receivables of Detox Industries, a Houston, Texas environmental clean-up firm.
(11) Witt gave $9,500.00, a credit union withdrawal in the form of a money order, on or about May 12, 1995 to a salesman for MHM Company, Inc. for the above-referenced venture, and was issued a promissory note in the amount of $10,000.00, executed by Dhonau, President for MHM Company, Inc.
(12) Ledford gave $9,500.00 on or about May 19, 1995 to a salesman for MHM Company, Inc. for the above-referenced venture, and was issued a promissory note in the amount of $10,000.00, executed by Dhonau, President for MHM Company, Inc.
(13) Harmon gave $4,750.00 on or about July 13, 1995 to a salesman for MHM Company, Inc. for the above-referenced venture, and was issued a promissory note in the amount of $5,000.00, executed by Dhonau, President for MHM Company, Inc.
(14) Cornett gave $19,000.00 on or about April 20, 1995, and $19,000.00 on or about April 23, 1995 to a salesman for MHM Company, Inc. for the above-referenced venture, and was issued two separate promissory notes in the amount of $20,000.00 each, executed by Dhonau for MHM Company, Inc.
(15) MHM Company, Inc. and Dhonau issued promissory notes to at least 30 individuals, of which promissory notes were issued to at least 23 Ohio investors from April 1995 to July 1995, according to documents given to investors as part of the sales presentation and records received by the Division.
(16) On or about June 27, 1996, Witt rolled over his $10,000.00 into four (4) corporate debentures of MHM Company Inc., at $2,500.00 each, that had a "stated rate of 12%," upon being solicited by a salesman for MHM Company, Inc.
(17) Witt was given a document entitled "Accredited Investor Subscription Agreement" to sign which was executed by Dhonau, President of MHM Company, Inc., and is dated June 27, 1996.
(18) The promissory notes described in Paragraphs (11) through (14) and the debentures described in Paragraph (16) fall within the definition of "security" as that term is defined in Revised Code section 1707.01(B).
(19) The transactions described in Paragraphs (11), (12), (13), (14) and (16) fall within the definition of "sale" as that term is defined in Revised Code section 1707.01(C).
(20) Revised Code section 1707.44(C)(1) prohibits the sale in Ohio of securities that are not exempt from the registration requirements of Revised Code sections 1707.02, not the subject matter of an exempt transaction under Revised Code sections 1707.03, 1707.04 or 1707.34, not registered by description, coordination or qualification, or not the subject matter of a transaction that has been registered by description.
(21) The promissory notes sold in Paragraphs (11) through (14) and the debentures sold in Paragraph (16) are not exempt from the registration requirements of Revised Code sections 1707.02, not the subject matter of an exempt transaction under Revised Code sections 1707.03, 1707.04 or 1707.34, not registered by description, coordination or qualification, or not the subject matter of a transaction that has been registered by description, and, therefore, the promissory notes and debentures were sold in violation of Revised Code section 1707.44(C)(1).
WHEREAS, based on Paragraphs (1) through (21) above, the Division finds that John E. Dhonau and MHM Company, Inc. have violated the provisions of Ohio Revised Code section 1707.44(C)(1);
WHEREAS, on February 27, 1998, the Division issued and thereafter served a Notice of Opportunity for Hearing, Division Order No. 98-061, to John E. Dhonau via Certified Mail No. P 123-964-296 and MHM Company, Inc. via Certified Mail No. P 123-964-297, in accordance with Ohio Revised Code Chapter 119, giving notice of the opportunity to request a hearing within thirty (30) days from the date of the mailing of the notice;
WHEREAS, Certified Mail Nos. P 123-964-296 and P 123-964-297 were returned to the Division undelivered to John E. Dhonau and MHM Company, Inc.;
WHEREAS, on April 2, 1998, the Division issued and thereafter served an Amended Notice of Opportunity for a Hearing, Division Order No. 98-061, to John E. Dhonau via Certified Mail No. P 123-964-326 and MHM Company, Inc. via Certified Mail No. P 123-964-324, in accordance with Ohio Revised Code Chapter 119, giving notice of the opportunity to request a hearing within thirty (30) days from the date of the mailing of the notice;
WHEREAS, Certified Mail Nos. P 123-964-326 and P 123-964-324 were returned to the Division undelivered to John E. Dhonau and MHM Company, Inc.;
WHEREAS, in accordance with Chapter 119 of the Ohio Revised Code, notice of Amended Notice of Opportunity for a Hearing, Division Order No. 98-061, was published in the Daily Court Reporter of Montgomery County, Ohio, on April 27, 1998, May 4, 1998 and May 11, 1998;
WHEREAS, in accordance with Chapter 119 of the Ohio Revised Code, the Division mailed to John E. Dhonau and MHM Company, Inc. at their last known address evidence of such publication via Certified Mail No. P 123-964-348 on May 14, 1998;
WHEREAS, John E. Dhonau and MHM Company, Inc. failed to timely request an adjudicative hearing as permitted by Chapter 119 of the Ohio Revised Code; and
THEREFORE, IT IS ORDERED THAT, pursuant to Ohio Revised Code section 1707.23, John E. Dhonau and MHM Company, Inc. CEASE AND DESIST from the acts and practices as described above which constitute violations of Chapter 1707 of the Ohio Revised Code.
NOTICE OF APPEAL RIGHTS: JOHN E. DHONAU AND MHM COMPANY, INC. ARE HEREBY NOTIFIED THAT THIS ORDER MAY BE APPEALED PURSUANT TO SECTION 119.12 OF THE OHIO REVISED CODE BY FILING A NOTICE OF APPEAL WITH THE OHIO DIVISION OF SECURITIES, SETTING FORTH THE ORDER APPEALED FROM AND THE GROUNDS OF THE APPEAL. A COPY OF SUCH NOTICE OF APPEAL SHALL ALSO BE FILED WITH THE FRANKLIN COUNTY COURT OF COMMON PLEAS. SUCH NOTICE OF APPEAL MUST BE FILED WITHIN (15) DAYS AFTER THE DATE OF MAILING OF THIS ORDER.
KLT/mm
Witness my hand and the official seal of this Division at
Columbus, Ohio this 22nd day of May, A.D. 1998.
Thomas E. Geyer, Commissioner of Securities |
