Capsource, Inc. – Ordered to Cease and Desist by Colorado Division of Securities | Goodman & Nekvasil P.A. May Recover Investor Losses
According to the Colorado Division of Securities:
Acting Colorado Securities Commissioner David Cheval has signed an order against Nevada-based CapSource, Inc. (“CapSource”) and listed control person Steven J. Byrne. The order directs Byrne and CapSource to immediately cease and desist all violations of the Colorado Securities Act, to include the use of unlicensed sales representatives to solicit and sell unregistered, non-exempt securities.
According to the Division of Securities, part of the Department of Regulatory Agencies (DORA), the respondents offered and sold at least $21,500,000 to over 200 Colorado investors over a period of four years between 2015 and 2019. Individuals were solicited to purchase investments in what was called the “CapSource Note Program,” billed as a guaranteed, pooled, fixed-rate, commercial mortgage investments that meet the definition of securities in Colorado. However, the note program products were never registered with the Division of Securities, nor were they exempt from registration.
Further, lead finders used to locate potential investors, and sales representatives used to promote and sell investments in the program were not licensed to do so in Colorado, as required by the Colorado Securities Act. These lead finders and representatives, at least one of whom was based in Colorado, also received fees for their services, in violation of Colorado statute.
As of April 2019, approximately $17,000,000 in funds remained outstanding with at least 185 of the participating Colorado investors.
“It’s always hard to see people lose money on investments that were pitched as ‘guaranteed’ to produce a profit,” stated Acting Commissioner Cheval. “All we can do is remind people to do their due diligence and check the license of whomever they’re dealing with, as well as the registration of any product they’re considering in the securities market. It’s the best way to make sure your money doesn’t fall into the wrong hands.”
The order, signed on November 1, 2019 permits the commissioner to ensure compliance with the order, and grants the commissioner authority to enter additional orders against the Respondents.
According to The State of Michigan:
Caspource, Inc. was ordered to cease and desist from offering and selling unregistered securities and to cease and desist from continuing to directly or indirectly make any untrue statements of material fact, or omit to state material facts necessary in order to make statements made, in the light of the circumstances under which they were made, not misleading, contrary to the Securities Act.
The Bureau conducted an investigation of Capsource Inc.’s activities in the securities industry in Michigan. The investigation developed evidence that Capsource, Inc. offered and sold fixed-interest pooled mortgage investments which were “investment contract” securities to multiple Michigan investors. Capsource, Inc. would identify appropriate businesses to be borrowers, collect money from multiple investors, pool the funds, offer loans to the businesses, and pay back investors as borrowers paid back the loans. The following transactions involved Michigan investors:
| Borrower | Investor | Amount | Rate of Return |
| EQ Durango, LLC | SA | $13,000 | 7% |
| EQ Durango, LLC | PH | $9,100 | 9% |
| EQ Durango, LLC | TG | $24,100 | 7.8% |
| Flipping Capital III, LLC | DS | $26,500 | 7% or 9% |
| Flipping Capital III, LLC | TG | $75,000 | 9% |
|
Global Bio Labs, LLC |
RA | $50,000 | 5% |
| Global Bio Labs, LLC | PH | $10,000 | 7% |
| Global Bio Labs, LLC | VJ | $12,000 | 8% |
| America’s Rehab Campuses-Arizona, LLC | FJ | $150,000 | 8% |
| America’s Rehab Campuses-Arizona, LLC | KD | $50,000 | 8% |
| America’s Rehab Campuses-Arizona, LLC | BC | $10,400 | 8% |
Investors in Capsource, Inc. May Recover their Losses with Goodman & Nekvasil, P.A.
If you invested in CapSource, Inc. Goodman & Nekvasil, P.A. may help you. Goodman & Nekvasil, P.A., a Clearwater, Florida, law firm with a national practice representing victimized investors, has recovered more than $180 million dollars on behalf of victimized investors.
All our cases are handled on a purely contingency fee basis by Kalju Nekvasil, Esq., formerly regional counsel with the NASD, now known as FINRA. Kalju Nekvasil, Esq. has practiced in this area of the law for more than 35 years.
There is no charge for an evaluation of your case. Further, we handle our cases on a contingency fee basis. This means that unless we recover money for you, we charge no attorney’s fee. Unless you recover any money, you pay us nothing, not even the costs and expenses which the firm will advance on your behalf.
If you incurred investment losses and would like your case evaluated by a securities attorney (again, there is no charge for an evaluation and all cases are handled on a purely contingency fee basis), please contact us.
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