The Kansas Securities Commissioner's Office ordered a Wichita private equity firm Monday to stop what it called violations of the state's Uniform Securities and Loan Brokers Acts.
The cease-and-desist order against Lion Share Capital LLC, Lion Share Capital Partners and its officials — Jeffrey K. Williams, Sherrilynn L. Frierson, Mark K. Nordyke and Gregory A. Buss — claims that the company violated the acts by collecting more than $550,000 to find lenders for more than 20 companies in Kansas and across the United States, said Rick Fleming, general counsel to Kansas Securities Commissioner Chris Biggs.
Lion Share's address is 110 S. Main, Suite 410, in Wichita.
"You can't charge an advance fee for the promise of going out and finding them a lender," Fleming said. "We're saying Lion Share was going out and promising to arrange financing and charging an advance fee for doing so."
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The order also claims that Lion Share was getting an equity stake in several of the companies along with the "due diligence/good faith" fees.
"When they did that, then what we're alleging is that in connection with the purchase of a security, they made material misrepresentations and omissions," Fleming said.
Those alleged misrepresentations and omissions include:
* Williams, the general manager of Lion Share according to the company Web site, failed to disclose his 2005 conviction for fraud in Illinois and his subsequent time in a federal penitentiary.
According to a May 10, 2005, news release from Patrick Fitzgerald, U.S. Attorney for the Northern District of Illinois, Williams, now 38, was found guilty of fraud charges "arising from a scheme to illegally take over businesses and then drain cash from those businesses."
* The advance fee was refundable when it was not.
* The fee would be used for due diligence and to procure funding when it was used for personal expenses and operating costs.
* That similar projects had been funded successfully by Lion Share when they had not.
Williams did not return a call for comment. Buss' cell phone voice mailbox was full.
The order does not shut Lion Share's doors, Fleming said. It only requires that violations of the two acts cease.
"To the extent that they can continue to function without violating these acts, they're fine," Fleming said.
However, the administrative action by Biggs' office does not preclude further action, including the filing of charges, Fleming said.
In addition, Lion Share officials can appeal the order to Biggs' office.