The Oregon Department of Consumer and Business Services said Friday it has ordered Michael Holcomb and Gary Holcomb, and their BERJAC partnerships, to cease and desist from engaging in the unlawful sale of high-risk promissory notes.
The department proposed civil penalties totaling $900,000.
BERJAC partnerships have offices in Eugene and Clackamas. The partnerships raised tens of millions of dollars from Oregon residents and used those funds to make loans to real estate developers and fund the partnerships' business ventures.
Investors were attracted to BERJAC as the result of the generous rates of return it offered. However, Oregon residents were not given a prospectus disclosing the many risks associated with the purchase of promissory notes issued by a small business.
The department alleges that the securities at issue were not registered with the Division of Finance and Corporate Securities, as mandated by law.
Furthermore, the department asserts that the Holcombs were not licensed to sell the investments. The parties are entitled to a hearing on this matter before an administrative law judge.
"Oregon residents should exercise caution before purchasing promissory notes," said David Tatman, administrator of the department's Division of Finance and Corporate Securities.
"Though promised rates of return may seem enticing, there is a high degree of risk associated with this type of investment: businesses may not have the revenues or resources to make good on their obligations when the notes reach maturity."
Tatman urges consumers to ask questions before making any investment.
As a general rule, those who sell investments in Oregon must be licensed, and all securities must be registered.
Call the Division of Finance and Corporate Securities at 1-866-814-9710 (toll-free) or visit www.dfcs.oregon.gov.