PHOENIX — The Arizona Corporation Commission has levied a total of $27,000 in administrative penalties on David R. Kosack of Paradise Valley and Ernie Barrueta of Phoenix, as well as David J. Varrone and The Credit Engineers, Inc. both of Florida, for selling unregistered securities in connection with a purported hedge fund.
The Commission found investors were assisted by The Credit Engineers, Inc. to obtain loans with a promise the proceeds would be invested in a hedge fund. The Commission found, however, that little to none of the investors’ proceeds were invested in a hedge fund. None of the respondents were registered to offer or sell securities in Arizona.
As part of the resolution of this matter, The Credit Engineers, Inc. has repaid in full the investors’ principal investments. Further, the respondents neither admitted nor denied the Commission’s findings, but agreed to the entry of the consent order.