Alan Sorensen Havre Daily News email@example.com
The state auditors office recently fined two Blaine County residents and ordered them to perform community service for their involvement in the sale of securities “not properly registered in Montana.” Calvin Statelen of Chinook and Danny Kegel of Turner each entered into an agreement with the state in which they neither admitted nor denied the allegations. Statelen, a Havre business owner, was fined $10,000 and ordered to perform 500 hours of community service over the next five years. For his part, Kegel was fined $5,000 and ordered to perform 100 hours of community service. Both men were accused of promoting and selling shares in Cascade Exploration Inc. and Cascade Water Holdings Inc. while “not properly registered to offer or sell securities in Montana.” Also listed in the complaint filed on Jan. 4 were Roundup residents Gordon Walters, president and treasurer of the two companies, and his wife and company secretary, Ann Walters. State Auditor John Morrison said the two corporations, Cascade Exploration Inc. and Cascade Water Holdings Inc., also face disciplinary action. “Fraud is a serious matter and deceptive business people need to know that Montana has zero tolerance for fraudulent dealings,” Morrison said in a written statement in January. Gordon Walters is separately accused of fraud violations for offering and selling securities that appear to be backed by the federal Small Business Administration, according to an Associated Press story in January. The auditor’s office said an investigation found Cascade Exploration and Cascade Water Holdings’ securities appear to never have been registered with the Montana Securities Department, were never listed on any stock exchange and that investors received little or no information about the companies before they invested, the auditor’s office said. Cascade Exploration claims to be a mineral exploration company and Cascade Water Holdings produces energized water for consumption. The auditor’s office said its investigation indicates investors received false information about the companies’ consultants, including false resumes. Investors also were provided “surety bonds,” bonds which could only be issued and guaranteed by the U.S. Small Business Administration and investors were not told the securities were not properly registered, the auditor’s office said. Morrison said the companies claim to have raised about $308,000 from investors, but the auditor’s office believes the figure could be significantly higher. Neither Statelen nor Kegel admitted or denied the allegations in their agreements with the state. And neither man was ordered to pay restitution. Both men are barred for life from applying for registration as a securities salesman. Each man’s agreement protects him from prosecution for any transactions made before the agreement that might come to light later. Kegel entered his agreement on April 4 and Statelen entered his on April 13. Both men also agreed to testify against the Walters the two companies as part of their deal with the state, Roberta Cross Guns, special assistant attorney general and attorney for the Montana Securities Department, told the Daily News on Wednesday. “We’re going to trial with the Walters in October in Billings,” Cross Guns said. “It is scheduled for Oct. 22.” The trial will be held before an administrative officer rather than a judge and jury, she said.