UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION February 9, 1999 SECURITIES EXCHANGE ACT OF 1934 Release No. 41031/February 9, 1999 INVESTMENT ADVISERS ACT OF 1940 Release No. 1788/February 9, 1999 ADMINISTRATIVE PROCEEDING File No. 3-9728 ______________________________ In the Matter of : :ORDER MAKING FINDINGS AND IMPOSING RANDY DEPOISTER :REMEDIAL SANCTIONS BY DEFAULT : ______________________________ The Securities and Exchange Commission (Commission) initiated this proceeding on September 25, 1998, by an Order Instituting Proceedings (OIP). The Respondent was personally served with the OIP on November 13. By the terms of the OIP and Rule 220(b) of the Commission's Rules of Practice, 17 C.F.R. § 201.220(b), his Answer was due in 20 days -- December 3. The Commission never received an Answer from him. Nor did he appear at the December 7 prehearing conference of which he was notified by my November 30 Order Scheduling Prehearing Conference. On December 17 the Division of Enforcement (Division) filed its Motion to Enter Default and to Issue an Order Imposing Remedial Sanctions. The Division seeks a collateral bar against the Respondent to prevent him from being associated with any broker, dealer, municipal securities dealer, investment adviser, investment company, or member of a national securities exchange or registered securities association pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 (Exchange Act). Pursuant to Rules 155(a)(1) and (2), 220(f), and 221(f), a respondent who fails to file an Answer to the OIP, to appear at a prehearing conference of which he has been notified, to respond to a dispositive motion, or otherwise to defend the proceeding may be deemed to be in default. The administrative law judge may determine the proceeding against him upon consideration of the record, including the OIP, the allegations of which may be deemed to be true. On December 29 I ordered the Respondent to show cause, by January 15, 1999, why he should not be held in default and why I should not impose the remedial action requested by the Division against him. On January 15 Attorney Thomas P. Ward appeared on the Respondent's behalf by filing a letter requesting an extension of time to respond to the Order to Show Cause. On January 22 the Division opposed this request and renewed its motion for default and remedial sanctions. On January 28 a prehearing conference was held at which the Division and Mr. Ward, on behalf of the Respondent, appeared. Various possibilities for resolving this matter expeditiously were discussed, and another prehearing conference was set for February 9. On February 9 the Division filed its Renewal of Motion to Enter Default, to which was attached Mr. Ward's February 8 letter advising that the Respondent has decided not to oppose imposition of the collateral bar requested in the Division's earlier motion for default. The parties also requested cancellation of the prehearing conference scheduled for February 9. Respondent Depoister is in default within the meaning of Rule 155(a). He failed to answer the OIP and, in response to the Order to Show Cause, has affirmatively decided not to defend the proceeding. See Rules 155(a)(2) and 220(f). His decision was taken after consulting with counsel following the January 28 prehearing conference. Accordingly, I find that the allegations in the OIP are true: A. Between 1982 and 1993, Depoister was a registered representative associated with several broker-dealers registered with the Commission. Since 1984, Depoister has been the principal, sole shareholder and sole officer of Financial Resources Advisory, Inc. (FRA), an investment adviser registered with the Commission. B. On February 2, 1998, Depoister was enjoined from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (Advisers Act). SEC v. Weyman B. Sinyard, et al., 94C-5856 (N.D. Ill.) C. The court found in the Sinyard case that, between October 1989 and June 1991, Depoister, at times through FRA, offered and sold unsecured promissory notes in Jarco, Inc. (Jarco) thereby raising $461,750 from eighteen investors. The court further found that Depoister knowingly misrepresented and omitted to state material facts regarding the returns, duration, risks, safety and true nature of the investment, Depoister's own investment in Jarco and Depoister's conversion of $90,200 of the monies he raised from investors for his own use. D. On May 12, 1995, Depoister was convicted of seventeen criminal counts of mail fraud, wire fraud, money laundering and causing the interstate transportation of property obtained by fraud. U.S. v. Depoister, 94CR-50026 (N.D. Ill., Western Div.), aff'd, 116 F.3d 292 (7th Cir. 1997). He was sentenced to 48 months in prison without parole to be followed by 36 months of supervised release. He was also ordered to make restitution of $441,000 to eighteen investors. The criminal action was based on the same course of conduct as the injunctive action. In view of the above it is in the public interest to impose sanctions against Depoister pursuant to Sections 15(b) and 19(h) of the Exchange Act and Section 203(f) of the Advisers Act. Depoister's conduct by its nature flows across various securities professions. He acted both as a person associated with a broker- dealer and as an investment adviser while defrauding customers. His misconduct was clearly egregious and requires a comprehensive response to protect the public. As the facts clearly warranted, he was enjoined from antifraud and other violations and sentenced to a substantial prison term on conviction of crimes arising out of securities-related misconduct. Since he failed to participate in this proceeding, there can be no finding of any mitigating factors. Accordingly, a collateral bar is in the public interest. Meyer Blinder, 65 SEC Docket 1970 (Oct. 1, 1997). IT IS ORDERED that the February 9, 1999, prehearing conference IS CANCELLED. IT IS FURTHER ORDERED that the March 19, 1999, hearing date IS VACATED. IT IS FURTHER ORDERED that Respondent Randy Depoister IS BARRED from association with any broker, dealer, municipal securities dealer, investment adviser, investment company, or member of a national securities exchange or registered securities association. __________________________________ Carol Fox Foelak Administrative Law Judge