Better late than never?

Following the SEC and having shut it down, the Business, California’s Department of Business Oversight has issued USFIA, Steve Chen, Leonard Stacy Johnson and Weiwen (Wayne) Zhao a cease and desist.

The state regulator is accusing USFIA and it’s principals of violation sections 25110 and 25401 of California’s Corporations Code.

The notice is signed off on October 1st by Jan Lynn Owen, Deputy Commissioner of the Enforcement Division,

“All investment fraud is intolerable, but this Gemcoin scheme ranks high on the egregious scale,” said DBO Commissioner Jan Lynn Owen in a statement.

“The perpetrators’ claims are outlandish and disturbing, and their unlawful conduct required quick action to help prevent further victimization.”

USFIA principals identified in the cease and desist, along with their roles within USFIA are as follows:

Steve Chen – owner and President of USFIA

Leonard Johnson – Vice President of Investor Relations and company spokesman

Weiwen Wayne Zhao – “an executive at USFIA” and company spokesperson

Not surprisingly, the Department of Business Oversight have taken issue with
USFIA’s offering of unregistered securities
.

The investment contracts offered and sold by (USFIA) constitute securities.

These securities were offered for sale in the State of California in an issuer transaction.

(USFIA) have neither applied for nor secured from the California Commissioner of Business Oversight a qualification to offer or sell securities in California.

These securities have not been qualified under the California Corporate Securities Law of 1968, n violation of dection 25110 of the Corporations Code.

The Department then goes on to call out USFIA’s various marketing claims, citing four in particular:

USFIA misrepresented the endorsement, approval or registration of GemCoin and USFIA’s GemCoin auction house and exchange by local, state of national governments.

USFIA misrepresented that USFIA investors would be able to cash out or sell their investments within 60 days of purchasing their investment contracts.

USFIA misrepresented that the value of GemCoin was “guaranteed”, “secured” and less subject to risk than other virtual currencies.

USFIA failed to disclose the risk of obtaining and the expense of obtaining regulatory approvals necessary to operate USFIA’s GemCoin auction house and exchange.

Pursuant to various sections of the California Corporate Securities Law of 1968, the Department concludes

USFIA, Steve Chen, Leonary Stacy Johnson and Weiwen (Wayne) Zhao are hereby ordered to dsist and refrain from offering and selling any security in the State of California.

These orders are necessary, in the public interest, for the protection of investors and consistent with the purposes, policies and provisions of the Corporate Securities Law of 1968.

Steve Chen meanwhile, or someone representing they are him, is insisting that USFIA is “
clean of all false accusations
“.

This interruption during the inve

🤖 Quick Answer

What action did California's Department of Business Oversight take against USFIA?
California's Department of Business Oversight issued a cease and desist order against USFIA and its principals—Steve Chen, Leonard Stacy Johnson, and Weiwen Zhao—on October 1st. The regulator accused them of violating California Corporations Code sections 25110 and 25401 related to an unlawful Gemcoin investment scheme.

Who signed the cease and desist notice?
Jan Lynn Owen, Deputy Commissioner of the Enforcement Division at California's Department of Business Oversight, signed the cease and desist notice on October 1st against USFIA and its principals.

What were the regulatory violations alleged?
USFIA and its principals were accused of violating sections 25110 and 25401 of California's Corporations Code, which relate to unlicensed investment activities

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