DISTRICT COURT, CITY AND COUNTY OF

DENVER, COLORADO
DATE FILED: April 8, 2013 3:25 PM
FILING ID: FAFDD0CF

1437 Bannock Street

Denver, CO 80202
FRED J. JOSEPH, Securities Commissioner for the
State of Colorado,
Plaintiff,
v.
PROVIDENCE FINANCIAL SERVICES, INC.
d/b/a INTEGRITY FINANCIAL CONSULTING
and PERRY SAWANO,
Defendants,
RMC FINANCIAL, LLC, DELTA REAL ESTATE
FUND, LTD., AND ASPEN RIDGE
INVESTMENTS, INC.,
Relief Defendants.
JOHN W. SUTHERS, Attorney General
RUSSELL B. KLEIN, 31965*
First Assistant Attorney General
SUEANNA P. JOHNSON, 34840*
Assistant Attorney General
1300 Broadway, 10th Floor
Denver, CO 80203
Klein Tel: (720) 508-6413
Johnson Tel: (720) 508-6402
FAX: (720) 508-6037
russell.klein@state.co.us
sueanna.johnson@state.co.us
*Counsel of Record

COURT USE ONLY

Case No.
Ctrm.:

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF

Plaintiff, Fred J. Joseph, Securities Commissioner for the State of

Colorado (the Commissioner), by and through his counsel, the Colorado
Attorney General, and for his Complaint against the Defendants, alleges
as follows:

JURISDICTION
1.
Plaintiff Fred J. Joseph is the Securities Commissioner for
the State of Colorado (the Commissioner), and is authorized pursuant to
11-51-703, C.R.S., to administer all provisions of the Colorado Securities
Act (the Act). Pursuant to 11-51-602, C.R.S., the Commissioner is
authorized to bring this action against Defendants and to seek temporary,
preliminary, and permanent injunctive relief and other equitable relief
against Defendants upon sufficient evidence that Defendants have
engaged in or are about to engage in any act or practice constituting a
violation of any provision of the Act.
2.
Venue is proper pursuant to 11-51-602(1), C.R.S., in the
district court for the city and county of Denver, Colorado.
SUMMARY OF THE ACTION
3.
This case involves an investment advisers theft from his
clients. From at least January 2007 to present, Perry Sawano through his
firm, Providence Financial Services, d/b/a Integrity Financial Consulting
used funds from approximately twenty-six (26) investment advisory
clients totaling approximately $2.7 million dollars to purportedly invest in
alternative investments on behalf of their clients, mostly unbeknownst
to and without authority of those individuals. Sawanos fraudulent and
deceptive course of business includes a pattern whereby he would
liquidate securities or other assets of his clients held at various custodial
financial institutions and deposit the monies into entities affiliated with or
controlled by Sawano. Sawano would then invest the client funds in
purported investments, some of which may be legitimate but most of
which appear to be defunct or fabricated. At times, when the client
became aware of the purported alternative investment, the client would
seek to liquidate the position. Financial records for both Integrity and
affiliated entities of Sawano reveal that for the time period at issue,
Sawano would use client funds to pay off or pay back previous clients who
wished to liquidate their positions in the alternative investments,
consequently engaging in the classic Ponzi strategy of utilizing new
investor funds to pay off older redeeming investors.
4.
Based upon this fraudulent and deceptive course of business,
Sawano violated the antifraud provisions of the Act and breached his
fiduciary duty that he owed to his investment advisory clients and
violated various provisions of the Act. Specifically, Sawano materially
misrepresented the nature of the investments that he purchased on behalf

of his clients or failed to disclose material facts related to the investments.

Additionally, financial records reveal that Sawano and Integrity
misappropriated substantial amounts of client funds in excess to the
compensation he was entitled as an investment adviser. Finally, financial
records reveal that Sawano took custody and control of client assets in
contravention to the disclosures made to his clients and in violation of the
custody provisions in the Act.
DEFENDANTS
5.
Providence Financial Services, Inc. d/b/a Integrity Financial
Consulting (Integrity) is a Colorado corporation formed on April 15, 1997
with a last known business address of 5181 Ward Road, Suite 206, Wheat
Ridge, Colorado 80333. Integrity is a licensed Colorado investment
adviser.
6.
Perry Sawano (Sawano) is an adult individual male with a
last known address of 6634 Arbutus Court, Wheat Ridge, Colorado 80033.
Sawano is licensed in Colorado as an investment adviser representative.
Sawano is President of Integrity and an investment adviser representative
with the firm.
RELIEF DEFENDANTS
7.
RMC Financial, LLC (RMC) is a Colorado limited liability
company formed on September 15, 1999 with a last known business
address of 12650 West 64th Avenue, Unit E-176, Arvada, Colorado 80004.
RMC was formed by Phil D. Gibson, who is an investment advisory client
of Sawanos. Sawano is one of the authorized signatories for RMCs bank
account.
8.
Delta Real Estate Fund, Ltd. (Delta) is a Colorado limited
partnership formed on September 26, 2008 with a last known business
address of 4360 Marshall Street, Wheat Ridge, Colorado 80033. Upon
information and belief, James Norton is a control person of Delta and also
an investment advisory client of Sawanos.
9.
Aspen Ridge Investments, Inc. (Aspen) is a Wyoming
corporation formed on January 31, 2006 with a last known business
address of 9249 S. Broadway Blvd., Unit 200-#340, Highlands Ranch,
Colorado 80129. The Secretary and Treasurer for Aspen are Martin
Findley and Terri Findley, respectively. Sawano is also listed on the
Board of Directors for Aspen.

CUSTODIAL ENTITIES
10. Pershing, LLC (Pershing) is a Colorado licensed brokerdealer with a main mailing address of One Pershing Plaza, 10th Floor,
Jersey City, New Jersey 07399. Pershing is a custodial broker-dealer for
some of the investment advisory client assets of Integrity and Sawano.
11. Charles Schwab & Co. (Schwab) is a Colorado licensed
broker-dealer with a main mailing address of 211 Main Street, San
Francisco, California 94105. Schwab is a custodial broker-dealer for some
of the investment advisory client assets of Integrity and Sawano.
12. Sterling Trust Company (Sterling) is a self-directed IRA
custodian with a business address of 1101 Wooded Acres, Suite 120, Waco,
Texas 76710. Sterling is a custodian for some of the investment advisory
client assets of Integrity and Sawano.
13. YieldQuest Securities, LLC (YieldQuest) is a Colorado
licensed broker-dealer with a main mailing address of 3280 Peachtree
Road, Atlanta, Georgia 30305. Sawano represented to an investment
advisory client that YieldQuest acted as a custodial broker-dealer for
certain assets.
MATERIAL ALLEGATIONS
14. Integrity and Sawano are licensed as an investment adviser
and investment adviser representative, respectively, in the state of
Colorado since January 1, 1999 to present.
15. According to Integritys Form ADV dated March 30, 2012,
Integrity has advised over one hundred investment advisory clients who
comprise individuals, high net worth individuals, and small corporations
or businesses. Integrity reports to have assets under management of
$27.5 million dollars of which 226 are discretionary accounts and 11 are
non-discretionary accounts
16. According to Integritys Part 2A of the Form ADV dated June
1, 2011, Integrity charges a percentage of fees under management ranging
from 1.85% to .90% depending upon the amount of assets under
management at the end of March of each calendar year. Integrity also
discloses that it does not take custody of client assets or securities.

17. Integrity provides advice and management to its clients in

mutual funds, exchange traded funds, stocks, bonds, certificates of
deposit, variable annuities, and partnerships that invest in real estate and
oil and gas interests.
18. Upon information and belief, Integrity and Sawano have
approximately $24.4 million dollars of client assets with Pershing.
19. Beginning in at least January 2007, Sawano and Integrity
began to engage in a fraudulent and deceptive course of business in which
they liquidated certain assets held at various custodial brokerage firms or
institutions of least twenty-six (26) investment advisory clients in order to
purchase purported investments, including alternative investments in
private placements or privately held companies, for those clients.
20. In most instances, the investment advisory clients were not
provided notice, nor did they authorize the withdrawal or liquidation of
their assets at the custodial financial institution.
21. In most instances, the investment advisory clients were
provided little to no information about the purported investments or
alternative investment.
22. Bank records reveal that upon liquidation of the assets from
the custodial financial institution, Sawano would then deposit the funds
into RMC, Delta, or some other entity affiliated with and/or controlled by
Sawano.
23. Upon information and belief, the purported investments or
alternative investments appear to be defunct and/or not legitimate, as
they are currently not performing. Examples of these investments
include, but are not limited to the following:
a.
Delta is a company that is owned and operated by
James Norton, an Integrity investment advisory client. Sawano and
Integrity sold secured promissory notes issued by Delta to his
investment advisory clients. Delta has a Private Placement
Memorandum for real estate investments ostensibly collateralized
by a viaticized insurance policy that ostensibly secures the
promissory notes. Bank records of Delta reveal that from at least
December 2009 through January 31, 2012, Delta has made no
apparent real estate investments, has no operational income, and
paid at least part of its officers and directors salaries and expenses

associated with the viaticized insurance contract with funds from

Sawano and Integritys clients.
b.
RMC is a company that is owned and operated by Phil
Gibson, another Integrity and Sawano client. Sawano is an
authorized signatory on the RMC bank account. RMC has no
apparent legitimate purpose except to be used by Sawano as a
conduit bank account to funnel investment advisory client monies.
From at least January 1, 2007 to September 30, 2008, virtually all
deposits into RMC represent funds from Integrity investment
advisory clients and virtually all monies were directed to Integrity
for use and disposition. From at least October 2008 to December
2011, it appears that RMC has no operational revenue and nearly
100 percent of monies that funnel through it are from Integrity
clients.
24. During January 2007 to December 2011, RMC had deposits of
$2,699,646, of which $2,697,300 represented funds from Integrity and
Sawano clients. Of this amount, $2,690,377 was expended. Based upon
information currently known to the Commissioner, Sawano used the
monies deposited into RMC as follows:
a.
$1,312,104 was used to pay other Integrity investment
advisory clients for their liquidation or purported proceeds from
certain investments or alternative investments;
b.
$1,287,000 was misappropriated by Sawano to fund
Integrity business expenses or for personal expenses of Sawano,
including payment of credit cards or transfers to Sawanos personal
bank accounts;
c.
$57,901 was used to pay associated expenses with the
purported alternative investments, such as the premium on the
viaticized insurance contract owned by Delta.
25. Sawano and Integritys compensation for their investment
advisory services to their clients would be withdrawn from client accounts
held at Pershing based upon the disclosed percentage of the assets under
management set forth in Integritys Part 2A of the Form ADV. Because
Sawano was paid his investment advisory fees through Pershing (and/or
through Shareholders Service Group, the introducing firm for Integrity
and Sawano accounts through Pershing), the substantial amounts he or
Integrity received through RMC were misappropriated client funds that
he then used for personal and business expenses.
6

26. In most instances, the clients were provided with fabricated

or misleading information as to the nature of the purported investments
or alternative investments including but not limited to, the location or
entity that held the investments and the value of the investments.
MATERIAL MISREPRESENTATIONS OR OMMISSIONS
27.
In connection with their investment advisory services and/or
in connection with the offer and sale of securities, Sawano and Integrity,
either directly or indirectly, made oral or written statements to investors,
in and from the State of Colorado, including, but not limited to, the
following:
a.
The purported investments or alternative
investments purchased by Sawano on behalf of his investment
advisory clients include certificates of deposit, tranches in a
managed pool of $100,000,000 worth of certificates of deposit, put
options, promissory notes or certificates of debt or other types of
investments in Aspen, Delta, Still Waters Resort, or other entities
affiliated with and/or controlled by Sawano;
b.
Client assets were held at certain banking or financial
institutions or brokerage firms;
c.
The value or amount of the investments that Sawano
purportedly invested in for his clients;
d.
assets;

Sawano and Integrity do not take custody of client

e.
Certain clients were told that because of their high net
worth and sophistication, that Sawano did not need to obtain prior
approval to liquidate assets or withdrawal assets to other financial
institutions.
made:

28.

In truth and material fact, and contrary to the statements

a.
The purported investments or alternative
investments in some instances are fabricated or appear to not have
any legitimacy;
b.
Certain client assets were in fact not held at the
banking institutions or brokerage firms as represented, such as
KeyBank, US Bank, or YieldQuest but were transferred into RMC,
7

Delta or Integrity bank accounts. Furthermore, in some instances

the account statements for those institutions were forged;
c.
The value of the purported investments were fictitious.
For example, one client had a loss in a Fixed Income Note and
Sawano fabricated documents to show that the Fixed Income Note
morphed into a put option and that the put option still had value;
d.
Sawano and Integrity takes custody and control over
client assets when investment advisory funds are deposited in RMC,
Integrity or Sawanos personal bank accounts.
e.
Even with discretionary authority over most of his
clients accounts, Sawano nonetheless must provide documentation
to support the client authorized or signed for the alternative
investment. In some instances, Sawano did not even have
discretionary authority over certain accounts account to withdrawal
funds but withdrew funds nonetheless.
29. In connection with their investment advisory business and/or
in connection with the offer and sale of securities, Sawano and Integrity,
directly or indirectly, failed to disclose material facts to their investment
advisory clients which were necessary to make the statements that
Sawano made to investors, under the circumstances in which they were
made, not misleading:
a.
Sawano has a financial or beneficial interest in some of
the purported alternative investments he purchased on behalf of
his investment advisory clients. For instance, Sawano is on the
Board of Directors of Aspen;
b.
Some of the purported alternative investments
Sawano purchased on behalf of his investment advisory clients
involve entities associated with and/or controlled by Sawano or
owned by other Integrity investment advisory clients;
c.
That instead of investing funds from his clients, those
funds would be used to pay back other clients who attempted to
liquidate their alternative investments or misappropriated by
Sawano for business or personal expenses.
30. In connection with their investment advisory business and/or
in connection with the offer and sale of securities, Sawano and Integrity
engaged in an act, practice or course of business which operates or would

operate as a fraud or deceit upon any person, including, but not limited to,
the following:
a.
Sawano and Integrity provided no notice to their
investment advisory clients prior to the liquidation and withdrawal
of assets from a custodial institution or if notice is provided, Sawano
provides little information as to the intended use of the monies;
b.
Sawano and Integrity provided little to no information
about the purported alternative investments they purchase on
behalf of their investment advisory clients;
c.
Investment advisory clients were paid back or provided
funds for liquidation of their alternative investments with other
Integrity investment advisory client funds;
d.
Sawano and Integrity provided fabricated or misleading
information with respect to the purported investment or
alternative investment; and
e.
Based upon the financial records of Integrity and RMC,
Sawano and Integrity misappropriated investment advisory client
funds in substantial amounts in addition to the amount of
investment advisory compensation they received and that was
disclosed to their clients.
31. Based on the information currently available to the
Commissioner, the following sub-paragraphs detail the known scheme to
defraud investors and the acts, practices and course of business engaged
in by Sawano and Integrity that acted as a fraud, was deceitful or
manipulative:
a.
BG, a Colorado resident, is an investment advisory
client of Sawano and Integrity. In or around 2010, BG retained
Sawano as his investment adviser representative. BG trusted
Sawano and relied upon his financial expertise. Sawano and
Integrity established a trust account for BG at Pershing.
On August 11, 2011, Sawano instructed Pershing to withdraw
$400,000 from BGs trust account and directed the funds to a
KeyBank bank account ostensibly in the name of BG. BGs
$400,000 was deposited into RMC account, and not to a BG account
at KeyBank. Analysis of BGs $400,000 showed that his money was
used to pay back other investment advisory clients, including but
not limited to, $330,026 which went to pay back investment
9

advisory client MM with respect to her purported investments or

alternative investments. BG does not recall discussing with
Sawano or receiving anything in writing from Sawano regarding
his purported investment in RMC, and was unaware that his funds
were used to pay back other Integrity clients.
Sometime after September 2012, Sawano represented to BG
that he had invested $1.4 million dollars of BGs money via two
trusts at KeyBank or US Bank. Sawano orally represented the
monies were invested in 14 certificates of deposit, and provided BG
with an Integrity spreadsheet outlining the banks balances.
When BG realized that the KeyBank and US Bank had not
confirmed the opening of the trust accounts for him, BG confronted
Sawano again. On March 7, 2013, Sawano produced purported
statements outlining BGs $1.4 million of certificates of deposit held
at YieldQuest. YieldQuest denied that the statements provided to
BG were issued by the firm, and has no record of an account in the
name of or for the benefit of BG at its firm.
When presented with the information that YieldQuest has no
account for BG, Sawano claimed that Yield Quest was mistaken.
Sawano said that he pooled BGs money with other investors and
that the money was invested via a non-retail account with which
Yield Quest personnel must have been unfamiliar.
On March 16, 2013, after BG became aware that another
$220,000 was taken from his Pershing account without his
knowledge, BG met with Sawano. Sawano explained that BGs
$1.62 million was in fact part of a managed pool of certificates of
deposit worth approximately $100 million that were held in a nonretail trading account at Pershing. Sawano then produced to BG
another purported YieldQuest statement reflecting the $100 million
managed pool was held in the Integrity Financial Trading Custody
Account.
In mid-March 2013, Sawano orally represented to BG that his
software erroneously reflected that BGs certificates of deposit were
held at YieldQuest, but the $100 million managed pool of
certificates of deposit were held in Integritys corporate account at
Pershing. Both Pershing and YieldQuest deny holding a
$100,000,000 pool of CDs as managed by Sawano or Integrity.
YieldQuest claims the statements are not issued from their firm and
likely forged.
There is no evidence to support that BGs monies were
invested in 14 certificates of deposit issued by KeyBank, US Bank,
held at YieldQuest or managed in a pool of certificates of deposit at
Pershing. In fact, records reveal that BGs $1.62 million dollars was
10

remitted into RMC and Deltas bank accounts, of which it appears

that $708,987.50 of it was remitted from a Delta account to pay
back the 401(k) accounts held at Pershing of three other clients, RL,
JL, and CM.
b.
RL and JL, Colorado residents, are husband and wife
and own their own business. In 2000, RL and JL established 401(k)
accounts for their employees at Schwab. One of their employees is
their operations manager, CM. RL and JL hired Sawano and
Integrity to manage the 401(k) accounts. Sawano and Integrity had
discretionary authority to execute transactions on behalf of the
401(k) accounts, including accounts established for RL and JL, but
had limited authority to withdraw or transfer funds.
In or around the summer 2012, RL and CM were reconciling
the 401(k) accounts and discovered some irregularities, including
funds had been withdrawn from the 401(k) accounts of RL, JL and
CM held at Schwab without any of those individuals knowledge or
authorization. RL and CM contacted Sawano. Sawano represented
that the monies had been invested and that because RL and CM are
sophisticated, high net worth individuals, Sawano could transfer the
monies without their permission.
RL and CM requested information from Sawano about their
investments. Sawano provided information that revealed that RL
and JL had purportedly invested in an Aspen Ridge Mid-Term Note
with a 10% rate of return purportedly valued at $277,670 and two
other Convertible Debt and Security Instruments dated October 30,
2006 in the amount of $150,000, respectively. The promissory notes
from Aspen Ridge were not signed by RL or JL but only by Aspen
Ridges secretary, Martin Findley.
Sawano also provided information that revealed that CM had
purportedly invested in Aspen Ridge but the document provided to
CM revealed information about a company known as Bon Voyage
reflecting at 10% APR and that the transactions occurred from
September 2006 to October 2007. The document for Bon Voyage
reflected that the Aspen investment was purportedly cost $185,000.
CM was also provided with information about his Aspen Ridge
investment with an Aspen Ridge Convertible Debt and Security
Instrument also dated October 30, 2006 in the amount of $150,000.
Similar to RL and JLs promissory notes from Aspen Ridge, the note
was not signed by CM but only by Aspen Ridges secretary Martin
Findley.
RL, JL and CM had not authorized withdrawals from their
401(k) accounts, were not aware of Aspen Ridge or Bon Voyage and
11

do not recall receiving any documentation or information relating to

these investments prior to their request to Sawano. Because of the
lack of transparency in the transactions, RL, JL and CM requested
that Sawano return the monies immediately. In response to their
demands, on October 12, 2012, three checks drawn from the Delta
account totaling $708,987.50 were deposited into the 401(k)
accounts of RL, JL and CM at Pershing. RL, JL and CM did not
have any knowledge of Delta and have no idea why Delta would
remit payment for the Aspen Ridge notes. The $708,987.50 appear
to represent the investment advisory client funds of BG, as
described in detail above.
32. The investments or alternative investments are securities
as defined in 11-51-201(17), C.R.S., in that they are notes, certificates of
deposit, or investment contracts.
FIRST CLAIM FOR RELIEF
(Investment Advisory Fraud)
11-51-501(5), C.R.S.
All Defendants
33.
reference.
34.

Paragraphs 1 through 32 above are incorporated herein by

Section 11-51-501(5), C.R.S., states the following:
It is unlawful for any person who receives, directly or
indirectly, any consideration from another person for
advising the other person as to the value of securities or
of any purchase or sale thereof, whether through the
issuance of analyses or reports or otherwise to:
(a) Employ any device, scheme, or artifice to defraud
any client or prospective client;
(b) Make an untrue statement of a material fact to any
client or prospective client or to omit to state to any
client or prospective client any material fact necessary
to make the statements made, in light of the
circumstances under which they are made, not
misleading, in the disclosure statement delivered to any
client or prospective client pursuant to section 11-51409.5 or a similar document under the federal
"Investment Advisers Act of 1940" or during the
solicitation of any such client or otherwise in connection

12

with providing investment advisory services; or

(c) Engage in any transaction, act, practice, or course of
business that operates or would operate as a fraud or
deceit upon any client or prospective client or that is
fraudulent, deceptive, or manipulative.

35. By engaging in the above conduct, Sawano and Integrity are

in violation of 11-51-501(5), C.R.S., as they made material
misrepresentations or omitted material facts to their investment advisory
clients or conducted their investment advisory business in such a manner
that it acted as a fraud or deceit upon their investment advisory clients, or
was deceptive and manipulative.
36. The Commissioner is entitled to a temporary, preliminary and
permanent injunction pursuant to 11-51-602, C.R.S., based upon
violations of 11-51-501(5), C.R.S., against Integrity and Sawano.
Because this action is against an investment adviser and investment
adviser representative, the Commissioner is also entitled pursuant to
11-51-602(1), C.R.S., to an order from the Court restraining and enjoining
Integrity and Sawano from associating in any capacity with any brokerdealer, sales representative, promoter, issuer, financial planner,
investment adviser, or investment adviser representative, engaged in
business in Colorado, or any individual or entity engaged in the offer,
purchase, or sale of securities or any investment in or from Colorado.
Finally, the Commissioner is entitled to an award of damages, interest,
costs, reasonable attorneys fees, restitution, disgorgement, and other
equitable relief on behalf of persons injured by the conduct of Integrity
and Sawano pursuant to 11-51-602(2) and 604, C.R.S., based upon
violations of 11-51-501(5), C.R.S.
SECOND CLAIM FOR RELIEF
(Securities Fraud)
11-51-501(1), C.R.S.
All Defendants
37.
reference.
38.

Paragraphs 1 through 36 above are incorporated herein by

Section 11-51-501(1), C.R.S., states the following:
It is unlawful for any person, in connection with the
offer, sale, or purchase of securities, directly or
indirectly:

13

(a) To employed a device, scheme, or artifice to defraud;

(b) To make any untrue statement of material fact or to
omit to state a material fact necessary in order to make
the statements made, in light of circumstances under
which they were made, not misleading;
(c) To engage in any act, practice, or course of business
which operates and would operate as a fraud or deceit
upon any person.

39. By engaging in the above conduct, Sawano and Integrity are

in violation of 11-51-501(1), C.R.S., as they made material
misrepresentations or omitted material facts in connection with the offer
or sale of securities or conducted their investment advisory business in
such a manner that it acted as a fraud or deceit upon their investment
advisory clients, or was deceptive and manipulative.
40. The Commissioner is entitled to a temporary, preliminary and
permanent injunction pursuant to 11-51-602, C.R.S., based upon
violations of 11-51-501(1), C.R.S., against Integrity and Sawano.
Because this action is against an investment adviser and investment
adviser representative, the Commissioner is also entitled pursuant to
11-51-602(1), C.R.S., to an order from the Court restraining and enjoining
Integrity and Sawano from associating in any capacity with any brokerdealer, sales representative, promoter, issuer, financial planner,
investment adviser, or investment adviser representative, engaged in
business in Colorado, or any individual or entity engaged in the offer,
purchase, or sale of securities or any investment in or from Colorado.
Finally, the Commissioner is entitled to an award of damages, interest,
costs, reasonable attorneys fees, restitution, disgorgement, and other
equitable relief on behalf of persons injured by the conduct of Integrity
and Sawano pursuant to 11-51-602(2) and 604, C.R.S., based upon
violations of 11-51-501(1), C.R.S.
THIRD CLAIM FOR RELIEF
(Custody Violations)
11-51-407(5), C.R.S.
All Defendants
41.
reference.

Paragraphs 1 through 40 above are incorporated herein by

42. Section 11-51-407(5), C.R.S., prohibits an investment adviser

with a principal place of business in this state or investment adviser
14

representative of a licensed investment adviser with a place of business in

this state shall take custody or possession of client funds unless certain
requirements are satisfied that are set forth in 11-51-407(5)(a) through
(f), C.R.S.
43. Integrity and Sawano had no authority, discretionary or
otherwise, to transfer funds from the custodial accounts of their clients to
other bank accounts.
44. Bank records reveal that funds for some of Sawano and
Integritys clients were deposited into bank accounts for Integrity or RMC.
Integrity has a corporate account and client assets should not have been
deposited in that account unless as compensation to Sawano and
Integrity. RMC is an entity in which Sawano is an authorized signatory
and by all appearances is not a legitimate investment or an investment at
all. Sawano took custody and possession of client assets once the funds
once deposited into Integrity or RMCs bank accounts.
45. Upon information and belief, Sawano or Integrity have failed
to satisfy all requirements set forth in 11-51-407(5)(a) through (f),
C.R.S., which authorize an investment adviser representative or
investment adviser to take custody and possession of client assets.
46. The Commissioner is entitled to a temporary, preliminary and
permanent injunction pursuant to 11-51-602, C.R.S., based upon
violations of 11-51-407(5)(a) through (f), C.R.S., against Integrity and
Sawano. The Commissioner is entitled to an award of damages, interest,
costs, reasonable attorneys fees, restitution, disgorgement, and other
equitable relief on behalf of persons injured by the conduct of Integrity
and Sawano pursuant to 11-51-602(2) and 604, C.R.S., based upon
violations of 11-51-407(5)(a) through (f), C.R.S.
FOURTH CLAIM FOR RELIEF
(Imposition of Constructive Trust or Equitable Lien)
Relief Defendants RMC Financial, LLC, Delta Real Estate Fund,
Ltd., and Aspen Ridge Investments, Inc.
47.
reference.

Paragraphs 1 through 46 are incorporated herein by

48. Relief Defendants RMC, Delta, and Aspen Ridge (collectively,

the Relief Defendants) have received funds fraudulently obtained from
Integrity and Sawano clients.
15

49. Relief Defendants received these fraudulently obtained funds

without giving a reasonably equivalent value in exchange and, as a result,
each has no legitimate right or claim to these monies. The Relief
Defendants therefore will be unjustly enriched if they are allowed to
maintain ownership of the funds fraudulently obtained.
50. Based on the foregoing, the Relief Defendants, or any entity
controlled by them, are constructive trustees with respect to the
fraudulently obtained funds received from the investments for the benefit
of the investors. As constructive trustees with respect to these
fraudulently obtained funds, the Relief Defendants hold these funds under
circumstances in which it is unjust or inequitable for the Relief
Defendants, or any entity controlled by them, to retain the funds.
51. Based on the foregoing, the Commissioner requests that the
Court impose a constructive trust and/or equitable lien on the
fraudulently obtained funds received by the Relief Defendants, and order
the Relief Defendants, and any entity controlled by them, to account for
and disgorge all funds received by them.
WHEREFORE, Plaintiff prays for relief as follows:
1.
For temporary, preliminary and permanent injunctive relief
against Sawano and Integrity, and each of their officers, directors, agents,
servants, employees, and successors; any person who directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is
under common control with Sawano or Integrity, and all those in active
concert of participation of Sawano and Integrity, enjoining each of Sawano
and Integrity from violations of the Colorado Securities Act, or successor
statute, and ordering the non-destruction of records;
2.
For a judgment in an amount to be determined at trial
against Sawano and Integrity, jointly and severally, for restitution,
disgorgement, and other equitable relief pursuant to 11-51-602(2),
C.R.S., and for damages, rescission, interest, costs, reasonable attorneys
fees, and such other legal and equitable relief as the Court deems
appropriate, pursuant to 11-51-602(2) and 604, C.R.S., all on behalf of
persons injured by the acts and practices of Sawano and Integrity
constituting violations of the Colorado Securities Act.
3.
For an Order imposing a constructive trust on the
fraudulently obtained funds held by each Defendant and Relief Defendant,
and any entity controlled by them, and to order each Defendant and Relief

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Defendant to account for and disgorge all funds fraudulently obtained by

them from the investors and transferred to them.
4.
For an Order imposing a constructive trust on the
fraudulently obtained funds held by Sawano or Integrity, or any entity
controlled by them, and to order Sawano and Integrity to account for and
disgorge all funds fraudulently obtained by them from the investors and
transferred to them.
5.

For such other and further relief as the court deems proper.

Respectfully submitted this 8th day of April, 2013.

JOHN W. SUTHERS
Attorney General
Pursuant to C.R.C.P. 121, 1-26(7), a printable copy of
this E-Served document is maintained in the Office of
the Attorney General for the State of Colorado

/s/ Sueanna P. Johnson

RUSSELL B. KLEIN, 31965*
First Assistant Attorney General
SUEANNA P. JOHNSON, 34840*
Assistant Attorney General
Business & Licensing Section
Attorneys for Plaintiff
*Counsel of Record

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