Genie Lens Technology founder barred from securities industry, ordered to pay a more-than $13 million judgment
DENVER (Oct. 8, 2015) – Seth Weiss, former CEO and managing member of Genie Lens Technology, LLC, has been permanently barred from the Colorado securities industry, and has further been ordered to pay over $13 million plus 8-percent interest in restitution, disgorgement, and damages to the Colorado Division of Securities, part of the Department of Regulatory Agencies (DORA).
The court order follows a trial of the matter in which the Division, represented by the Colorado Attorney General’s office, proved that the defendant violated both the registration requirement and anti-fraud provisions of the Colorado Securities Act.
“Again, under Securities Commissioner Gerald Rome’s leadership, the Division of Securities staff’s investigative work has uncovered significant fraudulent practices harmful to Colorado investors,” said Joe Neguse, DORA Executive Director. “I commend them on their important work.”
Weiss, a resident of Cherry Hills Village, co-founded Genie Lens Technology in 2006. The company was formed to research, develop, and manufacture various intellectual property patents. The defendant initially offered investors five-year promissory notes promising a 10-percent interest rate. In 2010, Weiss contacted current investors to offer an extended two-year promissory note on their investments, and further asked them to help him recruit new investors for a three-year note offering. Neither the two, nor the three-year promissory note offerings were ever registered with the Division.
According to findings made in the court’s order, beginning in 2009 at the request of the company’s Chief Operating Officer, Genie Lens began issuing quarterly reports to its investors that included balance sheets and profit and loss statements for the company. Weiss, who had sole access to the company’s bank account and records, would receive statements from the bank at his home address, and would then supply the balance sheets that purportedly represented “actual” cash that Genie Lens had to his investors on a regular basis. However, through an investigation into company bank records, the Division discovered that not once in the three-plus years of quarterly reports did Weiss communicate the true state of the company’s finances.
One quarterly report to investors in 2012 went so far as to represent that the company had over $1 million in its checking account. A few weeks later a bank statement indicated there was actually $749.85 in the company account. Two weeks after that bank statement issued, Weiss stated in a webinar to investors that Genie Lens had “about $2 million…cash on hand.”
“What we saw here was a deliberate betrayal of the trust placed in Mr. Weiss by the investors in his company,” stated Colorado Securities Commissioner Gerald Rome. “Not only did Weiss flat out misrepresent to his investors a situation that would have greatly influenced their investment decisions, but furthermore used them to recruit other unknowing victims.”
During trial, several investors testified that they reviewed and relied upon the quarterly updates and information provided by Weiss to inform their decisions about whether to continue or make new investments with Genie Lens Technologies. The court agreed that these statements were unquestionably of material importance to a reasonable investor. Therefore, the court ruled in favor of the Division of Securities, and found that both the registration and anti-fraud provisions of the Securities Act had been willfully violated by Weiss.
In addition to his permanent and immediate restraint from practicing— directly or indirectly—in the Colorado securities industry, the court ruled that Weiss raised, and is therefore responsible for $12,146,002 in funds for the two-year promissory note offer, and $1.15 million for the three-year offer. In aggregate, the judgment states that Weiss is ordered to pay $13,296,002 to the Division.
The order was signed by District Court Judge Shelley Gilman on Tuesday, October 7. At trial, the Division was represented by Assistant Attorneys General Charles Kooyman and Nicholas Lopez from the Colorado Attorney General’s office. “We appreciate the hard work and professionalism shown by our attorneys throughout the pursuit of this case,” said Commissioner Rome.
A copy of the court order can be found on the Division’s web site or obtained by calling 303-894-2320.
Division of Securities