State sued for yanking broker's license

A Las Vegas stock broker filed suit accusing several state officials of conspiring to force his firm into bankruptcy and to thwart his return to the securities industry.

Robert Tretiak is the founder and chairman of Retirement Financial Centers of America Inc. and its subsidiary RFCA Financial Services Inc. Tretiak and RFCA Financial Services had their Nevada securities licenses revoked in June 1997.

That was after Retirement Financial collapsed in April 1997, costing 250 stockholders, the majority of whom were Las Vegas senior citizens, hundreds of thousands of dollars.

The case centers around a 1996-97 administrative action taken by Secretary of State Dean Heller, Nevada Securities Division Chief Charles Moore and several other state officials to revoke the licenses and suspend the trading of Retirement Financial stock. The state's action also prevented the stockholders from selling their shares in Retirement Financial before it went bankrupt.

The District Court suit said the Securities Division conducted investigations and revoked the licenses based on allegations by former Tretiak employees. He said they were plotting to take over his company in July 1996 when they became whistleblowers accusing him of plundering the corporate treasury and allegedly diverting money from an initial public stock offering in his company.

Tretiak subsequently appealed the license revocation action in September 1997 to Clark County District Court. State Court Judge Mark Gibbons in March of this year ruled Tretiak and RFCA Financial could reapply for securities licenses.

"But this license can only be obtained on a supervised basis and only if there is a mechanism determined by the state to supervise," Gibbons said in the order.

Gibbons also ruled Tretiak may apply in an unsupervised capacity after Jan. 1, 2002. State officials, however, have appealed Gibbons' ruling to allow Tretiak and RFCA Financial to reapply for securities licenses both on a supervised and unsupervised basis.

"We are appealing Judge Gibbons' authority to modify the sanctions to the Supreme Court ... and we're hoping this would lead to blocking Tretiak's return to the industry," Moore said.

"We've tried to have mandatory settlement negotiations with Tretiak before the Supreme Court hears our appeal, but we were unable to reach any type of settlement," he said.

Tretiak blamed his company's collapse on the negative publicity generated by an administrative complaint filed in September 1996 by state officials, the suspension of Retirement Financial stock trading and an alleged subsequent false press release issued by Heller allegedly calling Retirement Financial a senior "rip-off" firm.

The Securities Division alleged in its complaint Tretiak's brokerage had facilitated trades in its stock in the secondary market at inflated prices.

The defendants had alleged Tretiak violated state securities laws and used $1 million in initial public offering stock proceeds -- meant for buying land in Summerlin for Retirement Financial's corporate headquarters -- for improper expenditures including paying off his $36,000 credit card bill.

Investors were told their money would be secured by the property, which was bought to increase the net worth of the company. The court found a loan was secured instead to fund the land's purchase.

Tretiak said the company was worth about $8 million at the time of its IPO and had grown to an estimated $15 million at the time of the secondary trades.

Tretiak said the Securities Division allegedly punished him and his companies severely for what he called "unintentional and minor errors" made in their use of "SCOR" and branded these as securities fraud. The SCOR program is designed to help small businesses generate equity funding without requiring attorneys and accountants who specialize in securities regulations.

The suit said the program was part of former Secretary of State Cheryl Lau's policy in 1990 to encourage diversification of Nevada's economy by encouraging entrepreneurs to relocate here and to stimulate the growth of small businesses.

Tretiak claims he moved his business to Nevada to take advantage of the SCOR program, which he said enables the company's stock to be more freely tradeable with an ascertainable market value and also allows controlling shareholders to have a ready market to sell their interests.

Tretiak alleged the business climate changed when Heller took over as Secretary of State. He said Heller and his Securities Division adopted an anti-small business and small brokerage attitude.

He said Heller adopted an unpublicized in-house enforcement policy that held SCOR securities should not be liquid, and that an ascertainable market value was virtually impossible to determine in the newly formed Pacific Stock Exchange SCOR marketplace in 1995 because the trading volume then wasn't sufficient to support an adequate pricing mechanism.

Tretiak said his companies received approval to sell Retirement Financial stock at $6.50 a share to raise up to $1 million for a one-year period starting Oct. 21, 1994. RFCA Financial underwrote and completed the SCOR offering at the end of October 1995.

He said Administrative Judge Wayne Klein had, allegedly without showing of evidence, accused his company of selling Retirement Financial stock at inflated prices after an unsolicited individual bought some stock in the secondary market at $11.50 a share.

But Tretiak disputed such accusations, claiming proper trades were done at those levels and reflected the growth in his company's net worth. "Even assuming ... that the allegations had been true, incredibly, what the state did was to ruin RFCA and RFCA Financial, thus themselves destroying the investment of the very stockholders whose public interest they had a duty to protect," Tretiak said.

Tretiak also alleged the defendants had allegedly repeatedly obstructed his attempts to appeal the license revocations, delayed the lifting of license revocations and allegedly prodded other securities regulators including NASD Regulation to file actions against him.

Attorneys in the Nevada Attorney General's office declined comment on Tretiak's suit.

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