A temporary cease and desist order in Montana is having
repercussions among some Morgan Hill investors and in 12 other
states as well.
A temporary cease and desist order in Montana is having repercussions among some Morgan Hill investors and in 12 other states as well.
The State of Montana at the end of January ordered David Tacke and Sports Eye Systems Corp., to stop offering selling unregistered securities. Montana requires such registration as does California.
The Montana state auditor’s office is also investigating Tacke and his several companies for defrauding investors and a string of other financial misdeeds. However, many investors are sticking by Tacke throughout his troubles, despite a series of revealing articles in the Daily InterLake newspaper.
“ It was accidental that the securities were not registered,” said Jan Dean of Morgan Hill. “There was full disclosure.” She is joined in a vigorous defense of Tacke by Shirley and Bruce Coffman, Joe Locsin, Jim Freeman and others also of Morgan Hill.
Tacke is founder, president and chief executive officer of SESC, Binocs Manufacturing, Venue Tech Systems and Tekware Solutions and is based in Kalispell, Mont.
The Morgan Hill residents invested in Venue Tech/Binocs, a company that plans to install binoculars under the seats of sports arenas, a service to be offered through Ticketmaster and already installed in Philadelphia’s First Union arena.
The cease and desist order is the result of complaints by four people who had invested in Venue Tech and Binocs. It also alleges that Tacke failed to inform investors of past financial troubles, including a previous permanent cease and desist order against selling unregistered securities, and a number of pending lawsuits; that he used some investors money to pay debts and his living expenses.
Tacke is also alleged to have used investors’ money for speculative stock trading, incurring, the order claimed, “substantial financial losses.”
Investigators raided Tacke’s offices in Kalispell in December 2001, just behind Tacke, who had left through a back door, according to the order. They interviewed several employees who said most financial issues were handled directly by Tacke. Others said paychecks had been returned for insufficient funds and medical bills went unpaid because the company health insurance had been canceled for non-payment of premiums, the money being diverted to other purposes.
The order also claims that Tacke withheld court-ordered child support payments from employee’s wages during four months in 2001 and failed to forward them to the proper agencies.
Dean, the Coffmans and the others still believe in Tacke and in Venue Tech/binocs as a viable company. A letter dated Feb. 14, 2003 from pro-Tacke investors accuses the complainants of an “attempt to further discredit the company and David Tacke. Their purpose is not to protect the shareholders.” The letter also accuses reporter William Spence of the Daily InterLake of “defaming” Tacke in his articles and an editorial.
“He’s just seeking notoriety,” said Shirley Coffman. “The paper only printed negative comments from investors.”
Jeff Bradford, who grew up in Morgan Hill and was named in the letter as a complainant, said he had invested $200,000 in the company.
“He is very charismatic,“ said Bradford. “He comes across as a financial genius. Tacke can talk the talk but can’t walk the walk.”
“I originally filed a complaint with State of Montana because it’s such a sickening thing,” Bradford said. “It’s a mini-Enron.”
“Many victims are angry with the state … that they are shutting this guy down. Those people really need to know.”
Tacke’s defenders have a different opinion.
“ Many employees are continuing to work, without salary,” Shirley Coffman said, “because the product is like their child – they totally support it.”
“The real issue here is the abuse of government power,” Bruce Coffman said.
“The state (of Montana) has stopped (Binoc’s) ability to get bank funding,” Bruce Coffman said. “We could be making money now even during the current bad market,” said Dean.
Meanwhile, a hearing is pending. Wendy Rainey, of the auditor’s office, said the temporary cease and desist order will become permanent if, at a hearing, the charges were upheld and if Tacke does not appeal the finding. A violation would then be punishable, upon conviction, by imprisonment of not more than 10 years and/or a fine not to exceed $5,000.
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