The Secretary of State’s Office last week ordered a Lincoln man to stop offering unregistered investments that cost Missouri residents thousands of dollars.

Officials in the Securities Division of Secretary of State Robin Carnahan’s office issued a cease-and-desist order against David B. Cooper, president of GemSafe Plastics and World Coin Net Inc., for offering unregistered investments in companies he promised would bring jobs to his community and make shareholders wealthy. Investors around Warsaw and Lincoln lost more than $20,000 as a result of the scheme.

Cooper did not respond to requests for comment.

The office began investigating the investments in 2007, after receiving complaints from two people who had both lost more than $5,000.

The first complainant had met with Cooper in the fall of 2005, when Cooper said he was going to start a company that would manufacture collector coin cases. Cooper allegedly offered to sell shares of GemSafe, after which investors would receive shares of World Coin.

When the complainant bought 100,000 shares of GemSafe for $6,667, Cooper indicated that the investment would be fully recovered by the end of 2006. Cooper also promised that investors “would be rich, could stop working, could start traveling and would not have to worry about retirement,” according to the cease-and-desist order.

The first investor who filed a complaint contributed another $10,000 in July 2006 to help purchase equipment for World Coin. In August 2007, he requested to withdraw his investment and sell his shares of GemSafe but received no response.

Another investor who filed a formal complaint purchased $5,000 worth of GemSafe stock in February 2007.

In January 2008, Cooper sent an e-mail to shareholders that warned that “the company is on financial life support. The company is completely out of money and has been for several months now.”

Cooper assured investors, “I will do my best to repurchase your stock as soon as possible, either personally or through stock resale.”
Neither investor received compensation for their shares, financial data on the company nor patent information on the coin display cases.

In December 2007, investigators requested a list of all investors, a copy of the patent or patent application, copies of financial records and names of the board members. The letter, marked “unclaimed,” was returned days later. Since then, Cooper has not responded to investigators’ letters or phone calls.

To sell securities or offer investment advice, an individual must be properly registered with the state of Missouri. Records maintained by the Securities Division indicate that neither Cooper nor his two companies were registered to offer or sell investments in Missouri. The order also charges Cooper with failing to provide information to investors.

The order states that Cooper’s “actions in making an untrue statement and omitting to state material facts necessary in order to make the statements made ... not misleading, in connection with the offer, sale or purchase of a security ... are illegal acts, practices, or courses of business.”

Carnahan said this case demonstrates the dangers of unregistered investments. She urged potential investors to examine a company’s history before contributing any money, no matter how promising an offer may appear.

“Anyone considering a new investment should call the Investor Protection Hotline, even if it is being offered by someone you know,” Carnahan said. “If it sounds too good to be true, it probably is.”

The cease-and-desist order could result in the assessment of penalties and costs against Cooper and his companies.

Secretary of State spokeswoman Laura Egerdal said Cooper has 30 days to request a hearing with investigators. Otherwise the office intends to seek civil penalties, victim restitution and an award for the state’s investor education fund totaling up to $10,000. The office may also refer matters for criminal prosecution to local prosecutors, the attorney general, or the U.S. attorney.

“At the hearing, he can explain why he should not be subject to the penalties,” Egerdal said. “But I do not believe he has requested a hearing yet.”