A Denver judge has thrown out a lawsuit that state regulators filed against an investment broker and signaled she will do the same to their case against an Indian restaurant.
In a setback for the agency, Judge Sarah Wallace determined the Colorado Division of Securities can sue only people and companies who committed investment fraud within the past five years, rejecting the division’s argument that it is immune from statutes of limitations.
In mid-April, the Division of Securities sued the securities broker Michael Bissonnette as well as Bombay Group, which operates Saucy Bombay on East Colfax Avenue. In separate lawsuits, the Division of Securities accused the defendants of misleading investors about their grandiose plans for a fast-casual chain and then misspending $380,000 in investor cash.
“The investors in this case really believed in The Bombay Group and their restaurant Saucy Bombay,” Tung Chan, the state’s securities commissioner, said then. “But as we allege, the investors were not told the truth about the investments and have not been paid back.”
Attorneys for Bissonnette and Bombay Group asked Wallace, who is presiding over both cases, to dismiss them because the alleged misdeeds occurred in 2016 and the Colorado Securities Act, the law they were being sued under, has a statute of limitations of five years.
Assistant Attorney General Sarah Donahue disagreed, arguing on behalf of Chan that because the law allows her to sue “whenever it appears to the securities commissioner” that there is evidence of investment fraud, a statute of limitations cannot be imposed on Chan.
On June 27, Wallace disagreed.
“A finding that the statute of limitations in the Colorado Securities Act which applies to all persons does not apply to the commissioner would be contrary to settled case law in Colorado,” the judge wrote, adding that it would be “absurd” to exempt the Division of Securities.
With that, Wallace dismissed the case against Bissonnette. She has not yet ruled on Bombay Group’s similar motion to dismiss, which was filed several weeks after Bissonnette’s, but that case involves the same allegations from 2016, so it will presumably be dismissed.
“Coloradans lost hundreds of thousands of dollars because of Bisonnette’s lies and material omissions,” Chan said Tuesday. “We believe the court’s holding is wrong and harmful to investor protections under the Colorado Securities Act. We are considering our options.”
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Bombay Group is represented by Alan Friedberg with Berg Hill Greenleaf & Ruscitti in Boulder. Bissonnette’s attorneys are Paul Vorndran and Javier Heres at Jones & Keller.
“We believe Judge Wallace’s order rightfully dismissed the commissioner’s attempt at circumventing long-established Colorado law requiring that the government be held to the same standards as any other litigant,” Vorndran told BusinessDen this week.
“We intend to vigorously defend our clients against any further attempts by the commissioner to undermine these fundamental legal protections,” Bissonnette’s attorney added.
Read more at our partner, BusinessDen.