false or misleading statements when person making them knew or had reason to know they were false or misleading). Therefore, the defendants' subjective belief as to where Garretto resided is simply not relevant. Because defendants admit that both Garretto and Digestive were Wisconsin residents at all times material to the complaint (see p. 4 & n.5, supra), and the record reflects a sustained course of activity directed to plaintiffs in Wisconsin, there is no genuine issue of material fact as to whether defendants were transacting business in Wisconsin.
In a closely related context, Wisconsin courts have twice rejected the contention that an intent requirement should be read into a portion of the Wisconsin securities statute which imposes criminal liability upon those who willfully engage in conduct which operates as a fraud or deceit upon a person. In Van Duyse v. Israel, 486 F. Supp. 1382 (E.D. Wis. 1980), a habeas proceeding challenging the defendant's conviction under this provision, the district court explained:
The plain meaning of the statutory provisions indicate that the State need only prove that the accused willfully engaged in conduct which operates or would operate as a fraud or deceit upon any person. It is the nature of the act which is dispositive, not the state of mind of the actor. In this sense, the statute imposes a form of strict liability. Once the seller has willfully engaged in conduct which operates or would operate as a fraud or deceit, he will not be heard to argue that he did not intend the consequences of his acts.
Accord People v. Mitchell, 175 Mich. App. 83, 437 N.W.2d 304, 308 (1989). In State v. Temby, supra, 108 Wis. 2d 521, 322 N.W.2d at 526, the Wisconsin appellate court likewise held that the absence of the word "intent" from the statute signaled that intent was not an element of the offense. These cases lend strong support to the Court's conclusion that the absence of the word "knowingly" from Sections 551.31(1) and 551.31(3) obviates any requirement that a broker-dealer or investment advisor realize he is dealing with a Wisconsin resident.
Moreover, defendants' arguments as to their purported ignorance are completely unsupported by the evidence. Defendants sent letter after letter to Garretto in Kenosha, Wisconsin in the months surrounding the transactions. Moreover, Garretto listed his Wisconsin address and phone number on the attachment to the "Subscription Agreement" he signed in connection with the investments in Elite Properties (see Def. Exhibit 21 at 9; Def. Exhibit 27 at 9).
Indeed, defendants themselves, under the heading "Residence Address/Telephone," listed Garretto's Kenosha, Wisconsin residence and telephone number (and no Illinois address or number) on the June 3, 1988 "Personal Financial Planning Case Analysis" which they prepared for Garretto. (Pl. Ex. 13 at 3.)
That defendants were dealing with a Wisconsin resident and a Wisconsin corporation was, at minimum, something they should have realized; and the evidence presently before the Court strongly suggests that they were in fact aware of this circumstance.
The penalty for violating the license requirement is clear. Anyone who offers or sells a security in violation of Section 551.31 is liable to the purchaser for "the consideration paid for the security, together with interest at the legal rate under Section 138.04 from the date of payment, and reasonable attorney fees . . . ." Wis. Stat. § 551.59(1)(a). Plaintiffs are therefore entitled to recover the total of $ 100,000 they paid for the partnership interests they purchased in Elite Properties. In addition, an award of attorneys' fees is mandatory, as the court held in Criticare Systems, Inc. v. Sentek, Inc., 159 Wis. 2d 639, 465 N.W.2d 216, 221 (App. 1990), review denied, 471 N.W.2d 509 (Wis. 1991):
The intent of the statute was to provide for enforcement of state securities laws largely by civil suits brought by citizens. 3 Loss, Securities Regulation, 1631, 1643 (1961). Inadequate budgets and uneven enforcement of Blue Sky laws make civil liability the only really effective sanction. Id. at 1631. We conclude that the award of reasonable attorney's fees encourages private enforcement of ch. 551, Stats. If a securities violation is found to exist, attorney's fees therefore are mandated.
The court went on to hold that the same was true for interest. 465 N.W.2d at 221. Accordingly, plaintiffs are also entitled to recover interest from the dates upon which the partnership interests in Elite Properties were purchased, together with reasonable attorneys fees.
No calculation of these amounts has been submitted to the Court. Plaintiffs shall file a statement of the amounts for which they seek recovery, including accrued interest and attorneys' fees, no later than May 29, 1992. Any request for attorneys' fees shall provide reasonable detail and supporting affidavits from plaintiffs' counsel as to the work performed. Defendants shall file any objections to the amounts sought no later than June 5, 1992.
For the reasons set forth above, plaintiffs' motion for summary judgment is granted, the Court finding that defendants transacted business as investment advisors in Wisconsin without a license. Entry of final judgment is held in abeyance pending the submission and review of a statement of the amounts plaintiffs are owed in principle, interest, and reasonable attorneys' fees.
ILANA DIAMOND ROVNER
UNITED STATES DISTRICT JUDGE
Dated: May 22, 1992