WASHINGTON

ON JUNE 28, 2012, THE SECURITIES DIVISION ENTERED A FINAL ORDER AGAINST BB&A PROPERTIES VIII, LLC ("BB&A") AND FRANCIS BERTHOLIC, JR. ("BERTHOLIC"). THE FINAL ORDER FOUND THAT BB&A AND BERTHOLIC OFFERED AND SOLD APPROXIMATELY $965,000 WORTH OF INVESTMENTS TO AT LEAST THIRTEEN WASHINGTON INVESTORS. THE FINAL ORDER FOUND THAT BB&A AND BERTHOLIC EACH VIOLATED THE REGISTRATION AND ANTI-FRAUD PROVISIONS OF THE SECURITIES ACT OF WASHINGTON. THE FINAL ORDER ORDERED BB&A AND BERTHOLIC TO CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT OF WASHINGTON AND REVOKED EXEMPTIONS, IMPOSED A FINE, AND CHARGED INVESTIGATIVE COSTS AGAINST BERTHOLIC. BB&A AND BERTHOLIC EACH HAVE THE RIGHT TO REQUEST JUDICIAL REVIEW OF THE FINAL ORDER. ON MAY 29, 2012, THE SECURITIES DIVISION ENTERED A STATEMENT OF CHARGES AND NOTICE OF INTENT TO ENTER AN ORDER TO CEASE AND DESIST, TO REVOKE EXEMPTIONS, TO IMPOSE A FINE, AND TO CHARGE COSTS ("STATEMENT OF CHARGES") AGAINST RESPONDENTS, BB&A PROPERTIES VIII, LLC; FRANCIS BERTHOLIC, JR.; AND MARCIA J. MARTIN. THE STATEMENT OF CHARGES ALLEGED THAT RESPONDENTS OFFERED AND SOLD APPROXIMATELY $965,000 WORTH OF PROMISSORY NOTE INVESTMENTS TO AT LEAST THIRTEEN WASHINGTON INVESTORS. THE STATEMENT OF CHARGES ALLEGED THAT RESPONDENTS VIOLATED THE REGISTRATION AND ANTI-FRAUD PROVISIONS OF THE SECURITIES ACT OF WASHINGTON. THE SECURITIES DIVISION GAVE NOTICE OF ITS INTENT TO ORDER RESPONDENTS TO CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT OF WASHINGTON, TO REVOKE EXEMPTIONS, TO IMPOSE A FINE, AND TO CHARGE INVESTIGATIVE COSTS. RESPONDENTS EACH HAVE THE RIGHT TO REQUEST A HEARING ON THE STATEMENT OF CHARGES.

Order

Cease and Desist

Civil and Administrative Penalty(ies)/Fine(s)

$50,000.00

Monetary Penalty other than Fines

$5,000.00

BREACH OF CONTRACT; COMMON LAW FRAUD; BREACH OF FIDUCIARY DUTY; NEGLIGENCE AND GROSS NEGLIGENCE; AND FAILURE TO SUPERVISE

$435,000.00

NASD

NASD RULES 2110, 2210(B)(1), 2210(D)(1)(A), 2210(D)(1)(B), 2210(D)(2)(C), 3040 - FRANCIS BART BERTHOLIC, JR. ENGAGED IN PRIVATE SECURITIES TRANSACTIONS WITHOUT PRIOR WRITTEN NOTICE TO, AND APPROVAL BY, HIS MEMBER FIRM; TOLD PUBLIC CUSTOMERS HE WOULD INVEST PROCEEDS OF A PROMISSORY NOTE IN REAL ESTATE OR TO MAINTAIN AND IMPROVE REAL PROPERTY BUT DEPOSITED THE FUNDS IN A BANK ACCOUNT IN HIS NAME AND WITHDREW FUNDS FOR PERSONAL EXPENSES, THEREBY MAKING IMPROPER USE OF CUSTOMER FUNDS. BERTHOLIC PUBLISHED ADVERTISEMENTS AND DISTRIBUTED A FLYER SOLICITING THE PURCHASE OF PROMISSORY NOTES SECURED BY REAL PROPERTY OR INVESTING IN REAL PROPERTY AS A SECURED LENDER BUT FAILED TO DISCLOSE THE NAME OF HIS MEMBER FIRM IN THE ADS AND FLYER AND THEY WERE NOT APPROVED BY A REGISTERED PRINCIPAL OF THE FIRM. BERTHOLIC USED A WEBSITE DESCRIBING THE OPPORTUNITY TO INVEST IN REAL ESTATE AS A SECURED LENDER BUT FAILED TO PROVIDE A BALANCED DISCUSSION ABOUT THE RISKS; STATEMENTS WERE FALSE, EXAGGERATED, UNWARRANTED AND/OR MISLEADING; TESTIMONIALS FROM PURPORTED CUSTOMERS WERE FALSE SINCE HE HAD NEVER CONDUCTED BUSINESS WITH THEM; AND THE WEBSITE FAILED TO DISCLOSE HIS MEMBER FIRM AND IT WAS NOT APPROVED BY A REGISTERED PRINCIPAL OF HIS FIRM. BERTHOLIC DISTRIBUTED A BROCHURE DESCRIBING THE OPPORTUNITY TO INVEST IN REAL PROPERTY AS A SECURED LENDER BUT IT DID NOT PROVIDE A BALANCED DISCUSSION; CONTAINED FALSE, EXAGGERATED, UNWARRANTED AND/OR MISLEADING STATEMENTS; AND FAILED TO DISCLOSE HIS MEMBER FIRM AND IT WAS NOT APPROVED BY A REGISTERED PRINCIPAL OF THE FIRM PRIOR TO USE.

Acceptance, Waiver & Consent(AWC)

Bar

WITHOUT ADMITTING OR DENYING THE FINDINGS, BERTHOLIC CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS; THEREFORE, HE IS BARRED FROM ASSOCIATION WITH ANY NASD MEMBER IN ANY CAPACITY.

WASHINGTON

FRANCIS BART BERTHOLIC, JR., FIRST LIBERTY FINANCIAL SERVICES, INC., BB & A PROPERTIES, LLC, BB & A PROPERTIES I, LLC, BB & A PROPERTIES V, LLC, BB & A PROPERTIES VII, LLC, AND BB & A PROPERTIES X, LLC - S-06-024-06-SC01 - STATEMENT OF CHARGES ON DECEMBER 27, 2006, THE SECURITIES DIVISION ENTERED A STATEMENT OF CHARGES AND NOTICE OF INTENT TO ORDER RESPONDENTS TO CEASE AND DESIST, PAY RESTITUTION, IMPOSE FINES, CHARGE COSTS, AND DENY FUTURE REGISTRATIONS AGAINST THE ABOVE-NAMED RESPONDENTS. THE STATEMENT OF CHARGES ALLEGES THE RESPONDENTS HAVE RAISED $883,000 FROM NINE INVESTORS BY OFFERING AND SELLING UNREGISTERED STOCK AND PROMISSORY NOTES. THE STOCK, ISSUED BY FIRST LIBERTY FINANCIAL SERVICES, WAS SOLD EXCLUSIVELY TO CLIENTS OF MR. BERTHOLIC'S INSURANCE AND BROKERAGE BUSINESS. THE PROMISSORY NOTES, ISSUED BY BOTH MR. BERTHOLIC AND BB & A PROPERTIES, WERE INITIALLY SOLD EXCLUSIVELY TO MR. BERTHOLIC'S INSURANCE AND BROKERAGE CLIENTS, BUT WERE LATER ADVERTISED IN THE SPOKANE SPOKESMAN-REVIEW AND ON THE INTERNET. THE RESPONDENTS, ALL OF SPOKANE, WERE CHARGED WITH MAKING MATERIAL MISREPRESENTATIONS AND OMISSIONS IN CONNECTION WITH THE OFFERS AND SALES, A VIOLATION OF THE ANTI-FRAUD PROVISION OF THE SECURITIES ACT OF WASHINGTON. THE SECURITIES DIVISION INTENDS TO ORDER RESTITUTION TO INVESTORS, IMPOSE FINES AND COSTS TOTALING MORE THAN $275,000, AND BAR ANY FUTURE SECURITIES REGISTRATION FILED BY MR. BERTHOLIC. ALL OF THE NAMED RESPONDENTS HAVE A RIGHT TO REQUEST A HEARING ON THE STATEMENT OF CHARGES.

Order

Cease and Desist

Civil and Administrative Penalty(ies)/Fine(s)

$50,000.00

Monetary Penalty other than Fines

$5,000.00

securities exemptions are revoked