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State alleges fraud by Kalispell businessman David Tacke of Venue Tech Systems, Binocs Manufacturing and Tekware Solutions

Three years ago, Kalispell businessman David Tacke was flying high, claiming he was ready to expand operations here and roll out a series of new, high-tech products.

By William L. Spence
The Daily Inter Lake

Today, Tacke and the companies he founded — Venue Tech Systems, Binocs Manufacturing and Tekware Solutions — are being investigated for allegedly defrauding hundreds of investors in 13 states.

Last week, state Auditor John Morrison’s office issued a cease-and-desist order for Tacke and the companies, demanding that they stop offering and selling unregistered securities.

The order highlights allegations of a variety of financial misconduct, including that Tacke failed to disclose the existence of a prior cease-and-desist order, that he failed to inform investors about the companies’ precarious financial position, that some investor money was used for speculative stock trading and to cover Tacke’s personal expenses, and that the companies regularly wrote bad checks.

It also alleges that numerous lawsuits facing Tacke were never disclosed — including three in Canada; seven in Seattle and King County, Wash.; five in Lake County; three in Flathead County; one in Illinois; one in Colorado; and one in Pennsylvania, together with nine state and federal tax liens and nine other liens.

Tacke did not return several telephone calls seeking comment. His attorneys in Helena and Las Vegas also did not return calls.

During an interview in March 2000, Tacke said Venue Tech and its Binocs and Tekware subsidiaries were ready to hire hundreds of employees and invest more than $250 million in equipment, space and marketing for a new wireless point-of-sale system.

The system was supposed to help customers monitor sales activity worldwide, allowing them to track in real time what items were being sold where, and in some cases who they were being sold to and what had been the buyer’s past purchasing preferences.

The technology opened up "a potential $100 billion market," Tacke said at the time. He also billed Venue Tech’s product as the first operational system of its kind.

"In our realm, we are the first to climb Mount Everest," he said. "We don’t necessarily have a need for capital. We have a lot of individuals trying to keep us private, and have enough private funds available to more than cover our financing needs."

However, the cease-and-desist order indicates that the companies began to experience financial difficulties less than two years later.

Starting in June 2001, Venue Tech allegedly withheld health-insurance premiums — and in some cases child-support payments — from payroll checks, but failed to forward the money to the proper agencies.

In October that year, Blue Cross/Blue Shield of Montana notified employees that their health insurance had been canceled, retroactive to June 15, for nonpayment of premiums.

Payroll checks also started to bounce, according to investigators, and the company regularly paid for goods and services by check, and then stopped payment on the checks.

Furthermore, the cease-and-desist order noted that previous companies owned and operated by Tacke "operated similarly in the practice of check kiting and obtaining goods and services and failing to pay for them."

The state received several complaints regarding Tacke in October 2001. Based on those complaints, a warrant was obtained and Venue Tech’s business offices here were searched in December.

"Records seized during execution of the search warrant … disclosed the identities of more than 200 investors in 13 states, and that (Tacke) solicited approximately $6 million for investment in unregistered securities through unlicensed broker-dealers," the order stated.

The records also disclosed that Tacke and other company officers allegedly offered and sold promissory notes worth more than $1 million.

Betsy Griffing, chief legal counsel for the state auditor’s office, said any firm wishing to offer or sell securities in Montana must do two things.

"First, they have to register the securities. That gives us an opportunity to review the note, its terms, and what type of disclosure is being made," Griffing said.

"What we’re mostly concerned about is the financial condition of the company. If the company is in severe financial straits and that isn’t fully disclosed, people can end up making bad decisions."

The people who sell securities also have to be licensed and registered, Griffing said. They have to pass tests to ensure that they’re knowledgeable and competent.

Tacke, a Great Falls native, is not licensed with the state, and none of the securities offered by Venue Tech were registered.

In fact, a previous cease-and-desist order issued in 1985 expressly forbid Tacke from offering securities for sale in Montana.

As with the current order, the 1985 order alleged that Tacke offered and/or sold unregistered securities, and that he failed to disclose pertinent information to investors.

Griffing said that the state issues about a dozen cease-and-desist orders each year.

In this case, Tacke will have 15 days to request a hearing regarding the allegations being made.

If the state is successful in demonstrating fraud, the hearing examiner could require that restitution be made to investors.

A cease-and-desist order does not involve jail time, Griffing said. However, it’s possible that other agencies will pursue criminal charges against Tacke.

Reporter Bill Spence may be reached at 758-4459 or by e-mail at [email protected]

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