Two insurance agents from Virginia and the 12 companies they operate were barred by the Virginia State Corporation Commission from selling securities until February 2010.

In an SCC order dated Oct. 20, Julius Everett Johnson and Walter Ray Reinhardt and their companies received a temporary injunction, barring sales for 120 days following a recommendation by the state’s securities division. Among the companies named in the order are Benefit Contract Administrators, First Fidelity Financial of Richmond and Livingwell Healthcare of Virginia, all based in Virginia, and Capital Investor Group, which Reinhardt is the principal, based in North Carolina.

The two and their companies face accusations of violating and continuing to violate the Virginia Securities Act.

In an affidavit, Tom Bayly, senior investigator for the securities division, said securities officials received an inquiry from North Carolina’s securities unit about four of Johnson and Reinhardt’s companies, which issued promissory notes to residents there. Johnson provided a North Carolina investigator with a list of state investors in private offerings indicating that the companies issued more than $2.9 million in notes to 52 North Carolina investors.

The investigator found that most of the investors never received a private offering memorandum or in some cases, an incomplete copy, and several investors were instructed by Reinhardt to invest through self-directed retirement accounts at Fiserv Investment Support Services. The Virginia review of the record indicated additional North Carolina and other investors in 10 of Johnson’s companies, not four, with account balances of more than $5 million, thus broadening the scope of the investigation.

During the North Carolina inquiry, Virginia securities personnel received a complaint from a state resident, who said she was led to believe by Johnson that she was purchasing an FDIC-insured bank CD. In fact, Reinhardt had her sign a subscription agreement for the purchase of an unsecured promissory note of Benefit Contract Administrators, records show.

The woman asked for and received her money back, according to Bayly’s affidavit.

Investigators found evidence that offers for the CDs the woman saw in a local newspaper were later advertised under a new company, Commonwealth Assurity, with Reinhardt listed as its principal, records show.

Reinhardt is the subject of two cease and desist orders in North Carolina in 1999 and 2007, in which he was charged with selling unregistered non-exempt securities, records show. He is not registered in North Carolina or Virginia as a broker-dealer representative or as an agent of any issuer, Bayly said.

Johnson told Bayly that only he and Reinhardt acted as selling agents for all of the private offering and the memorandums state the securities are offered without being registered due to an exemption under federal securities statutes. Research by Bayly indicates no federal or Virginia filings pursuant to the exemption mentioned by Johnson and Reinhardt.

In a September interview, Bayly asked Johnson to provide claims of other exemptions, as well as private placement memorandums, annual financial statements and other information.

Reinhardt told the Richmond Times-Dispatch that the 120-day injunction will give SCC officials time to review that information, as well as their compliance with what he described as extensive and complex regulations governing securities sales.

“It’s just meant to give the commission time for a review; if they thought people were at imminent risk, they’d issue a cease and desist order,” Reinhardt told the paper.