Cease-desist order sought against City Lips

The Utah Division of Securities is seeking a cease-and-desist order against City Lips Cosmetics LLC and others for alleged violations of the Utah Securities Act.

The others are City Lips Marketing LLC, Jory C. Allen, Chad D. Wright and Frank J. Gillen.

The division said they have offered unlicensed securities to three victims who invested a total of $454,000 but have received only a small interest payment on their principal. Two had to sell their home as a result of losing money to City Lips, the division said.

The division said the victims were told their money would be used to grow the business, launch new products, increase inventory and take City Lips LLC public. The company representatives told the investors City Lips was a "good company" and that it was "financially secure" when they had no documents to back these claims, it said.

Further, the division claims that Gillen failed to tell investors he was investigated by the Securities Exchange Commission in 1997, and by the NASD in 1999 and 2000, resulting in a $25,000 fine for selling unregistered securities. Gillen's securities license was revoked after he failed to pay the NASD fine.

The division seeks to keep them from "further solicitation of investors or conduct" violating the act, plus a payment of $1.7 million to the division.