HENRY COUNTY— The Indiana Secretary of State’s Securities Commissioner has issued a cease and desist order to the CEO of Jack’s Donuts, aimed at preventing him from offering and selling securities to investors.
Financial securities typically refer to an investment such as a stock, bond or note.
“A financial security is an instrument that provides investors claims on future cash flows,” Steven Sibley, an associate chair of finance graduate programs at the IU Kelley School of Business.
The cease and desist order, effective May 5, alleges Lee Marcum and three of his businesses violated the Indiana Uniform Securities Act (IUSA).
It outlines two alleged violations:
- Count 1: In June 2024, Marcum and his businesses unlawfully offered an unregistered security to Investor MD
- Count 1: In September 2024, Marcum and his businesses unlawfully offered and sold an unregistered security to Investor AB.
The law requires securities to be registered with the Indiana Secretary of State unless they qualify for an exemption.
“Registration of securities in Indiana is necessary for the protection of Indiana investors,” according to the Indiana Secretary of State’s website.
“Proper registration of securities offerings allows investors to have access to any and all information necessary to make informed investment decisions. The registration of securities offerings is also necessary to prevent deceit, misrepresentations, and other fraud in the sale of securities.”
In March, WRTV Investigates told you about civil lawsuits and judgments against Marcum and businesses connected to him.
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The Secretary of State’s cease and desist order, which is posted in the state’s administrative action portal, is the first public document indicating the government is investigating Marcum’s business practices.
“An investigation is ongoing,” said Lindsey Eaton, Communications Director at the Indiana Secretary of State, in an email to WRTV.
The document orders Marcum and his businesses to immediately cease and desist from engaging in any act that violates the Indiana Uniform Securities Act and the Commissioner’s Administrative Orders, including the further offer or sale of securities in Indiana either directly or indirectly, through intermediaries, broker-dealers, third parties, or other persons.
“This is a very substantial development,” said Steven Sibley, an associate chair of finance graduate programs at the IU Kelley School of Business. “It would be very uncommon for companies to even try to issue unregistered securities.”
The cease and desist order names Marcum, Jack’s Donuts of Indiana Commissary LLC, Marcum Industries LLC and KCL Group Inc.
“This order is largely about protecting the public,” said Sibley. “Any member of the public is a potential investor, so it’s about protecting investors first and foremost and anybody who could buy or be sold financial securities.”
The cease and desist says the order “is in the public interest and is necessary for the protection of Indiana investors.”
WRTV Investigates contacted Marcum for a response to the cease and desist order.
“As we address this matter internally, our priority remains ensuring the continued smooth operation of our company and cooperation with the Secretary of State,” Marcum said in an emailed response on June 3.
Several franchise owners told WRTV Investigates they’re concerned about the financial future of Jack’s Donuts.
According to the cease and desist order, Marcum can request a hearing with the Indiana Secretary of State.
June 19 is the deadline to file a request for a hearing, according to the Secretary of State’s office.
Marcum has declined WRTV Investigates’ repeated requests for an interview.
“Furthermore, the stress and disruption caused by this news investigation, led by Kara Kenney, have placed an undue burden on our franchisees, employees, their families, and our investors—at a time when stability is critical to our organization,” said Marcum in an emailed statement on June 3. “We want to be clear: our leadership team is fully engaged in managing our company. Engaging with the media on this matter is not something we are prioritizing at this time, nor is it a distraction we can afford. We will not be providing any comment on internal matters.”
WRTV’s offer to interview Marcum still stands.
FULL STATEMENT FROM JACK’S DONUTS CEO LEE MARCUM
“As we address this matter internally, our priority remains ensuring the continued smooth operation of our company and cooperation with the Secretary of State. Furthermore, the stress and disruption caused by this news investigation, led by Kara Kenney, have placed an undue burden on our franchisees, employees, their families, and our investors—at a time when stability is critical to our organization. We want to be clear: our leadership team is fully engaged in managing our company. Engaging with the media on this matter is not something we are prioritizing at this time, nor is it a distraction we can afford. We will not be providing any comment on internal matters.”
