Hanbleceya and its leaders fined for investment law violations

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by Jack Mayne

Two people involved in Hanbleceya, the now defunct Normandy Park mental health treatment and housing program, and the ownership corporation have been fined assessed costs totaling $18,500 by the State Department of Financial Institutions for violating state securities sales laws.

The fines were included in a consent order issued by the state on July 2.

Kerry Paulson

The department said Kerry Paulson, managing partner of Hanbleceya, headquartered in the San Diego suburb of La Mesa, Calif., was fined $3,500 an a $2,500 investigative charge. The department also fined Seattle area resident and volunteer Elizabeth Browning $2,500 and a $2,500 investigative charge.

The state also fined Hanbleceya and its umbrella corporation, Seattle Business Associates, $5,000 and a $2,500 investigative charge.

What the state probe found
The state Financial Institutions investigation found the that Paulson and Browning offered and sold limited liability corporation units that violated the law. The two, and the Hanbleceya corporate entity violated “the securities registration section of the Securities Act of Washington, because no registration for such an offer and/or sale is on file with the Securities Administrator, state of Washington.”

The agency said Paulson and Browning violated the law “by offering or selling said securities while not registered as a securities salesperson or broker-dealer.”

Browning, the consent order said, “became involved with the Hanbleceya Investment through her work as an advocate for mental health. Her not-for-profit organization, Browning Communities, is dedicated to providing therapeutic living facilities for the chronically mentally ill.

“Browning was impressed with Hanbleceya San Diego,” the state said, “so in mid-2009, Browning contacted Paulson inquiring whether Paulson would consider opening a Hanbleceya facility in the Seattle area. Paulson told Browning that if she was able to secure the funding, he would consider it. In 2009, Paulson estimated that $1.2 million needed to be raised to cover start-up costs for Hanbleceya Seattle. Browning took charge of raising the funds. Paulson took charge of handling all of the business details.”

They raised a total of $835,000, the state says.

The Financial Institutions agency order said that around Aug. 31, 2011, Paulson distributed the final Business Plan to investors, which offered cash investors “50 percent ownership in (the umbrella corporation) for $1.2 million. A minimum investment of $100,000 would yield a 4.2 percent ownership interest…”

The investment would be “partially secured by an ownership interest in a minimum of three four-bedroom single family houses in the Seattle area which, the business plan explained, would reduce investor risk of loss.”

Paulson: lawyers ‘didn’t warn us’
“We hired a law firm to represent us in the process of setting up the business (in Normandy Park), writing the operating agreements and just making sure the work complied with all of the laws,” Paulson said in a telephone interview Friday (Aug. 9). “This … violation is the result of just, frankly, not knowing the law. In retrospect that was really our job to know the law. That is why we hire attorneys.

“What the state is essentially saying, is that if you are going to raise money with a small number of qualified investors,” you have to know the law.

He added that all of the investors were “friends or family of the Browning’s.”

Browning said accepting the state’s consent order “without admitting or denying any violation” was “to close this matter in the most timely way.”

“The charges imply a failure to know the law, but the charges do not imply any kind of intentional misconduct,” Browning said in an email statement and a follow up telephone interview.

Elizabeth Browning

‘Deeply regrets choosing Normandy Park’
Browning was instrumental in getting Hanbleceya to come to the Seattle area, but also in choosing Normandy Park for its location.

“I deeply regret being instrumental in choosing the Normandy Park neighborhood for Washington state’s first private therapeutic community for the mentally ill,” she said. “I never anticipated such determined neighborhood resistance could create the maelstrom that would cause us to close our doors. Naively, I believed we would be welcomed, supported and a contributing member of the community.

“Furthermore I sincerely hope that those Normandy Park residents who fought our presence will rest easy now that we are gone and they can return to the ‘pre-Hanbleceya’ days of peace and harmony with their neighbors.

“In conclusion I am mostly happy that our staff (and clients) have returned to doing what they do best: working together for independence and productivity at the Hanbleceya San Diego location as it enters its 35th year.”

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19 Responses to “Hanbleceya and its leaders fined for investment law violations”
  1. Jill K says:

    The aspirations of Bigots can do real damage to the intentions of good human beings. It’s unfortunate we can’t read a story on how the ignorance and hatred of a community group (NPC) toward the mentally ill can have real negative, lasting effects.

    • Cassie Southerhorn says:

      State judged against Hanbleceya, Hanbleceya was operating without license, and breaking state law.

      What more do you need? Patient testimonies? Oh wait, Seattle Times published those.

      • clandest98 says:

        There you go again Cassie whateveryournameis. You NPC bigots have no desire to actually tell the truth. The state determined they in fact were not operating illegally, remember – that they didn’t need a license. Oh, you probably forgot !!!

        • clandest98 says:

          Brenda—there are more culprit than the ones you named. All in all, the Normandy Park community has been damaged by their (NPC’s) short sided, ignorant behavior. They lie when telling the truth would be just as easy. Their problem is that telling the truth would expose them to the scrutiny of the rest of the community, who would forever more question their integrity or lack thereof!

  2. Cassie Southerhorn says:

    “In retrospect that was really our job to know the law. That is why we hire attorneys.” – Paulson, yet those sentences make no sense. Talking in circles again.

    Yet it was Paulson who presented the plan, to investors, edited the plan, etc, but it was the attorney’s fault. Of course it is.

    And to Liz Browning, You regret choosing Normandy Park? How about you regret getting in bed with Hanbleceya that has lied to everyone investor and neighbor alike since they came into Washington?

    This didn’t have to do with Normandy Park, Liz, this had to do with a crooked business that didn’t want to follow the laws either for patient care or financial laws. Stop drinking the cool aid, Liz and reevaluate what has transpired, and the testimonies, and depositions surrounding Hanbleceya here in Washington.

    It wouldn’t matter if it was Normandy Park, Yelm, Deer Park, Spokane, Seattle, Medina, or Kirkland. Breaking the law is breaking the law.

    Liz, you got into the situation without evaluating who or what Hanbleceya is.
    I wrote to you over a year ago, personally, about issues I had myself uncovered with Hanbleceya, and Paulson, so don’t act surprised or that it was the neighborhood’s fault, Hanbeceya failed. They failed because of dishonesty, breaking the law and inhumane treatment of their clientele. Perhaps next time a email comes advising you of caution in getting into bed with a company or situation you will take the time to review it, and hopefully learn from this disaster you wrought on your self.


  3. Kathleen Waters says:

    Normandy Park Cares, NPC, is a grassroots organization that grew up as a result of a group of people seeing the need to have Hanbleceya regulated to assure the welfare of its clients and the sustenance of our neighborhoods as residential areas. Regulation was never achieved but withdrawal is an outcome that restores the community to its original character. As for the patients that were moved out it isn’t true, as Browning states, that they all moved to the LaMesa operation to live happily ever after. Mental health patients in America are in peril as anyone who can read or watch on TV can aver. One thing NPC learned this past year is that there is a big gap in the role and regulations around residential treatment between the Dept of Health and the Dept of Social and Health Services in our state. Further, for-profit companies do not have to meet the same (higher) standards as non-profits. This is an ongoing tussle in discussions about regulation in the mental health arena here. It needs to be resolved so that the for-profits toe the same line as non-profits. Its my hope that those of us who worked to bring about humane treatment for the Hanbleceya clients and their patients will continue to work on development of better state regulations so that what happened this past year will not happen again. Thanks to the many loyal and generous supporters who worked with NPC.

  4. Aimee Potter says:

    @ Kathleen Waters : sorry, you are wrong. Thiś was a pure case of “not in my backyard”. Very sad for the mental health community in Washingron State. I personally know that Hanbeleceya is a well-run institution and it is a tragedy that the mental-health community in my state will not have acces to their high-quality care. Thanks to you and your “regulations”. Oh yeah, let’s get the “state” involved, they really always do things better right ? Just take a look at the “care” they provide to mentally ill people today (like none).

    • Kathleen Waters says:

      Aimee Potter: Judgmental about you isn’t my aspect in writing about the for-profit Hanbleceya company and their sneaky, deceptive and outrageous intrusion into a small residential community. So, I respect your right to your opinion and will not flatly accuse you of being wrong as you are comfortable doing with me. I do know that no part of the professional mental health community including NAMI came to their defense when they were caught out skirting the regulations and breaking the law. So, on the other side of the coin it can be pretty easily assumed that those who need mental health services were given a gift when Paulson pulled up stakes here because he couldn’t guarantee the 18% – 20% return on their investment to the investors he and Browning lured into investing. Read the statement from the Dept of Financial Institutions and get informed. Or do some homework on some search engines to get an idea of what patients and their families have experienced. If you have some good suggestions to replace regulations get out there and put them in place. If not, work with the agencies our tax dollars go to so that the regs can be improved and better enforced.

      • Aimee Potter says:

        @ Kathleen Walker : I happen to be informed. My nephew is in Hanblecaya CA. Nuff said. And they were not “sneaking” around in Seattle. It was all very above-board.

      • ljsecurity says:

        Kathleen, There are those in this community that think you are not only a bigot but also a real jerk. It’s too bad you have nothing better to do with your life. DISGRACEFUL would be a good word to describe how I and others in this community feel about you. Any chance you would be moving soon?

    • clandest98 says:

      Very good point Aimee. My niece is suffering from bipolar disorder and would be a good candidate for this program. I’m sorry they have gone. From the look of things Normandy Park is a community that probably doesn’t want mentally ill people in the neighborhood, or black people, or Mexican’s, or autistic people, or…….fill in the blank. NIMBYism, plain and simple. Probably nothing better for them to do anyway.

      • Aimee Potter says:

        Hi Clandest and John C.
        Hanbleceya did EVERYTHING to integrate into that neighborhood. Open Houses, invited the community to come. They were absolutely shocked with the negative response they got from some people. And I must say some, because other residents were very welcoming. But Ms Walker and her “grass-roots” organization created such an environment of hostility that they didn’t feel they could stay. (As you said John, the fine was for a minor violation, a technicality if you like). From my understanding, Ms Walker lives across the street from one of the houses. As we say in French (I live in France) “Ceci explique cela” (that explains that). It is a very sad thing for the mentally-ill community in Seattle. And I must say every time I come back to Seattle I see more and more people on the streets that are obviously extremely mentally ill. Thanks Ms Walker, a real help to society!

        • Normandy Parker says:

          Hah Hah Haaa – Aimee, that’s hilarious! Now we have people slamming Normandy Park from France! It’s kinda ironic – France attacking Normandy… Anyhow, Aimee’s credentials – she has a relative in treatment in San Diego and she lives across the Atlantic- allow her to speak to our experience in Normandy Park. Aimee apparently doesn’t know that Hanbleceya Seattle wasn’t actually in Seattle – I doubt she could locate Normandy Park on a map.

          She obviously doesn’t know that ongoing “Bigots of Normandy Park” campaign on Facebook and the Web was conducted by Kerry Paulson himself under his aliases – Ashley Zander, Bill Landon, Jenny Lan, Jenny Thomas, Susan Thompson, etc.) and aimed at anyone who questioned his tactics.

          “Bigots” and “NIMBY” are easy words to throw – from a distance. Normandy Park citizens are reasonable, well-informed people. There have always been folks here caring for loved ones suffering from mental illness, as in most communities, so the NIMBY taunts are baseless. Reasonable communities anywhere will seek oversight and regulation of the treatment of mental illness in their midst. Are they all bigots? Please, counsel us Aimee!

          • Alan W says:

            Bigots and NIMBY are exactly the right words to describe those in NPC and especially you Ms. Waters, not the rest of the people in our nice community. Why you continue to blame mr Paulson or anyone else for that matter is a testament to the myopic views of your organization. Bottom line: You hate mentally ill people; You don’t trust mentally ill people; You are afraid of mentally ill people; And you will do anything you can to remove them from your community. You are a disgraceful group of people.

            • juliedum says:

              Thanks Alan. Agree with you that these NPC people (Waters, Bishoff, etc) are pathetic bigots. We need to get together as a community and figure out how to contain their 1960’s behavior. Hard to believe they are still disseminating their discriminatory views. My bet is that they will pay a big price in the community.

              • Burien Fan says:

                Paulson and his operatives continue to stalk this blog and this comment thread to harass and smear anyone who would question his operation, or his motives. Let’s be clear about this. Whatever help his operation provided for the mentally ill, it is undisputable IN ADDITION that he ran a profit-making organization, and that he operated outside of the applicable laws in this state.

                Paulson’s adherents can continue their invective as long as they care to. Bottom line, though, is that he has been exposed and busted, and he is gone from Normandy Park. Comments should be closed from here on in.

  5. Ryan says:


    Obviously per the fines and the closing, I would say not all was above board…

    • John C says:

      Ryan, its pretty clear they made a mistake. If I were them, I’d be considering a lawsuit against their counsel but I know you’d prefer to make more of it. I work in the investment world and know full well If there was egregious behavior the fines would have been infinitely higher. $5000 is an amount that likely covers the cost of the investigation. And if you read the consent order, it’s clear DFI had nothing other than a minor violation that would have been avoided by filing a basic one page Reg D form for less than $1000. Sorry to burst your bubble.

  6. biglenny says:

    How can we be such a cruel community? Mental illness is a huge societal problem and this group was trying to play a meaningful role in helping a population that needs it. I’ve followed this story for most of this year and quite frankly am disgusted with the people in NPC who hide their bigoted views by trying to deceive the public. Mostly lies, mistruths and misinformation. If I were an NPC supporter, I’d install eyes in the back of my head.

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