Most recently, Jeremy Stamper was the founder and CEO of Federal Savings LLC, a controversial Seattle-based finance company that took on the large commercial banks with higher interest rates than bank-offered CDs. Despite tortious interference from more than one commercial bank, Federal Savings sucessfully repaid $4.7 million to investors in October, including agreed upon interest. Previously, Stamper was Founder and CEO of Progressive Homesellers, a Seattle company that connects home sellers nationwide with prescreened agents at brokerages like Coldwell Banker and Prudential who take listings for a flat $3995 instead of the traditional 3% listing commission. Stamper founded Progressive Homesellers in 2005 with a vision of low cost, flat-fee real estate transactions as the future of the industry. Previously, Stamper was founder and CEO of The Delaware Company where he built the company into one of the country’s largest and most successful online incorporation services. Led the company to a successful acquisition by Wolters Kluwer (NL:WKL), a global multibillion-dollar revenue professional products and services corporation. Currently, Stamper is working on a startup in the information commerce industry.

Text of recent statement:

A claim has been asserted that I sold securities without first registering them pursuant to the law. Federal Savings LLC offered short-term notes over the Internet. As the company’s CEO, I believed in good faith, based upon advice of competent securities counsel, that the Notes were exempt from registration. Nobody willfully attempted to evade any law or regulation. Full refunds were provided to anyone who requested them until FSLLC’s bank accounts were abruptly frozen. When told by the State of Washington to “cease and desist” selling the Notes, all such activities worldwide were immediately stopped pending resolution of any regulatory concerns. Without access to the funds or any ability to earn a return on them, I nevertheless made arrangements to pay the Notes in accordance with their terms. My personal funds were put into escrow to ensure such payments were fully available to the Note purchasers. I have been bankrupted and have paid a high personal price for my efforts to raise capital with the Notes. The civil remedies that might be available to purchasers of the Notes are not required because they have already been voluntarily provided.

In January 2007, I began to explore raising investment capital using the Internet. I had no previous experience raising capital. I retained one of the most respected law firms in the Northwest. The firm has an extensive securities law practice. One of the securities attorneys suggested that capital be raised by means of nine-month-or-less promissory notes. I was advised that the nine-month-or-less notes would be “federal covered securities,” and as such would not require registration at either the federal or state level. This was an attractive approach for a company that intended to raise funds primarily over the Internet and was looking for a simple and clean way to do so.

I agreed to structure our capital-raising efforts around the short-term notes recommended by the firm. The firm drafted the short-term promissory Note to be displayed on FSLLC’s website and provided to purchasers. The firm billed and was paid approximately $17,000 for the work.

FDIC Insurance. At no point did FSLLC, either on its website or in any communication with Note purchasers, indicate that Notes were insured by the FDIC or any other federal agency. To the contrary, despite no legal requirement to do so, FSLLC prominently disclaimed any association with the FDIC on its homepage. In addition, the site contained an entire page dedicated to explaining FSLLC’s lack of FDIC insurance and the related implications.

No Fraud. FSLLC never lied about anything, whether it was our ownership structure, licensing status, company history or investment strategy. On the contrary, we went out of our way to correct any note purchasers who were confused about the nature of the company or the Notes.

Elderly People. FSLLC in no way targeted elderly people or promulgated any materials, advertising or information that might be construed as being of special interest to elderly people, or that might get the attention of elderly people as opposed to the general population. Use of the Internet would not seem to be the most likely means of attempting to communicate with the elderly.

Broker/Dealer. The only Notes sold were those of FSLCC itself, the issuer of the Notes. No broker/dealer statutes or regulations were violated by the sale of the Notes. I was the CEO of FSLLC. I never earned any commission, bonus or incentive pay of any kind related to FSLLC’s sale of the Notes.

Refunds. FSLCC promptly provided full refunds to any customers who requested them. There was no time limit within which such refunds needed to be requested. There were no conditions on the refunds. It did not matter that the Notes had a six-month maturity date and FSLLC had no obligation to make refunds. If any note purchaser had requested a refund at any time prior to the sudden freezing of FSLLC’s bank accounts, such refund would have been made immediately.

Cease and Desist. In March, 2007 the State of Washington ordered FSLLC to cease and desist its capital-raising activities. FSLLC did so immediately. The website was disabled and FSLLC stopped accepting funds, pending resolution of all issues with the Washington DFI.

Frozen Accounts. Close to the time that FSLLC ceased its efforts to raise additional funds, all of its bank accounts were frozen, including a Bank of America account in Nevada with a balance of approximately $1.6 million. The freezing of the bank accounts made it impossible to continue making refunds, and also made it impossible for FSLCC to use the proceeds from the Notes to earn a return to pay back the purchasers.

Payment of Notes in Accordance with their Terms. Despite having no access to the proceeds from the Notes, and with my company destroyed, it was nevertheless my first and continuing concern to repay all of the Notes as they became due, in accordance with their original terms, including agreed-upon interest. With no access to simple bank records, hundreds of thousands of dollars were spent to have: (i) an independent forensic accountant reconstruct bank records and track refunds; and (ii) a law firm structure a payback plan.

With a reasonable accounting completed on approximately August 10, 2007, I immediately deposited $500,000 of personal funds to an escrow account at a law office in Seattle so that full payment of the Notes could be made. Together with amounts being held from frozen bank accounts, sufficient funds were available to repay the funds of all Note-purchasers. I later added another $98,000 to the escrow account to ensure that all interest payments were fully covered.

Issues

Exemption from Registration. The plain language of Section 3(a)(3) of the Securities Act of 1933 exempts from federal registration a “note…which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace…” Section 18 of the Act makes it clear that such notes are “covered securities” and thus exempted them from the registration requirements of any State.

In Ernst & Young vs. SEC, the US Supreme Court specifically declined to address the issue of whether any unwritten conditions should added to the plain language of the statute regarding short-term exempt notes. The plain language of the Securities Act of 1933 has subsequently been spread through Model Acts and numerous state statutes with no indication that it means anything other than what it says.

None of the securities attorneys retained by FSLLC, including the attorney who drafted the Note and reviewed the website, expressed awareness of any limitation on the status of the Notes as federal covered securities exempt from state registration requirements.

Nothing is available to a layperson that would contradict the firm’s assessment of short-term notes or the plain language of the Securities Act of 1933, or even raise a red flag with respect to such notes. Nothing accessible through the SEC, Washington State or Nevada websites would give any indication that there was a different interpretation regarding short-term notes than the one provided to FSLCC by its legal counsel.

The only thing I did not do is get a second or third legal opinion. There was no reason for me to imagine I might need one. It is unreasonable to expect a lay person to independently come to a more conclusive answer than his legal counsel. Under the circumstances, it is impossible to conclude that I willfully failed to comply with registration requirements.

If there is a violation it is technical in nature and not done willfully. I did not purposely set out to violate any statute or regulation. I did not intentionally violate a known legal duty. Before engaging in the sale of six-month Notes over the Internet, I made a bona fide, diligent effort to ascertain and abide by the law, and acted in good faith and in reliance upon the results of such effort. I believed FSLLC to be exempt by the law from registering the Notes. I was open and conspicuous in my conduct of FSLLC. I did not attempt to obscure my association with FSLLC. To the contrary, I openly listed myself as an officer and director of the company and personally signed the Notes on behalf of FSLCC.

Recent letter to investors:

Dear Federal Savings investors,

I want to personally apologize for the delay, confusion and inconvenience surrounding the repayment of your Federal Savings™ fixed rate promissory note. I’m sorry if you have spent even one moment worrying that your investment might not be repaid. You deserve a personal explanation. Whatever the causes of the current situation, Federal Savings has now honored its commitment and has done so voluntarily.

In February 2007, Bank of America unexpectedly froze the Federal Savings’ bank account used for investor reimbursements. They gave no warning, no explanation and wouldn’t return our phone calls. I was eventually able to get through to someone in their corporate security department. They said they had reviewed our website and were concerned that investors might not be repaid. I told Bank of America the obvious: they were in danger of creating a self-fulfilling prophecy: without giving us access to the funds, how could we possibly repay investors?

Like many issuers, we had periodic requests for the early return of principal. However, Bank of America had frozen the only account we could use for reimbursements and refused to allow us to send money back to investors. In one case, I asked them to allow a refund check to go through to a particular investor. I left repeated messages but didn’t hear back from them. With over $1.6 million in the Federal Savings account, Bank of America let the check bounce.

After Bank of America froze our account, I was advised by a financial consultant to declare Federal Savings bankrupt and allow a government appointed receiver to distribute refunds to investors at pennies on the dollar. Although probably a smart financial strategy, I never considered it. Instead, I have personally spent over $200,000 in fees to hire a team of lawyers and a former IRS Special Agent to structure a payback plan. In addition, I have contributed almost $600,000 of my own money in supplemental funds to ensure that everyone is repaid with interest. Although I am now personally bankrupt, I have the satisfaction of knowing that every single investor will be repaid.

In retrospect, it’s apparent that I should have better understood the risks, including the fact that banks in the United States currently have broad powers to seize deposited funds with absolutely no notification or due process. Please accept my apologies for any wasted time, inconvenience or stress this situation has caused you.

Sincerely,

Jeremy M. Stamper

All Others