STATE OF WASHINGTON
DEPARTMENT OF FINANCIAL INSTITUTIONS
IN THE MATTER OF DETERMINING
Whether there has been a violation of the
Business Opportunity Fraud Act by:
Joseph Zapata, d/b/a Redsolutions,
Order No.: S-17-2293-18-SCOI
STATEMENT OF CHARGES AND
NOTICE OF INTENT TO
ENTER ORDER TO CEASE AND DESIST
THE STATE OF WASHINGTON TO: Joseph Zapata
STATEMENT OF CHARGES
Please take notice that the Securities Administrator of the state of Washington has reason to believe
that the Respondent, Joseph Zapata, has violated the Business Opportunity Fraud Act, RCW 19.100, and
that his violations justify the entry of an order of the Securities Administrator under RCW 19.110.150 to
cease and desist from such violations. The Securities Administrator finds as follows:
TENTATIVE FINDINGS OF FACT
1. Joseph Zapata ("Zapata") is a California resident who is doing business using the name
"Redsolutions." Redsolutions' website lists its principal place of business as Irvine, California.
Redsolutions holds itself out as a commercial coffee route and equipment provider.
Nature of the Offering
2. Zapata used misleading Internet advertising claims to offer a business opportunity. On
October 23, 2017, Zapata posted a Craigslist advertisement on the Internet. The advertisement was targeted
to the Seattle and Tacoma, Washington area. The advertisement remained on the Internet during at least
October and November 2017.
3. In the Craigslist advertisement, Zapata made misleading earnings claims. The advertisement
included the headline: "Make [$]100,000 a year doing coffee routes!!!" The advertisement also repeatedly
included a claim that purchasers would "Make $1,500.00 a month on your first cycle! Make [$]6,000 a
month after 1 year!" Zapata failed to provide any reasonable basis for the business opportunity's projected
4. Zapata omitted material information about the business opportunity that was being offered.
The Craigslist advertisement stated that Redsolutions would pay for the business and the products and
equipment, but Zapata failed to disclose the projected costs of operating the business opportunity. The
Craigslist advertisement also referenced a $5,000 program fee, but stated that everyone would be approved
and in-house financing would be provided. However, Zapata failed to disclose the terms of any available
5. In the Craigslist adve1iisement, Zapata misrepresented that "Redsolutions operates in
EVERY city and EVERY state in the USA." Zapata also misrepresented that the business opportunity was
risk-free. The Craigslist advertisement stated that the opportunity had a money-back guarantee with "NO RISK!!!" In fact, the business opportunity had material risks, including the possible loss of the entire investment.
6. During the same time period of the Craigslist ads, Zapata adve1iised the business oppo1iunity
on a second Internet website with additional false or misleading claims. In October 2017, Zapata
misleadingly adve1tised that for a "small set up fee of $5000 you can jump right into the commercial coffee
services industry ... with a whopping 15 to 20 accounts and 'without spending a dime." The advertisement
failed to disclose the purchaser's costs of operating the business opportunity, including, but not limited to,
mileage, communications expenses, and business formation costs.
7. In the Internet advertisement, Zapata omitted other material information about the business
opportunity that was being offered. The advertisement indicated that insurance would be available to
purchasers, but it failed to disclose the source, the type, or the amount of any available insurance coverage.
8. In the Internet advertisement, Zapata included a misleading statement that a route license
could be sold for "huge" sums of money after it reached maturity. Zapata failed to provide a reasonable
basis for the projected increase in value or provide a timeline for the expected return.
Additional Undisclosed Material Information
9. When offering the Redsolutions business opportunity, Zapata failed to disclose other material
risks of the business opportunity, including, but not limited to, competition; the unknown operating history,
legal status, and financial condition of Redsolutions, the company offering the business opportunity; the
operating costs and expected revenues for the coffee delivery business being offered (including delivery and
service costs and the anticipated revenues for any specific routes); regulatory compliance risks; personal
liability risks; litigation risks; and the risks of inexperience with operating a coffee delivery business.
Failure to Respond to an Investigative Subpoena
10. In November 2017, the Securities Division served a subpoena on Zapata, which required the
production of records relating to the offer and sale of Redsolutions business opportunities to any
Washington investors. Zapata failed to respond to the subpoena.
11. Zapata and Redsolutions have never been registered to sell business oppo1iunities m
Based upon the above Tentative Findings of Fact, the following Conclusions of Law are made:
CONCLUSIONS OF LAW
1. The offer of the opportunity described above constitutes the offer of a business opportunity
as defined in RCW 19.110.020(1).
2. Respondent Joseph Zapata has violated RCW 19 .110 by offering and selling business
s opportunities without being registered with the Securities Administrator to do so.
3. Respondent Joseph Zapata has violated RCW 19.110.120 by making a untrue or misleading
statement of a material fact or to omitting to state a material fact in connection with the offer, sale, or lease
of a business opportunity in the state of Washington.
NOTICE OF INTENT TO ORDER THE RESPONDENT TO CEASE AND DESIST
Based upon the above Tentative Findings of Fact and Conclusions of Law, the Securities
Administrator intends to order that Respondent Joseph Zapata, and his agents and employees each shall
cease and desist from violations of RCW 19.110.050 and RCW 19.110.120.
AUTHORITY AND PROCEDURE
This Statement of Charges is entered pursuant to the provisions ofRCW19.110.150 and is subject to
the provisions of Chapter 34.05 RCW. The Respondent, Joseph Zapata, may make a written request for a
hearing as set forth in the NOTICE OF OPPORTUNITY TO DEFEND AND OPPORTUNITY FOR
HEARING accompanying this order. If the Respondent does not make a hearing request in the time
allowed, the Securities Administrator intends to adopt the above Tentative Findings of Fact and Conclusions
of Law as final and to enter a permanent order to cease and desist as to that Respondent.
Signed and Entered this 11th day of January, 2018
*Note: For some reason cutting and pasting from a PDF resulted in misspellings that did not exist in the pdf. I have corrected them.