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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
13G
Under
the Securities Exchange Act of 1934
(Amendment
No. )*
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Converted
Organics Inc.
(Name
of
Issuer)
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Common
Stock
(Title
of Class of
Securities)
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21254S107
(CUSIP
Number)
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December
14, 2007
(Date
of Event which Requires Filing of this
Statement)
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Check
the appropriate box to designate the rule pursuant to which this
Schedule
is filed:
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[
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X
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]
Rule 13d-1(b)
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[
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X
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]
Rule 13d-1(c)
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[ ] |
Rule 13d-1(d)
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*
The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject
class of
securities, and for any subsequent amendment containing information
which
would alter the disclosures provided in a prior cover
page.
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The
information required on the remainder of this cover page shall
not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities
of
that section of the Act but shall be subject to all other provisions
of
the Act (however, see the Notes).
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SCHEDULE
13G
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CUSIP
No. 21254S107
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1.
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Names
of Reporting Persons.
Chester
L.F. and Jacqueline M. Paulson as Joint Tenants
I.R.S.
Identification Nos. of above persons (entities only).
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2.
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Check
the Appropriate Box if a Member of a Group (See Instructions)
(a)
[ ] (b) [ X ]
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3.
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SEC
USE ONLY
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4.
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Citizenship
or Place of Organization
United
States of America
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Number
of
Shares
Beneficially
Owned
by
Each
Reporting
Person
With:
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5.
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Sole
Voting Power
120,000
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6.
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Shared
Voting Power
486,000
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7.
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Sole
Dispositive Power
120,000
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8.
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Shared
Dispositive Power
486,000
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9.
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Aggregate
Amount Beneficially Owned by Each Reporting Person
606,000
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10.
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Check
if the Aggregate Amount in Row (9) Excludes Certain Shares (See
Instructions) [ ]
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11.
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Percent
of Class Represented by Amount in Row (9)
13.0759
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12.
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Type
of Reporting Person
IN
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Chester
L.F. and Jacqueline M. Paulson (together the "Paulsons") may
be deemd to
control paulson Capital Corp. ("PLCC"), which wholly owns Paulson
Investment Company, Inc. ("PICI"). The Paulsons control and are
the
managing partners of the Paulson Family LLC ("LLC") which is
a controlling
shareholder of PLCC, which is the parent company for
PICI.
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SCHEDULE
13G
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CUSIP
No. 21254S107
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1.
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Names
of Reporting Persons.
Paulson
Capital Corp.
I.R.S.
Identification Nos. of above persons (entities only).
93-0589534
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2.
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Check
the Appropriate Box if a Member of a Group (See Instructions)
(a)
[ ] (b) [ X ]
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3.
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SEC
USE ONLY
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4.
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Citizenship
or Place of Organization
United
States of America
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Number
of
Shares
Beneficially
Owned
by
Each
Reporting
Person
With:
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5.
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Sole
Voting Power
0
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6.
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Shared
Voting Power
486,000
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7.
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Sole
Dispositive Power
0
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8.
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Shared
Dispositive Power
486,000
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9.
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Aggregate
Amount Beneficially Owned by Each Reporting Person
486,000
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10.
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Check
if the Aggregate Amount in Row (9) Excludes Certain Shares (See
Instructions) [ ]
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11.
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Percent
of Class Represented by Amount in Row (9)
10.7654
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12.
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Type
of Reporting Person
BD
CO
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Paulson
Capital Corp. ("PLCC") wholly owns Paulson Investment Company,
Inc.
("PICI"). PLCC is a corporation and PICI is a
broker-dealer.
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Item
1.
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(a)
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Name
of Issuer
Converted
Organics Inc.
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(b)
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Address
of Issuer's Principal Executive Offices
7A
Commercial Wharf West
Boston,
Massachusetts 02110
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Item
2.
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(a)
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Name
of Person Filing
This
statement is being filed jointly by each of the following persons
pursuant
to Rule 13d-1(k) promulgated by the Securities and Exchange Commission
under Section 13 of the Securities Exchange Act of 1934, as amended:
(i)
Chester L.F. Paulson and Jacqueline M. Paulson, as joint tenants
and each
individually (together, the "Paulsons") who control and are the
managing
partners of the Paulson Family LLC ("LLC"); and (ii) Paulson
Capital
Corporation, an Oregon corporation ("PLCC"), which directly wholly
owns
Paulson Investment Company, Inc., an Oregon corporation ("PICI").
The
Paulsons and PLCC are collectively referred to as the "Reporting
Persons".
The Reporting Persons schedule 13G Joint Filing Agreement is
attached as
Exhibit 1.
Information
with respect to the Reporting Persons is given solely by such
Reporting
Persons, and no Reporting Person assumes responsibility for the
accuracy
or completeness of teh information by another Reporting Person,
except as
otherwise provided in Rule 13d-1(k). By their signature on this
statement,
each of the Reporting Persons agree that this statement is filed
on behlaf
of such Reporting Persons.
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(b)
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Address
of Principal Business Office or, if none, Residence
The
Paulsons, PLCC's, and PICI's principal business address is:
811
SW Naito Parkway, Suite 200
Portland,
Oregon 97204
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(c)
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Citizenship
The
Paulsons are citizens of the United States of America, and PLCC
and PICI
are organized under the laws of the United States of
America.
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(d)
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Title
of Class of Securities
Common
Stock for Converted Organics Inc.
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(e)
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CUSIP
Number
21254S107
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Item
3.
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If
this statement is filed pursuant to §§240.13d-1(b) or 240.13d-2(b) or (c),
check whether the person filing is a:
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(a)
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[
X
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Broker
or dealer registered under section 15 of the Act (15 U.S.C.
78o).
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(b)
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[
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Bank
as defined in section 3(a)(6) of the Act (15 U.S.C. 78c).
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(c)
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[
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Insurance
company as defined in section 3(a)(19) of the Act (15 U.S.C.
78c).
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(d)
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[
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Investment
company registered under section 8 of the Investment Company
Act of 1940
(15 U.S.C 80a-8).
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(e)
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[
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An
investment adviser in accordance with
§240.13d-1(b)(1)(ii)(E);
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(f)
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[
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An
employee benefit plan or endowment fund in accordance with
§240.13d-1(b)(1)(ii)(F);
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(g)
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[
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A
parent holding company or control person in accordance with §
240.13d-1(b)(1)(ii)(G);
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(h)
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[
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A
savings associations as defined in Section 3(b) of the Federal
Deposit
Insurance Act (12 U.S.C. 1813);
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(i)
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[
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A
church plan that is excluded from the definition of an investment
company
under section 3(c)(14) of the Investment Company Act of 1940
(15 U.S.C.
80a-3);
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(j)
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[
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Group,
in accordance with §240.13d-1(b)(1)(ii)(J).
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Item
4.
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Ownership.
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(a)
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Amount
beneficially owned:
The
Paulsons may be deemed to be the beneficial owners of a total
of 606,000
shares of Issuer Common Stock. The precise owners of these shares
is
described more specifically in this paragrph. The Paulsons may
be deemed
to control Paulson Capital Corp. ("PLCC"), which wholly owns
Paulson
Investment Company, Inc. ("PICI"). The Paulsons control and are
the
managing partners of the Paulson Family LLC ("LLC"). Through
the LLC, the
Paulsons indirectly own 0 shares of Issuer Common Stock and 0
shares of
Issuer Warrants. The Paulsons collectively own 0 shares of Issuer
Common
Stock and 0 shares of Issuer Warrants. Chester Paulson directly
owns 0
shares of Issuer Common Stock and 120,000 shares of Issuer Warrants.
Jacqueline M. Paulson directly owns 0 shares of Issuer Common
Stock and 0
shares of Issuer Warrants. The Paulsons may be deemed to indirectly
own 0
shares of Issuer Common Stock, 0 shares of Issuer Warrants, and
Underwriter Warrants exercisable into 486,000 shares of Common
Stock
through PICI. PLCC directly owns 0 shares of Issuer Common Stock
and 0
shares of Issuer Warrants. Pursuant to SEC Rule 13d-4, the Paulsons
expressly disclaim beneficial ownership of the 0 shares of Issuer
Common
Stock and 0 shares of Issuer Warrants of which PICI is record
owner.
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(b)
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Percent
of class:
As
of November 12, 2007 the Issuer had 4,028,472 shares of Issuer
Common
Stock issued and outstanding, as reported in their 10QSB filed
November
13, 2007 (the "Issuer Outstanding Shares"). The Paulsons actual
and deemed
beneficial ownership of Issuer Common Stock represented approximately
13.0759% of the Issuer Outstanding Shares. PLCC's indirect beneficial
ownership of Issuer Common Stock represented approximately 10.7654%
of the
Issuer Outstanding Shares.
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(c)
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Number
of shares as to which the person has:
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(i)
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Sole
power to vote or to direct the vote
The
Paulsons have sole power to vote or direct the vote of 120,000
shares.
PLCC has sole power to vote or direct the vote of 0
shares.
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(ii)
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Shared
power to vote or to direct the vote
The
Paulsons have shared power to vote or direct the vote of 486,000
shares.
PLCC has shared power to vote or direct the vote of 486,000
shares.
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(iii)
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Sole
power to dispose or to direct the disposition of
The
Paulsons have sole power to dispose or direct the disposition
of 120,000
shares. PLCC has sole power to dispose or direct the disposition
of 0
shares.
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(iv)
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Shared
power to dispose or to direct the disposition of
The
Paulsons have shared power to dispose or direct the disposition
of 486,000
shares. PLCC has shared power to dispose or direct the disposition
of
486,000 shares.
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Item
5.
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Ownership
of Five Percent or Less of a Class
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If
this statement is being filed to report the fact that as of the
date
hereof the reporting person has ceased to be the beneficial owner
of more
than five percent of the class of securities, check the following
[
].
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Instruction:
Dissolution of a group requires a response to this
item.
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Item
6.
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Ownership
of More than Five Percent on Behalf of Another
Person
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N/A
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Item
7.
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Identification
and Classification of the Subsidiary Which Acquired the Security
Being
Reported on By the Parent Holding Company or Control
Person
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See
Item 4(a).
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Item
8.
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Identification
and Classification of Members of the Group
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N/A
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Item
9.
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Notice
of Dissolution of Group
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Item
10.
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Certifications
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SIGNATURE
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Chester
L.F. Paulson
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By:
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/s/ Chester
L.F. Paulson
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Chester
L.F. Paulson
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Title:
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Individually
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Jacqueline
M. Paulson
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By:
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/s/ Jacqueline
M. Paulson
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Jacqueline
M. Paulson
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Title:
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Individually
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Paulson
Capital Corp.
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By:
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/s/ Chester
L.F. Paulson
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Chester
L.F. Paulson
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Title:
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Chairman
of the Board
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