DOB: News Bulletin 1885 - April 7, 2000

The Department of Banking News Bulletin 

Bulletin # 1885
Week Ending April 7, 2000

This bulletin constitutes the only official notification you will receive from this office concerning any of the following applications. Any observations you may have are solicited. Any comments should be in writing to John P. Burke, Banking Commissioner, at the Connecticut Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800 or via E-mail to john.burke@ct.gov. Written comments will be considered only if they are received within ten days from the date of this bulletin.


STATE BANK ACTIVITY
Branch Activity

Section 36a-145 of the Connecticut General Statutes requires that each application for a branch, or for a limited branch at which loans will be made, be accompanied by a plan detailing how adequate services to meet the banking needs of all community residents will be provided. Plans are submitted when such applications are filed and are available for public inspection and comment at this Department for a period of 30 days. Questions concerning branch activity should be directed to the Bank Examination Division, (860) 240-8180.
Note: dates are listed in month/day/year format.

Date Bank Location Activity
4/04/00 People's Bank
Bridgeport
*Stop & Shop
  566 West Main Street
  Centennial Plaza
  Meriden, CT 06451-2764
opening
date
* Limited Branch

CREDIT UNION DIVISION ACTIVITY
Merger

Pursuant to Section 36a-470 of the Connecticut General Statutes, on March 27, 2000, approval was granted to Backus Hospital Employees Credit Union, Inc., Norwich, to merge with and into Norwich Pequot Teachers Federal Credit Union, Norwich.

SECTION 36a-425 APPROVAL

On April 3, 2000, approval was granted to Mellon Financial Corporation, a Pennsylvania corporation, to establish an office of its subsidiary, The Boston Company Financial Services, Inc., a Massachusetts corporation, at One East Weaver Street, Greenwich, Connecticut.

SECTION 36a-425 APPLICATIONS

On April 3, 2000, Emigrant Bancorp, Inc., a New York corporation, withdrew its application to establish an office of its subsidiaries, Emigrant Mortgage Company, Inc., Emigrant Funding Corporation, and MoneyNow Mortgage Corporation, all New York corporations, at 1175 Post Road East, Westport, Connecticut.

On April 6, 2000, Citigroup, Inc., a Delaware corporation, filed an amendment to its application to establish an office of its subsidiary, Source One Mortgage Corporation, a Delaware corporation, at 100 Queen Street, Suite 5, Southington, Connecticut, to substitute its subsidiary CitiMortgage, Inc., a Delaware corporation, for Source One Mortgage Corporation.

REORGANIZATION INTO A MUTUAL HOLDING COMPANY

On April 7, 2000, pursuant to Section 36a-192 of the Connecticut General Statutes, Savings Institute, Willimantic, Connecticut, a mutual savings bank, filed an application to reorganize as a mutual holding company.

EFFECTIVE REGULATIONS

Attached to this issue of the Bulletin is a copy of amended regulations concerning dishonored check charges imposed on borrowers by affiliated entities of small loan licensees. Such regulations became effective on April 7, 2000.

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Temporary Restraining Order Entered; Stipulation for Order Contemplates Investors Refunds; Financial Monitoring

On March 14, 2000, the Banking Commissioner, through the Office of the Attorney General, filed a verified complaint for injunctive relief in the Superior Court for the Judicial District of Hartford against Corlogic Corporation of 762 Boston Post Road, Madison, Connecticut and Theodore William Russell of 44 Middle Beach Road West, Madison, Connecticut. Russell is the president of Corlogic Corporation. The complaint also sought a fine, restitution and the appointment of a receiver. The complaint alleged that, from at least January, 1999 forward, the corporation and Russell sold over $925,000 in nine-month promissory notes, and that from at least July, 1999 forward, Corlogic Corporation and Russell sold three-year promissory notes and warrants on the corporation's outstanding common stock in an amount exceeding $1.4 million. The complaint claimed that the defendants sold the nine-month notes and the three-year notes without registering them under the Connecticut Uniform Securities Act, and that the corporation violated the antifraud provisions of the Act by failing to disclose the unregistered status of the securities; the fact that there had been a material change in the number of shares being set aside for the warrant offering; the fact that financial projections reflecting the future value of Corlogic's common stock had changed; that Russell had filed for personal bankruptcy in 1995; and that no working prototype of the corporation's medical device product existed. On March 14, 2000, the court granted the plaintiff's application for a temporary restraining order and corporate asset freeze.

Corlogic Corporation and Theodore William Russell had been the subject of a February 14, 2000 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing issued by the Banking Commissioner based on the same allegations.

On March 31, 2000, the parties to the civil action agreed to a Stipulation for Order to be entered by the court. Pursuant to the Stipulation, the defendants agreed, pending a hearing on the plaintiff's Application for Temporary Injunction and Appointment of a Temporary Receiver, to refrain from offering or selling securities; disposing of records and evidence; and dissipating corporate assets. The defendants also agreed to wire $829,966 in corporate funds to a designated escrow agent and fund the escrow account as monies became available. The Stipulation also included provisions requiring financial reporting; filing of complaint information; written disclosures to investors; the filing of a federal patent application and subsequent assignment of the patent to Corlogic. The parties agreed that noteholders would be provided with the right to request a refund of monies paid, and that the repayment would come from the established escrow account. The Stipulation also permitted Corlogic Corporation to accept new funds from qualified accredited investors. In consideration of the Stipulation for Order, the defendants withdrew their motion to dismiss the plaintiff's complaint, and the department, on March 31, 2000, rescinded its prior Order to Cease and Desist and withdrew the related Notice of Intent to Fine.

Dated: Tuesday, April 11, 2000

John P. Burke
Banking Commissioner


DISHONORED CHECK CHARGES IMPOSED ON BORROWERS
BY AFFILIATED ENTITIES OF SMALL LOAN LICENSEES

Subsection (m) of Section 36a-570-17 of the Regulations of Connecticut State Agencies is amended to read as follows:

    (m) Dishonored check service charge. If the agreement between the lender and the borrower so provides, the lender may assess and collect a dishonored check service charge in accordance with the provisions of Section 52-565a of the Connecticut General Statutes.