The Department of Banking News Bulletin
Bulletin # 2248
Week Ending March 23, 2007
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 Howard F. Pitkin, Banking Commissioner, at the Connecticut Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800 or via E-mail. Written comments will be considered only if they are received within ten days from the date of this bulletin.
State Bank 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 Financial Institutions Division, (860) 240-8180.
Fairfield County Bank
457 Main Street, Suite 3A
Danbury, CT 06811
On March 23, 2007, pursuant to Section 36a-185 of the Connecticut General Statutes, the Commissioner issued a notice of intent not to disapprove the acquisition by New England Bancshares, Inc., and New England Bancshares Acquisition, Inc., of 100 percent of the issued and outstanding voting securities of First Valley Bancorp, Inc.
NEW BANK ACTIVITY
On March 19, 2007, pursuant to Section 36a-70(i) of the Connecticut General Statutes, Higher One Bank (In Organization) received approval for an extension of the period of its Temporary Certificate of Authority from March 29, 2007 to July 31, 2007.
CONSUMER CREDIT DIVISION ACTIVITY
Check Cashing Service License Activity
Circle H Food Mart, LLC
1084 Burnside Avenue
East Hartford, CT 06108
Lanka Financial Services, Inc.
d/b/a United Check Cashing
689 Foxon Road
East Haven, CT 06513
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Tennessee Firm Fined $25,000 for Unregistered Business Opportunity Sales
On March 21, 2007, the Commissioner entered a Consent Order with respect to Energy Automation Systems, Inc. (“EASI”) of 145 Anderson Lane, Hendersonville, Tennessee. The Consent Order alleged that from at least 2003, the corporation, through its representatives, including Joseph C. Merlo, its CEO, and Paul B. Bleiweis, its president, 1) sold unregistered energy conservation business opportunities to Connecticut purchaser-investors in violation of Sections 36b-67(1), 36b-62(a) and 36b-65(a) of the Connecticut Business Opportunity Investment Act; 2) failed to provide Connecticut purchaser-investors with required disclosures in violation of Section 36b-63 of the Act; and 3) violated Section 36b-67(2) of the Act by making earnings claims without including documented substantiating data. EASI maintained that it had relied upon the advice of counsel in preparing appropriate business opportunity registrations and/or disclosures for state purposes but that such counsel had never made such registration or disclosure in Connecticut. The Consent Order acknowledged the corporation’s undertaking to file an application for business opportunity registration under the Act and not make additional sales of its energy conservation business opportunities in or from Connecticut until that registration was declared effective by the Commissioner.
The Consent Order fined EASI $25,000 and directed EASI, Bleiweis, Merlo, their agents, affiliates and successors in interest to cease and desist from regulatory violations. In addition, the Consent Order directed EASI to extend a written rescission offer to each Connecticut purchaser-investor to whom EASI had sold a business opportunity from 2000 forward and who had not received restitution from EASI. The amount of restitution to be paid to each purchaser-investor electing rescission would be determined via binding arbitration conducted in Connecticut under the auspices of the American Arbitration Association. The Consent Order also required that, for three years, EASI, Bleiweis and Merlo retain counsel familiar with the regulation of business opportunities to evaluate at least twice during each calendar year their respective compliance with the Act and the terms of the Consent Order.
New Jersey Firm Fined $300,00 Following Allegations of Fraud,
Unregistered Security Sales
On March 21, 2007, the Commissioner entered an Order Imposing Fine against Crystal Sky Enterprises, LLC of 238 Raritan Street, Keyport, New Jersey. The Order Imposing Fine had been preceded by a November 21, 2006 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing alleging that the respondent sold unregistered securities consisting of promissory notes in violation of Section 36b-16 of the Connecticut Uniform Securities Act, and that the respondent’s managing member was not registered as an agent of issuer in violation of Section 36b-6(b) of the Act. The note investment would finance the purchase of real property and the related redevelopment of a New Jersey former middle school building. The November 21, 2006 action had also alleged that the respondent violated the antifraud provisions in Section 36b-4 of the Act by failing to disclose in the issuer’s prospectus risk factors, financial information on the issuer and the work histories of the issuer’s managing members. The prospectus represented that investors would receive a guaranteed 20 percent return if the real estate project, purportedly financed by commercial lenders, did not move forward to loan settlement and a guaranteed 100 percent return if loan settlement occurred.
In fining the respondent $300,000, the Commissioner found that the respondent had violated Sections 36b-16, 36b-6(b) and 36b-4(a) of the Act. The respondent did not appear or contest the imposition of the fine. The November 21, 2006 Order to Cease and Desist, also being uncontested, had became permanent on January 18, 2007.
Dated: Tuesday, March 27, 2007
Howard F. Pitkin