The Department of Banking News Bulletin
Bulletin # 2255
Week Ending May 11, 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.
Farmngton Savings Bank
73 Broad Street
New Britain, CT 06053
On May 4, 2007, pursuant to the provisions of Section 36a-70(n) of the Connecticut General Statutes, Bankers’ Bank Northeast, Glastonbury, received approval to exercise limited fiduciary powers.
CONSUMER CREDIT DIVISION ACTIVITY
On May 3, 2007, the Commissioner entered into a Settlement Agreement with Yvette Allen (“Allen”). The Settlement Agreement was based on an investigation by the Consumer Credit Division (“Division”). As a result of such investigation, the Commissioner alleged that Allen, who was employed as a loan originator with Stanley Capital Mortgage Company, Inc. between July 14, 2004 and March 21, 2005, took loan applications that contained false statements from two borrowers in violation of Sections 36a-53b, 36a-494(b) and 36a-517(b) of the 2006 Supplement to the General Statutes and Section 36a-56 of the General Statutes. Pursuant to the Settlement Agreement, Allen agreed not to act as an originator in Connecticut for a period of three months from the date of execution of the agreement, subsequent to which she may act as an originator, provided she is registered and provides evidence that she has completed a mortgage origination class approved by the Division. In addition, Allen agreed to comply with the requirements of Part I of Chapter 688, Sections 36a-485 to 36a-534a, inclusive, of the General Statutes and that the alleged violations will not occur in the future.
On May 4, 2007, the Commissioner entered into a Settlement Agreement with Raymond L. Patrice (“Patrice”). The Settlement Agreement was based on an investigation by the Consumer Credit Division (“Division”). As a result of such investigation, the Commissioner alleged that Patrice, who was employed as a loan originator with VIP Mortgage Corporation between September 8, 2005 and May 11, 2006, made certain statements on loan applications taken from a borrower in violation of Sections 36a-53b, 36a-494(b) and 36a-517(b) of the 2006 Supplement to the General Statutes. Pursuant to the Settlement Agreement, Patrice agreed not to act as an originator in Connecticut for a period of one year commencing June 1, 2006, subsequent to which he may act as an originator provided he is registered. In addition, Patrice agreed to comply with the requirements of Part I of Chapter 688, Sections 36a-485 to 36a-534a, inclusive, of the General Statutes and that the alleged violations will not occur in the future.
Notice of Intent to Issue Order to Cease and Desist, Notice of Intent
to Impose Civil Penalty and Notice of Right to Hearing Issued
On May 7, 2007, the Commissioner issued a Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing (“Notice”) In The Matter Of: Joseph E. Ventura
(“Respondent”). Respondent was employed with Fairfield Financial Mortgage Group, Inc. as a loan originator from June 3, 2003 to December 20, 2004. The Notice alleges that Respondent provided a lender with a HUD-1, escrow letter and loan application that contained false statements which violate Section 36a-56 of the Connecticut General Statutes (“General Statutes”); failed to disclose material particulars of a mortgage loan transaction to a lender in violation of Sections 36a-494(b) and 36a-517(b) of the General Statutes; and, employed a device, scheme or artifice to defraud, made untrue statements of material facts or engaged in acts, practices or a course of business which operated as a fraud or deceit upon a lender, in violation of Section 36a-53b of the General Statutes. The notice states that Respondent’s actions form the basis for the issuance of an order to cease and desist pursuant to Section 36a-52 of the General Statutes and to impose a civil penalty pursuant to Section 36a-50 of the General Statutes. The Notice also states that the Commissioner intends to impose a civil penalty upon Respondent not to exceed $100,000. Respondent was afforded an opportunity to request a hearing with regard to the allegations set forth in the Notice. A copy of the Notice can be obtained from the department's website, www.ct.gov/dob
or by contacting the department's Legal Division.
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Notice of Intent to Issue Stop Order Denying Effectiveness
to a Business Opportunity Registration Issued
On May 4, 2007, the Banking Commissioner issued a Notice of Intent to issue a stop order denying the business opportunity registration of Blue Coast Financial Group, Inc. a/k/a Questar Financial Group under the Connecticut Business Opportunity Investment Act. The corporation, located at 2929 North Power Road, Suite C100, Mesa, Arizona, offers an arrangement whereby purchasers can start a business auditing workers compensation insurance premiums. The Notice of Intent to Issue Stop Order alleged that the business opportunity registration was materially incomplete or contained materially false or misleading statements with respect to disciplinary events involving the seller’s principals and related entities, the risks factors involved in the arrangement and key background information. Shawn Hull, CEO of the respondent, was also the president of Taxback, LLC, against whom the Commissioner issued an Order to Cease and Desist and Notice of Intent to Fine on January 10, 2005, and Taxback Opportunities, LLC, which had been the subject of a January 10, 2005 Notice of Intent to Issue Stop Order Revoking Business Opportunity Registration and Notice of Intent to Fine. The claims against Taxback, LLC and Taxback Opportunities, LLC had been resolved via a June 7, 2005 Consent Order involving both parties. Respondent Blue Coast Financial Group, Inc. was afforded an opportunity to request a hearing on the Notice of Intent to Issue Stop Order.
Weston, Connecticut Firm Resolves
Unregistered Investment Adviser Issue
On May 4, 2007, the Banking Commissioner entered into a Stipulation and Agreement with KMH Management, Inc., an investment adviser located at 133 Lords Highway, Weston, Connecticut. The Stipulation and Agreement alleged that, from at least 2002 forward, the firm had rendered investment advisory services through one or more unregistered investment adviser agents at a time when the firm was not registered as an investment adviser under the Connecticut Uniform Securities Act. The Stipulation and Agreement acknowledged, however, that 1) the firm had represented that, from 2002 forward, it had rendered advisory services to only three clients in Connecticut and Hong Kong and that those clients had been obtained through the family connections of the firm’s president, Karen Mae Ho; 2) upon being apprised of the department’s concerns, the firm filed for investment adviser and investment adviser agent registration under the Act; and 3) neither the firm nor its president had any reported disciplinary history.
Pursuant to the Stipulation and Agreement, the firm agreed to comply with all statutory requirements governing investment advisers and their operations, and to pay $1,500 to the department. Of that amount, $1,000 constituted reimbursement for past due registration fees and $500 would be applied to defray the agency’s costs of investigating the matter. KMH Management, Inc. became registered as an investment adviser in Connecticut on May 4, 2007.
Dated: Tuesday, May 15, 2007
Howard F. Pitkin