DOB: News Bulletin 2265 - July 20, 2007

The Department of Banking News Bulletin 

Bulletin # 2265
Week Ending July 20, 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.



ORDER FOR HEARING
 
Pursuant to Section 36a-70 of the Connecticut General Statutes, the Commissioner has ordered a hearing to be held on August 21, 2007 at 10:00 a.m., in Room 50 of the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut, to consider the issuance of a temporary certificate of authority with respect to the application of Frederick Afragola and Peter Kirk to organize The Bank of Fairfield, Fairfield, Connecticut, for the purpose of doing business as a Connecticut bank.

NEW BANK ACTIVITY
 
On July 17, 2007, pursuant to Section 36a-70(i) of the Connecticut General Statutes, Quinnipiac Bank & Trust Company (In Organization) received approval for an extension of the period of its Temporary Certificate of Authority from July 24, 2007 to April 24, 2008.

CONSUMER CREDIT DIVISION ACTIVITY
Notice of Intent to Issue Order to Cease and Desist,
Notice of Intent to Revoke First Mortgage Broker and Secondary
Mortgage Broker Licenses, Notice of Intent to Impose Civil Penalty
and Notice of Right to Hearing
 
On July 12, 2007, the Commissioner issued a Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Revoke First Mortgage Broker and Secondary Mortgage Broker Licenses, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing (“Notice”) In the Matter of: L & S Mortgage, LLC (‘L & S”), which has its principal place of business at 419 Whalley Avenue, Suite 401, New Haven, Connecticut.  The Notice was based on the allegations that L & S: submitted renewal applications in which it responded “No” to the questions of whether it had ever been the defendant in any litigation in connection with the consumer credit business when it was or had been a defendant in six actions, in violation of Section 36a-53a of the Connecticut General Statutes (“General Statutes”) and Sections 36a-494(a)(1)(A) and 36a-517(a)(1)(A) of the General Statutes, as amended; failed to pay five civil judgments which demonstrates a pattern of similar conduct indicating recklessness, in violation of Section 52-400e of the General Statutes; failed to maintain the required tangible net worth in violation of Sections 36a-488(a)(2) and 36a-513(a)(2) of the General Statutes; acted as a first and secondary mortgage broker at three locations without obtaining licenses for such locations, in violation of Sections 36a-490(a) and 36a-515(a) of the General Statutes; failed to register 33 loan originators, in violation of Sections 36a-486(b) and 36a-511(b) of the General Statutes; took loan applications with false statements concerning renting of property from two borrowers and obtaining false verifications of rent, in violation of Sections 36a-53b, 36a-56, 36a-494(b) and 36a-517(b) of the General Statutes; and, engaged in conduct that illustrates that the financial responsibility, character, reputation, integrity and general fitness of Respondent are not such as to warrant belief that L & S’s business will be operated soundly and efficiently, in the public interest and consistent with the purposes of Sections 36a-485 to 36a-498a, inclusive, and Sections 36a-510 to 36a-524, inclusive, of the General Statutes.  In the Notice the Commissioner states that the alleged violations form a basis to issue an order to cease and desist against L & S, and constitute sufficient grounds to revoke L & S’s First Mortgage Broker and Secondary Mortgage Broker licenses and impose a civil penalty upon L & S not to exceed $100,000.  L & S 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.
 
Settlement Agreements
 
On July 19, 2007, the Commissioner entered into a Settlement Agreement with First Choice Funding, Inc. d/b/a Norstar Mortgage Group, Inc.  (“Norstar”).  The Settlement Agreement was based on an investigation by the Consumer Credit Division.  As a result of such investigation, the Commissioner alleged that Norstar employed or retained at least four originators without first registering them, in violation of Sections 36a-486(b) and 36a-511(b) of the Connecticut General Statutes.  Pursuant to the Settlement Agreement, Norstar agreed to remit to the Department of Banking four thousand dollars as a civil penalty.
 
On July 19, 2007, the Commissioner entered into a Settlement Agreement with Elite Mortgage, LLC (“Elite”).  The Settlement Agreement was based on an investigation by the Consumer Credit Division.  As a result of such investigation, the Commissioner alleged that Elite employed or retained at least two originators without first registering them, in violation of Sections 36a-486(b) and 36a-511(b) of the Connecticut General Statutes.  Pursuant to the Settlement Agreement, Elite agreed to remit to the Department of Banking two thousand dollars as a civil penalty.
 
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Agent Registration Revoked; $300,000 Fine Imposed
 
On July 13, 2007, the Commissioner issued Findings of Fact, Conclusions of Law and an Order in the matter of Steven Gray, a former registered broker-dealer agent of Independent Securities Investors Corporation.  The action had been preceded by a March 2, 2006 Notice of Intent to Revoke Registration as Agent and Notice of Intent to Fine.  The Notice of Intent to Revoke Registration as Agent and Notice of Intent to Fine had alleged that respondent Gray 1) violated Section 36b-16 of the Connecticut Uniform Securities Act by selling unregistered, non-exempt notes issued by Charter One Capital Holding, Inc., an entity of which he was president and that owned and operated a branch of Independent Securities Investors Corporation in New York, New York; 2) violated Section 36b-4 of the Act by engaging in fraudulent practices with respect to sales of the Charter One Capital Holdings, Inc. notes; 3) failed to supervise one or more Independent Securities Investors Corporation agents who engaged in unauthorized trading, effected securities transactions while unregistered,  and violated Section 36b-16 of the Act by selling unregistered securities of Bio-Solutions Manufacturing and Stake Technology; 4) violated Section 36b-31-6e of the Regulations by engaging in private securities transactions; 5) engaged in dishonest or unethical practices; and 6) withheld material information from the Commissioner by failing to provide agency staff with requested documents.  A hearing on the matters alleged in the Notice of Intent to Revoke Registration as Agent and Notice of Intent to Fine was held on September 25, 2006, October 16, 2006, November 28, 2006, November 29, 2006 and April 11, 2007.
 
In revoking respondent Gray’s agent registration and fining respondent Gray $300,000, the Commissioner found that 1) grounds existed under Section 36b-15(a)(2)(K) of the Connecticut Uniform Securities Act to revoke the respondent’s registration based upon the respondent’s failure to supervise agents subject to his oversight; 2) the respondent violated Section 36b-16 of the Act by selling unregistered, non-exempt notes issued by Charter One Capital Holding, Inc.; and 3) the respondent violated the antifraud provisions in Section 36b-4 of the Act by failing to pay interest on the Charter One Capital Holding, Inc. notes in accordance with the notes’ terms, failing to provide risk disclosure or sufficient financial information on the issuer, and providing investors with false information on the affiliation between Charter One Capital Holding, Inc. and various individuals.  In addition, the Commissioner found that the respondent 1) violated Section 36b-31-6e of the Regulations under the Act by engaging in private securities transactions in connection with the Charter One Capital Holding, Inc. note offerings; 2) engaged in dishonest and unethical practices in the securities business within the meaning of Section 36b-31-15a(b) of the Regulations under the Act; and 3) withheld material information from the Commissioner.
 
California Company Assessed $7,500 for
Unregistered Investment Adviser Activity
 
On July 17, 2007, the Commissioner entered a Consent Order with respect to ICG Financial, LLC of 6729 North Palm Avenue, Fresno, California.  The Consent Order alleged that from at least January 1, 2005 to September 30, 2005, the firm transacted business as an investment adviser while unregistered in violation of Section 36b-6(c)(1) of the Connecticut Uniform Securities Act.  The Consent Order directed ICG Financial, LLC to cease and desist from regulatory violations and required that the firm remit $7,500 to the department.  Of that amount, $5,000 constituted an administrative fine and $2,500 would be applied to defray agency investigative costs.
 
       Dated:  Tuesday, July 24, 2007
 
       Howard F. Pitkin
       Banking Commissioner