DOB: Bulletin 2494 - Dec. 9, 2011

The Department of Banking News Bulletin 

Bulletin # 2494
Week Ending December 9,  2011

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.


 

INTEREST RATE TO BE PAID ON CLAIMS FOR PROPERTY, FUNDS OR MONEY DELIVERED TO THE STATE TREASURER PURSUANT TO SECTION 3-57a(a)(1) or (2), MORTGAGE ESCROW ACCOUNTS, PUBLIC SERVICE COMPANY, CERTIFIED TELECOMMUNICATIONS PROVIDER AND ELECTRIC SUPPLIER CUSTOMER SECURITY DEPOSITS AND TENANT SECURITY DEPOSITS
 
In accordance with Sections 3-70a(e), 16-262j(d), 47a-21(i)(2) and 49-2a(c ) of the Connecticut General Statutes, the deposit index for calendar year 2012 is 0.16%.  However, Sections 16-262j(c) and 49-2a(a) provide that in no event shall the rate be less than 1.5%.  Therefore, the interest rate to be paid on mortgage escrow accounts, public service company, certified telecommunications provider and electric supplier customer security deposits is 1.5% for the period commencing January 1, 2012 and ending December 31, 2012.
 
 
CONSUMER CREDIT DIVISION ACTIVITY
Check Cashing Service License Activity
 
Date Check Casher Location Activity
11/25/11
Newington Financial, LLC
d/b/a United Check Cashing
10 East Cedar Street
Newington, CT  06111
filed
12/07/11
 
Gold Star Check Cashing LLC
591 Route 12
Groton, CT  06339
approved
 
Order Revoking Mortgage Broker License and Order to Cease and Desist
 
On October 20, 2011, the Commissioner issued an Order Revoking Mortgage Broker License and Order to Cease and Desist (“Order”) in the Matter of:  Blum Group LLC d/b/a Blum Group Lending, NMLS # 172433 (“Respondent”), Middlebury, Connecticut.  The basis of the Order was that Respondent failed to maintain a surety bond, in violation of Section 36a-492 of the Connecticut General Statutes.  The Order revokes Respondent’s license to act as a mortgage broker in Connecticut from 530 Middlebury Road, Suite 213B, Middlebury, Connecticut, and orders Respondent to cease and desist from violating Section 36a-492 of the Connecticut General Statutes.
 
Order Revoking Consumer Collection Agency License and Order to Cease and Desist
 
On October 20, 2011, the Commissioner issued an Order Revoking Consumer Collection Agency License and Order to Cease and Desist (“Order”) in the Matter of:  Strategic Recovery Systems, Inc (“Respondent”), Philadelphia, Pennsylvania.  The basis of the Order was that Respondent failed to maintain a surety bond, in violation of Section 36a-802(a) of the Connecticut General Statutes.  The Order revokes Respondent’s license to act as a consumer collection agency in Connecticut from 421 North 7th Street, Suite 701, Philadelphia, Pennsylvania, and orders Respondent to cease and desist from violating Section 36a-802(a) of the Connecticut General Statutes.

Consent Orders
 
On October 24, 2011, the Commissioner entered into a Consent Order with Squire Industries, Inc. (“Squire”), Hamden, Connecticut.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, the Commissioner alleged in an Order of Summary Suspension, Notice of Intent to Revoke Check Cashing Service License, 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 27, 2011, that Squire, among other things, failed to promptly notify the Commissioner of a pending felony charge against its President, Claude A. Narracci, and that such conduct constituted grounds to revoke Squire’s check cashing service license, issue an order to cease and desist and impose a civil penalty.  As part of the Consent Order, Squire was ordered to pay $250 as a civil penalty and surrender its check cashing service license, and Narracci was permanently barred from acting as an officer, director, authorized agent, member or shareholder owning ten percent or more of the outstanding stock of a check casher.
 
On November 2, 2011, the Commissioner entered into a Consent Order with Envoy Mortgage LTD d/b/a Envoy Mortgage, A Limited Partnership, NMLS # 6666 (“Envoy Mortgage”), Houston, Texas.  The Consent Order was based on an examination by the Consumer Credit Division.  As a result of such examination, the Commissioner alleged that Envoy Mortgage employed or retained, during the period of March 11, 2009 through December 2, 2010, 19 individuals as mortgage loan originators who were not licensed, in violation of Section 36a-486(b) of the Connecticut General Statutes.  As part of the Consent Order, Envoy Mortgage was ordered to pay $19,000 as a civil penalty.
 
On November 2, 2011, the Commissioner entered into a Consent Order with North American Asset Services, LLC d/b/a Frontier Financial Group a/k/a FFG & Associates (“North American Asset Services”), Henderson, Nevada.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, the Commissioner alleged in a Temporary Order to Cease and Desist, 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 April 6, 2011, that during the period of May 2009 to April 6, 2011, North American Asset Services acted as a consumer collection agency in Connecticut without the required license, in violation of Section 36a-801(a) of the Connecticut General Statutes.  As part of the Consent Order, North American Asset Services was ordered to pay $15,000 as a civil penalty.
 
On November 10, 2011, the Commissioner entered into a Consent Order with AAA Southern New England Bank d/b/a AAA Southern New England Bank, Inc., NMLS # 179871 (“AAA Southern New England Bank”), Providence, Rhode Island.  The Consent Order was based on an examination by the Consumer Credit Division.  AAA Southern New England Bank self-reported that it employed or retained, during the period of September 23, 2009 through July 13, 2011, one (1) individual as a mortgage loan originator who was not licensed, in violation of Section 36a-486(b) of the Connecticut General Statutes.  As part of the Consent Order, AAA Southern New England Bank was ordered to pay $1,000 as a civil penalty.
 
On November 10, 2011, the Commissioner entered into a Consent Order with Pathway Financial Management, Inc. (“Pathway Financial”), Garden Grove, California.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, the Commissioner alleged in a Temporary Order to Cease and Desist, 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 August 19, 2011, that Pathway Financial engaged in debt negotiation in Connecticut without obtaining the required license, in violation of Section 36a-671(b) of the Connecticut General Statutes.  As part of the Consent Order, Pathway Financial was ordered to pay a civil penalty in the amount of $3,000, to cease and desist from violating Section 36a-671(b) of the Connecticut General Statutes, and to repay all fees paid to Pathway Financial by any remaining Connecticut residents for debt negotiation services on or after October 1, 2009.

 
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Order to Cease and Desist, Order to Make Restitution and Order Imposing Fine Issued
 
On December 5, 2011, the Banking Commissioner entered an Order to Cease and Desist, Order to Make Restitution and Order Imposing Fine against Julius Blackwelder d/b/a Friend’s Investment Group of Tyler, Texas.  The action had been preceded by a June 30, 2011 Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-11-7806-S) alleging that from at least 2001 forward, respondent Blackwelder sold several unregistered promissory notes in violation of the Connecticut Uniform Securities Act, and represented to certain investors that he would manage and invest their funds to achieve a guaranteed return of 20 percent and 25 percent.  The June 30, 2011 action had also alleged that respondent Blackwelder engaged in fraudulent, dishonest or unethical practices by failing to disclose to investors that respondent Blackwelder would use investor funds to pay for his personal and household expenses; that investors might lose their entire investment; any risk factors related to the investment; any financial information on respondent Blackwelder; information substantiating how the represented rates of return could be achieved; and information on respondent Blackwelder’s ability to meet his obligations under the notes.
 
Although respondent Blackwelder requested a hearing on the matters alleged, he ultimately failed to appear at the hearing held on October 6, 2011, and a default order was entered.  Finding that respondent Blackwelder violated Sections 36b-16, 36b-4(a) and 36b-4(b) of the Act, the Commissioner rendered the June 30, 2011 Order to Cease and Desist and Order to Make Restitution permanent as of December 5, 2011, and directed the respondent to 1) within 30 days, provide an accounting of amounts received from and disbursed to Connecticut investors from January 1, 2001 to December 5, 2011; 2) within 45 days, reimburse previously identified Connecticut investors for amounts invested plus interest; and 3) within 45 days, pay a $300,000 fine to the department.
 

       Dated:  Tuesday, December 13, 2011
 
       Howard F. Pitkin
       Banking Commissioner