DOB: Bulletin 2531 - August 24, 2012

The Department of Banking News Bulletin 

Bulletin # 2531
Week Ending August 24, 2012

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
Conversion
 
On August 21, 2012, pursuant to Section 36a-135 of the Connecticut General Statutes, Eastern Federal Bank, Norwich, Connecticut, filed an application to convert from a federal mutual savings bank to a Connecticut state-chartered mutual savings bank to be known as Eastern Savings Bank.
 

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Consent Order
 
On August 22, 2012, the Banking Commissioner entered a Consent Order with respect to Mullaney Management & Trust, LLC, a Connecticut-registered investment adviser located in Stamford, Connecticut, and Raymond Michael Mullaney, President and Chief Investment Officer of the firm.  The Consent Order alleged that  1) the firm transacted business as a broker-dealer in Connecticut while unregistered by pooling investor funds to purchase shares in Auex Ventures, Inc., a Canadian gold exploration company, which shares were then fractionalized and distributed to the investors; 2) the firm sold unregistered securities of AMI Resources Inc., Midasco Capital Corp. and Redstar Resources Corp., all of which were gold exploration companies, in violation of Section 36b-16 of the Connecticut Uniform Securities Act; 3) the firm engaged in a fraudulent, deceptive or misleading act, practice or course of business within the meaning of Section 36b-31-5b(a)(2) of the Regulations under the Act by failing to adhere to the segregation requirements applicable to investment advisers having custody of client funds or securities; and 4) in effecting or attempting to effect sales of a private placement involving AMI Resources Inc. securities, Raymond Michael Mullaney transacted business as an unregistered agent of issuer in violation of Section 36b-6(a) of the Act.
 
The Consent Order fined both respondents $10,000, jointly and severally, and required that they cease and desist from regulatory violations.  In addition, the Consent Order directed the firm to retain a regulatory consultant to perform on-site compliance reviews according to a prescribed schedule and file sworn affidavits, on a periodic basis, verifying its compliance with the terms of the Consent Order and the regulatory consultant’s recommendations.
 

CONSUMER CREDIT DIVISION ACTIVITY
Temporary Order to Cease and Desist, Notice of Intent to Issue
Order to Cease and Desist and Notice of Intent to Impose Civil Penalty
 
On July 24, 2012, the Commissioner issued 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 (“Notice”) in the Matter of:  D & K Holdings, Incorporated d/b/a D & K Holdings Group Incorporated d/b/a Reliant Home Financial Group, Incorporated d/b/a The Arize Group, Inc. (“D & K Holdings”) of St. Louis, Missouri, Overland Park, Kansas, and Creve Coeur, Missouri; SKD Holdings, Inc. d/b/a Arize Home Financial Group, Incorporated (“SKD Holdings”) of St. Louis, Missouri, and Prairie Village, Kansas; and The Arize Group, Incorporated (“Arize Group”) of Overland Park and Shawnee, Kansas (collectively, “Respondents”).  The Notice alleges that D & K Holdings’ offering to engage in debt negotiation in this state without obtaining the required license constitutes a violation of Section 36a-671(b) of the Connecticut General Statutes, in effect prior to October 1, 2011, and Section 36a-671(b) of the 2012 Supplement to the General Statutes.  The Notice also alleges that SKD Holdings’ offering to engage in debt negotiation in this state without obtaining the required license constitutes a violation of Section 36a 671(b) of the Connecticut General Statutes, in effect prior to October 1, 2011, and Section 36a 671(b) of the 2012 Supplement to the General Statutes.  Further, the Notice alleges that Arize Group’s engaging in debt negotiation in this state without obtaining the required license constitutes a violation of Section 36a 671(b) of the Connecticut General Statutes, in effect prior to October 1, 2011, and Section 36a-671(b) of the 2012 Supplement to the General Statutes.  The Commissioner also found that public welfare requires the issuance of a Temporary Order to Cease and Desist against Respondents.  Respondents were afforded an opportunity to request a hearing with regard to the allegations set forth in the Notice.
 
On July 30, 2012, the Commissioner issued 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 (“Notice”) in the Matter of:  State Law Group (“State Law Group”) and Haben Habte Tesfai, Attorney at Law (“Tesfai”) (collectively, “Respondents”).  The Notice alleged that: (1) State Law Group’s offering to engage in debt negotiation in this state without obtaining the required license constitutes a violation of Section 36a-671(b) of the Connecticut General Statutes, in effect prior to October 1, 2011, and Section 36a-671(b) of the 2012 Supplement to the General Statutes; (2) State Law Group’s engaging in debt negotiation in this state without obtaining the required license constitutes a violation of Section 36a-671(b) of the Connecticut General Statutes, in effect prior to October 1, 2011, and Section 36a-671(b) of the 2012 Supplement to the General Statutes; and (3) Tesfai’s engaging in debt negotiation in this state without obtaining the required license constitutes a violation of Section 36a-671(b) of the Connecticut General Statutes, in effect prior to October 1, 2011.  The Commissioner also found that public welfare required the issuance of a Temporary Order to Cease and Desist against Respondents.  Respondents were afforded an opportunity to request a hearing with regard to the allegations set forth in the Notice.
 
Order to Cease and Desist, Order of Repayment of Fees
and Order Imposing Civil Penalty
 
On July 30, 2012, the Commissioner issued an Order to Cease and Desist, Order of Repayment of Fees and Order Imposing Civil Penalty (“Order”) In the Matter of:  Frank Albanese a/k/a C.A. Financial Group and Jeffrey Clark a/k/a C.A. Financial Group (collectively, “Respondents”), Stamford, Connecticut.  The basis of the Order was that each Respondent engaged in debt negotiation in this state without obtaining the required license, in violation of Section 36a-671(b) of the Connecticut General Statutes, in effect prior to October 1, 2011, and that the fees charged by Respondents for debt negotiation services were excessive.  Each Respondent was ordered to cease and desist from violating Section 36a 671(b) of the Connecticut General Statutes, in effect prior to October 1, 2011, to each pay a civil penalty in the amount of $10,000, and to repay fees to an identified resident.
 
Consent Order
 
On August 2, 2012, the Commissioner entered into a Consent Order with Weststar Mortgage, Inc. (NMLS # 2925) (“Weststar Mortgage”), Woodbridge, Virginia.  The Consent Order was based on an examination by the Consumer Credit Division.  As a result of such examination, the Commissioner alleged that Weststar Mortgage employed or retained, during the period of January 17, 2008 through January 29, 2010, six (6) individuals as originators or mortgage loan originators without first registering them or without such individuals being licensed, in violation of Sections 36a-486(b) and 36a-511(b) of the then applicable Connecticut General Statutes.  As part of the Consent Order, Weststar Mortgage was ordered to pay $6,000 as a civil penalty.
 
 
     Dated:  Tuesday, August 28, 2012
 
 
       Howard F. Pitkin
       Banking Commissioner