DOB: Accelerated Collection Systems, Inc., Order to Cease and Desist, Refusing to Renew Consumer Collection Agency License and Imposing Civil Penalty

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IN THE MATTER OF:

ACCELERATED COLLECTION
SYSTEMS, INC.

    ("Respondent")

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ORDER TO CEASE AND DESIST

ORDER REFUSING TO RENEW
CONSUMER COLLECTION AGENCY
LICENSE

AND

ORDER IMPOSING CIVIL PENALTY


I.  PRELIMINARY STATEMENT

WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Part XII of Chapter 669, Sections 36a-800 to 36a-810, inclusive, of the Connecticut General Statutes, “Consumer Collection Agencies”, and the regulations adopted thereunder (Sections 36a-809-1 to 36a-809-5, inclusive, of the Regulations of Connecticut State Agencies);
 
WHEREAS, the Commissioner, through the Consumer Credit Division of the Department of Banking (“Department”), conducted an investigation of the activities of Respondent, pursuant to the authority granted by Section 36a-17 of the Connecticut General Statutes, to determine if it had violated, was violating or was about to violate the provisions of the Connecticut General Statutes;
 
WHEREAS, on November 16, 2007, the Commissioner issued an Order of Summary Suspension, Temporary Order to Cease and Desist, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Refuse to Renew Consumer Collection Agency License, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing (collectively “Notice”) against Respondent, which Notice is hereby incorporated by reference and adopted herein;
 
WHEREAS, the Notice was sent by registered mail, return receipt requested, to Respondent, 182 Grand Street, Suite 320, P.O. Box 2724, Waterbury, Connecticut 06723, registered mail no. RB028034335US; and via facsimile to (203) 597-9428;
 
WHEREAS, the Notice provided Respondent with the opportunity for a hearing and stated that the Commissioner (1) would issue an order that Respondent cease and desist from violating Sections 36a-17(d) and 36a-805 of the Connecticut General Statutes and Section 36a-809-1 of the Regulations of Connecticut State Agencies, (2) would refuse to renew Respondent’s license to act as a consumer collection agency in Connecticut, and (3) may order that the maximum civil penalty of Three Hundred Thousand Dollars ($300,000) be imposed upon Respondent if a hearing was not requested within 14 days of its receipt;
 
WHEREAS, the Commissioner alleged in the Notice, with respect to the activity described therein, that Respondent’s failure to cooperate with the Commissioner pursuant to Section 36a-17(d) of the Connecticut General Statutes forms the basis to issue an order to cease and desist and to impose a civil penalty pursuant to Sections 36a-52(a) and 36a-50(a) of the Connecticut General Statutes, and constitutes grounds to refuse to renew its consumer collection agency license pursuant to Section 36a-51 of the Connecticut General Statutes, as amended by Public Act 07-91, and Section 36a-804(a) of the Connecticut General Statutes, as amended by Public Act 07-91;
 
WHEREAS, the Commissioner alleged in the Notice, with respect to the activity described therein, that Respondent’s conduct illustrates that Respondent lacks financial responsibility and is not in all respects properly qualified and trustworthy and that the granting of a consumer collection agency license to Respondent would be against the public interest, which constitutes grounds to refuse to renew Respondent’s consumer collection agency license pursuant to Sections 36a-804(a) and 36a-51 of the Connecticut General Statutes, as amended;
 
WHEREAS, the Commissioner alleged in the Notice, with respect to the activity described therein, that Respondent’s conduct constitutes a violation of Section 36a-805(a) of the Connecticut General Statutes and Section 36a-809-1(b) of the Regulations of Connecticut State Agencies, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-804(b) and 36a-52(a) of the Connecticut General Statutes and an order imposing civil penalty pursuant to Sections 36a-804(b) and 36a-50(a) of the Connecticut General Statutes, and constitutes grounds to refuse to renew Respondent’s consumer collection agency license pursuant to Sections 36a-804(a) and 36a-51 of the Connecticut General Statutes, as amended;
 
WHEREAS, the Commissioner alleged in the Notice, with respect to the activity described therein, that Respondent’s conduct constitutes a violation of Section 36a-809-4 of the Regulations of Connecticut State Agencies, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-804(b) and 36a-52(a) of the Connecticut General Statutes and an order imposing civil penalty pursuant to Sections 36a-804(b) and 36a-50(a) of the Connecticut General Statutes, and constitutes grounds to refuse to renew Respondent’s consumer collection agency license pursuant to Sections 36a-804(a) and 36a-51 of the Connecticut General Statutes, as amended;
 
WHEREAS, Section 36a-804(a) of the Connecticut General Statutes, as amended, provides, in pertinent part, that “[t]he commissioner may . . . refuse to renew any [consumer collection agency] license . . . , in accordance with the provisions of section 36a-51, . . . for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-800 to 36a-810, inclusive, or if the commissioner finds that the licensee or any proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has done any of the following: . . . (2) committed any fraud or misrepresentation or misappropriated funds; or (3) violated any of the provisions of sections 36a-800 to 36a-810, inclusive, or of any regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business”;
 
WHEREAS, Section 36a-804(b) of the Connecticut General Statutes provides, in pertinent part, that “[w]henever it appears to the commissioner that any person has violated, is violating or is about to violate any of the provisions of sections 36a-800 to 36a-810, inclusive, or any regulation adopted pursuant thereto, or the licensee or any proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has committed any fraud, made any misrepresentation or misappropriated funds, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52”;
 
WHEREAS, Section 36a-805(a) of the Connecticut General Statutes provides, in pertinent part, that “[n]o consumer collection agency shall: . . . (12) commingle money collected for a creditor, claimant or forwarder with its own funds or use any part of a creditor’s, claimant’s or forwarder’s money in the conduct of its business . . .”;
 
WHEREAS, Section 36a-809-1(b) of the Regulations of Connecticut State Agencies provided, in pertinent part, that “[e]ach consumer collection agency shall deposit funds received from consumer debtors in a separate account which shall not be commingled with funds of the consumer collection agency or used in the conduct of the consumer collection agency’s business.  Such account shall not be used for any purpose other than (1) the deposit of funds received from consumer debtors, (2) the payment of such funds to creditors, and (3) the payment of earned fees to the consumer collection agency”;

WHEREAS,
Section 36a-809-4 of the Regulations of Connecticut State Agencies provided that “(a) No consumer collection agency shall terminate its business unless the following conditions have been met:
 
(1)
The commissioner has received notice of the proposed termination at least thirty days prior to its effective date.
(2)
All clients of the consumer collection agency are notified in writing of the proposed termination and its date at least thirty days prior to that date.
(3)
All clients of the consumer collection agency are provided with detailed final accountings of all consumer debtor accounts.
(4) All money held in escrow by the consumer collection agency, exclusive of earned fees, is remitted to each respective client of the consumer collection agency.
(5) All papers, documents and other property of clients turned over to the consumer collection agency in connection with its collection efforts are returned to each respective client of the consumer collection agency.
(6)
The consumer collection agency license is returned to the commissioner for cancellation.
 
(b) No consumer collection agency, when terminating a consumer collection agency business, shall transfer a consumer debtor’s account to another consumer collection agency without securing the written permission of the client”;
 
WHEREAS, Section 36a-17 of the Connecticut General Statutes provides, in pertinent part, that “(a) [t]he commissioner, in the commissioner’s discretion, may make such public or private investigations or examinations within or outside this state, concerning any person subject to the jurisdiction of the commissioner, as the commissioner deems necessary to carry out the duties of the commissioner. . . .
 
(d)  Any person who is the subject of any such investigation, examination or proceeding shall make its records available to the commissioner in readable form; provide personnel and equipment necessary, including, but not limited to, assistance in the analysis of computer-generated records; provide copies or computer printouts of records when so requested; furnish unrestricted access to all areas of its principal place of business or wherever records may be located; and otherwise cooperate with the commissioner”;
 
WHEREAS, Section 36a-52(a) of the Connecticut General Statutes provides, in pertinent part, that “[i]f a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice, unless the person fails to appear at the hearing.  After the hearing, the commissioner shall determine whether an order to cease and desist should be issued against the person named in the notice.  If the person . . . fails to appear at the hearing, the commissioner shall issue an order to cease and desist against the person.  No such order shall be issued except in accordance with the provisions of chapter 54”;
 
WHEREAS, Section 36a-51(b) of the Connecticut General Statutes provides, in pertinent part, that “[i]f a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice unless the licensee fails to appear at the hearing.  After the hearing, the commissioner shall . . . refuse to renew the license for any reason set forth in the applicable licensing provisions of the general statutes if the commissioner finds sufficient grounds exist for such . . . refusal to renew.  If the licensee . . . fails to appear at the hearing, the commissioner shall . . . refuse to renew the license”;
 
WHEREAS, Section 36a-50(a)(2) of the Connecticut General Statutes provides, in pertinent part, that “[i]f a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice unless such person fails to appear at the hearing.  After the hearing, if the commissioner finds that the person has violated any such provision, [or] regulation, . . . the commissioner may, in the commissioner’s discretion and in addition to any other remedy authorized by law, order that a civil penalty not exceeding one hundred thousand dollars per violation be imposed upon such person.  If such person . . . fails to appear at the hearing, the commissioner may, as the facts require, order that a civil penalty not exceeding one hundred thousand dollars per violation be imposed upon such person”;
 
WHEREAS, on November 21, 2007, Anton N. Kimball was appointed receiver for Respondent;
 
WHEREAS, on December 4, 2007, the Notice was delivered to Respondent;
 
WHEREAS, on December 18, 2007, Anton N. Kimball, Receiver, filed an Appearance and Request for Hearing on behalf of Respondent;

WHEREAS,
on December 19, 2007, the Commissioner issued a Notification of Hearing and Designation of Hearing Officer stating that the hearing would be held on January 22, 2008, at 9 a.m., at the Department and appointing Paul A. Bobruff as Hearing Officer;
 
WHEREAS, on January 22, 2008, Hearing Officer Bobruff granted a request for a continuance and rescheduled the hearing to February 21, 2008, at 9 a.m.;
 
WHEREAS, on February 21, 2008, Attorney Jesse B. Silverman represented the Department at the hearing;
 
WHEREAS, on February 21, 2008, Respondent failed to appear at the hearing;
 
AND WHEREAS, Section 36a-1-31(b) of the Regulations of Connecticut State Agencies provides, in pertinent part, that “[w]hen a party fails to appear at a scheduled hearing, the allegations against the party may be deemed admitted”.
 

II.  FINDINGS OF FACT AND CONCLUSIONS OF LAW

1.
The facts as set forth in paragraphs 1 through 8, inclusive, of Section II of the Notice shall constitute findings of fact within the meaning of Section 4-180(c) of the Connecticut General Statutes, and that the conclusions set forth in paragraphs 1 through 4, inclusive, of Section III of the Notice shall constitute conclusions of law within the meaning of Section 4-180(c) of the Connecticut General Statutes and Section 36a-1-52 of the Regulations of Connecticut State Agencies.
2.
The Commissioner finds that Respondent has engaged in acts or conduct which, pursuant to Section 36a-52(a) of the Connecticut General Statutes, forms the basis to issue an order to cease and desist against Respondent.
3.
The Commissioner finds that Respondent has engaged in acts or conduct which, pursuant to Sections 36a-804(a) and 36a-51 of the Connecticut General Statutes, as amended, constitutes sufficient grounds to refuse to renew Respondent’s license to act as a consumer collection agency in Connecticut.
4. The Commissioner finds that Respondent has engaged in acts or conduct which, pursuant to Section 36a-50(a)(2) of the Connecticut General Statutes, forms the basis to issue an order imposing a civil penalty against Respondent.  Section 36a-50(a)(2) of the Connecticut General Statutes provides, in pertinent part, that “[i]f such person . . . fails to appear at the hearing, the commissioner may, as the facts require, order that a civil penalty not exceeding one hundred thousand dollars per violation be imposed upon such person”.  The Notice provided Respondent with the opportunity for a hearing and stated that the Commissioner intends to impose a civil penalty upon Respondent not to exceed Three Hundred Thousand Dollars ($300,000).  Pursuant to Section 36a-1-31(b) of the Regulations of Connecticut State Agencies, the allegations in the Notice are be deemed admitted due to Respondent’s failure to appear at the scheduled hearing.
 
The record establishes that Respondent has violated Sections 36a-17(d) and 36a-805(a) of the Connecticut General Statutes, and Sections 36a-809-1(b) and 36a-809-4 of the Regulations of Connecticut State Agencies, which forms the basis for the issuance of an order imposing civil penalty against Respondent for each violation pursuant to Sections 36a-804(b) and 36a-50(a) of the Connecticut General Statutes.  The Connecticut Supreme Court has stated that “[t]he assessment of civil penalties is a fact-specific and broadly discretionary determination”.  Rocque v. Light Sources, Inc., 275 Conn. 420, 450 (2005).
 
The record establishes that Respondent failed to provide the Commissioner access to Respondent’s records in violation of Section 36a-17(d) of the Connecticut General Statutes which, pursuant to Section 36a-50(a) of the Connecticut General Statutes, forms the basis for the Commissioner to impose a civil penalty in the amount of One Hundred Thousand Dollars ($100,000) for one violation.
 
The record establishes that Respondent commingled money collected for creditors with its own funds and used creditors’ money for the conduct of Respondent’s business in violation of Section 36a-805(a) of the Connecticut General Statutes and Section 36a-809-1(b) of the Regulations of Connecticut State Agencies which, pursuant to Sections 36a-804(b) and 36a-50(a) of the Connecticut General Statutes, forms the basis for the Commissioner to impose a civil penalty in the amount of One Hundred Thousand Dollars ($100,000) for one violation.
 
The record establishes that Respondent terminated its business in violation of Section 36a-809-4 of the Regulations of Connecticut State Agencies which, pursuant to Sections 36a-804(b) and 36a-50(a) of the Connecticut General Statutes, forms the basis for the Commissioner to impose a civil penalty in the amount of One Hundred Thousand Dollars ($100,000) for one violation.
5.
The Commissioner finds that the Notice was given in compliance with Sections 36a-52 and 36a-51(a) of the Connecticut General Statutes, as amended, and Sections 36a-50(a), 4-177 and 4-182(c) of the Connecticut General Statutes.
 

III.  ORDER

Having read the record, I hereby ORDER, pursuant to Section 36a-804 of the Connecticut General Statutes, as amended, and Sections 36a-52(a), 36a-51(b) and 36a-50(a) of the Connecticut General Statutes, that:

1.
Accelerated Collection Systems, Inc., CEASE AND DESIST from violating Sections 36a-17(d) and 36a-805 of the Connecticut General Statutes and Section 36a-809-1 of the Regulations of Connecticut State Agencies;
2.
The license of Accelerated Collection Systems, Inc., to act as a consumer collection agency in Connecticut NOT BE RENEWED;
3. A CIVIL PENALTY of Three Hundred Thousand Dollars ($300,000) be imposed against Accelerated Collection Systems, Inc., to be remitted to the Department of Banking by cashier’s check, certified check or money order, made payable to “Treasurer, State of Connecticut”, no later than 45 days from the date this Order is mailed; and
4. This Order shall become effective when mailed.

 

Dated at Hartford, Connecticut
this 8th day of October 2008.                    ________/s/_________
                                                            Howard F. Pitkin
                                                            Banking Commissioner


This Order was mailed by certified mail,
return receipt requested, to Respondent
on October 9, 2008.


Anton N. Kimball, CPA, Receiver 
Kimball, Paris, Gugliotti, P.C.
1579 Straits Turnpike, Suite 1-B
Middlebury, CT 06762                Certified Mail No. 7007 2680 0001 3136 7221

 


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