DOB: Cornerstone Credit Corporation, Rene M. Gagnon, Order to Cease and Desist and Order Imposing Civil Penalty

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IN THE MATTER OF:

CORNERSTONE CREDIT
CORPORATION ("Cornerstone")

RENE M. GAGNON ("Gagnon")

    (collectively "Respondents")

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ORDER TO CEASE AND DESIST

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 Sections 36a-809-1 to 36a-809-17, inclusive, of the Regulations of Connecticut State Agencies (“Regulations”) promulgated thereunder;
 
WHEREAS, the Commissioner, through the Consumer Credit Division of the Department of Banking (“Department”), conducted an investigation of the activities of Respondents, pursuant to the authority granted by Sections 36a-17 and 36a-806(a) of the Connecticut General Statutes, to determine if they had violated, were violating or were about to violate the provisions of the Connecticut General Statutes or Regulations;
 
WHEREAS, on August 4, 2008, the Commissioner, acting pursuant to Sections 36a-52 and 36a-804(b) of the 2008 Supplement to the General Statutes, and Sections 36a-50(a), 36a-807(a) and 36a-808 of the Connecticut General Statutes, 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 (collectively “Notice”) against Respondents, which Notice is incorporated herein by reference;
 
WHEREAS, on August 4, 2008, the Notice was sent by registered mail, return receipt requested, to Cornerstone (Registered Mail Nos. RB028035035US and RB028035044US);
 
WHEREAS, on August 4, 2008, the Notice was sent by registered mail, return receipt requested, to Gagnon (Registered Mail Nos. RB028035058US and RB028035061US);
 
WHEREAS, the Notice provided Respondents with the opportunity for a hearing and stated that the Commissioner would issue a cease and desist order against Respondents, and may order that the maximum civil penalty of Four Hundred Thousand Dollars ($400,000) be imposed upon Cornerstone and a maximum civil penalty of Two Hundred Thousand Dollars ($200,000) be imposed upon Gagnon if a hearing was not requested within 14 days of its receipt;
 
WHEREAS, on August 11, 2008, Cornerstone received the Notice;
 
WHEREAS, on August 8, 2008 and August 25, 2008, the Notices sent to Gagnon were returned to the Department marked “Returned To Sender – Remove No FWD Address” and “Returned To Sender – Unclaimed”, respectively;
 
WHEREAS, Section 36a-52(a) of the 2008 Supplement to the General Statutes provides, in pertinent part, that “[t]he notice shall be deemed received by the person on the earlier of the date of actual receipt or seven days after mailing or sending”;
 
WHEREAS, Section 36a-50(a)(1) of the Connecticut General Statutes provides, in pertinent part, that “[t]he notice shall be deemed received by the person on the earlier of the date of actual receipt or seven days after mailing or sending”;
 
WHEREAS, Respondents failed to request a hearing within the prescribed time period;
 
WHEREAS, the Commissioner alleged in the Notice, with respect to the activity described therein, that Cornerstone’s engaging in the business of collecting consumer debts, as more fully described in paragraph 4 of the Matters Asserted of the Notice, constitutes a violation of Section 36a-801(a) of the Connecticut General Statutes, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-804(b) and 36a-52(a) of the 2008 Supplement to the General Statutes and Section 36a-807(a) of the Connecticut General Statutes, and an order imposing civil penalty pursuant to Section 36a-804(b) of the 2008 Supplement to the General Statutes and Sections 36a-808 and 36a-50(a) of the Connecticut General Statutes;
 
WHEREAS, the Commissioner alleged in the Notice, with respect to the activity described therein, that Cornerstone’s receipt of payments from one or more consumer debtors which it then failed to timely remit to the creditor, as more fully described in paragraph 5 of the Matters Asserted of the Notice, constitutes a violation of Section 36a-805(a)(9) of the Connecticut General Statutes, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-804(b) and 36a-52(a) of the 2008 Supplement to the General Statutes and Section 36a-807(a) of the Connecticut General Statutes, and an order imposing civil penalty pursuant to Section 36a-804(b) of the 2008 Supplement to the General Statutes and Sections 36a-808 and 36a-50(a) of the Connecticut General Statutes;
 
WHEREAS, the Commissioner alleged in the Notice, with respect to the activity described therein, that Cornerstone’s failure to maintain a bond, as more fully described in paragraph 6 of the Matters Asserted of the Notice, constitutes a violation of Section 36a-802(a) of the Connecticut General Statutes, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-804(b) and 36a-52(a) of the 2008 Supplement to the General Statutes and Section 36a-807(a) of the Connecticut General Statutes, and an order imposing civil penalty pursuant to Section 36a-804(b) of the 2008 Supplement to the General Statutes and Sections 36a-808 and 36a-50(a) of the Connecticut General Statutes;
 
WHEREAS, the Commissioner alleged in the Notice, with respect to the activity described therein, that Cornerstone’s failure to produce its debtor and creditor records to the Department, as more fully described in paragraph 9 of the Matters Asserted of the Notice, constitutes a violation of Section 36a-809-1(a) of the Regulations, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-804(b) and 36a-52(a) of the 2008 Supplement to the General Statutes and Section 36a-807(a) of the Connecticut General Statutes, and an order imposing civil penalty pursuant to Section 36a-804(b) of the 2008 Supplement to the General Statutes and Sections 36a-808 and 36a-50(a) of the Connecticut General Statutes;
 
WHEREAS, the Commissioner alleged in the Notice, with respect to the activity described therein, that Gagnon’s engaging in the business of collecting consumer debts, as more fully described in paragraph 4 of the Matters Asserted of the Notice, constitutes a violation of Section 36a-801(a) of the Connecticut General Statutes, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-804(b) and 36a-52(a) of the 2008 Supplement to the General Statutes and Section 36a-807(a) of the Connecticut General Statutes, and an order imposing civil penalty pursuant to Section 36a-804(b) of the 2008 Supplement to the General Statutes and Sections 36a-808 and 36a-50(a) of the Connecticut General Statutes;
 
WHEREAS, the Commissioner alleged in the Notice, with respect to the activity described therein, that Gagnon’s statements that, inter alia, neither he nor Cornerstone has consumer collection clients in Connecticut and that the only state in which Respondents collect consumer debts is Texas when, in fact, Respondents do have Connecticut consumer collection clients and were collecting consumer debts in Connecticut, as more fully described in paragraph 8 of the Matters Asserted of the Notice, constitute a violation of Section 36a-53a of the Connecticut General Statutes, which forms the basis to issue an order to cease and desist pursuant to Section 36a-52(a) of the 2008 Supplement to the General Statutes, and an order imposing civil penalty pursuant to Section 36a-50(a) of the Connecticut General Statutes;
 
WHEREAS, Section 36a-52(a) of the 2008 Supplement to the General Statutes provides, in pertinent part, that “[i]f the person does not request a hearing within the time specified in the notice or 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-50(a)(2) of the Connecticut General Statutes provides, in pertinent part, that “[i]f such person does not request a hearing within the time specified in the notice or 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, Section 36a-50(a)(3) of the Connecticut General Statutes provides, in pertinent part, that “[e]ach action undertaken by the commissioner under this subsection shall be in accordance with the provisions of chapter 54”;
 
AND WHEREAS, Section 36a-1-31(a) of the Regulations of Connecticut State Agencies provides, in pertinent part, that “[w]hen a party fails to request a hearing within the time specified in the notice, the allegations against the party may be deemed admitted.  Without further proceedings or notice to the party, the commissioner shall issue a final decision in accordance with section 4-180 of the Connecticut General Statutes and section 36a-1-52 of the Regulations of Connecticut State Agencies”.


II.  FINDINGS OF FACT AND CONCLUSIONS OF LAW

1.
The Commissioner finds that the matters asserted, as set forth in paragraphs 1 through 9, 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 6, 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 Cornerstone has engaged in acts or conduct which, pursuant to Sections 36a-52 and 36a-804(b) of the 2008 Supplement to the General Statutes and Section 36a-807(a) of the Connecticut General Statutes, forms the basis to issue an order to Cornerstone to cease and desist from violating Sections 36a-801(a), 36a-805(a)(9) and 36a-802(a) of the Connecticut General Statutes and Section 36a-809-1(a) of the Regulations, and pursuant to Sections 36a-50(a), 36a-807(a) and 36a-808 of the Connecticut General Statutes and Section 36a-804(b) of the 2008 Supplement to the General Statutes to impose a civil penalty upon Cornerstone.
3.
The Commissioner finds that Gagnon has engaged in acts or conduct which, pursuant to Sections 36a-52 and 36a-804(b) of the 2008 Supplement to the General Statutes and Section 36a-807(a) of the Connecticut General Statutes, forms the basis to issue an order to Gagnon to cease and desist from violating Sections 36a-801(a) and 36a-53a of the Connecticut General Statutes, and pursuant to Sections 36a-50(a) and 36a-808 of the Connecticut General Statutes and Section 36a-804(b) of the 2008 Supplement to the General Statutes to impose a civil penalty upon Gagnon.
4.
The Commissioner finds that the Notice was given in compliance with Section 36a-52(a) of the 2008 Supplement to the General Statutes and Section 36a-50(a) of the Connecticut General Statutes.
 

III.  ORDER

Having read the record, I HEREBY ORDER, pursuant to Sections 36a-52 and 36a-804(b) of the 2008 Supplement to the General Statutes and Sections 36a-50(a), 36a-807(a) and 36a-808 of the Connecticut General Statutes, that:

1.
Cornerstone Credit Corporation CEASE AND DESIST from violating Sections 36a-801(a), 36a-805(a)(9) and 36a-802(a) of the Connecticut General Statutes and Section 36a-809-1(a) of the Regulations of Connecticut State Agencies;
2.
Cornerstone Credit Corporation pay a CIVIL PENALTY in the amount of Four Hundred Thousand Dollars ($400,000).  The civil penalty shall be paid by cashier’s check, certified check or money order payable to “Treasurer, State of Connecticut”, no later than ninety (90) days from the date this order is mailed;
3.
Rene M. Gagnon CEASE AND DESIST from violating Sections 36a-801(a) and 36a-53a of the Connecticut General Statutes;
4.
Rene M. Gagnon pay a CIVIL PENALTY in the amount of Two Hundred Thousand Dollars ($200,000).  The civil penalty shall be paid by cashier’s check, certified check or money order payable to “Treasurer, State of Connecticut”, no later than ninety (90) days from the date this order is mailed; and
5.
This Order shall become effective when mailed.


Dated at Hartford, Connecticut
this 28th day of October 2008.                      ________/s/_________
                                                               Howard F. Pitkin
                                                               Banking Commissioner



This order was sent by certified mail,
return receipt requested, to
Respondents on October 30, 2008.

Cornerstone Credit Corporation 
2024 East Main Street
Waterbury, CT 06705            Certified Mail No. 7099 3400 0009 0180 2888

Cornerstone Credit Corporation 
P.O. Box 3367
Waterbury, CT 06705-2605     Certified Mail No. 7099 3400 0009 0180 2895

Rene M. Gagnon 
335 Meriden Road
Waterbury, CT 06705             Certified Mail No. 7099 3400 0009 0180 2901

Rene M. Gagnon 
172 Alexander Avenue
Waterbury, CT 06705             Certified Mail No. 7099 3400 0009 0180 2918

                                                               


Administrative Orders and Settlements