DOB: Michael Schulman d/b/a New England Financial, Notice of Intent to Revoke Mortgage Broker License, Impose Civil Penalty

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IN THE MATTER OF:

MICHAEL SCHULMAN d/b/a
NEW ENGLAND FINANCIAL

    ("Respondent")

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NOTICE OF INTENT TO REVOKE
MORTGAGE BROKER LICENSE

NOTICE OF INTENT TO IMPOSE
CIVIL PENALTY

AND

NOTICE OF RIGHT TO HEARING


I.  LEGAL AUTHORITY AND JURISDICTION

The Banking Commissioner (“Commissioner”) is charged with the administration of Part I of Chapter 668, Sections 36a-485 to 36a-534a, inclusive, of the Connecticut General Statutes, “Mortgage Lenders, Brokers and Originators” (“Act”).
 
Pursuant to the authority granted by Section 36a-17 of the Connecticut General Statutes, the Commissioner, through the Consumer Credit Division (“Division”) of the Department of Banking, has investigated the activities of Respondent to determine if he has violated, is violating or is about to violate the provisions of the Connecticut General Statutes within the jurisdiction of the Commissioner.
 
Section 36a-17(a) of the Connecticut General Statutes provides:
The 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.
Section 36a-494(a)(1) of the 2008 Supplement to the General Statutes, as amended by Public Acts 07-91, 07-156 and 08-176, provides, in pertinent part, that:
The commissioner may . . . revoke . . . any . . . mortgage broker license . . . in accordance with the provisions of section 36a-51 . . . .  
Section 36a-51 of the 2008 Supplement to the General Statutes provides, in pertinent part, that:
(a)  The commissioner may . . . revoke . . . any license issued by the commissioner under any provision of the general statutes by sending a notice to the licensee by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt.  The notice shall be deemed received by the licensee on the earlier of the date of actual receipt or seven days after mailing or sending.  Any such notice shall include:  (1) A statement of the time, place, and nature of the hearing; (2) a statement of the legal authority and jurisdiction under which the hearing is to be held; (3) a reference to the particular sections of the general statutes . . . involved; (4) a short and plain statement of the matters asserted; and (5) a statement indicating that the licensee may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice. . . .
(b)  If 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 . . . revoke . . . 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 . . . revocation . . . .  If the licensee does not request a hearing within the time specified in the notice or fails to appear at the hearing, the commissioner shall . . . revoke . . . the license.  No such license shall be . . . revoked except in accordance with the provisions of chapter 54.
Section 36a-494(b) of the 2008 Supplement to the General Statutes, as amended by Public Acts 07-91, 07-156 and 08-176, provides, in pertinent part, that:
Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any of the provisions of sections 36a-485 to 36a-498a, inclusive, . . . the commissioner may take action against such person or licensee in accordance with . . . [section] 36a-50 . . . .
Section 36a-50(a) of the Connecticut General Statutes provides, in pertinent part, that:
(1)  Whenever the commissioner finds as the result of an investigation that any person has violated any provision of the general statutes within the jurisdiction of the commissioner, . . . the commissioner may send a notice to such person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt.  The notice shall be deemed received by the person on the earlier of the date of actual receipt or seven days after mailing or sending.  Any such notice shall include:  (A) A statement of the time, place, and nature of the hearing; (B) a statement of the legal authority and jurisdiction under which the hearing is to be held; (C) a reference to the particular sections of the general statutes . . . alleged to have been violated; (D) a short and plain statement of the matters asserted; (E) the maximum penalty that may be imposed for such violation; and (F) a statement indicating that such person may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice.
(2)  If 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, . . . 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 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.
(3)  Each action undertaken by the commissioner under this subsection shall be in accordance with the provisions of chapter 54.


II.  MATTERS ASSERTED
1.
Respondent is a sole proprietor with his principal place of business located at 191 Post Road West, Westport, Connecticut.
2.
From June 15, 2004 through June 30, 2008, Respondent has held a license (No. 13978) as a first mortgage broker and a license (No. 13979) as a secondary mortgage broker under the Act, which licenses, pursuant to Section 39 of Public Act 08-176, are deemed to be a mortgage broker license (No. 13978) on and after July 1, 2008.
3.
From at least January 16, 2007 to September 17, 2008, Respondent employed a mortgage loan originator (“Originator”) without registering or licensing such Originator.
4.
Between August 30, 2007 and October 20, 2008, the Commissioner received five complaints involving the activities of the Originator.  The Commissioner brought the complaints to Respondent’s attention and asked him to respond to the complaints.
5. Respondent has provided a response to only two of the complaints referred to in paragraph 4 of the Matters Asserted and with respect to one of the two has failed to respond to the Commissioner’s request for additional information.
6.
From June 30 to July 1, 2008, the Division conducted an examination of Respondent and by e-mail dated August 11, 2008, requested additional information concerning five loan files.  Respondent has not provided all of the requested information.
7.
On October 6, 2008, the Division sent Respondent a letter pursuant to Section 4-182(c) of the Connecticut General Statutes, giving Respondent an opportunity to show compliance with all lawful requirements for retention of his mortgage broker license.
8. By facsimile transmission dated October 20, 2008, Respondent’s office manager claimed Respondent had responded to the complaints and stated that the requested information concerning the loan files would be collected and forwarded.
9. On October 27, 2008, the Division sent Respondent a second letter pointing out that Respondent had failed to respond to two of the complaints; enclosing two additional complaints received by the Commissioner involving the Originator and asking Respondent to respond to those complaints.  Respondent has not provided a response to the Commissioner regarding the four complaints.
10.
As of the date of this Notice, Respondent has failed to show compliance with all lawful requirements for retention of his mortgage broker license.
 
 
III.  STATUTORY BASES FOR REVOCATION OF MORTGAGE
BROKER LICENSE AND IMPOSITION OF CIVIL PENALTY
 
Section 36a-486(b) of the 2008 Supplement to the General Statutes, as amended by Public Acts 07-156 and 08-176, provides in pertinent part, that:
No person licensed as a . . . mortgage broker shall employ or retain a mortgage loan originator unless such mortgage loan originator is licensed under sections 36a-485 to 36a-498a, inclusive.
Section 36a-17(d) of the Connecticut General Statutes provides, in pertinent part, that:
Any person who is the subject of any . . . investigation, [or] examination . . . shall . . . cooperate with the commissioner.
Section 36a-494(a)(1) of the 2008 Supplement to the General Statutes, as amended by Public Acts 07-91, 07-156 and 08-176, provides, in pertinent part, that:
The commissioner may . . . revoke . . . any . . . mortgage broker license . . . for any reason which would be sufficient grounds for the commissioner to deny an application for such license under sections 36a-485 to 36a-498a, 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:  . . . (C) violated any of the provisions of this title . . .
1.
Respondent’s employment or retention of a loan originator absent registration or licensure, as more fully described in paragraph 3 of the Matters Asserted, constitutes a violation of Section 36a-486(b) of the 2008 Supplement to the General Statutes, as amended.  Such violation constitutes grounds to revoke Respondent’s mortgage broker license pursuant to Section 36a-494(a)(1)(C) of the 2008 Supplement to the General Statutes, as amended, and Section 36a-51 of the 2008 Supplement to the General Statutes, and forms the basis to impose a civil penalty against Respondent pursuant to Section 36a-494(b) of the 2008 Supplement to the General Statutes, as amended, and Section 36a-50(a) of the Connecticut General Statutes.  Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Respondent in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.  The Commissioner intends to impose a maximum civil penalty upon Respondent not to exceed Ten Thousand Dollars ($10,000), subject to his right to a hearing on the allegations set forth above.
2.
Respondent’s failure to respond to the complaints and provide the Commissioner with the information requested on five loan files, as more fully described in paragraphs 4 through 10 of the Matters Asserted, constitutes a violation of Section 36a-17(d) of the Connecticut General Statutes.  Such violation constitutes grounds to revoke Respondent’s mortgage broker license pursuant to Section 36a-494(a)(1)(C) of the 2008 Supplement to the General Statutes, as amended, and Section 36a-51 of the 2008 Supplement to the General Statutes, and forms the basis to impose a civil penalty against Respondent pursuant to Section 36a-50(a) of the Connecticut General Statutes.  Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Respondent in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.  The Commissioner intends to impose a maximum civil penalty upon Respondent not to exceed Twenty Thousand Dollars ($20,000), subject to his right to a hearing on the allegations set forth above.
 
 
IV.  NOTICE OF INTENT TO REVOKE MORTGAGE BROKER LICENSE,
NOTICE OF INTENT TO IMPOSE CIVIL PENALTY
AND NOTICE OF RIGHT TO HEARING
 
WHEREAS, the Commissioner has reason to believe that Respondent has engaged in acts or conduct which constitutes sufficient grounds for the Commissioner to revoke his license to act as a mortgage broker in Connecticut pursuant to Section 36a-494(a)(1)(C) of the 2008 Supplement to the General Statutes, as amended, and Section 36a-51 of the 2008 Supplement to the General Statutes, and forms the basis to impose a civil penalty pursuant to Section 36a-494(b) of the 2008 Supplement to the General Statutes, as amended, and Section 36a-50(a) of the Connecticut General Statutes.
 
NOW THEREFORE, notice is hereby given to Respondent that the Commissioner intends to REVOKE Respondent’s license to act as a mortgage broker in Connecticut, and to impose a CIVIL PENALTY upon Respondent as set forth herein, subject to Respondent’s right to a hearing on the allegations set forth above.
 
A hearing will be granted to Respondent if a written request for a hearing is received from Respondent by the Department of Banking, Legal Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following its receipt of this Notice of Intent to Revoke Mortgage Broker License, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing, as set forth in Section 36a-51 of the 2008 Supplement to the General Statutes and Section 36a-50(a) of the Connecticut General Statutes.  This Notice of Intent to Revoke Mortgage Broker License, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing shall be deemed received on the earlier of the date of actual receipt, or seven days after mailing or sending.  The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address.  If Respondent will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”.  Once a written request for a hearing is received, the Commissioner may issue a notification of hearing and designation of hearing officer that acknowledges receipt of a request for a hearing, designates a presiding officer and sets the date of the hearing in accordance with Section 4-177 of the Connecticut General Statutes and Section 36a-1-21 of the Regulations of Connecticut State Agencies.  If a hearing is requested, the hearing will be held on February 4, 2009, at 9:30 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
 
The hearing will be held in accordance with the provisions of Chapter 54 of the Connecticut General Statutes, unless Respondent fails to appear at the requested hearing.  At such hearing, Respondent will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.
 
If Respondent does not request a hearing within the time prescribed, the Commissioner will issue an order revoking Respondent’s license to act as a mortgage broker in Connecticut and may order that the maximum civil penalty of Thirty Thousand Dollars ($30,000) be imposed upon Respondent.
 
 
 
So ordered at Hartford, Connecticut
this 16th day of December 2008.        ________/s/_________
                                                    Howard F. Pitkin
                                                    Banking Commissioner
 
 
 
CERTIFICATION
 
I hereby certify that on this 16th day of December 2008, the foregoing Notice of Intent to Revoke Mortgage Broker License, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing was sent by registered mail, return receipt requested, to Michael Schulman d/b/a New England Financial, 191 Post Road West, Westport, Connecticut 06880, registered mail no. RB028035574US.
 
 
                                                   ________/s/_________
                                                   Nirja Savill
                                                   Prosecuting Attorney
 

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