DOB: Expert Financial Services - Temp CD-NOI CD-CP

* * * * * * * * * * * * * * * * * * *

IN THE MATTER OF:

EXPERT FINANCIAL
SERVICES, INC.
  
   ("Respondent")




* * * * * * * * * * * * * * * * * * *

*
*
*
*
*
*
*
*
*
*
*
*
*

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


I.  LEGAL AUTHORITY AND JURISDICTION

The Banking Commissioner (“Commissioner”) is charged with the administration of Sections 36a-671 to 36a-671d, inclusive, of the 2010 Supplement to the General Statutes contained in Part II of Chapter 669 of the Connecticut General Statutes, “Debt Adjusters and Debt Negotiation”.
 
Pursuant to the authority granted by Section 36a-17(a) 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 it 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-52 of the Connecticut General Statutes provides, in pertinent part, that:
(a)  Whenever it appears to the commissioner that any person has violated, is violating or is about to violate 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:  (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 . . . alleged to have been violated; (4) a short and plain statement of the matters asserted; and (5) 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.  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 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 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.
(b)  If the commissioner finds that the public welfare requires immediate action, the commissioner may incorporate a finding to that effect in the notice sent in accordance with subsection (a) of this section and issue a temporary order requiring the person to cease and desist from the activity which constitutes such alleged violation and to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this section.  Such temporary order shall become effective on receipt and, unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or dismissal of the matters asserted in the notice.
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 Michigan corporation with an office at 34020 West Seven Mile Road, Suite 100, Livonia, Michigan.
2.
Respondent, through its website, offers to assist debtors located in Connecticut by negotiating with a debtor’s creditor to reduce monthly mortgage payments, convert an adjustable rate mortgage to a fixed rate mortgage loan, lower interest rates and restructure a debtor’s other debt.
3.
On June 21, 2010, Respondent solicited a Connecticut resident by telephone offering to assist such resident to obtain a reduction in her mortgage interest rate or mortgage payments.
4.
On June 23, 2010, the Connecticut resident paid Respondent, via electronic payment, $2,500 from such resident’s banking account.
5. On June 24, 2010, the Connecticut resident signed and returned, while located in Connecticut, to Respondent the following forms:  (a) Required Document Checklist Form; (b) Client’s Responsibilities during the Loss Mitigation Process; (c) Authorization to Represent; and (d) Limited Power of Attorney.
6. At no time relevant hereto has Respondent been licensed to engage in or offer to engage in debt negotiation in this state.
7. At no time relevant hereto did Respondent provide any satisfactory debt negotiation services to the Connecticut Resident.
8.
On May 7, 2010, the Division sent a letter to Respondent giving Respondent an opportunity to apply for the required license and requested that Respondent provide a list of all Connecticut debtors with whom Respondent had entered into a contract with or represented.  To date, the Division has not received any response.
 
 
III.  STATUTORY BASIS FOR ORDER TO CEASE
AND DESIST AND IMPOSITION OF CIVIL PENALTY
 
Section 36a-671 of the 2010 Supplement to the General Statutes states, in pertinent part, that:
(a) As used in this section and sections 36a-671a to 36a-671d, inclusive, (1) “debt negotiation” means, for or with the expectation of a fee, commission or other valuable consideration, assisting a debtor in negotiating or attempting to negotiate on behalf of a debtor the terms of a debtor’s obligations with one or more mortgagees or creditors of the debtor . . . [and] (2) “debtor” means any individual who has incurred indebtedness or owes a debt for personal, family or household purposes . . . .
(b) No person shall engage or offer to engage in debt negotiation in this state without a license issued under this section for each location where debt negotiation will be conducted. . . .  A person is engaging in debt negotiation in this state if such person:  . . . (2) has a place of business located outside of this state and the debtor is a resident of this state who negotiates or agrees to the terms of the services contract in person, by mail, by telephone or via the Internet while physically present in this state; or (3) has its place of business located outside of this state and the contract concerns a debt that is secured by property located within this state.
Section 36a-671a(b) of the 2010 Supplement to the General Statutes provides, in pertinent part, that:
Whenever it appears to the commissioner that any person has violated, is violating or is about to violate the provisions of sections 36a-671 to 36a-671d, inclusive, . . . the commissioner may take action against such person . . . in accordance with sections 36a-50 and 36a-52.
Section 36a-671b(b) of the 2010 Supplement to the General Statutes provides that:
No person offering debt negotiation services may receive a fee, commission or other valuable consideration for the performance of any service the person offering debt negotiation services has agreed to perform for any consumer until the person offering debt negotiation services has fully performed such service.  A person offering debt negotiation services may receive reasonable periodic payments as services are rendered, provided such payments are clearly stated in the contract.  The commissioner may establish a schedule of maximum fees that a debt negotiator may charge for specific services.
1. Respondent’s engaging and offering to engage in debt negotiation in this state without obtaining the required license, as more fully described in paragraphs 1 through 6, inclusive, of the Matters Asserted, constitutes a violation of Section 36a-671(b) of the 2010 Supplement to the General Statutes.  Such violation forms the basis to issue an order to cease and desist pursuant to Section 36a-671a(b) of the 2010 Supplement to the General Statutes and Section 36a-52(a) of the Connecticut General Statutes and impose a civil penalty pursuant to Section 36a-671a(b) of the 2010 Supplement to the General Statutes 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 civil penalty upon Respondent not to exceed Ten Thousand Dollars ($10,000), subject to Respondent’s right to a hearing on the allegations set forth above.
2.
Respondent’s imposition of a fee upon debtors in connection with its debt negotiation activity in this state in excess of five hundred dollars ($500), as more fully described in paragraph 4 of the Matters Asserted, constitutes a violation of Section 36a-671b(b) of the 2010 Supplement to the General Statutes.  Such violation forms the basis to issue an order to cease and desist pursuant to Section 36a-671a(b) of the 2010 Supplement to the General Statutes and Section 36a-52(a) of the Connecticut General Statutes and impose a civil penalty pursuant to Section 36a-671a(b) of the 2010 Supplement to the General Statutes 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 civil penalty upon Respondent not to exceed Thirty Thousand Dollars ($30,000), subject to Respondent’s right to a hearing on the allegations set forth above.
 
 
IV.  FINDING AND STATUTORY BASIS FOR
TEMPORARY ORDER TO CEASE AND DESIST
 
The Commissioner finds that public welfare requires immediate action to issue a temporary order requiring Respondent to cease and desist from engaging or offering to engage in debt negotiation in this state in violation of Section 36a-671(b) of the 2010 Supplement to the General Statutes, and imposing fees in excess of that allowed by law, and to take such other action as set forth herein to effectuate the purposes of Section 36a-52(b) of the Connecticut General Statutes in that the interests of Connecticut residents are being materially prejudiced by Respondent’s receiving monies from Connecticut residents and failing to perform the contracted services, and that the interests of additional Connecticut residents also may be materially prejudiced.
 
 
V.  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
 
WHEREAS, the Commissioner has reason to believe that Respondent has engaged in acts or conduct which forms the basis to issue an order to cease and desist pursuant to Section 36a-671a(b) of the 2010 Supplement to the General Statutes and Section 36a-52(a) of the Connecticut General Statutes and impose a civil penalty pursuant to Section 36a-671a(b) of the 2010 Supplement to the General Statutes and Section 36a-50(a) of the Connecticut General Statutes;
 
AND WHEREAS, the Commissioner has made the finding required under Section 36a-52(b) of the Connecticut General Statutes.
 
THE COMMISSIONER THEREFORE ORDERS, pursuant to Section 36a-52(b) of the Connecticut General Statutes, that Expert Financial Services, Inc., immediately CEASE AND DESIST from engaging or offering to engage in debt negotiation in this state and imposing fees in excess of that allowed by law, and to take such other action as set forth herein to effectuate the purposes of Section 36a-52(b) of the Connecticut General Statutes.  This Temporary Order shall become effective upon receipt by Expert Financial Services, Inc., and, unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or dismissal of the matters asserted in this Temporary Order.
 
THE COMMISSIONER FURTHER ORDERS, pursuant to Section 36a-52(b) of the Connecticut General Statutes, that:  Not later than 10 days from receipt of this 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, Respondent shall provide to Marlene M. Mannix, Director, Consumer Credit Division, Department of Banking, 260 Constitution Plaza, Hartford, Connecticut 06103-1800, or marlene.mannix@ct.gov, a list of all Connecticut residents with whom it has entered into agreements for debt negotiation services to date where such agreements were either entered before October 1, 2009 but were in effect on October 1, 2009, or were entered into on and after October 1, 2009.  Such submission shall include:
 
1. A copy of each contract pursuant to which Respondent provided or is providing such debt negotiation services;
2.
Each debtor’s name and address, and full itemization of each debtor’s payments made pursuant to the agreement, specifying the dates, amounts and to whom such payments were made.
 
FURTHER, notice is hereby given to Respondent that the Commissioner intends issue an order requiring Respondent to CEASE AND DESIST from violating Sections 36a-671(b) and 36a-671b(b) of the 2010 Supplement to the General Statutes, and 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 by the Department of Banking, Consumer Credit Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following its receipt of this 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 as set forth in Sections 36a-52(a) and 36a-50(a) of the Connecticut General Statutes.  This 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 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 hearing 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 10, 2011, at 10 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 that Respondent cease and desist from violating Sections 36a-671(b) and 36a-671b(b) of the 2010 Supplement to the General Statutes, and may order a civil penalty in an amount not to exceed Forty Thousand Dollars ($40,000) be imposed upon Respondent.
 
 
So ordered at Hartford, Connecticut
this 7th day of December 2010.                ________/s/_________
                                                          Howard F. Pitkin
                                                          Banking Commissioner
 
 
CERTIFICATION
 
I hereby certify that on this 8th day of December 2010, the foregoing 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 was sent by registered mail, return receipt requested to Expert Financial Services, Inc., Attention:  Rick White, Sr., Resident Agent, 34020 West Seven Mile Road, Suite 100, Livonia, Michigan 48152, registered mail no. RB028037371US.
 
 
                                                          ________/s/_________
                                                          Doniel Kitt       
                                                          Prosecuting Attorney
 

Administrative Orders and Settlements