DOB: Commercial Recovery Systems, Inc. - Temp. CD-Sum Sus-NOI Rev-Ref Ren-NOI CD-CP

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IN THE MATTER OF:

COMMERCIAL RECOVERY
SYSTEMS, INC.

     ("Respondent")









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TEMPORARY ORDER TO
CEASE AND DESIST

ORDER OF SUMMARY SUSPENSION

NOTICE OF INTENT TO REVOKE
AND REFUSE TO RENEW
CONSUMER COLLECTION AGENCY
LICENSE

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 Part XII of Chapter 669, Sections 36a-800 to 36a-810, inclusive, of the Connecticut General Statutes, “Consumer Collection Agencies”, and Sections 36a-809-6 to 36a-809-17, inclusive, of the Regulations of Connecticut State Agencies (“Regulations”).
 
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 it has violated, is violating or is about to violate the provisions of the Connecticut General Statutes or Regulations within the jurisdiction of the Commissioner.

Section 36a-17(a) of the Connecticut General Statutes provides, in pertinent part, that:

The commissioner, in the commissioner’s discretion, may, subject to the provisions of section 36a-21 and the Freedom of Information Act, as defined in section 1-200; (1) 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 . . . .

Subsection (a) and (b) of Section 36a-51 of the Connecticut General Statutes provide, in pertinent part, that:

(a)  The commissioner may . . . revoke or refuse to renew 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, [or] regulations . . . 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.  If the commissioner finds that public health, safety or welfare imperatively requires emergency action, and incorporates a finding to that effect in the notice, the commissioner may order summary suspension of a license in accordance with subsection (c) of section 4 182 and require the licensee to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this section, pending proceedings for . . . revocation or refusal to renew.

(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 or 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 . . . revocation or refusal to renew.  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 or refuse to renew the license.  No such license shall be suspended or revoked except in accordance with the provisions of chapter 54.

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, or any regulation . . . adopted . . . thereunder, 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, [or] regulations . . . 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, or any regulation . . . adopted . . . thereunder, 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, [or] regulations . . . 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 not later than fourteen days after 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, [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 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. 

Section 4-182(b) of the Connecticut General Statutes provides, in pertinent part, that:

When a licensee has made timely and sufficient application for the renewal of a license . . . , the existing license shall not expire until the application has been finally determined by the agency . . . .

Section 4-182(c) of the Connecticut General Statutes, as amended by Public Act 13-279, provides, in pertinent part, that:

If the agency finds that public health, safety or welfare imperatively requires emergency action, and incorporates a finding to that effect in its order, summary suspension of a license may be ordered pending proceedings for revocation or other action.  These proceedings shall be promptly instituted and determined.


II.  MATTERS ASSERTED

1.
Respondent is a Texas corporation with its main office at 8035 East R.L. Thornton Freeway, Suite 220, Dallas, Texas.
2.
Respondent currently holds a license to act as a consumer collection agency in this state (No. 2130).
3.
On January 2, 2013, an examiner from the Division attempted to conduct an examination of Respondent by sending a letter requesting certain information (“First Day Letter”) and a Manager’s Questionnaire.
4.
During the period from February 27 to June 20, 2013, the examiner left several voice-mail messages and sent several e-mails to David Devany, Vice President of Respondent (“Devany”) and/or Jeff Wood, Associate General Counsel for Respondent (“Wood”), and requested that Respondent forward the information and documents requested in the First Day Letter.
5.
On March 14, 2013, Wood called the examiner and stated that Respondent would provide a response to the First Day Letter by April 1, 2013.
6. On April 24, 2013, Wood called the examiner and informed him that almost everything was ready and Respondent would provide the response to the First Day Letter by April 29, 2013.
7. By e-mails dated May 1 and May 3, 2013, the examiner informed Wood that, to date, the Division had not received the documentation requested in the First Day Letter and if such documentation was not received by May 7, 2013, the matter would be referred for further action.
8. On May 20, 2013, the Division received some of the requested documents.
9. By e-mail dated May 29, 2013, the examiner requested Devany and Wood to respond to unanswered questions on the Manager’s Questionnaire and to send the remaining documents requested in the First Day Letter.  By e-mail dated May 31, 2013, the examiner reminded Devany and Wood that a response to the May 29, 2013 request had not been received.
10. By e-mail dated June 3, 2013, Wood informed the examiner that he was working on the missing information and needed a few more days to respond.
11. On June 13, 2013, the Division again received an incomplete response.
12. By e-mail dated June 16, 2013, the examiner reminded Devany and Wood that Respondent’s June 13, 2013, response was not complete and that the Division still needed the remaining items requested in the First Day Letter.
13. By e-mail dated June 19, 2013, Wood claimed that the prior submission was complete; and in response, the examiner provided Wood with a list of the items that were previously received by the Division.
14. By e-mail dated June 20, 2013, Wood acknowledged that the Manager’s Questionnaire was not submitted and stated that it would be sent by fax that afternoon.
15. By e-mails dated June 21 and June 25, 2013, the examiner reminded Wood that the Manager’s Questionnaire had not been received.  On June 25, 2013, the examiner received a partial response.
16. By e-mail dated June 27, 2013, the examiner provided Devany with a list of additional information to be submitted to the Division with a response due by July 9, 2013.
17. By e-mails dated July 11 and July 17, 2013, the examiner reminded Devany and Wood that no response to the June 27, 2013 request had been received.
18. On August 14, 2013, the Division sent a letter by certified mail, return receipt requested, to Respondent, pursuant to Section 4-182(c) of the Connecticut General Statutes (“Compliance Letter”), requesting again that Respondent provide certain information as part of its examination.  The Compliance Letter gave Respondent an opportunity to show compliance with all lawful requirements for the retention of its consumer collection agency license.  To date, no response has been received.
19.
On September 3, 2013, Respondent filed with the Commissioner an application for Renewal of Consumer Collection Agency License – Main Office.


III.  STATUTORY BASIS FOR REVOCATION AND REFUSAL TO RENEW CONSUMER
COLLECTION AGENCY LICENSE, ORDER TO CEASE AND DESIST
AND IMPOSITION OF CIVIL PENALTY

Section 36a-17 of the Connecticut General Statutes provides, in pertinent part, that:

(c)  For the purpose of any investigation, [or] examination . . . the commissioner may . . . require written statements and require the production of any records which the commissioner deems relevant or material.  The commissioner may require that certified copies of any such records be provided to the commissioner at the commissioner’s office. . . .

(d)  Any person who is the subject of any such investigation, [or] examination . . . shall make its records available to the commissioner in readable form; . . . 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. . . .

(f)  As used in this section, “records” includes, but is not limited to, books, papers, correspondence, memoranda, agreements, diaries, logs, notes, ledgers, journals, visual, audio, magnetic or electronic recordings, computer printouts and software, and any other documents.

Section 36a-806(a) of the Connecticut General Statutes provides, in pertinent part, that:

The commissioner shall have the power to examine the affairs of every consumer collection agency in this state in order to determine whether it has been or is engaged in any act or practice prohibited by sections 36a-805 to 36a-808, inclusive.

Section 36a-801(b) of the Connecticut General Statutes provides, in pertinent part, that:

To further the enforcement of this section and to determine the eligibility of any person holding a license, the commissioner may, as often as the commissioner deems necessary, examine the licensee’s books and records, and may, at any time, require the licensee to submit such a financial statement for the examination of the commissioner, so that the commissioner may determine whether the licensee is financial responsible to carry on a consumer collection agency business within the intents and purposes of sections 36a-800 to 36a-810, inclusive. . . .

Respondent’s conduct, as more fully described in paragraphs 4 through 19, inclusive, of the Matters Asserted, constitutes violations of Sections 36a-17(d) and 36a-801(b) of the Connecticut General Statutes.  Such conduct constitutes sufficient grounds for the Commissioner to revoke and refuse to renew Respondent’s license to act as a consumer collection agency in this state pursuant to subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes, forms the basis to issue an order to cease and desist pursuant to Section 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty 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.

IV.  FINDINGS AND STATUTORY BASIS FOR TEMPORARY ORDER
TO CEASE AND DESIST AND ORDER OF SUMMARY SUSPENSION

The Commissioner finds that public safety and welfare imperatively require emergency action to summarily suspend Respondent’s license to act as a consumer collection agency in this state under Section 4-182(c) of the Connecticut General Statutes, as amended, and finds that public welfare requires immediate action to issue a temporary order requiring Respondent to cease and desist from violating the law under Section 36a-52(b) of the Connecticut General Statutes, in that Respondent’s failure to produce copies of records to the Commissioner impedes the Commissioner’s ability to carry out his duties to examine Respondent’s activities in order to determine whether Respondent is in all respects properly qualified and trustworthy, and therefore adversely effects the public.

V.  TEMPORARY ORDER TO CEASE AND DESIST, ORDER OF SUMMARY SUSPENSION,
NOTICE OF INTENT TO REVOKE AND REFUSE TO RENEW CONSUMER
COLLECTION AGENCY LICENSE, NOTICE OF INTENT TO ISSUE ORDER
TO CEASE AND DESIST, NOTICE OF INTENTTO 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 and refuse to renew Respondent’s license to act as a consumer collection agency in this state pursuant to subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes, forms a basis to issue an order to cease and desist against Respondent pursuant to Section 36a-52(a) of the Connecticut General Statutes and to impose a civil penalty upon Respondent pursuant to Section 36a-50(a) of the Connecticut General Statutes;

AND WHEREAS, the Commissioner has made the findings required under Section 36a-52(b) of the Connecticut General Statutes and Section 4-182(c) of the Connecticut General Statutes, as amended.

THE COMMISSIONER THEREFORE ORDERS, pursuant to the authority granted in Section 36a-52(b) of the Connecticut General Statutes, that Commercial Recovery Systems, Inc., immediately CEASE AND DESIST from further violations of Sections 36a-17(d) and 36a-801(b) of the Connecticut General Statutes.  This Temporary Order to Cease and Desist shall become effective upon receipt by Commercial Recovery Systems, 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 to Cease and Desist.
 
THE COMMISSIONER FURTHER ORDERS, pursuant to the authority granted in Section 36a 51(a) of the Connecticut General Statutes and Section 4-182(c) of the Connecticut General Statutes, as amended, that the license of Commercial Recovery Systems, Inc., to act as a consumer collection agency in this state be and is hereby SUMMARILY SUSPENDED pending proceedings for revocation and refusal to renew.
 
FURTHER, notice is hereby given to Respondent that the Commissioner intends to REVOKE and REFUSE TO RENEW Respondent’s license to act as a consumer collection agency in this state, issue an order requiring Respondent to CEASE AND DESIST from violating Sections 36a-17(d) and 36a-801(b) of the Connecticut 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 Respondent’s receipt of this Temporary Order to Cease and Desist, Order of Summary Suspension, Notice of Intent to Revoke and Refuse to Renew Consumer Collection Agency License, 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 subsections (a) and (b) of Section 36a 51, and Sections 36a-52(a) and 36a-50(a) of the Connecticut General Statutes.  This Temporary Order to Cease and Desist, Order of Summary Suspension, Notice of Intent to Revoke and Refuse to Renew Consumer Collection Agency License, 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 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 January 16, 2014, 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 revoking and refusing to renew Respondent’s license to act as a consumer collection agency in this state from 8035 East R.L. Thornton Freeway, Suite 220, Dallas, Texas, issue an order that Respondent cease and desist from violating Sections 36a-17(d) and 36a-801(b) of the Connecticut General Statutes, and may order a civil penalty not to exceed One Hundred Thousand Dollars ($100,000) per violation be imposed upon Respondent.



So ordered at Hartford, Connecticut
this 18th day of November 2013.                  ________/s/_________
                                                               Howard F. Pitkin
                                                               Banking Commissioner


CERTIFICATION

I hereby certify that on this 19th day of November 2013, the foregoing Temporary Order to Cease and Desist, Order of Summary Suspension, Notice of Intent to Revoke and Refuse to Renew Consumer Collection Agency License, 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 certified mail, return receipt requested, to Commercial Recovery Systems, Inc., Attention:  Jeff Wood, General Counsel, 8035 East R.L. Thornton Freeway, Suite 220, Dallas, Texas 75228, certified mail no 70121010000172649333; and to Commercial Recovery Systems, Inc., Attention:  David Devany, Vice President, 8035 East R.L. Thornton Freeway, Suite 220, Dallas, Texas 75228, certified mail no. 70121010000172645465.

                                                              ________/s/_________
                                                              Doniel Kitt
                                                              Prosecuting Attorney
 


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