DOB: World Law Debt, Inc. - Findings of Fact, Conclusions of Law and Order



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IN THE MATTER OF:

WORLD LAW DEBT, INC. ("WLD")

WORLD LAW PROCESSING ("WLP")

ORION PROCESSING, LLC
d/b/a WORLD LAW DEBT
d/b/a WORLD LAW GROUP
("Orion Processing")

     (Collectively, "Respondents")


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FINDINGS OF FACT,
CONCLUSIONS OF LAW
AND ORDER


                     

 FINDINGS OF FACT 

1.On July 8, 2013, the Banking Commissioner (“Commissioner”) issued a Temporary Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing against Respondents (collectively “Notice”).  The Notice is incorporated by reference herein.  (Tr. at 5-6, 10-11; H.O. Ex. 1; State Exs. 1, 3.)
2.The Notice quoted provisions from Sections 36a-52(a) and 36a-50(a) of the General Statutes of Connecticut concerning the consequences of a failure to appear at a scheduled healing.  (Tr. at 5-6, 10-11; H.O. Ex. 1; State Exs. 1, 3.)
3.The Notice was issued pursuant to Sections 36a-52(a) and 36a-50(a) of the General Statutes of Connecticut, and Sections 36a-671 to 36a-671e, inclusive, of the General Statutes of Connecticut contained in Part II of Chapter 669 of the General Statutes of Connecticut, “Debt Adjusters and Debt Negotiation”.  (Tr. at 5-6, 10-11; H.O. Ex. 1; State Exs. 1, 3.)
4.The Notice alleges that Respondents engaged in debt negotiation in this state without obtaining the required license, which constitutes violations of Section 36a-671(b) of the General Statutes of Connecticut.  The Notice advised Respondents that such violations form the basis to issue an order to cease and desist against Respondents pursuant to Sections 36a-671a(b) and 36a-52(a) of the General Statutes of Connecticut, issue an order to make restitution against Respondents pursuant to Sections 36a-671a(b) and 36a-50(c) of the General Statutes of Connecticut, and impose a civil penalty upon each Respondent pursuant to Sections 36a-671a(b) and 36a-50(a) of the General Statutes of Connecticut. (Tr. at 5-6, 10-11; H.O. Ex. 1; State Exs. 1, 3.)
5.The Notice advised Respondents that the Order to Make Restitution shall remain in effect and become permanent against any Respondent that fails to appear at any hearing, and the Commissioner will issue an order that any Respondent that fails to appear at any hearing will cease and desist from violating Section 36a-671(b) of the Connecticut General Statutes, and may order a civil penalty in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation be imposed upon any Respondent that fails to appear at any hearing.  (Tr. at 5-6, 10-11; H.O. Ex. 1; State Exs. 1, 3.)
6.In the Order to Make Restitution, the Commissioner ordered that Respondents make restitution of any sums obtained as a result of Respondents’ violations of Sections 36a-671(b) of the General Statutes of Connecticut, plus interest at the legal rate set forth in Section 37-1 of the General Statutes of Connecticut.  The Order to Make Restitution ordered that within thirty (30) days from the date this Order to Make Restitution becomes permanent Respondents shall repay each Connecticut resident the amounts identified in Exhibit A of the Notice plus interest, and repay to any other Connecticut resident who entered into an agreement for debt negotiation services with World Law Debt, Inc. or World Law Processing on and after October 1, 2009, any fees paid by such Connecticut resident to World Law Debt, Inc., World Law Processing and/or Orion Processing, LLC in connection with such agreements plus interest.  (Tr. at 5-6, 10-11; H.O. Ex. 1; State Exs. 1, 3.)
7.The Notice was sent by certified mail, return receipt requested, to Respondents.  (Tr. at 5-6, 10-11; H.O. Ex. 1; State Ex. 1.)
8.On August 1, 2013, Attorney Brad Haskins requested a hearing on the Notice on behalf of Respondents.  (Tr. at 5-6, 11; H.O. Ex. 1; State Ex. 2.)
9.On August 12, 2013, the Commissioner issued a Notification of Hearing and Designation of Hearing Officer stating that the hearing would be held on October 1, 2013, at 10 a.m. (“Hearing”), at the Department of Banking (“Department”) and appointing Attorney Cynthia Antanaitis as Hearing Officer.  The Notification of Hearing and Designation of Hearing Officer also stated that the attorney representing the Department is Doniel Kitt, Principal Attorney.  (Tr. at 5-6, 11; H.O. Ex. 1; State Ex. 4.)
10.On August 12, 2013, Attorney Kitt also e-mailed the Notification of Hearing and Designation of Hearing Officer with the Notice and Exhibit A to the Notice attached.  (Tr. at 11; State Ex. 3.)
11.On August 19, 2013, the Commissioner issued a Redesignation of Hearing Officer appointing Attorney Paul A. Bobruff as Hearing Officer.  (Tr. at 6, 11-12; H.O. Ex. 2; State Ex. 6.)
12.On September 23, 2013, Attorney Kitt sent Attorney Haskins an E-mail stating that since there had not been any further contact from him and he had not withdrawn the request for a hearing that Attorney Kitt could only assume the hearing was going forward on October 1, 2013.  (Tr. at 12; State Ex. 8.)
13.
On September 23, 2013, Attorney Haskins replied to Attorney Kitt’s E-mail stating that Respondents were assuming that the hearing was going forward. (Tr. at 12-13; State Ex. 9.)
14. On September 24, 2013, the Hearing Officer E-mailed Attorney Haskins and Attorney Kitt reminding them of the October 1, 2013, hearing, and requested clarification from Attorney Haskins regarding his ability to appear in this matter on behalf of the Respondents pursuant to Section 36a-1-32 of the Regulations of Connecticut State Agencies.  (Tr. at 6-7, 13; H.O. Ex. 3; State Ex. 10.)
15.
On September 26, 2013, Attorney Haskins sent an E-mail to the Hearing Officer and Attorney Kitt, regarding the case which included the following statement from Attorney Haskins “[i]f we all wish to proceed on Tuesday we will send local counsel.”  (Tr. at 7-8, 13-14; H.O. Ex. 4; State Ex. 11.)
16.On September 27, 2013, the Hearing Officer E-mailed Attorney Haskins and Attorney Kitt advising them that that Hearing will proceed as scheduled on Tuesday, October 1, 2013, and advising Attorney Haskins that any local counsel obtained to represent the Respondents must file an appearance as soon as possible pursuant to Section 36a-1-32 of the Regulations of Connecticut State Agencies.  (Tr. at 14; State Ex. 13.)
17.  On October 1, 2013, a hearing was held at the Department.  Attorney Kitt represented the Consumer Credit Division of the Department at the Hearing.  (Tr. at 4-5.)
18.  Neither Respondents nor their legal counsel appeared at the Hearing and the Hearing Officer noted for the record that the Respondents and their counsel were aware that the Hearing was going forward and the Hearing Officer had not received any communications from Respondents or their counsel since the September 26, 2013, E-mail from Attorney Haskins.  (Tr. at 5, 8, 10, 14-15.)
19.  The Hearing was conducted in accordance with Chapter 54 of the General Statutes of Connecticut, the “Uniform Administrative Procedure Act” and the Department’s contested case regulations, Sections 36a-1-19 to 36a-1-57, inclusive, of the Regulations of Connecticut State Agencies.  (Tr. at 8-9; H.O. 1; State Exs. 1, 3, 4.)
20.WLD is a purported corporation and division of World Law Group with offices at 2201 Donley Drive, Suite 250, Austin, Texas, and 7668 Warren Parkway, Suite 325, Frisco, Texas.  (Tr. at 5-6, 10-11; H.O. Ex. 1; State Exs. 1, 3.)
21.  WLP is a purported division of WLD with mailing addresses at P.O. Box 82641 Austin, Texas, and 7668 Warren Parkway, Suite 315, Frisco, Texas.  (Tr. at 5-6, 10-11; H.O. Ex. 1, State Exs. 1, 3.)
22.   Orion Processing is a purported limited liability company with an office at 2201 Donley Drive, Suite 250, Austin, Texas.  (Tr. at 5-6, 10-11; H.O. Ex. 1; State Exs. 1, 3.)
23.On May 14, 2012, a Connecticut resident entered into a “Customer Enrollment Package” (“Agreement”) with WLD, and indirectly WLP, in which the Connecticut resident engaged the services of WLD and WLP in connection with negotiating a possible mitigation of such Connecticut resident’s unsecured debt.  (Tr. at 5-6, 10-11, 18-19; H.O. Ex. 1; State Exs. 1, 3, 14.)
24.In connection with the Agreement, total payment of $350 via ACH was processed from the account of the Connecticut resident referred to in paragraph 4 of the Notice, and held in an account established by Orion Processing with a third-party (“Third Party”).  The total payment of $350 is in excess of amounts that debt negotiators may charge for services pursuant to the Schedule of Maximum Fees established by the Commissioner on or about October 1, 2009 (“Schedule of Maximum Fees”).  (Tr. at 5-6, 10-11, 18-19; H.O. Ex. 1; State Exs. 1, 3, 14)
25.On January 9, 2013, counsel for Third Party provided an agreement in response to the Division’s request for all agreements between WLD and Third Party.  Such agreement was between Third Party and Orion Processing.  (Tr. at 5-6, 10-11, 22-23; H.O. Ex. 1; State Exs. 1, 3, 19.)
26.   The Schedule of Maximum Fees provides, in pertinent part, that “[a] debt negotiator of unsecured debt may charge the debtor a reasonable one-time initial or set-up fee in an amount not to exceed fifty dollars ($50). . . .  A debt negotiator of unsecured debt may collect total aggregate fees including the initial fee and service fees, not to exceed ten percent (10%) of the amount by which the consumer’s debt is reduced as part of each settlement as agreed to in the debt negotiation service contract as each settlement is achieved”.  (Tr. at 5-6, 10-11; H.O. Ex. 1; State Exs. 1, 3.)
27.On June 19, 2012, a second Connecticut resident entered into a “Client Service Agreement” with WLD, and indirectly WLP, in which the Connecticut resident engaged the services of WLD and WLP in connection with negotiating a possible mitigation of such Connecticut resident’s unsecured debt.  (Tr. at 5-6, 10-11, 30-31; H.O. Ex. 1; State Exs. 1, 3, 23.)
28.  In connection with the Client Service Agreement, a total payment of at least $2,961.27 was paid to and held in an account established with Third Party by the Connecticut resident referred to in paragraph 7 of the Notice, which amount is in excess of amounts that debt negotiators may charge for services pursuant to the Schedule of Maximum Fees.  (Tr. at 5-6, 10-11, 31; H.O. Ex. 1; State Exs. 1, 3, 23.)
29.From at least July 20, 2010 to December 17, 2012, Respondents engaged in debt negotiation of unsecured debt on behalf of at least 5 Connecticut residents and were paid at least $275,931.26 for such debt negotiation services.  (Tr. at 5-6, 10-11, 18-19, 22-24, 27-40, H.O. Ex. 1, State Exs. 1, 3, 14, 19-27.)
30.At no time relevant hereto have Respondents been licensed to engage in debt negotiation in this state, nor do Respondents qualify for an exemption from such licensure.  (Tr. at 5-6, 10-11, 13, 15, 19-24, 45-47; H.O. Ex. 1; State Exs. 1, 3, 11, 15, 16, 19.)
31.On June 26, 2012, the Commissioner received a complaint filed by the Connecticut resident referred to in paragraph 4 of the Notice, concerning Respondents’ failure to perform or successfully complete the services specified in the Agreement. (Tr. at 5-6, 10-11, 18-19; H.O. Ex. 1; State Exs. 1, 3, 14.)
32.On September 20, 2012, the Commissioner received a complaint filed by the Connecticut resident referred to in paragraph 7 of the Notice, concerning Respondents’ failure to perform or successfully complete the services specified in the Client Service Agreement.  (Tr. at 5-6, 10-11, 27-44; H.O. Ex. 1; State Exs. 1, 3, 20-27.)
33.During the hearing, Attorney Kitt requested a default ruling against Respondents in light of their failure to appear.  (Tr. at 45-46.)
34.At the hearing, the Department requested that a fine of at least $500,000 each be imposed on WLD, WLP and Orion Processing.  (Tr. at 48-50.)


CONCLUSIONS OF LAW 

Jurisdiction and Procedure

1.The Commissioner has jurisdiction over the licensing and regulation of Debt Adjusters and Debt Negotiators pursuant to Sections 36a 671 to 36a-671e, inclusive, of the General Statutes of Connecticut contained in Part II of Chapter 669 of the General Statutes of Connecticut, “Debt Adjusters and Debt Negotiation”.
2.
Section 36a-1-31(b) of the Regulations of Connecticut State Agencies provides that:
When a party fails to appear at a scheduled hearing, the allegations against the party may be deemed admitted.  Without further proceedings or notice to the party, the presiding officer shall submit to the commissioner a proposed final decision containing the relief sought in the notice, provided the presiding officer may, if deemed necessary, receive evidence from the department, as part of the record, concerning the appropriateness of the amount of any civil penalty, fine or restitution sought in the notice.  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.
3.The Notice issued by the Commissioner comported with the requirements of Section 4-177(b) of Chapter 54 of the General Statutes of Connecticut.
4.The Notice complied with the notice requirements of Sections 36a-50(a) [civil penalty], 36a-50(c) [restitution order] and 36a-52(a) [cease and desist order] of the General Statutes of Connecticut.
5.The Respondents received notice that the hearing was scheduled for October 1, 2013.
6.
Section 4-177(c) of Chapter 54 of the General Statutes of Connecticut provides, in pertinent part that “Unless precluded by law, a contested case may be resolved by . . . the default of a party.”

Section 36a-52(a) of the General Statutes of Connecticut Requires that a
 Cease and Desist Order be Issued Where There is a Failure to Appear
7.Subject to a respondent’s right to request a hearing on the matters alleged, Section 36a-52(a) of the General Statutes of Connecticut authorizes the Commissioner to issue a cease and desist order where 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, rule or order adopted or issued thereunder.  Section 36a-52(a) also provides, in part, that, “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.”  (Emphasis added.)
8.In accordance with Section 36a-1-31(b) of the Regulations of Connecticut State Agencies, the factual and legal allegations against the Respondents which were contained in the Notice are deemed admitted and adopted in the Findings of Fact and Conclusions of Law herein contained.
9.In accordance with Section 36a-1-31(b) of the Regulations of Connecticut State Agencies, the Commissioner finds that Respondents WLD, WLP and Orion Processing each violated Section 36a-671(b) of the General Statutes of Connecticut.
10.
The express terms of Section 36a-52(a) of the General Statutes of Connecticut require that the Commissioner issue a cease and desist order against the Respondents given the Respondents’ failure to appear at the hearing.
Imposition of Civil Penalty and Restitution pursuant to
Sections 36a-50(a) and 36a-50(c) of the General Statutes of Connecticut

11.
Subject to a respondent’s right to request a hearing on the matters alleged, Section 36a-50(a) of the General Statutes of Connecticut authorizes the Commissioner to issue a notice of intent to impose a civil penalty of up to $100,000 per violation where 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, rule or order adopted or issued thereunder.

Subdivisions (2) and (3) of subsection (a) of Section 36a-50 provide, in pertinent part, that:
(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, regulation, rule or order, 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.

(3)  Each action undertaken by the commissioner under this subsection shall be in accordance with chapter 54.
(Emphasis added.)

12.Section 36a-50(c) of the Connecticut General Statutes authorizes the Commissioner to order that any person that the Commissioner finds as the result of an investigation has violated any provision of the general statutes within the jurisdiction of the commissioner, or any regulation, rule or order adopted or issued under such provisions, make restitution of any sums shown to have been obtained in violation of any such provision, regulation, rule or order plus interest at the legal rate set forth in section 37-1.  After the Commissioner issues such an order, the person named in the order may, not later than fourteen days after the receipt of such order, file a written request for a hearing.  The order 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 hearing shall be held in accordance with the provisions of chapter 54.
13.
In accordance with Section 36a-1-31(b) of the Regulations of Connecticut State Agencies, the factual and legal allegations against the Respondents which were contained in the Notice are deemed admitted and adopted in the Findings of Fact and Conclusions of Law herein contained.
14. Pursuant to Section 36a-1-31(b) of the Regulations of Connecticut State Agencies, the Hearing Officer, deeming it necessary, received evidence from the Department as part of the record solely concerning the appropriateness of the amount of the civil penalty and restitution sought in the Notice.
15.
In  accordance with Section 36a-1-31(b) of the Regulations of Connecticut State Agencies, the Commissioner finds that (1) Respondents WLD, WLP and Orion Processing each committed at least five violations of Section 36a-671(b) of the General Statutes of Connecticut; and (2) sufficient grounds exist for the Commissioner to impose a civil penalty and issue an order to make restitution against Respondents pursuant to Sections 36a-671a(b), 36a-50(a) and 36a-50(c) of the General Statutes of Connecticut.
16.
The Commissioner finds that the imposition of a civil penalty and an order of restitution are warranted based upon the record and the matters alleged in the Notice.  Future harm to Connecticut residents will be deterred through the imposition of a civil penalty against Respondents and, for those Connecticut residents who have already suffered financial loss as a result of Respondents’ conduct, an order to make restitution will serve to lessen such losses.  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).  Respondents engaged in debt negotiation of unsecured debt on behalf of at Connecticut residents for well over two years and were paid at least $275,931.26 for such debt negotiation services without obtaining the required license, which constitutes violations of Section 36a-671(b) of the General Statutes of Connecticut.  In addition, Respondents have been the subject of complaints by Connecticut residents concerning Respondents’ failure to perform or successfully complete the services specified in their Client Service Agreements and have charged Connecticut residents amounts in excess of amounts that debt negotiators may charge for services pursuant to the Schedule of Maximum Fees established by the Commissioner on or about October 1, 2009.  There were no mitigating factors regarding Respondents’ statutory violations that justify a lesser sanction in this case.  Consequently, the Commissioner finds that the imposition of a civil penalty in the amount of Five Hundred Thousand Dollars ($500,000) each against World Law Debt, Inc., World Law Processing and Orion Processing, LLC is warranted based upon the nature of each Respondents’ actions in violation of the Act and the absence of mitigating factors in the record regarding Respondents’ violations.

PROPOSED ORDER

Having read the record, I hereby ORDER, pursuant to Sections 36a-50, 36a-52 and 36a-671a(b) of the General Statutes of Connecticut, that:|    

1.World Law Debt, Inc., CEASE AND DESIST from violating Section 36a-671(b) of the Connecticut General Statutes;
2.World Law Processing CEASE AND DESIST from violating Section 36a-671(b) of the Connecticut General Statutes;
3.  Orion Processing, LLC CEASE AND DESIST from violating Section 36a-671(b) of the Connecticut General Statutes;
4.  A CIVIL PENALTY of Five Hundred Thousand Dollars ($500,000) be imposed upon World Law Debt, 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 thirty (30) days from the date this Order is mailed;
5.  A CIVIL PENALTY of Five Hundred Thousand Dollars ($500,000) be imposed upon World Law Processing, 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 thirty (30) days from the date this Order is mailed;
6.  A CIVIL PENALTY of Five Hundred Thousand Dollars ($500,000) be imposed upon Orion Processing, LLC, 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 thirty (30) days from the date this Order is mailed;
7. 
THE ORDER TO MAKE RESTITUTION issued against World Law Debt, Inc., World Law Processing and Orion Processing, LLC on July 8, 2013, shall be and is hereby made PERMANENT as follows:

a.   Not later than thirty (30) days from the date this Order to Make Restitution becomes
      permanent, World Law Debt, Inc., World Law Processing and Orion Processing, LLC
      shall repay each Connecticut resident in the amounts identified in Exhibit A of the
      Notice plus interest and repay to any other Connecticut resident who entered into an
      agreement for debt negotiation services with World Law Debt, Inc. or World Law
      Processing on and for debt negotiation services with World Law Debt, Inc. or World
      Law Processing on and after October 1, 2009, any fees paid by such Connecticut
      resident to World Law Debt, Inc., World Law Processing and/or Orion Processing,
      LLC in connection with such agreements plus interest.  Payments shall be made by
      cashier's check, certified check or money order; and 

b.  Provide to Carmine Costa, Director, Consumer Credit Division, Department of
     Banking, 260 Constitution Plaza, Hartford, Connecticut 06103-1800, or
     carmine.costa@ct.gov, evidence of such repayments, including a list of all
     Connecticut residents' names and addresses with whom World Law Debt, Inc. and
     World Law Processing have entered into agreements for debt negotiation services on
     and after October 1, 2009, and full itemization of each Connecticut resident's payments
     made pursuant to the agreement, specifying the dates, amounts and to whom such
     payments were made.
8.In accordance with Section 36a-52(b) of the General Statutes of Connecticut, the Temporary Order to Cease and Desist contained in the Notice shall no longer be in effect upon entry of the Permanent Order to Cease and Desist herein contained; and
9.
The Order shall become effective when mailed.


 

So ordered at Hartford, Connecticut
this 27th day of January 2014.                 ________/s/_________
                                                                 Howard F. Pitkin
                                                                 Banking Commissioner

This Order was sent by E-Mail and facsimile to
Respondents’ counsel of record
on January 27, 2014.
 


Administrative Orders and Settlements