DOB: Arrowhead Investment, Inc. - CD-CP

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IN THE MATTER OF:

ARROWHEAD INVESTMENT, INC.

    ("Respondent")

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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 III of Chapter 668, Sections 36a-555 to 36a-573, inclusive, of the Connecticut General Statutes, “Small Loan Lenders” and the regulations adopted thereunder (Sections 36a-570-1 to 36a-570-17, inclusive, of the Regulations of Connecticut State Agencies) (“Regulations”);
 
WHEREAS, the Commissioner, through the Consumer Credit Division of the Department of Banking (“Department”), conducted an investigation of the activities of Respondent, pursuant to the authority granted by Section 36a-17(a) of the Connecticut General Statutes, to determine if it had violated, was violating or was about to violate the provisions of the Connecticut General Statutes within the jurisdiction of the Commissioner;

WHEREAS,
on January 16, 2014, the Commissioner, acting pursuant to Section 36a-573(c) of the Connecticut General Statutes, subsections (a) and (b) of Section 36a-52 of the Connecticut General Statutes, and subsections (a) and (c) of Section 36a-50 of the Connecticut General Statutes, 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 (collectively “Order and Notice”) against Respondent, which Order and Notice is incorporated herein by reference;
 
WHEREAS, as a result of further investigation, pursuant to Section 36a-1-22 of the Regulations of Connecticut State Agencies, the Commissioner amended the Order and Notice on February 27, 2014, pursuant to Section 36a-573(c) of the Connecticut General Statutes, subsections (a) and (b) of Section 36a-52 of the Connecticut General Statutes, and subsections (a) and (c) of Section 36a-50 of the Connecticut General Statutes, by issuing an Amended and Restated Temporary Order to Cease and Desist, Amended and Restated Order to Make Restitution, Amended and Restated Notice of Intent to Issue Order to Cease and Desist, Amended and Restated Notice of Intent to Impose Civil Penalty, and Notice of Right to Hearing (collectively “Amended Order and Notice”), which Amended Order and Notice is incorporated herein by reference;
 
WHEREAS, the Amended Order and Notice provided Respondent with the opportunity for a hearing, and stated that if a hearing was not requested within 14 days of its receipt, the Amended and Restated Order to Make Restitution shall remain in effect and become permanent against Respondent and the Commissioner would issue an order that Respondent cease and desist from violating Sections 36a-555 and 36a-573(a) 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;
 
WHEREAS, on March 3, 2014, Respondent received the Amended Order and Notice;

WHEREAS, on March 5, 2014, Respondent’s attorney received the Amended Order and Notice;
 
WHEREAS, Respondent failed to request a hearing within the prescribed time period;
 
WHEREAS, the Commissioner alleged in the Amended Order and Notice, with respect to the activity described therein, that Respondent’s making, offering or assisting Connecticut borrowers to obtain consumer loans without obtaining the required license constitutes violations of Section 36a-555 of the Connecticut General Statutes.  Such violations form the basis to issue an order to cease and desist against Respondent pursuant to Section 36a-52(a) of the Connecticut General Statutes, and impose a civil penalty against Respondent pursuant to Section 36a-50(a) of the Connecticut General Statutes;
 
WHEREAS, the Commissioner further alleged in the Amended Order and Notice, with respect to the activity described therein, that Respondent’s charging, contracting for and receiving interest at a rate greater than 12% on at least one consumer loan to a Connecticut resident in an amount less than $15,000, without obtaining the required license constitutes at least one violation of Section 36a-573(a) of the Connecticut General Statutes, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-573(c) and 36a-52(a) of the Connecticut General Statutes, issue an order to make restitution pursuant to Sections 36a-573(c) and 36a-50(c) of the Connecticut General Statutes, and impose a civil penalty pursuant to Sections 36a-573(c) and Section 36a-50(a) of the Connecticut General Statutes;
 
WHEREAS, also in the Amended Order and Notice, the Commissioner ordered, pursuant to Sections 36a-573(c) and 36a-50(c) of the Connecticut General Statutes that, not later than thirty (30) days from the date the Amended and Restated Order to Make Restitution becomes permanent, Respondent shall repay any interest in excess of 12% received by Respondent on or after October 1, 2009, from the Connecticut resident identified in Exhibit A or any other Connecticut resident in connection with a small loan, plus interest, and provide evidence of such repayments to the Director of the Consumer Credit Division;
 
WHEREAS, the Order to Make Restitution remains in effect and became permanent against Respondent on March 20, 2014;
 
WHEREAS, no evidence of repayments by Respondent has been provided to the Director;
 
WHEREAS, Section 36a-52(a) of the Connecticut 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 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 6, inclusive, of Section II of the Amended Order and Notice, shall constitute findings of fact within the meaning of Section 4-180(c) of the 2014 Supplement to the General Statutes, and that the conclusions, as set forth in paragraphs 1 and 2 of Section III of the Amended Order and Notice, shall constitute conclusions of law within the meaning of Section 4-180(c) of the 2014 Supplement to the General Statutes and Section 36a-1-52 of the Regulations of Connecticut State Agencies.
2.
The Commissioner finds that Respondent has engaged in acts or conduct which, pursuant to Sections 36a-573(c) and 36a-52(a) of the Connecticut General Statutes, forms the basis to issue an order to cease and desist against Respondent, and, pursuant to Sections 36a-573(c) and 36a-50(a) of the Connecticut General Statutes forms the basis to impose a civil penalty upon Respondent.
3.
The Commissioner finds that the Amended Order and Notice was given in compliance with Section 36a-52(a), subsections (a) and (c) of Section 36a-50 and Section 4-177 of the Connecticut General Statutes.


III.  ORDER

Having read the record, I HEREBY ORDER, pursuant to Sections 36a-573(c), 36a-52(a) and 36a-50(a) of the Connecticut General Statutes that:

1.
Arrowhead Investment, Inc. CEASE AND DESIST from violating Sections 36a-555 and 36a-573 of the Connecticut General Statutes;
2.
A CIVIL PENALTY of One Hundred Thousand Dollars ($100,000) be imposed upon Arrowhead Investment, 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; and
3.
This Order shall become effective when mailed.

Dated at Hartford, Connecticut
this 22nd day of April 2014.             

 ________/s/_________
 Howard F. Pitkin
 Banking Commissioner

This Order was sent by certified mail,
return receipt requested, to
Respondent and Respondent’s attorney
on April 23, 2014.



Arrowhead Investment, Inc.                       Certified Mail No. 7012 1010 0001 7317 2205
32 West 200 South, Suite 500
Salt Lake City, Utah 84101

John L. Mullen, Esq.                                  Certified Mail No. 7012 1010 0001 7264 7216
Franke Schultz & Mullen
8900 Ward Parkway
Kansas City, Missouri 64114


 


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