DOB: United Obligations - FFCL and Order



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IN THE MATTER OF:

UNITED OBLIGATIONS
LIMITED LIABILITY COMPANY

     ("Respondent")


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FINDINGS OF FACT,
CONCLUSIONS OF LAW
AND ORDER


                     

 FINDINGS OF FACT 

1. On October 15, 2015, the Banking Commissioner (“Commissioner”) issued a Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing against Respondent (collectively “Notice”).  The Notice is incorporated by reference herein.  (Tr. at 7; HO Ex. 1 (Notice attached as Exhibit A to HO Ex 1.))*
2. The Notice was issued pursuant to Sections 36a-52(a) and 36a-50(a) of the General Statutes of Connecticut and Section 36a-804(b) of the General Statutes of Connecticut, as amended by Public Act 15-235.  (HO Ex.1.)
3. The Notice alleges that Respondent acted as a consumer collection agency in this state without a consumer collection agency license, which constitutes a violation of Section 36a-801(a) of the General Statutes of Connecticut, as amended by Public Act 15-235.  The Notice advised Respondent that such violation forms the basis to issue an order to cease and desist against Respondent pursuant to Section 36a-804(b) of the General Statutes of Connecticut, as amended, and Section 36a-52(a) of the General Statutes of Connecticut, and impose a civil penalty upon Respondent pursuant to Section 36a-804(b) of the General Statutes of Connecticut, as amended, and Section 36a-50(a) of the General Statutes of Connecticut.  (HO Ex. 1.)
4. The Notice advised Respondent that if a hearing was not requested within the time period prescribed or Respondent failed to appear at any hearing, the Commissioner will issue an order that Respondent cease and desist from violating Section 36a-801(a) of the General Statutes of Connecticut, as amended, and may order a civil penalty in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation be imposed upon Respondent.  (HO Ex. 1.)
5. The Notice was sent by certified mail, return receipt requested, to Respondent.  (HO Ex. 1.)
6. October 23, 2015, Paul Miller, Managing Member, requested a hearing on the Notice on behalf of Respondent.  (Tr. at 7-8; HO Ex 2.)
7. On October 29, 2015, the Commissioner issued a Notification of Hearing and Designation of Hearing Officer stating that the hearing would be held on December 8, 2015, at 10 a.m. (“Hearing”), at the Department of Banking (“Department”) and appointing Attorney Paul A. Bobruff as Hearing Officer.  The Notification of Hearing and Designation of Hearing Officer also stated that the attorney representing the Department is John Mosychuk, Staff Attorney.  (HO Ex. 1.)
8. On December 3, 2015, the Hearing scheduled for December 8, 2015, was continued to allow the parties to engage in settlement discussions.  (Tr. at 11-12; HO Ex. 5.)
9. On January 6, 2016, the Hearing was rescheduled to January 20, 2016.  (Tr. at 10-12; HO Exs. 4, 5.)
10. On January 20, 2016, a Hearing was held at the Department.  Attorney Mosychuk represented the Department.  (Tr. at 4.)
11. No one appeared at the hearing on behalf of the Respondent and the Respondent did not withdraw its request for a hearing on the Notice.  (Tr. at 4-6, 14-15.)
12. At the outset of the hearing, both counsel for the Department and the Hearing Officer noted for the record that neither had received any communications from Respondent or its counsel excusing Respondent’s absence at the hearing or requesting an additional continuance.  (Tr. 4-6, 14-15)
13.
The Hearing was conducted in accordance with Chapter 54 of the Connecticut General Statutes, the “Uniform Administrative Procedure Act”, and the Department’s rules of practice in contested case regulations, Sections 36a-1-19 to 36a-1-57, inclusive, of the Regulations of Connecticut State Agencies (“Regulations”).  (Tr. at 7, 12-13; HO Ex. 1.)
14.  Respondent is a limited liability company organized under the laws of the State of New York with offices located at 2005 Palmer Avenue, Suite 235, Larchmont, New York; 1771 Post Road East, Suite 150, Westport, Connecticut; and 795 Congress Street, Portland, Maine.  (HO Ex. 1.)
15.
Since at least November 2014, Respondent has acted as a consumer collection agency in this state, inter alia, by engaging as a third party in the business of collecting or receiving for payment for others of any account, bill or other indebtedness from a Connecticut consumer debtor.  (HO Ex. 1.)
16. At no time relevant hereto was Respondent licensed to act as a consumer collection agency in Connecticut nor was Respondent otherwise exempt from such licensure.  (HO Ex. 1.)
17.  Respondent’s acting within this state as a consumer collection agency without a consumer collection agency license constitutes a violation of Section 36a-801(a) of the Connecticut General Statutes, as amended.  (Tr. at 20; HO Ex. 1.)
18.  The Department requested a default ruling against Respondent in light of its failure to appear.  (Tr. at 15.)
19.  During the hearing, counsel for the Department presented the following observations relating to the amount of the civil penalty, if any, to be imposed:  (1) Respondent is a Limited Liability Company under New York Law which has not filed for bankruptcy (Tr. at 16-19); and (2) a civil penalty was appropriate in light of the allegations in the Notice.  (Tr. at 20-22.)
20. A maximum civil penalty of $100,000 per violation could be imposed upon Respondent based on the violation of Section 36a-801(a) of the General Statutes of Connecticut, as amended, acting as a consumer collection agency in this state without obtaining the required license.  At the Hearing, the Department requested a civil penalty of $100,000 be imposed on Respondent based on the violation of Section 36a-801(a) of the General Statutes of Connecticut, as amended.  (Tr. at 20-22)

CONCLUSIONS OF LAW 
 
The Commissioner has jurisdiction over the licensing and regulation of consumer collection agencies pursuant to Part XII of Chapter 669, Sections 36a-800 to 36a-812, inclusive, of the General Statutes of Connecticut and the regulations promulgated thereunder, Sections 36a-809-6 to 36a-809-17, inclusive of the Regulations.  The Notice issued by the Commissioner comported with the requirements of Section 4-177(b) of Chapter 54 of the General Statutes of Connecticut.  The Notice complied with the notice requirements of Sections 36a-50(a) [civil penalty] and 36a-52(a) [cease and desist order] of the General Statutes of Connecticut.  The Respondent received notice that the Hearing was scheduled for January 20, 2016.
 
The Commissioner’s broad regulatory authority includes the power to impose civil penalties pursuant to Section 36a-50(a) of the General Statutes of Connecticut, and to issue orders to cease and desist pursuant to Section 36a-52(a) of the General Statutes of Connecticut.

Section 36a-50(a) of the General Statutes of Connecticut 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 . . . certified mail, return receipt requested . . . . 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 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 . . . 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 the provisions of chapter 54.

Section 36a-52(a) of the General Statutes of Connecticut 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 . . . certified mail, return receipt requested . . . .  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 . . . 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.

Section 4-177(c) of the General Statutes of Connecticut provides, in pertinent part, that “[u]nless precluded by law, a contested case may be resolved . . . by the default of a party.”

Section 36a-1-31(b) of the Regulations provides, in pertinent part, 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.
Pursuant to Section 36a-1-31(b) of the Regulations of Connecticut State Agencies, the allegations made in the Notice against Respondent are deemed admitted.
 
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 Respondent given Respondent’s failure to appear at the hearing.
 
Pursuant to Section 36a-1-31(b) of the Regulations, 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 sought in the Notice.
 
Section 36a-800 of the General Statutes of Connecticut, as amended by Public Act 15-235, provides, in pertinent part, that:

(2)  “Consumer collection agency” means any person (A) engaged as a third party in the business of collecting or receiving for payment for others of any account, bill or other indebtedness from a consumer debtor . . . ;
 
(3)  “Consumer debtor” means any natural person, not an organization, who has incurred indebtedness or owes a debt for personal, family or household purposes . . . ;
 
(4)  “Creditor” means a person . . . that retains, hires, or engages the services of a consumer collection agency[.]
Section 36a-801(a) of the General Statutes of Connecticut, as amended, provides, in pertinent part, that:
No person shall act within this state as a consumer collection agency unless such person has first obtained a consumer collection agency license for such person’s main office and each branch office where such person’s business is conducted.  A consumer collection agency is acting within this state if it (1) has its place of business located within this state; (2) has its place of business located outside this state and (A) collects from consumer debtors . . . who reside within this state for creditors who are located within this state . . . [or] (3) has its place of business located outside this state and regularly collects from consumer debtors . . . who reside within this state for creditors who are located outside this state[.]
Respondent acted within this state as a consumer collection agency without a consumer collection agency license, in violation of Section 36a-801(a) of the General Statutes of Connecticut, as amended, which forms a basis for an order to cease and desist to be issued against Respondent and for the imposition of a civil penalty upon Respondent pursuant Section 36a-804(b) of the General Statutes of Connecticut, as amended, and Sections 36a-52(a) and 36a-50(a) of the General Statutes of Connecticut.
 

ORDER

Having read the record, I hereby ORDER, pursuant to Section 36a-804(b) of the General Statutes of Connecticut, as amended, and Sections 36a-52(a) and 36a-50(a) of the General Statutes of Connecticut, that: 

1. United Obligations Limited Liability Company CEASE AND DESIST from violating Section 36a-801(a) of the General Statutes of Connecticut, as amended;
2. A CIVIL PENALTY of One Hundred Thousand Dollars ($100,000) be imposed upon United Obligations Limited Liability Company, 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 the Order is mailed; and
3.
The Order shall become effective when mailed.

So ordered at Hartford, Connecticut
this 6th day of July 2016.                      ________/s/_________
                                                        Jorge L. Perez
                                                        Banking Commissioner


This Order was sent by certified mail, return
receipt requested, to Paul Miller, Managing Member,
United Obligations Limited Liability Company;
and hand-delivered to John Mosychuk, Staff Attorney,
State of Connecticut Department of Banking
on July 6, 2016.


Paul Miller, Managing Member                  Certified Mail No. 7012 3050 0000 7000 0009
United Obligations Limited Liability Company
2005 Palmer Avenue, Suite 235
Larchmont, New York 10538 


Administrative Orders and Settlements