The Department of Banking News Bulletin 

Bulletin # 2108
Week Ending July 16, 2004

This bulletin constitutes the only official notification you will receive from this office concerning any of the following applications. Any observations you may have are solicited. Any comments should be in writing to John P. Burke, Commissioner of Banking, at the Connecticut Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800 or via E-mail to john.burke@ct.gov. Written comments will be considered only if they are received within ten days from the date of this bulletin.

BRANCH ACTIVITY

Section 36a-145 of the Connecticut General Statutes requires that each application for a branch, or for a limited branch at which loans will be made, be accompanied by a plan detailing how adequate services to meet the banking needs of all community residents will be provided. Plans are submitted when such applications are filed and are available for public inspection and comment at this Department for a period of 30 days. Questions concerning branch activity should be directed to the Financial Institutions Division, (860) 240-8180.

On June 21, 2004, an acquisition statement was filed on behalf of Naugatuck Valley Mutual Holding Company, a federal mutual holding company in organization, and Naugatuck Valley Financial Corporation, its subsidiary, pursuant to Section 36a-184 of the Connecticut General Statutes, for the acquisition of all of the voting securities of Naugatuck Valley Savings and Loan immediately following the conversion of Naugatuck Valley Savings and Loan, S.B., from a Connecticut mutual savings bank to a federal mutual savings bank pursuant to Section 36a-135 of the Connecticut General Statutes, as amended by Public Act 03-259. In connection with the acquisition statement, Naugatuck Valley Mutual Holding Company and Naugatuck Valley Financial Corporation filed a community reinvestment plan that is available for public inspection and comment at the Department of Banking for a period of 30 days.

CONSUMER CREDIT DIVISION ACTIVITY 
Hearing Decision

On June 18, 2004 the Commissioner issued Findings of Fact, Conclusions of Law and Order ("Final Decision"), In the Matter of: Frederick Cornelius d/b/a Focus Mortgage ("Respondent"), of 637 Park Road, West Hartford, Connecticut. Respondent had been the subject of a January 5, 2004 Order of Summary Suspension, Notice of Intent to Revoke First Mortgage Lender/Broker License and Notice of Right to Hearing and a Notice of Intent to Refuse to Renew Secondary Mortgage Broker License and Notice of Right to Hearing. The hearing was held on March 18, 2004. The Commissioner ordered that pursuant to Sections 36a-51, 36a-494(a) and 36a-517(a) of the Connecticut General Statutes, the license of Respondent to engage in the business of granting first mortgage loans and to act as a first mortgage broker in Connecticut be revoked and that the license of Respondent to act as a secondary mortgage broker in Connecticut not be renewed. A copy of the Final Decision can be obtained from the department's website, www.ct.gov/dob or by contacting the department's Legal Division.

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY 
Florida Firm Fined $20,000 For Selling Unregistered Securities Through Unregistered Agents

On July 12, 2004, the Commissioner entered an Order Imposing Fine against Vegas International Players.com, LLP of 4701 North Federal Highway, Suite 380, Lighthouse Point, Florida. The respondent had been the subject of a May 11, 2004 Order to Cease and Desist and Notice of Intent to Fine alleging that, commencing in March 2003, the respondent sold unregistered non-exempt limited liability partnership units in violation of Section 36b-16 of the Connecticut Uniform Securities Act and, in so doing, employed one or more unregistered agents in violation of Section 36b-6(b) of the Act. The Order to Cease and Desist, being uncontested, had become permanent on June 25, 2004. The respondent also did not contest the imposition of the $20,000 fine. In fining the respondent, the Commissioner determined that the respondent had violated Sections 36b-6(b) and 36b-16 of the Act.

Stamford Firm Assessed $2,100 for Not Registering as Investment Adviser

On July 13, 2004, the Commissioner entered into a Stipulation and Agreement with Kleos Capital Management, Inc., an investment adviser subject to Securities and Exchange Commission regulation under the Investment Advisers Act of 1940. The firm has been located at 100 Prospect Street, Penthouse N., Stamford, Connecticut since late 2002 when it relocated its office from New York. The Stipulation and Agreement alleged that from approximately November 2002 until February 2004, when it became subject to exclusive SEC oversight, the firm transacted business as an investment adviser in Connecticut absent registration under the Connecticut Uniform Securities Act and employed unregistered investment adviser agents. The firm brought its unregistered activity and that of its investment adviser agents to the agency's attention, claiming that the failure to register was due to ineffective representation by prior legal counsel and to a preoccupation with a proposed merger that did not occur. Pursuant to the Stipulation and Agreement, the firm agreed to pay two thousand one hundred dollars to the department. Of that amount, $1,500 constituted an administrative fine and $600 represented past due investment adviser and investment adviser agent registration fees for calendar years 2002 and 2003.

New England Mobile Communications, Inc. Assessed Back Fees for Business Opportunity Registration Lapse

On July 15, 2004, the Commissioner entered into a Stipulation and Agreement with New England Mobile Communications, Inc. d/b/a KarTele, formerly of 93 New Canaan Avenue, Norwalk, Connecticut. The corporation was a franchisor of telecommunications equipment. The Stipulation and Agreement alleged, from approximately 1991 until September 8, 1992, when it registered its service mark and logo with the U.S. Patent and Trademark Office, New England Mobile Communications, Inc. sold a business opportunity in and from Connecticut absent compliance with the registration requirements in Sections 36b-62(a) and 36b-65(a) of the Connecticut Business Opportunity Investment Act. Under the Connecticut Business Opportunity Investment Act, the sale of a marketing program in conjunction with the licensing of a federally registered trademark or service mark is excluded from the definition of "business opportunity." In entering into the Stipulation and Agreement, New England Mobile Communications, Inc., through its counsel, represented to the Commissioner that it had not sold any franchises since 1996, and that it was no longer in the telecommunications franchising business. The Stipulation and Agreement required that New England Mobile Communications, Inc. refrain from selling business opportunities absent compliance with the Connecticut Business Opportunity Investment Act and reimburse the agency $300 for past due registration fees calculated on the basis of the law in effect from 1991 to 1992.

1.800 Vending, Inc. Fined $10,000 For Business Opportunity Investment Act Violations

On July 15, 2004, the Commissioner entered a Consent Order with respect to 1.800 Vending, Inc. of 347 North 300 West, Suite 201, Kaysville, Utah. The Consent Order alleged that (1) from at least 2003 forward, 1.800.Vending, Inc. violated Section 36b-67(1) of the Connecticut Business Opportunity Investment Act by offering and selling unregistered vending machine business opportunities in Connecticut; (2) 1.800.Vending, Inc. violated Section 36b-80 of the Act by misrepresenting its prior Connecticut business opportunity sales activity in a document filed with the Commissioner; (3) 1.800.Vending, Inc. violated Section 36b-63 of the Act by failing to provide purchaser-investors with a disclosure statement and cover sheet that complied with Section 36b-63 of the Act; and (4) 1.800.Vending, Inc. violated Section 36b-67(2) of the Act by making earnings claims on its web site without including documented data to substantiate such claims and disclosing such data to prospective purchaser-investors at the time such representations were made. The Consent Order also alleged that the company's application for business opportunity registration was materially incomplete in that, inter alia, the disclosure document (a) failed to adequately disclose a June 25, 2003 Stipulated Judgment and Order for Permanent Injunction obtained by the Federal Trade Commission against Michael S. Burnett and Jeff Marsh, officers of 1.800.Vending, Inc., in the U.S. District Court for the District of Utah, Northern Division, which action alleged that the defendants had sold consumers a fraudulent business opportunity and also resulted in the imposition of a $22,000 civil penalty against the defendants, jointly and severally; (b) failed to include financial statements in compliance with Section 36b-65(b) of the Act; (c) failed to make adequate disclosure concerning 1.800.Vending, Inc.'s affiliates and predecessors; (d) failed to describe in sufficient detail the employment histories of Michael S. Burnett and Jeffrey L. Marsh, officers of 1.800.Vending, Inc.; (e) failed to adequately set forth the risks involved in the business opportunity venture; (f) lacked sufficient information on the employment and disciplinary histories of 1.800.Vending, Inc.'s sales representatives; and (g) did not mention the fact that purchaser-investors might have to pay retailers for the use of space for the purchaser-investors' vending machines.

The Consent Order fined 1.800.Vending, Inc. $10,000; directed the company to cease and desist from regulatory violations; prohibited the company from seeking business opportunity registration in Connecticut for 36 months; and required that 1.800.Vending, Inc. provide notice to Connecticut purchaser-investors of their rights and remedies under Connecticut's business opportunity statute.