Bulletin # 2534
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 Howard F. Pitkin, Banking Commissioner, at the Connecticut Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800 or via E-mail. Written comments will be considered only if they are received within ten days from the date of this bulletin.
On September 11, 2012, the Commissioner issued a Declaratory Ruling in response to the Petition of Persels & Associates, LLC for Declaratory Ruling Regarding Application of Attorney Exemption under Debt Negotiation Statutes, ruling as follows:
Section 36a-671c(1) of the 2012 Supplement to the General Statutes provides an exemption from Sections 36a 671 to 36a-671d, inclusive, only for a natural person who: (a) is an attorney admitted to the practice of law in Connecticut; and (b) is not retained to perform, and does not perform, debt negotiation services, as defined in Section 36a-671 of the 2012 Supplement to the General Statutes, as the primary purpose of the representation, which shall be determined on a case-by-case basis in light of all of the facts and circumstances.
In addition, the Department will take a no-action position for a law firm that is a partnership, limited liability company or professional corporation engaging or offering to engage in debt negotiation services, as defined in Section 36a-671 of the 2012 Supplement to the General Statutes, to be performed and performed exclusively by an attorney admitted to the practice of law in Connecticut who is: (a) a partner or shareholder of the law firm, as the case may be; and (b) the only contact with the debtor and the debtor’s mortgagee(s) or creditor(s), as the case may be; and provided that the firm is not retained to perform, and does not perform, debt negotiation services as the primary purpose of the representation, which shall be determined on a case-by-case basis in light of all of the facts and circumstances.
CONSUMER CREDIT DIVISION ACTIVITY
Order to Cease and Desist and Notice of Intent to Impose Civil Penalty
On August 21, 2012, the Commissioner issued a Temporary Order to Cease and Desist, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing (“Notice”) in the Matter of: WJE Enterprises, Inc. d/b/a Federal Modification Group and Distressed Property Experts, LLC d/b/a Federal Modification Group, (“Respondents”) both of Westland, Michigan. The Notice was the result of an investigation by the Consumer Credit Division. The Notice alleges that Respondents offered to engage in debt negotiation in this state without the required license, in violation of Section 36a-671(b) of the Connecticut General Statutes, in effect prior to October 1, 2011, and engaged in debt negotiation in this state without the required license, in violation of Section 36a-671(b) of the Connecticut General Statutes, in effect prior to October 1, 2011. The Commissioner also found that the public welfare required the issuance of a Temporary Order to Cease and Desist against Respondents. Respondents were afforded an opportunity to request a hearing with regard to the allegations set forth in the Notice.
On August 31, 2012, the Banking Commissioner entered a Consent Order with respect to Deer Hill Financial Group, LLC of Danbury, Connecticut, and Stephen Burton Blankenship, the firm’s sole managing member and control person. Stephen Blankenship was previously registered as a broker-dealer agent under the Connecticut Uniform Securities Act.
Although Stephen Blankenship’s broker-dealer agent registration had been withdrawn in late 2011, Connecticut law preserves the Commissioner’s ability to institute revocation or suspension proceedings within one year after the withdrawal becomes effective.
On September 7, 2012, the Securities and Exchange Commission filed a Complaint for Injunctive and Other Relief in U.S. District Court for the District of Connecticut against Deer Hill Financial Group, LLC and Stephen Blankenship. The SEC action was based on allegations of securities fraud and unregistered activity. On September 12, 2012, in a parallel criminal proceeding brought by the U.S. Attorney for the District of Connecticut, Stephen Blankenship waived his right to indictment and pleaded guilty to charges of mail fraud and wire fraud.