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Branch Activity

On May 1, 2013, the Banking Commissioner entered a Consent Order (Docket No. CO-12-8048-S) with respect to DFS Capital Management, LP, an investment adviser located in Darien, Connecticut; John Vincent Greco, president of the firm; and DFS Fund, Limited Partnership (the “Fund”), an investment fund sharing the same address as DFS Capital Management, LP.

The respondents had been the subject of a November 6, 2012 Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Revoke Registration as an Investment Adviser and Notice of Intent to Fine (Docket No. CRF-12-8048-S).  DFS Capital Management, LP was the Fund’s general partner and investment adviser, and respondent Greco was responsible for the day-to-day management and operation of the Fund.  The November 6, 2012 action had alleged that respondent Greco violated Section 36b-6(c)(2) of the Connecticut Uniform Securities Act by transacting business as an unregistered investment adviser agent, and that DFS Capital Management, LP violated Section 36b-6(c)(3) of the Act by employing Greco as an unregistered investment adviser agent.  The action had also alleged that the respondents violated the antifraud provisions in Section 36b-4(a) of the Act in connection with an offering of interests in the Fund.  In addition, respondents Greco and DFS Capital Management, LP allegedly violated Section 36b-4(b) of the Act by engaging in dishonest and unethical practices.  Specifically, respondents Greco and DFS Capital Management, LP allegedly recommended that at least two investors liquidate their brokerage and retirement accounts at other firms to invest in the Fund which they variously characterized as a “no-lose” investment and one that would generate a return of approximately 20%.  The action had alleged that respondents Greco and DFS Capital Management, LP did not disclose to the affected investors, one of whom was 75 years old, any risks associated with the investment or that the Fund’s investment strategy was almost exclusively speculative options trading.  The two investors purportedly incurred $584,222 in trading losses due to their investment in the Fund.  The action had alleged that in or about December, 2011, respondent Greco closed the Fund due to the Fund’s trading losses.

In addition, the November 6, 2012 action had alleged that respondents Greco and DFS Capital Management, LP violated Section 36b-23 of the Act by making a materially false or misleading statement during a 2011 examination of DFS Capital Management, LP’s books and records.  Specifically, respondent Greco allegedly denied that he or DFS Capital Management, LP had issued any promissory notes.  The action alleged that, in reality, respondent Greco had induced an individual to invest in the Fund by agreeing to reimburse her for the deferred sales/surrender charge associated with her liquidating annuities held at another firm.  Subsequently, respondent Greco allegedly memorialized that agreement in a promissory note in favor of the investor.  In addition, the action alleged that DFS Capital Management, LP, the Fund’s general partner and investment adviser, violated Section 36b-14(d) of the Act and Section 36b-31-14f of the Regulations by repeatedly failing to provide the Division with requested books and records.

The Consent Order recited that the respondents had provided the agency with documentation evidencing respondents’ agreement to repay the affected investors in good funds on or before June 30, 2013.

The Consent Order barred respondents Greco and DFS Capital Management, LP for ten years from 1) transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent; 2) directly or indirectly soliciting or accepting funds for investment purposes from public or private investors in or from Connecticut; and 3) engaging in any other activity that would trigger a registration obligation under the Connecticut Uniform Securities Act.  The Consent Order also directed the respondents to cease and desist from regulatory violations.  In addition, the Consent Order required that respondents Greco and DFS Capital Management, LP retain Connecticut legal counsel to perform periodic regulatory compliance evaluations according to a prescribed schedule and file related reports with the department.

The Consent Order also provided that a failure by the respondents to repay the affected investors on or before June 30, 2013 would result in an order of full restitution to the affected investors and the imposition of a $100,000 fine by the Commissioner.

On March 27, 2013, the Commissioner, acting pursuant to Section 36a-51(c) of the Connecticut General Statutes, issued an Order Accepting Surrender (“Order”) of the consumer collection agency license of Hill Top Collections, Inc. d/b/a HTC, New York, New York, following the issuance by the Commissioner of a Notice of Automatic Suspension, Temporary Order to Cease and Desist, Notice of Intent to Revoke Consumer Collection License, Notice of Intent to Issue Order to Cease and Desist and Notice of Right to Hearing on March 5, 2013.  As part of the Order, the Commissioner accepted the surrender of the license effective as of March 27, 2013, and imposed no additional terms and conditions.

On March 27, 2013, the Commissioner entered into a Consent Order with Legal Helpers Debt Resolution, LLC a/k/a Macey, Aleman, Hyslip & Searns (“Legal Helpers”), Chicago, Illinois, and Denver, Colorado.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, the Commissioner alleged that Legal Helpers engaged in debt negotiation in this state without obtaining the required license, in violation of Section 36a-671(b) of the Connecticut General Statutes and Section 36a-671(b) of the 2012 Supplement to the General Statutes.  As part of the Consent Order, Legal Helpers was ordered to immediately cease and desist from engaging or offering to engage in debt negotiation in this state without the required license other than providing services to its remaining Connecticut-resident clients without any fees; and to refund monies to certain identified Connecticut residents.

On March 27, 2013, the Commissioner entered into a Consent Order with The Mortgage Law Group, LLP a/k/a The Law Firm of Macey, Aleman & Searns (Mortgage Law Group”), Chicago, Illinois, and Scottsdale, Arizona.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, 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”) against Mortgage Law Group, among others, that Mortgage Law Group engaged in debt negotiation in this state without obtaining the required license, in violation of Section 36a 671(b) of the Connecticut General Statutes, in effect prior to October 1, 2011.  As part of the Consent Order, Mortgage Law Group paid $7,500 as a civil penalty, and was ordered to immediately cease and desist from violating Section 36a-671(b) of the Connecticut General Statutes, and to repay monies to certain identified Connecticut residents.

On March 28, 2013, the Commissioner entered into a Consent Order with C.U. Members Mortgage Corporation (NMLS # 65128) (“C.U. Members Mortgage”), East Haven, Connecticut.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, on November 8, 2012, the 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 C.U. Members Mortgage.  The Commissioner alleged that C.U. Members Mortgage failed to file certain annual and quarterly information required by standard mortgage call reports in violation of Section 36a-534b(c)(3) of the 2012 Supplement to the General Statutes and/or Section 36a-534b(c)(3), as amended by Public Act 12-96.  As part of the Consent Order, C.U. Members Mortgage paid $2,500 as a civil penalty.

On April 4, 2013, the Commissioner entered into a Consent Order with 1st American Home Loans, LLC (NMLS # 2960) (“1st American Home Loans”), Dayville, Connecticut.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, on December 11, 2012, the 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 1st American Home Loans.  The Commissioner alleged that 1st American Home Loans failed to timely file certain annual and quarterly information required by standard mortgage call reports in violation of Section 36a-534b(c)(3) of the 2012 Supplement to the General Statutes and/or Section 36a-534b(c)(3) of the 2012 Supplement to the General Statutes, as amended by Public Act 12-96.  As part of the Consent Order, 1st American Home Loans paid $2,500 as a civil penalty.

On April 4, 2013, the Commissioner entered into a Consent Order with Jong Mortgage Group, LLC (NMLS # 89268) (“Jong Mortgage”), New Haven, Connecticut.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, on December 11, 2012, the 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 Jong Mortgage.  The Commissioner alleged that Jong Mortgage failed to timely file certain annual information required by standard mortgage call reports, in violation of Section 36a-534b(c)(3) of the 2012 Supplement to the General Statutes and/or Section 36a 534b(c)(3) of the 2012 Supplement to the General Statutes, as amended by Public Act 12 96.  Among other things, the Consent Order recognized that Jong Mortgage’s mortgage broker license had since expired and provided that Jong Mortgage shall not be eligible to re-apply for licensure as a mortgage lender, mortgage correspondent lender or mortgage broker before June 30, 2013.

On April 4, 2013, the Commissioner entered into a Consent Order with Mortgage Plus LLC (NMLS # 141646) (“Mortgage Plus”), Norwalk, Connecticut.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, on January 16, 2013, the Commissioner issued a Notice of Intent to Revoke and Refuse to Renew Mortgage Broker License, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing against Mortgage Plus.  The Commissioner alleged that Mortgage Plus failed to timely provide the Commissioner a complete and accurate response to a December 1, 2011, Report of Examination and August 31, 2012, Compliance Letter, constituting a failure to fully cooperate with the Commissioner, in violation of Section 36a-17(d) of the 2012 Supplement to the General Statutes, as amended by Public Act 12-96.  In addition, Mortgage Plus violated (1) Section 36a-486(b)(1) of the 2012 Supplement to the General Statutes by employing an unlicensed mortgage loan processor/underwriter; (2) Sections 36a 488(a)(1) and 36a-488(a)(2) of the 2012 Supplement to the General Statutes by failing to demonstrate that it maintained the required minimum tangible net worth; (3) Section 36a-534b(c)(3) of the 2012 Supplement to the General Statutes by not filing the residential mortgage loan activity component of the mortgage call report for the second quarter of 2012; and (4) Section 36a-489(a)(2) of the 2012 Supplement to the General Statutes by having a qualified individual who did not meet the minimum standards for such position.  As part of the Consent Order, Respondent paid $5,000 as a civil penalty.

On April 1, 2013, the 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 (“Notice”) in the Matter of:  EFA Processing L.P. and Consumer Law Associates, LLC (“Respondents”), of Frisco, Texas and Towson, Maryland, respectively.  The Notice was the result of an investigation by the Consumer Credit Division.  The Notice alleges that Respondents 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, and Section 36a-671(b) of the Connecticut General Statutes.  As part of the Order to Make Restitution, Respondents were order to repay each Connecticut resident who entered into an agreement for debt negotiation services on and after October 1, 2009, any fees paid by such Connecticut resident.  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 April 1, 2013, the 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 (“Notice”) in the Matter of:  Namakan Capital, LLC (“Respondent”), Kansas City, Missouri.  The Notice alleges that Respondent (1) offered and made at least one loan in Connecticut without obtaining the required license, in violation of Section 36a-555 of the Connecticut General Statutes, and (2) contracted for and charged an interest rate greater than 12% on a loan to a Connecticut resident in an amount less than $15,000, in violation of Section 36a-573(a) of the Connecticut General Statutes  As part of the Order to Make Restitution, Respondent was ordered to provide repayment of any interest in excess of 12% received by Respondent, on or after October 1, 2009, from an identified Connecticut resident and from any other Connecticut resident in connection with a consumer loan.  The Commissioner also found that public welfare required the issuance of a Temporary Order to Cease and Desist against Respondent.  Respondent was afforded an opportunity to request a hearing with regard to the allegation set forth in the Notice.

       Dated:  Tuesday, May 7, 2013