The Department of Banking News Bulletin
Bulletin # 3057 - Week Ending September 23, 2022This 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 Jorge L. Perez, Banking Commissioner, Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800. Written comments will be considered only if they are received within ten business days from the date of this bulletin.
CONSUMER CREDIT DIVISION ACTIVITY
On September 12, 2022, the Commissioner entered into a Consent Order with PrimePay LLC d/b/a PrimePay (NMLS # 1952666) (“PrimePay”), West Chester, Pennsylvania. The Consent Order was based on an investigation by the Consumer Credit Division. As a result of such investigation, the Commissioner alleged that PrimePay engaged in the business of money transmission in this state without the required license since at least 2020, in violation of Section 36a-597(a) of the Connecticut General Statutes. As part of the Consent Order, Kraken paid $10,000 as a civil penalty and $3,375 in back licensing fees.
Order to Cease and Desist and Order Imposing Civil Penalty
On September 15, 2022, the Commissioner issued an Order to Cease and Desist and Order Imposing Civil Penalty (“Order”) in the Matter of: LoanHero, Inc. (“LoanHero”), San Diego, California. The basis of the Order was that LoanHero’s making or offering, soliciting, brokering, directly or indirectly arranging, placing or finding a small loan for a prospective Connecticut borrower and receiving payments of principal and interest in connection with a small loan made to a Connecticut borrower without obtaining the required license constitutes at least one violation of Section 36a-556 of the Connecticut General Statutes, in effect at such time. The Commissioner ordered LoanHero to cease and desist from violating Section 36a-556 of the Connecticut General Statutes, and imposed a civil penalty in the amount of $100,000 upon LoanHero. In addition, the Order to Make Restitution issued against LoanHero on January 11, 2022, remains in effect and became permanent on February 3, 2022.
Temporary Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Issue Order to Cease and Desist and Notice of Intent to Impose Civil Penalty
On September 16, 2022, 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 (collectively, “Order”) in the Matter of: Legal Funding, LLC d/b/a Crash Advance, East Haven, Connecticut (“Respondent”). The Order was the result of an investigation by the Consumer Credit Division. The Commissioner alleges that Respondent’s: (1) making at least two small loans for a Connecticut borrower without the required license constitutes a violation of Section 36a-556(a)(1) of the Connecticut General Statutes; (2) enforcement and collection of monies in connection with at least two small loans against a Connecticut borrower without the required license constitutes a violation of Section 36a-558(c)(1) of the Connecticut General Statutes; and (3) failure to provide information requested during an investigation of the activities of Respondent constitutes a violation of Section 36a-17(e) of the Connecticut General Statues in effect at such time. The Commissioner found that the public welfare required the issuance of a Temporary Order to Cease and Desist against Respondent. As part of the Order to Make Restitution, Respondent was ordered to repay any amounts it received from Connecticut borrowers in connection with a loan, plus interest. Respondent was afforded an opportunity to request a hearing with regard to the allegations set forth in the Order.
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Olive Tree Ridge Investment Advisors LLC (IARD No. 305098)
On September 21, 2022, the Banking Commissioner entered a Consent Order (No. CO-22-202236-S) with respect to Olive Tree Ridge Investment Advisors LLC of 34 Knibloe Hill Road, Sharon, Connecticut 06069. The firm was intermittently registered as an investment adviser under the Connecticut Uniform Securities Act and reapplied for investment adviser registration in February 2022. The Consent Order alleged that the firm violated Section 36b-6(c)(1) of the Act by transacting business as an investment adviser at a time when its registration was no longer in effect.
The Consent Order directed the firm to cease and desist from regulatory violations and to pay a $5,000 fine to the department.
Endeavor Global Partners Corp., Endeavor Global Partners (HK) Ltd. and David Manning Fresne (CRD No. 1091992)
On September 21, 2022, the Banking Commissioner issued Findings of Fact, Conclusions of Law and an Order in the matter of Endeavor Global Partners Corp. of 151 Rowayton Avenue, Rowayton, Connecticut and 30/F Shanghai Square, 138 Middle Huai Hai Road, Shanghai, China; Endeavor Global Partners (HK) Ltd. of Unit 1010, Miramar Tower, 132 Nathan Road, TsimShaTsui, Hong Kong; and former Connecticut resident David Manning Fresne, control person of both entities. The Respondents had been the subject of a November 17, 2021 Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-21-201910905-S) alleging violations of the registration and antifraud provisions of the Connecticut Uniform Securities Act. A hearing on the November 17, 2021 action was held on March 17, 2022.
In rendering the hearing decision, the Commissioner found that, in 2016, Respondents accepted a $500,000 “Equity Participation Investment” and a $10,000 “due diligence” fee from an Alabama investor seeking funding for a Kentucky coal mining operation. In return for the investment, Respondents promised to provide the investor with $5 million in funding and represented that the initial $500,000 would be refunded in the event funding could not be obtained. The Commissioner found that the investment arrangement was a “security” and that the security offered and sold by Respondents was not registered in violation of Section 36b-16 of the Act. The decision also noted that, rather than safeguarding the investor's money pending the promised financing, Respondent Fresne used a portion of the funds invested to pay for his personal expenses and therefore violated the antifraud provisions in Section 36b-4(a) of the Act. The decision also found that Respondent Fresne violated Section 36b-6(a) of the Act by transacting business as an unregistered agent of issuer.
The decision rendered the November 21, 2021 Order to Cease and Desist permanent; directed the Respondents to pay the affected investor $500,000 in restitution plus interest; fined Respondent Fresne $300,000 and fined each entity Respondent $100,000 for a total of $500,000.
Jorge L. Perez