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IN THE MATTER OF:
COHEN, STUART L.
d/b/a CONN & CONN CO. a/k/a CONN & CONN MORTGAGE COMPANY NMLS # 113485 ("Respondent") * * * * * * * * * * * * * * * * * * * * |
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CEASE AND DESIST ORDER TO MAKE RESTITUTION
NOTICE OF INTENT TO ISSUE NOTICE OF INTENT TO IMPOSE NOTICE OF RIGHT TO HEARING |
I. LEGAL AUTHORITY AND JURISDICTION
The Banking Commissioner (“Commissioner”) is charged with the administration of Part I of Chapter 668, Sections 36a-485 to 36a-534c, inclusive, of the Connecticut General Statutes, “Mortgage Lenders, Correspondent Lenders, Brokers and Loan Originators”.
Pursuant to the authority granted by Section 36a-17(a) of the Connecticut General Statutes, the Commissioner, through the Consumer Credit Division of the Department of Banking, has investigated the activities of Respondent to determine if it has violated, is violating or is about to violate the provisions of the Connecticut General Statutes within the jurisdiction of the Commissioner.
Section 36a-17(a) of the Connecticut General Statutes provides, in pertinent part, that:
The commissioner, in the commissioner’s discretion, may, subject to the provisions of section 36a-21 and the Freedom of Information Act, as defined in section 1-200; (1) make such public or private investigations . . . within or outside this state, concerning any person subject to the jurisdiction of the commissioner, as the commissioner deems necessary to carry out the duties of the commissioner, (2) require or permit any person to testify, produce a record or file a statement in writing, under oath, or otherwise as the commissioner determines, as to all the facts and circumstances concerning the matter to be investigated or about which an action or proceeding is pending . . . .
Section 36a-52 of the Connecticut General Statutes provides, in pertinent part, that:
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 registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. 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 does not request a hearing within the time specified in the notice or 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.
(b) If the commissioner finds that the public welfare requires immediate action, the commissioner may incorporate a finding to that effect in the notice sent in accordance with subsection (a) of this section and issue a temporary order requiring the person to cease and desist from the activity which constitutes such alleged violation and to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this section. Such temporary order shall become effective on receipt and, unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or dismissal of the matters asserted in the notice.
Section 36a-50 of the Connecticut General Statutes provides, in pertinent part, that:
(a)(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 registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. 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 within fourteen days of 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 does not request a hearing within the time specified in the notice or 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.
(c) 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, in addition to any other remedy authorized by law, order such person to (1) make restitution of any sums shown to have been obtained in violation of any such provision . . . plus interest at the legal rate set forth in section 37-1 . . . . After the commissioner issues such an order, the person named in the order may, not later than fourteen days after receipt of such order, file a written request for a hearing. The order 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 hearing shall be held in accordance with the provisions of chapter 54.
II. MATTERS ASSERTED
| 1. |
Respondent currently has an office at 641 Farmington Avenue, Suite 203, Hartford, Connecticut. From December 2001 through January 2011, Respondent held a mortgage lender license in Connecticut. Since January 2011, Respondent has neither been licensed to engage in the business of a mortgage lender nor been licensed to act as a mortgage broker in Connecticut. |
| 2. |
At all times relevant hereto, Stuart L. Cohen a/k/a Stuart L. Conn (“Cohen”) has been President and Chief Executive of Respondent. Cohen has never held a mortgage loan originator license in Connecticut. Cohen and Paul Bzowyckiyj are listed as mortgage consultants on Respondent’s website at www.connandconn.com. |
| 3. |
From at least April 2013 to the present, Respondent offered, via various media, to make, negotiate, place or find residential mortgage loans in Connecticut. |
| 4. |
In particular, Respondent’s letterhead advertises various residential mortgage loan products, including first and second mortgages, home equity loans and home purchases. Respondent’s website makes statements concerning its residential mortgage loan products, for example, that it has provided residential loans to its Connecticut neighbors for over 65 years; that its products include “rehab loans”, first and second mortgages, refinancing, home equity loans and home purchases; and that as a mortgage lender/broker, it can locate the lowest available market rate.
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| 5. | Respondent’s website also has a “loan inquiry” page that consumers can fill out to receive additional information on its residential loan products and to be contacted by one of Respondent’s mortgage consultants. The form asks, among other things, if the consumer is a homeowner, the amount of money needed, the value of the home, and the amount of debt currently on the home. |
| 6. | On October 22, 2013, the Commissioner received a complaint from a Connecticut resident concerning a residential mortgage loan received from Respondent. On March 4, 2008, the Connecticut resident had received a first mortgage loan from Respondent in the principal amount of $100,000. In connection with such loan, the Connecticut resident paid prepaid finance charges of $6,190, which amount is in excess of 5% of the principal loan amount. |
III. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST, ORDER TO
MAKE RESTITUTION AND IMPOSITION OF CIVIL PENALTY
Section 36a-494(b) of the Connecticut General Statutes provides, in pertinent part, that:
Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate any of the provisions of sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, . . . the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.
Section 36a-486(a) of the Connecticut General Statutes provides, in pertinent part, that:
No person shall engage in the business of making residential mortgage loans or act as a mortgage broker in this state unless such person has first obtained the required license for its main office . . . in accordance with the provisions of sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b. . . . A person, other than a licensed mortgage loan originator acting on behalf of a mortgage lender or mortgage correspondent lender, shall be deemed to be engaged in the business of making residential mortgage loans if such person advertises, causes to be advertised, solicits or offers to make residential mortgage loans, either directly or indirectly. A person, other than a licensed mortgage loan originator acting on behalf of a mortgage broker, shall be deemed to be acting as a mortgage broker if such person advertises or causes to be advertised that such person will negotiate, solicit, place or find a residential mortgage loan, either directly or indirectly. . . .
Section 36a-498a of the Connecticut General Statutes in effect prior to July 1, 2008, provided in pertinent part, that:
No mortgage lender or first mortgage broker licensee under section 36a-489 and no person exempt from licensure under subdivisions (1), (2), (5) and (6) of section 36a-487 making a first mortgage loan shall charge, impose or cause to be paid, directly or indirectly, prepaid finance charges that exceed in the aggregate, the greater of five per cent of the principal amount of the loan or two thousand dollars. . . .
| 1. |
Respondent engaged in the business of making residential mortgage loans without a license by advertising, soliciting or offering to make residential mortgage loans via its website and letterhead, as more fully described in paragraphs 1 through 5, inclusive, of the Matters Asserted, in violation of Section 36a-486(a) of the Connecticut General Statutes. Such violation forms a basis to issue an order to cease and desist pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes and impose a civil penalty pursuant to Sections 36a-494(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation. |
| 2. |
Respondent acted as a mortgage broker without a license by advertising via its website that it would negotiate, solicit, place or find residential mortgage loans, either directly or indirectly, as more fully described in paragraphs 1 through 5, inclusive, of the Matters Asserted, in violation of Section 36a-486(a) of the Connecticut General Statutes. Such violation forms a basis to issue an order to cease and desist pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes and impose a civil penalty pursuant to Sections 36a-494(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation. |
| 3. |
Respondent charged, imposed or caused to be paid, directly or indirectly, prepaid finance charges in excess of five per cent of the principal amount of a first mortgage loan, as more fully described in paragraph 6 of the Matters Asserted, in violation of Section 36a-498a of the Connecticut General Statutes in effect prior to July 1, 2008. Such violation forms the basis to issue an order to cease and desist pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes, issue an order to make restitution pursuant to Sections 36a-494(b) and 36a-50(c) of the Connecticut General Statutes and impose a civil penalty pursuant to Sections 36a-494(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation. |
IV. FINDING AND STATUTORY BASIS FOR
TEMPORARY ORDER TO CEASE AND DESIST
The Commissioner finds that the public welfare requires immediate action to issue a temporary order requiring Respondent to cease and desist from violating Section 36a-486(a) of the Connecticut General Statutes, and to take such action as set forth herein to effectuate the purposes of Section 36a-52(b) of the Connecticut General Statutes, in that the interests of Connecticut residents are being materially prejudiced by Respondent continuing to advertise, solicit or offer residential mortgage loans in Connecticut, while not being duly licensed as a mortgage broker or mortgage lender in Connecticut and complying with the restrictions imposed on such licensees pursuant to Sections 36a-485 to 36a-534c, inclusive, of the Connecticut General Statutes.
V. 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
WHEREAS, the Commissioner has reason to believe that Respondent has engaged in acts or conduct which forms a basis to issue an order to cease and desist against Respondent pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes, issue an order to make restitution pursuant to Sections 36a-494(b) and 36a-50(c) of the Connecticut General Statutes and to impose a civil penalty upon Respondent pursuant to Sections 36a-494(b) and 36a-50(a) of the Connecticut General Statutes;
AND WHEREAS, the Commissioner has made the finding required under Section 36a-52(b) of the Connecticut General Statutes.
THE COMMISSIONER THEREFORE ORDERS, pursuant to the authority granted in Section 36a-52(b) of the Connecticut General Statutes, that Cohen, Stuart L. d/b/a Conn & Conn Co. a/k/a Conn & Conn Mortgage Company immediately CEASE AND DESIST from violating Section 36a-486(a) of the Connecticut General Statutes. This Temporary Order to Cease and Desist shall become effective upon receipt by Cohen, Stuart L. d/b/a Conn & Conn Co. a/k/a Conn & Conn Mortgage Company, and, unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or dismissal of the matters asserted in this Temporary Order to Cease and Desist.
THE COMMISSIONER FURTHER ORDERS, pursuant to Sections 36a-17(a) and 36a-52(b) of the Connecticut General Statutes, that: Not later than fourteen (14) days from receipt of this 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, Cohen, Stuart L. d/b/a Conn & Conn Co. a/k/a Conn & Conn Mortgage Company shall provide to Carmine Costa, Director, Consumer Credit Division, Department of Banking, 260 Constitution Plaza, Hartford, Connecticut 06103-1800, or carmine.costa@ct.gov:
| 1. |
A list of all individuals who from January 1, 2011 to the present, have either: (a) made an inquiry to Respondent concerning a residential mortgage loan in Connecticut, or (b) submitted an application to Respondent for a loan to be secured by residential property in Connecticut. The list shall include the individual’s name, address, date and nature of request. Respondent shall also provide copies of all underlying inquiry and application documentation; |
| 2. |
A detailed accounting of all loan transactions consummated since January 1, 2011, in which the loan was secured by residential property in Connecticut and Respondent was the lender of record or, in whole or in part, brokered the transaction, including the borrower’s name, address, date of transaction, role of Respondent, loan amount, prepaid finance charge and interest rate. Respondent shall provide copies of all corresponding executed settlement statements, notes, residential mortgages or other evidence of indebtedness, mortgage deeds, modifications, assignments and disclosures provided to mortgagors required by state or federal law; and |
| 3. |
A detailed accounting of all mortgage payments received by Respondent since January 1, 2011 in connection with a loan secured by residential property in Connecticut, including the name and address of the mortgagor and mortgagee, amounts of each payment, dates made, and corresponding loan amount, funding date and interest rate. In addition, Respondent shall provide copies of all notices and collection letters sent to mortgagors concerning such mortgage payments. |
THE COMMISSIONER FURTHER ORDERS, pursuant to Section 36a-50(c) of the Connecticut General Statutes that Cohen, Stuart L. d/b/a Conn & Conn Co. a/k/a Conn & Conn Mortgage Company MAKE RESTITUTION of any sums obtained as a result of Cohen, Stuart L. d/b/a Conn & Conn Co. a/k/a Conn & Conn Mortgage Company violating Section 36a-498a in effect prior to July 1, 2008, plus interest at the legal rate set forth in Section 37-1 of the Connecticut General Statutes. Specifically, the Commissioner ORDERS that: Not later than thirty (30) days from the date this Order to Make Restitution becomes permanent, Cohen, Stuart L. d/b/a Conn & Conn Co. a/k/a Conn & Conn Mortgage Company shall:
| 1. |
Repay any amounts in excess of five per cent or $2,000, as applicable, paid by the Connecticut resident identified in Exhibit A attached hereto plus interest and repay any amounts in excess of five percent or $2,000, as applicable, paid by any other Connecticut resident in connection with a first mortgage loan made by Cohen, Stuart L. d/b/a Conn & Conn Co. a/k/a Conn & Conn Mortgage Company. Payments shall be made by cashier’s check, certified check or money order; and |
| 2. |
Provide to Carmine Costa, Director, Consumer Credit Division, Department of Banking, 260 Constitution Plaza, Hartford, Connecticut 06103-1800, or carmine.costa@ct.gov, evidence of such repayments. |
NOW THEREFORE, notice is hereby given to Respondent that the Commissioner intends to issue an order requiring Respondent to CEASE AND DESIST from violating Section 36a-486(a) of the Connecticut General Statutes and Section 36a-498a of the Connecticut General Statutes in effect prior to July 1, 2008, and impose a CIVIL PENALTY upon Respondent as set forth herein, subject to its right to a hearing on the allegations set forth above.
A hearing will be granted to Respondent if a written request for a hearing is received by the Department of Banking, Consumer Credit Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following Respondent’s receipt of this 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 as set forth in Sections 36a-52(a) and subsections (a) and (c) of Section 36a-50 of the Connecticut General Statutes. This 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 shall be deemed received on the earlier of the date of actual receipt, or seven days after mailing or sending. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If Respondent will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”. Once a written request for a hearing is received, the Commissioner may issue a notification of hearing and designation of hearing officer that acknowledges receipt of a request for a hearing, designates a hearing officer and sets the date of the hearing in accordance with Section 4-177 of the Connecticut General Statutes and Section 36a-1-21 of the Regulations of Connecticut State Agencies. If a hearing is requested, the hearing will be held on March 11, 2014, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
The hearing will be held in accordance with the provisions of Chapter 54 of the Connecticut General Statutes, unless Respondent fails to appear at the requested hearing. At such hearing, Respondent will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.
If Respondent does not request a hearing within the time prescribed or fails to appear at any hearing, the Order to Make Restitution shall remain in effect and become permanent against Respondent, the Commissioner will issue an order that Respondent cease and desist from violating Section 36a-486(a) of the Connecticut General Statutes and Section 36a-498a of the Connecticut General Statutes in effect prior to July 1, 2008, and may order a civil penalty in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation be imposed upon Respondent.
So ordered at Hartford, Connecticut
this 23rd of January 2014. ________/s/_________
Howard F. Pitkin
Banking Commissioner
CERTIFICATION
I hereby certify that on this 24th day of January 2014, the foregoing 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 was sent by certified mail, return receipt requested, to Cohen, Stuart L. d/b/a Conn & Conn Co. a/k/a Conn & Conn Mortgage Company, 641 Farmington Avenue, Suite 203, Hartford, Connecticut 06105, certified mail no. 70121010000172645472.
________/s/_________
Stacey L. Serrano
Prosecuting Attorney