* * * * * * * * * * * * * * * * * * * * * IN THE MATTER OF: * * * * * * * * * * * * * * * * * * * * * | * * * ORDER OF SUMMARY SUSPENSION * * NOTICE OF INTENT TO REVOKE * SALES FINANCE COMPANY LICENSE * * AND * * NOTICE OF RIGHT TO HEARING * |
I. LEGAL AUTHORITY AND JURISDICTION
The Banking Commissioner (“Commissioner”) is charged with the administration of Part II of Chapter 668, Sections 36a-535 to 36a-546, inclusive, of the Connecticut General Statutes, “Finance Companies”.
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 . . . .
Section 36a-51 of the Connecticut General Statutes provides, in pertinent part, that:
(a) The commissioner may . . . revoke . . . any license issued by the commissioner under any provision of the general statutes by sending a notice to the licensee 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 licensee 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 . . . involved; (4) a short and plain statement of the matters asserted; and (5) a statement indicating that the licensee may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice. If the commissioner finds that public health, safety or welfare imperatively requires emergency action, and incorporates a finding to that effect in the notice, the commissioner may order summary suspension of a license in accordance with subsection (c) of section 4-182 and require the licensee to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this section, pending proceedings for . . . revocation . . . .
(b) 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 licensee fails to appear at the hearing. After the hearing, the commissioner shall . . . revoke or refuse to renew the license for any reason set forth in the applicable licensing provisions of the general statutes if the commissioner finds sufficient grounds exist for such . . . revocation . . . . If the licensee does not request a hearing within the time specified in the notice or fails to appear at the hearing, the commissioner shall . . . revoke . . . the license. No such license shall be suspended or revoked except in accordance with the provisions of chapter 54.
Section 4-182(c) of the 2014 Supplement to the General Statutes provides, in pertinent part, that:
If the agency finds that public health, safety or welfare imperatively requires emergency action, and incorporates a finding to that effect in its order, summary suspension of a license may be ordered pending proceedings for revocation or other action. These proceedings shall be promptly instituted and determined.
II. MATTERS ASSERTED
| 1. | Respondent is a New York corporation with an office at 165 Oser Avenue, Hauppauge, New York. |
| 2. | At all times relevant hereto, Stephen Baron (“Baron”) was the President and sole shareholder of Respondent. |
| 3. | Since April 18, 1995, Respondent has been licensed to act as a sales finance company in Connecticut pursuant to Section 36a-541 of the Connecticut General Statutes. |
| 4. | On October 11, 2013, the Government Relations and Consumer Affairs Division of the Department of Banking received a complaint stating, in part, that “Condor does not refund ANY money to consumers who pay more than they owe on their retail installment contract, unless the consumer is aware there is a balance due them, and directly asks to have it refunded”. |
| 5. | On April 23, 2014, Benjamin M. Lawsky, Superintendent of Financial Services of the State of New York (“Superintendent”), filed a civil complaint against Respondent and Baron (“Complaint”) in the United States District Court, Southern District of New York (“Court”) No. 14-CV-2863. The Complaint alleges that since Respondent’s inception, Respondent has wrongfully retained customers’ positive credit balances and taken active steps to conceal such balances from its customers and its regulators, in particular the Department of Financial Services, so as to frustrate their ability to detect such balances or request refunds. The Complaint further alleges that Respondent has maintained a “policy” of refusing and failing to refund such balances to customers absent a specific request, which Respondent took active steps to make sure could rarely, if ever, occur and thus has engaged in a longstanding scheme to steal funds from its vulnerable customers. |
| 6. | In connection with the Complaint, on April 23, 2014, the Court issued an Ex Parte Temporary Restraining Order and Order to Show Cause for Preliminary Injunction against Respondent and Baron (“Restraining Order”), pending the Court’s determination on the Superintendent’s Motion for a Preliminary Injunction, in which the Court ordered, among other things, that (a) Respondent and Baron are temporarily restrained and enjoined from falsely representing, or from assisting others who are falsely representing, concealing or omitting to disclose, expressly or by implication, the existence or amount of any loan balance of any customer of Respondent, including without limitation, any positive credit balance due such customer, and (b) the Superintendent is authorized immediately to take all steps necessary to secure and take control of the business premises of Respondent. |
III. STATUTORY BASIS FOR REVOCATION OF SALES FINANCE COMPANY LICENSE
Section 36a-541 of the Connecticut General Statutes provides, in pertinent part, that:
If the commissioner finds, upon the filing of an application for a license as a sales finance company, that the financial responsibility, character, reputation, integrity and general fitness of the applicant . . . and of the officers, directors and principal employees if the applicant is a corporation, are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-535 to 36a-546, inclusive, the commissioner may thereupon issue the applicant the license. If the commissioner fails to make such findings, or if the commissioner finds that the applicant has made any material misstatement in the application, the commissioner shall not issue a license, and shall notify the applicant of the denial and the reasons for such denial.
Section 36a-543(a) of the Connecticut General Statutes provides, in pertinent part, that:
The commissioner may . . . revoke . . . any sales finance company license or take any other action, in accordance with section 36a-51, if the commissioner finds that . . . (4) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the commissioner’s denial of such license originally . . . .
| 1. | The filing of the Complaint and issuance of the Restraining Order against Respondent, as more fully described in paragraphs 5 and 6 of the Matters Asserted, constitutes a basis for the Commissioner to conclude that Respondent fails to demonstrate that the financial responsibility, character, reputation, integrity and general fitness of Respondent are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-535 to 36a-546, inclusive, of the Connecticut General Statutes. Such failure constitutes grounds for the Commissioner to deny an application for a license as a sales finance company under Section 36a-541 of the Connecticut General Statutes, which would be sufficient grounds for the Commissioner to revoke Respondent’s license to engage in the business of a sales finance company pursuant to Section 36a-543(a)(4) and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes. |
| 2. | The filing of the Complaint and issuance of the Restraining Order against Baron, as more fully described in paragraphs 5 and 6 of the Matters Asserted, constitutes a basis for the Commissioner to conclude that Baron fails to demonstrate that the financial responsibility, character, reputation, integrity and general fitness of an officer, director or principal employee of Respondent are such as to warrant belief that Respondent’s business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-535 to 36a-546, inclusive, of the Connecticut General Statutes. Such failure constitutes grounds for the Commissioner to deny an application for a license as a sales finance company under Section 36a-541 of the Connecticut General Statutes, which would be sufficient grounds for the Commissioner to revoke Respondent’s license to engage in the business of a sales finance company pursuant to Section 36a-543(a)(4) and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes. |
IV. FINDING AND STATUTORY BASIS FOR ORDER OF SUMMARY SUSPENSION
The Commissioner finds that public safety and welfare imperatively require emergency action to summarily suspend Respondent’s license to engage in the business of a sales finance company pursuant to Section 4-182(c) of the 2014 Supplement to the General Statutes and Section 36a-51(a) of the Connecticut General Statutes in that the issuance of the Restraining Order and the underlying basis for the Complaint fails to demonstrate that the financial responsibility, character, reputation and integrity and general fitness of Respondent are such as to warrant belief that Respondent’s business will be operated soundly and efficiently, in the public interest and consistent with the purposes of Sections 36a-535 to 36a-546, inclusive, of the Connecticut General Statutes, and, therefore, adversely effects the public.
V. ORDER OF SUMMARY SUSPENSION, NOTICE OF INTENT TO REVOKE
SALES FINANCE COMPANY LICENSE AND NOTICE OF RIGHT TO HEARING
AND WHEREAS, the Commissioner has made the findings required under Section 4-182(c) of the 2014 Supplement to the General Statutes.
THE COMMISSIONER THEREFORE ORDERS, pursuant to the authority granted in Section 4-182(c) of the 2014 Supplement to the General Statutes, that the license of Condor Capital Corp. to engage in the business of a sales finance company be and is hereby SUMMARILY SUSPENDED pending proceedings for revocation.
NOW THEREFORE, notice is hereby given to Respondent that the Commissioner intends to REVOKE Respondent’s license to engage in the business of a sales finance company, subject to Respondent’s 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 Order of Summary Suspension, Notice of Intent to Revoke Sales Finance Company License and Notice of Right to Hearing as set forth in subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes. This Order of Summary Suspension, Notice of Intent to Revoke Sales Finance Company License 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 and set 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 July 1, 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 a hearing is not requested by Respondent within the time prescribed, the Commissioner will REVOKE Respondent’s sales finance company license.
So ordered at Hartford, Connecticut
this 8th day of May 2014. ________/s/_________
Howard F. Pitkin
Banking Commissioner
CERTIFICATION
I hereby certify that on this 9th day of May 2014, the foregoing Order of Summary Suspension, Notice of Intent to Revoke Sales Finance Company License and Notice of Right to Hearing was sent by certified mail, return receipt requested, to Condor Capital Corp., Attention: Stephen Baron, 165 Oser Avenue, Hauppauge, New York 11788, certified mail no. 7012 1010 0001 7264 7278.
________/s/_________
Doniel Kitt
Prosecuting Attorney