| * * * * * * * * * * * * * * * * * * * * * * * IN THE MATTER OF: NETWORK CAPITAL | * * * * * * * * * * * * | CONSENT ORDER |
WHEREAS, 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”;
WHEREAS, Network Capital is a Nevada corporation that has been continuously licensed in Connecticut since February 2, 2007 to engage in the business of a mortgage correspondent lender under Part I of Chapter 668, Sections 36a-485 et seq., of the Connecticut General Statutes;
WHEREAS, the Commissioner, through the Consumer Credit Division of the Department of Banking (“Department”), conducted an examination pursuant to the authority granted by Section 36a-17 of the Connecticut General Statutes, as amended by Public Acts 14-7 and 14-89, and Section 36a-498(f)(a) of the Connecticut General Statutes, into the activities of Network Capital to determine if it had violated, was violating, or was about to violate the provisions of the Connecticut General Statutes within the jurisdiction of the Commissioner;
WHEREAS, on July 17, 2014, as a result of the examination, the Commissioner, acting pursuant to Sections 36a-494, 36a-52, 36a-51, and 36a-50 of the Connecticut General Statutes, issued a Temporary Order to Cease and Desist (“Temporary Order to Cease and Desist”), Order to Make Restitution, Notice of Intent to Revoke or Refuse to Renew Mortgage Correspondent Lender License, 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 and Notice”) against Network Capital, which Order and Notice is incorporated herein by reference;
WHEREAS, the Order and Notice contain the following allegations:
| 1. | the Commissioner’s allegation that Network Capital failed to pay loan proceeds to the mortgagor, the mortgagor’s attorney, the mortgagee’s attorney or to any other person specified in any settlement statement, any written agreement between the mortgagor and mortgagee or any written instruction of the mortgagor in connection with at least two (2) Connecticut residential mortgage loans upon the termination of each borrower’s right to rescind the loan transaction, in violation of Section 36a-758 of the Connecticut General Statutes; |
| 2. | the Commissioner’s allegation that Network Capital failed to timely pay loan proceeds to the mortgagor, the mortgagor’s attorney, the mortgagee’s attorney or to any other person specified in any settlement statement, any written agreement between the mortgagor and mortgagee or any written instruction of the mortgagor in connection with at least twenty-two (22) Connecticut residential mortgage loans upon the termination of each borrower’s right to rescind the loan transaction, in violation of Section 36a-758 of the Connecticut General Statutes; |
| 3. | the Commissioner’s allegation that Network Capital accrued interest charges on at least eighteen (18) Connecticut residential mortgage loans prior to payment of the loan proceeds, which accrual would constitute engaging in an unfair or deceptive practice, in violation of Section 36a-498e(2) of the Connecticut General Statutes; |
| 4. | the Commissioner’s allegation that Network Capital engaged the services of at least eleven (11) mortgage loan originators who were not licensed in Connecticut in connection with at least twelve (12) Connecticut residential mortgage loans, in violation of Section 36a-486(b)(1) of the Connecticut General Statutes; |
| 5. | the Commissioner’s allegation that Network Capital failed to disclose the true identity of the eleven (11) actual unlicensed mortgage loan originators on at least twelve (12) Connecticut residential mortgage loans, which would constitute an unfair or deceptive practice, in violation of Section 36a-498e(2) of the Connecticut General Statutes, and would constitute engaging in an act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in violation of Section 36a-53b of the Connecticut General Statutes; |
| 6. | the Commissioner’s allegation that Network Capital failed to disclose the true identity of the eleven (11) actual unlicensed mortgage loan originators on at least twelve (12) Connecticut residential mortgage loans in its submitted loan list and in mortgage call reports, which would constitute negligently making a false statement or knowingly and willfully making omissions of material facts in connection with information or reports filed with the Department and the Nationwide Mortgage Licensing System and Registry (“NMLS”), in violation of Section 36a-498e(10) of the Connecticut General Statutes, and which would constitute the making of statements in documents filed with the Commissioner or in connection with an examination, which were, at the time and in the light of the circumstances under which they were made, false or misleading in a material respect, in violation of Section 36a-53a of the Connecticut General Statutes; |
| 7. | the Commissioner’s allegation that Network Capital altered certain loan documents, which would constitute an unfair or deceptive practice, in violation of Section 36a-498e(2) of the Connecticut General Statutes, and which would constitute engaging in an act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in violation of Section 36a-53b of the Connecticut General Statutes; |
| 8. | the Commissioner’s allegation that Network Capital failed to timely provide requested examination related information, which would constitute a failure to compile reports as directed by the Commissioner, in violation of Section 36a-498f(b) of the Connecticut General Statutes, and a failure to otherwise cooperate with the Commissioner, in violation of Section 36a-17(d) of the Connecticut General Statutes. |
WHEREAS, the Commissioner maintains that the violations of the Statutes cited above in paragraphs 1 through 8, if found to be true, would constitute sufficient grounds to revoke or refuse to renew a correspondent mortgage lender’s license pursuant to Section 36a-494(a)(1)(C) and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes, and form the basis to issue an order to cease and desist pursuant to Sections 36a 494(b)(1) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Sections 36a-494(b)(1) and 36a-50(a) of the Connecticut General Statutes;
WHEREAS, the Commissioner further alleged in the Order and Notice that the conduct described in the Order and Notice, if found to be true, would render the Commissioner unable to determine that a correspondent mortgage lender, its control person and qualified individual demonstrate character and general fitness such as to command the confidence of the community and to warrant a determination that such correspondent mortgage lender would operate honestly, fairly and efficiently within the purposes of Sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b of the Connecticut General Statutes. The Commissioner maintains that such failure would be a separate basis for the Commissioner to revoke or refuse to renew a mortgage correspondent lender license;
WHEREAS, on July 17, 2014, the Order and Notice was sent by email and FedEx to Network Capital (FedEx Tracking No. 8696 4180 1238);
WHEREAS, on July 18, 2014, Network Capital received the Order and Notice and on July 22, 2014, requested a hearing;
WHEREAS, Section 36a-1-22 of the Regulations of Connecticut State Agencies provides that the Commissioner may amend the notice of hearing at any stage of the contested case prior to the close of evidence;
WHEREAS, the allegations set forth in the Order and Notice would also support initiation of an administrative action directly against the sole owner, control person and qualified individual at Network Capital, Tri Minh Nguyen (“Nguyen”), and accordingly, the Commissioner has a basis to amend the Order and Notice to include Nguyen as an additional respondent;
WHEREAS, as a result of information provided pursuant to the Temporary Order to Cease and Desist, the Commissioner believes he has a basis to amend the Order and Notice to further allege that additional Connecticut residential mortgage loans were not timely funded, in violation of Section 36a-758 of the Connecticut General Statutes, and that Network Capital accrued interest on additional Connecticut residential mortgage loans prior to payment of the loan proceeds, which constitutes engaging in an unfair or deceptive practice, in violation of Section 36a-498e(2) of the Connecticut General Statutes;
WHEREAS, as a result of subsequent investigation after issuance of the Order and Notice, the Commissioner believes he has a basis to further allege that Network Capital routinely failed to maintain HUD-1 documents executed by the borrowers, in violation of Section 36a-493 of the Connecticut General Statutes;
WHEREAS, in connection with the matters alleged above, Network Capital and Nguyen have assured the Department that they are committed to ensuring full compliance with Connecticut law and that they have taken significant measures to augment their compliance resources and enhance their compliance policies, procedures and practices;
WHEREAS, in connection with the matters alleged above, Network Capital and Nguyen responded to the Department’s requests for information and documentation, both before and after the issuance of the Notice and Order and herein represent to the Commissioner that they have used best efforts to comply with all requirements imposed by the Temporary Order to Cease and Desist;
WHEREAS, Section 4-177(c) of the Connecticut General Statutes and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by consent order, unless precluded by law;
WHEREAS, the Commissioner, Network Capital and Nguyen now desire to resolve the matters alleged in the Order and Notice and additionally set forth herein;
WHEREAS, the Commissioner, Network Capital and Nguyen acknowledge that while nothing in this Consent Order constitutes a “finding” for any purpose, Network Capital and Nguyen nonetheless acknowledge that this Consent Order is a public record and is a reportable event for purposes of regulatory disclosure questions on the NMLS, as applicable;
WHEREAS, Network Capital and Nguyen, without admitting or denying any of the allegations set forth in the Order and Notice or any of the additional allegations set forth herein, voluntarily agree to consent to the entry of the sanctions and the issuance of the order set forth below solely for the purpose of obviating the need for further formal administrative proceedings concerning the allegations contained in the Order and Notice and the additional allegations set forth herein;
WHEREAS, Network Capital and Nguyen agree that the Order and Notice may be used in construing the terms of this Consent Order and agree to the language of this Consent Order;
WHEREAS, Network Capital, through its execution of this Consent Order, voluntarily agrees to waive any applicable procedural right, including a right to a hearing, as it pertains to the allegations contained in the Order and Notice and the additional allegations set forth herein that relate to Network Capital, and voluntarily waives its right to seek judicial review or otherwise challenge or contest the validity of this Consent Order;
AND WHEREAS, Nguyen, through his execution of this Consent Order, voluntarily agrees to waive any applicable procedural right, including a right to notice and an opportunity for hearing, as it pertains to the allegations set forth herein that relate to Nguyen, and voluntarily waives his right to seek judicial review or otherwise challenge or contest the validity of this Consent Order.
CONSENT TO ENTRY OF SANCTIONS
WHEREAS, Network Capital and Nguyen, through their execution of this Consent Order, consent to the Commissioner’s entry of a Consent Order imposing the following sanctions:
| 1. | No later than sixty (60) days after execution of this Consent Order by Network Capital, Network Capital shall provide evidence that it has sent restitution payments to the individuals identified in Exhibit A hereto in the amounts listed on Exhibit A hereto. The evidence required by this paragraph must include for each borrower identified, the amount refunded, and proof of payment. In the event that Network Capital cannot locate an identified borrower, or if the identified borrower has not deposited or otherwise accepted any such payment, Network Capital shall notify the Director of the Consumer Credit Division, in writing, providing documentary evidence of its efforts to locate and pay the borrower; and |
| 2. | Network Capital shall remit One Hundred and Seventy Five Thousand Dollars ($175,000) as a civil penalty. The civil penalty shall be paid in two installments as follows: (a) no later than December 26, 2014, Network Capital shall remit to the Department of Banking by wire transfer the sum of Eighty-Seven Thousand Five Hundred Dollars ($87,500); and (b) no later than June 1, 2015, Network Capital shall remit to the Department of Banking the sum of Eighty-Seven Thousand Five Hundred Dollars ($87,500) by wire transfer, or by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut”. |
CONSENT ORDER
NOW THEREFORE, the Commissioner enters the following:
| 1. | The Sanctions set forth above be and are hereby entered; |
| 2. | The mortgage correspondent lender license held by Network Capital and the mortgage loan originator license held by Nguyen shall expire by their own terms on December 31, 2014. It is expressly understood and agreed that all of the allegations set forth in the Order and Notice and the additional allegations set forth herein may be fully taken into account by the Commissioner in connection with any future application for a license filed by Network Capital (or any subsequent company with Nguyen as a control person) or Nguyen, and that no license shall be granted until such time as the Commissioner determines that Network Capital or Nguyen have, in the Commissioner’s opinion, time-tested policies, procedures, and practices in place at all levels of operation to adequately ensure that Network Capital and/or Nguyen will be able to perform services in Connecticut at all levels of operation in compliance with all lawful requirements for the conduct of the business for which the license is sought. Nothing in the foregoing is intended to alter any future statutory or regulatory requirements for licensure, but shall remain a requirement in addition thereto. |
| 3. | Upon issuance of this Consent Order by the Commissioner, this matter will be resolved and the Commissioner will not take any future enforcement action against Network Capital or Nguyen based upon: the underlying examination and the subsequent investigation described in the Order and Notice; the allegations set forth in the Order and Notice; the Temporary Order to Cease and Desist, or the further allegations set forth herein; provided that issuance of this Consent Order is without prejudice to the right of the Commissioner to take enforcement action against Network Capital or Nguyen based upon a violation of this Consent Order or the matters underlying its entry, if the Commissioner determines that compliance with the terms herein is not being observed or if any representation made by either Network Capital or Nguyen and reflected herein is subsequently discovered to be untrue; and |
| 4. | This Consent Order shall become final when issued. |
Issued at Hartford, Connecticut
this 24th day of December 2014. _______/s/_________
Howard F. Pitkin
Banking Commissioner
By: ________/s/___________
Name: Tri Minh Nguyen
Title: President
Network Capital Funding Corporation
State of: California
County of: Orange
On this the 23rd day of December 2014, before me, S. Patel, Notary Public, the undersigned officer, personally appeared Tri Minh Nguyen who acknowledged himself to be the President of Network Capital Funding Corporation, a corporation, and that he as such President, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as President.
In witness whereof I hereunto set my hand.
_________/s/_________
Notary Public
Date Commission Expires: Aug 25, 2017
I, Tri Minh Nguyen, have read the foregoing Consent Order; that I know and fully understand its contents and agree freely and without threat or coercion of any kind to comply with the sanction entered and terms and conditions ordered herein; and voluntarily agree to enter into this Consent Order, expressly waiving the procedural rights set forth herein as to the matters described herein.
________/s/_________
Tri Minh Nguyen
State of: California
County of: Orange
On this the 23rd day of December 2014, before me, S. Patel, Notary Public, the undersigned officer, personally appeared Tri Minh Nguyen, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledge that he executed the foregoing instrument for the purposes therein contained.
In witness whereof I hereunto set my hand.
_________/s/_________
Notary Public
Date Commission Expires: Aug 25, 2017