* * * * * * * * * * * * * * * * * * * * * * IN THE MATTER OF: UMC, INC. d/b/a UNITED MORTGAGE CONSULTING ("UMC") BRANDON P. CHODOSH ("Chodosh") (Collectively, "Respondents") * * * * * * * * * * * * * * * * * * * * * * | * |
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 of the Connecticut General Statutes, as amended by Public Acts 14-7 and 14-89, the Commissioner, through the Consumer Credit Division of the Department of Banking (“Department”), has investigated the activities of Respondents to determine if they have violated, are violating or are 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, as amended, 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 or examinations 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-52(a) 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.
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 not later than fourteen days after 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 the 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. | UMC is a California corporation with an address at 3419 Via Lido #117, Newport Beach, California. |
| 2. | At all relevant times hereto, Chodosh was President of UMC. For the ten-month-period ending October 31, 2012, Chodosh received compensation of at least $86,000. In addition, Chodosh was an account signatory for at least two UMC bank accounts and controlled disbursements from such accounts. |
| 3. | On at least one occasion, UMC solicited a Connecticut resident to obtain a lower interest rate on a residential mortgage loan. In particular, on or about December 2011, a Connecticut resident (“Connecticut Resident”) received an offer, by mail, from UMC to refinance his loan at an interest rate of 2.5%. The Connecticut Resident applied and received a Conditional Approval Letter that appeared to be from CitiFinancial. |
| 4. | The Conditional Approval Letter stated that the Connecticut Resident’s refinancing had been approved at an interest rate of 2.5% for 480 months and that the loan terms had been locked in. Along with the Conditional Approval Letter, there were payment instructions which stated that “to start the refinance process of your home mortgage”, $3,500 should be paid to a UMC bank account by cash, money order or cashier’s check. There was no disclosure concerning the refundability of the $3,500 payment. |
| 5. | On January 9, 2012, in furtherance of such refinancing, the Connecticut Resident deposited $3,500 in UMC’s bank account, as instructed. The Connecticut Resident never received the refinancing and complained to the Connecticut Attorney General on March 28, 2012. By letter dated April 27, 2012, the complaint was referred to the Department. |
| 6. | The Department investigated the Connecticut Resident’s complaint and made an inquiry to CitiFinancial concerning the Conditional Approval Letter. A written response was received from a Resolution Specialist at OneMain Financial, which stated, in pertinent part, that “[i]t appears that . . . [the Connecticut Resident] was the victim of an ‘advance fee scam’ carried out in the name of ‘CitiFinancial’ without our knowledge, participation or consent. . . . CitiFinancial was not providing new loans in the name of CitiFinancial, as CitiFinancial began operating as OneMain Financial as of July 1, 2011”. |
| 7. | The Department also made several inquiries directly to Respondents. On June 1, 2012, UMC, through its attorney, represented that it would refund the $3,500 paid by the Connecticut Resident in installments. To date, the Connecticut Resident has only received three checks of $100 each, all drawn on a UMC bank account and signed by Chodosh. |
| 8. | At no time relevant hereto has UMC been licensed to act as a mortgage broker in this state, nor does UMC qualify for an exemption from such licensure. |
III. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST, ORDER TO
MAKE RESTITUTION AND IMPOSITION OF CIVIL PENALTY
Section 36a-53b of the Connecticut General Statutes provides, in pertinent part, that:
No person shall, in connection with any activity subject to the jurisdiction of the commissioner: (1) Employ any device, scheme or artifice to defraud; (2) make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading; or (3) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
Section 36a-485 of the Connecticut General Statutes in effect prior to October 1, 2012, provided, in pertinent part, that:
(1) “Advance fee” means any consideration paid or given, directly or indirectly, to a mortgage lender, mortgage correspondent lender or mortgage broker required to be licensed pursuant to sections 36a-485 to 36a-498a, inclusive, and sections 36a-534a and 36a-534b, prior to the closing of a residential mortgage loan to any person, including, but not limited to, loan fees, points, broker’s fees or commissions, transaction fees or similar prepaid finance charges . . . .
(12) “Mortgage broker” means a person who, for compensation or gain or in the expectation of compensation or gain (A) takes a residential mortgage loan application, or (B) offers or negotiates terms of a residential mortgage loan, excluding an individual who is sponsored by another mortgage lender, mortgage correspondent lender or mortgage broker . . . .
Section 36a-486(a) of the Connecticut General Statutes provides, in pertinent part, that:
No person shall . . . act as a mortgage broker in this state unless such person has first obtained the required license for its main office and each branch office where such business is conducted in accordance with the provisions of sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b.
Section 36a-498 of the Connecticut General Statutes provides, in pertinent part, that:
(a) Except as provided in subsection (c) of this section, every advance fee paid or given, directly or indirectly, to a . . . mortgage broker required to be licensed pursuant to sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b shall be refundable. . . .
(c) Subsection (a) of this section shall not apply if: (1) The person providing the advance fee and the . . . mortgage broker agree in writing that the advance fee shall not be refundable, in whole or in part; and (2) the written agreement complies in all respects with the provisions of subsection (d) of this section.
(d) An agreement under subsection (c) of this section shall meet all of the following requirements to be valid and enforceable: (1) The agreement shall be dated, signed by both parties, and be executed prior to the payment of any advance fee; (2) the agreement shall expressly state the total advance fee required to be paid and any amount of the advance fee that shall not be refundable; (3) the agreement shall clearly and conspicuously state any conditions under which the advance fee will be retained by the . . . mortgage broker; (4) the term “nonrefundable” shall be used to describe each advance fee or portion thereof to which the term is applicable, and shall appear in boldface type in the agreement each time it is used; and (5) the form of the agreement shall (A) be separate from any other forms, contracts, or applications utilized by the . . . mortgage broker, (B) contain a heading in a size equal to at least ten-point boldface type that shall title the form “AGREEMENT CONCERNING NONREFUNDABILITY OF ADVANCE FEE”, (C) provide for a duplicate copy which shall be given to the person paying the advance fee at the time of payment of the advance fee, and (D) include such other specifications as the commissioner may by regulation prescribe.
(e) An agreement under subsection (c) of this section that does not meet the requirements of subsection (d) of this section shall be voidable at the election of the person paying the advance fee.
(f) (1) No . . . mortgage broker required to be licensed pursuant to sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b shall enter into an agreement with or otherwise require any person to pay the . . . mortgage broker for any fee, commission or other valuable consideration lost as a result of such person failing to consummate a residential mortgage loan, provided the . . . mortgage broker may collect such fee, commission or consideration as an advance fee subject to the requirements of this section.
| 1. | UMC’s taking a residential mortgage loan application or offering or negotiating terms of a residential mortgage loan to a Connecticut resident for compensation or gain, as more fully described in paragraphs 1 through 5, inclusive, and paragraph 8 of the Matters Asserted, constitutes acting as a mortgage broker in this state without a license, in violation of Section 36a-486(a) of the Connecticut General Statutes. Such violation forms 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, 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 upon UMC pursuant to Sections 36a-494(b)(1) 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. | UMC’s requiring the payment of an advance fee by a Connecticut resident, which was neither refunded nor disclosed as non-refundable, as more fully described in paragraphs 4 through 7, inclusive, of the Matters Asserted, constitutes a violation of Section 36a-498(f) of the Connecticut General Statutes. Such violation forms 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, issue an order to make restitution pursuant to Sections 36a-494(b)(1) and 36a-50(c) of the Connecticut General Statutes, and impose a civil penalty upon UMC pursuant to Sections 36a-494(b)(1) 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. | UMC’s providing a falsified residential mortgage approval letter to a Connecticut resident and requesting payment of $3,500 to UMC’s bank account in connection therewith, as more fully described in paragraphs 4 through 7, inclusive, of the Matters Asserted, constitutes a violation of Section 36a-53b of the Connecticut General Statutes. Such violation forms the basis to issue an order to cease and desist upon UMC pursuant to Section 36a-52(a) of the Connecticut General Statutes, issue an order to make restitution upon UMC pursuant to Section 36a-50(c) of the Connecticut General Statutes, and impose a civil penalty upon UMC pursuant to Section 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. |
| 4. | As UMC’s President, Chodosh employed a device, scheme or artifice to defraud; made an untrue statement of material fact or omitted to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or engaged in an act, practice, or course of business which operated or would operate as fraud or deceit upon any person, as more fully described in paragraphs 2 through 8, inclusive, of the Matters Asserted, in violation of Section 36a-53b of the Connecticut General Statutes. Such violation forms the basis to issue an order to cease and desist upon Chodosh pursuant to Section 36a-52(a) of the Connecticut General Statutes, issue an order to make restitution upon Chodosh pursuant to Section 36a-50(c) of the Connecticut General Statutes, and impose a civil penalty upon Chodosh pursuant to Section 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. 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 Respondents have engaged in acts or conduct which 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.
THE COMMISSIONER THEREFORE ORDERS, pursuant to Section 36a-50(c) of the Connecticut General Statutes, that UMC, Inc. d/b/a United Mortgage Consulting and Brandon P. Chodosh MAKE RESTITUTION of any sums obtained as a result of UMC, Inc. d/b/a United Mortgage Consulting violating Sections 36a-53b, 36a-486(a) and 36a-498(f) of the Connecticut General Statutes and Brandon P. Chodosh violating Section 36a-53b, 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, UMC, Inc. d/b/a United Mortgage Consulting and Brandon P. Chodosh shall:
| 1. | Repay the Connecticut resident in the amount identified in Exhibit A attached hereto plus interest and repay any other Connecticut resident who paid fees to UMC, Inc. d/b/a United Mortgage Consulting in connection with a residential mortgage loan, plus interest. 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 UMC that the Commissioner intends to issue an order requiring UMC to CEASE AND DESIST from violating Sections 36a-53b, 36a-486(a) and 36a-498(f) of the Connecticut General Statutes, and impose a CIVIL PENALTY upon UMC as set forth herein, subject to UMC’s right to a hearing on the allegations set forth above.
FURTHER, notice is hereby given to Chodosh that the Commissioner intends to issue an order requiring Chodosh to CEASE AND DESIST from violating Section 36a-53b of the Connecticut General Statutes, and impose a CIVIL PENALTY upon Chodosh as set forth herein, subject to Chodosh’s right to a hearing on the allegations set forth above.
A hearing will be granted to each 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 each Respondent’s receipt of this 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 Section 36a-52(a) and subsections (a) and (c) of Section 36a-50 of the Connecticut General Statutes. This 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 any 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 January 27, 2015, 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 any Respondent fails to appear at the requested hearing. At such hearing, Respondents 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 UMC does not request a hearing within the time period prescribed or fails to appear at any hearing, the Order to Make Restitution shall remain in effect and become permanent against UMC, and the Commissioner will issue an order that UMC cease and desist from violating Sections 36a-53b, 36a-486(a) and 36a-498(f) of the Connecticut General Statutes, and may order a civil penalty not to exceed One Hundred Thousand Dollars ($100,000) per violation.
If Chodosh does not request a hearing within the time period prescribed or fails to appear at any hearing, the Order to Make Restitution shall remain in effect and become permanent against Chodosh, and the Commissioner will issue an order that Chodosh cease and desist from violating Section 36a-53b of the Connecticut General Statutes, and may order a civil penalty not to exceed One Hundred Thousand Dollars ($100,000) per violation.
Dated at Hartford, Connecticut
this 8th day of December 2014. ________/s/_________
Howard F. Pitkin
Banking Commissioner
CERTIFICATION
I hereby certify that on this 10th day of December 2014, the foregoing 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 UMC, Inc. d/b/a United Mortgage Consulting, 3419 Via Lido #117, Newport Beach, California 92663, certified mail no. 70120470000147902129; UMC, Inc. d/b/a United Mortgage Consulting, 3419 Via Lido 117, Newport Beach, California 92663, certified mail no. 70120470000147902136; and Brandon P. Chodosh, 3419 Via Lido 117, Newport Beach, California 92663, certified mail no. 70120470000147902143.
________/s/________
Stacey L. Serrano
Prosecuting Attorney