FINDINGS OF FACT
The Commissioner has jurisdiction over the licensing and regulation of debt negotiators pursuant to Sections 36a-671 to 36a-671e, inclusive, of the Connecticut General Statutes contained in Part II of Chapter 669 of the Connecticut General Statutes, “Debt Adjusters and Debt Negotiation”. The Notice issued by the Commissioner comported with the requirements of Section 4-177(b) of Chapter 54 of the Connecticut General Statutes. The Notice complied with the notice requirements of Sections 36a-50(a) [civil penalty], 36a-50(c) [restitution order], 36a-52(b) [temporary order to cease and desist] and 36a-52(a) [cease and desist order] of the Connecticut General Statutes. The Respondent received notice of the hearing and appeared at the Hearing that was held at the Department on November 6, 2014. The Commissioner’s broad regulatory authority includes the power to impose civil penalties pursuant to Section 36a-50(a) of the Connecticut General Statutes, to issue an order to make restitution pursuant to Section 36a-50(c) of the Connecticut General Statutes, and to issue orders to cease and desist pursuant to Section 36a-52(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes provides, in pertinent part, that: (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 . . . certified mail, return receipt requested . . . . 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 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. . . . (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. 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 . . . certified mail, return receipt requested . . . . 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. . . . No such order shall be issued except in accordance with the provisions of chapter 54. Violation of Section 36a-671(b) of the Connecticut General Statutes Section 36a-671 of the Connecticut General Statutes provides, in pertinent part, that: (a) As used in this section and sections 36a-671a to 36a-671e, inclusive, (1) ”debt negotiation” means, for or with the expectation of a fee, commission or other valuable consideration, assisting a debtor in negotiating or attempting to negotiate on behalf of a debtor the terms of a debtor’s obligations with one or more mortgagees or creditors of the debtor . . . ; (2) “debtor” means any individual who has incurred indebtedness or owes a debt for personal, family or household purposes; . . . (4) “mortgagor” means a debtor who is an owner of residential property, including, but not limited to, a single-family unit in a common interest community, who is also the borrower under a mortgage encumbering such residential property; . . . and (7) “residential property” means one-to-four family owner-occupied real property. (b) No person shall engage or offer to engage in debt negotiation in this state without a license issued under this section for each location where debt negotiation will be conducted. . . . A person is engaging in debt negotiation in this state if such person: . . . (2) has a place of business located outside of this state and the debtor is a resident of this state who negotiates or agrees to the terms of the services in person, by mail, by telephone or via the Internet; or (3) has its place of business located outside of this state and the services concern a debt that is secured by property located within this state. Section 36a-671a(b) 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 the provisions of sections 36a-671 to 36a-671e, inclusive, . . . the commissioner may take action against such person . . . in accordance with sections 36a-50 and 36a-52. For purposes of sections 36a-671 to 36a-671e, inclusive, each engagement and each offer to engage in debt negotiation shall constitute a separate violation. At the Hearing, Respondent stipulated to the matters asserted in the Notice. The record establishes that Respondent engaged in debt negotiation in this state without obtaining the required license, which constitutes a violation of Section 36a-671(b) of the Connecticut General Statutes. For purposes of Sections 36a-671 to 36a-671e, inclusive, of the Connecticut General Statutes, each engagement and each offer to engage in debt negotiation constitutes a separate violation. Respondent was retained by two Connecticut residents to engage in debt negotiation without the required license, which constitutes two separate violations of Section 36a-671(b) of the Connecticut General Statutes. The record also establishes that, in connection with its debt negotiation services in this state, Respondent failed to abide by the fee schedule established by the Commissioner by collecting fees in excess of maximum fees allowable and collecting fees before the debt negotiation services had been fully performed. Respondent’s violations of Section 36a-671(b) of the Connecticut General Statutes form the basis to issue an order to cease and desist against Respondent pursuant to Sections 36a-671a(b) and 36a-52(a) of the Connecticut General Statutes, issue an order to make restitution against Respondent pursuant to Sections 36a-671a(b) and 36a-50(c) of the Connecticut General Statutes, and impose a civil penalty upon Respondent pursuant to Sections 36a-671a(b) and 36a-50(a) of the Connecticut General Statutes. Imposition of Restitution Pursuant to Section 36a-50(c) of the Connecticut General Statutes Section 36a-50(c) of the Connecticut General Statutes authorizes the Commissioner, as the result of an investigation, to order any person that the Commissioner finds has violated any provision of the general statutes within the jurisdiction of the Commissioner to 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 of the Connecticut General Statutes. Although the Commissioner has the authority to impose an order to make restitution, Respondent has already refunded the fees that it received from each Connecticut resident referred to in paragraphs 2 and 5 of the Notice. These two individuals were the only Connecticut residents with whom Respondent has entered into agreements for debt negotiation services and to whom restitution needed to be made due to Respondent’s violations of Section 36a-671(b) of the Connecticut General Statutes. Therefore, an order to make restitution is not warranted in this case because Respondent has already refunded the fees it had received from the two Connecticut residents. Based on the evidence presented at the Hearing, there are no other clients to whom restitution is required to be made. Imposition of Civil Penalty Pursuant to Section 36a-50(a) of the Connecticut General Statutes The legislature has delegated the regulation of the debt negotiation industry to the Commissioner. See Section 36a–671 et seq. of the Connecticut General Statutes. The debt negotiation statutes, on their face, are remedial in nature and include measures that protect consumers. See, Persels and Assoc., LLC v. State Dep’t of Banking, No. HHBCV126017849S, 2014 WL 1717246, at *6 (Conn. Super. Ct. Mar. 28, 2014). The Commissioner has extensive power to enforce the State’s debt negotiation provisions. Upon a debtor’s complaint, the Commissioner has the authority to conduct an investigation into a debt negotiation transaction and order a reduction of excess charges. Section 36a-671a(c) of the Connecticut General Statutes. The Commissioner may take action if he finds “that any person has violated, is violating or is about to violate the provisions of . . . [the debt negotiation statutes] or any licensee . . . has committed any fraud, misappropriated funds or failed to perform any agreement with a debtor . . . ”. Section 36a-671a(b) of the Connecticut General Statutes. The Commissioner may impose civil penalties of up to $100,000 per violation of statutes within his jurisdiction. Section 36a-50(a) of the Connecticut General Statutes. The debt negotiation regulatory framework includes measures that protect consumers from improprieties by the debt negotiation industry. Offering to engage or engaging in debt negotiation in Connecticut requires a license. Section 36a-671(b) of the Connecticut General Statutes. The Commissioner may only approve a license if he finds that the applicant’s “financial responsibility, character, reputation, integrity and general fitness . . . are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with” the debt negotiation statutes, and that “the applicant is solvent and no proceeding in bankruptcy, receivership or assignment for the benefit of creditors has been commenced against the applicant”. Section 36a-671(d) of the Connecticut General Statutes. Applicants and licensees are required to post a surety bond “conditioned upon the debt negotiation licensee . . . faithfully performing any and all written agreements or commitments with or for the benefit of debtors . . . truly and faithfully accounting for all funds received from a debtor . . . and conducting such business consistent with the provisions of . . . [the debt negotiation statutes].” Section 36a-671d(b) of the Connecticut General Statutes. Additionally, debt negotiation services contracts must include “a complete, detailed list of services to be performed, the costs of such services and the results to be achieved.” Section 36a-671b(a) of the Connecticut General Statutes. Each debt negotiation services contract must contain conspicuous language allowing consumers to rescind the contract within three business days after signing. Section 36a-671b(a) of the Connecticut General Statutes. Those that offer debt negotiation services must also abide by the fee schedule established by the Commissioner and may collect fees only after debt negotiation services have been fully performed. Section 36a-671b(b) of the Connecticut General Statutes. During the Hearing, the parties presented evidence concerning the appropriateness of the amount of the civil penalty. Section 36a-50(a) of the Connecticut General Statutes gives the Commissioner discretion to order a civil penalty not exceeding $100,000 per violation upon any person who has violated a law within the jurisdiction of the Commissioner. The Division is seeking a total civil penalty of $10,000 for the statutory violations, which is substantially less than the statutory maximum penalty of $100,000 per violation, or $200,000 maximum cumulative penalty for two violations of Section 36a-671 of the Connecticut General Statutes. Respondent contends that this civil penalty is not warranted based on the fact that there were only two violations and Respondent returned all the money the two individuals had paid to Respondent. Future harm to Connecticut residents will be deterred through the imposition of a civil penalty against Respondent. The Connecticut Supreme Court has stated that “[t]he assessment of civil penalties is a fact-specific and broadly discretionary determination.” Rocque v. Light Sources, Inc., 275 Conn. 420, 450 (2005). Respondent was retained by two Connecticut residents to engage in debt negotiation services on their behalf and was paid for such debt negotiation services while Respondent had not obtained the required license, which constitutes violations of Section 36a-671(b) of the Connecticut General Statutes. In addition, Respondent has been the subject of complaints made by the two Connecticut residents for Respondent’s failure to perform or successfully complete the debt negotiation services and for charging them amounts in excess of amounts that debt negotiators may charge for services pursuant to the Schedule of Maximum Fees. The amount of the civil penalty is based on the number and nature of the violations that occurred, the nature of the debt negotiation regulatory framework noted above, Respondent’s cooperation and Respondent’s refund of the fees that it had received from the two Connecticut residents. The Commissioner finds that: (1) the imposition of a civil penalty of Ten Thousand Dollars ($10,000) is warranted based upon the record; (2) Respondent committed two violations of Section 36a-671(b) of the Connecticut General Statutes; and (3) sufficient grounds exist to impose a civil penalty pursuant to Sections 36a-671a(b) and 36a-50(a) of the Connecticut General Statutes. ORDER Having read the record, I hereby ORDER, pursuant to Sections 36a-671a(b), 36a-52(a) and 36a-50(a) of the Connecticut General Statutes, that:
So ordered at Hartford, Connecticut
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