| * * * * * * * * * * * * * * * * * * * * * * * * IN THE MATTER OF: KMART CORPORATION | * * * * * * * * * | CONSENT ORDER |
WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Part IV of Chapter 668, Sections 36a-580 to 36a-589, inclusive, of the Connecticut General Statutes, “Check Cashing Services”, and Sections 36a-585-1, 36a-588-1, 36a-588-3 and 36a-588-4 of the Regulations of Connecticut State Agencies (“Regulations”);
WHEREAS, Kmart is a Michigan corporation with an office at 3333 Beverly Road, B2-130B, Hoffman Estates, Illinois;
WHEREAS, the Commissioner, through the Consumer Credit Division of the Department of Banking, conducted an investigation pursuant to Section 36a-17 of the Connecticut General Statutes, as amended by Public Acts 14-7 and 14-89, into the activities of Kmart to determine if it had violated, was violating or was about to violate the provisions of the Connecticut General Statutes and Regulations within the jurisdiction of the Commissioner;
WHEREAS, as a result of such investigation, the Commissioner alleges that Kmart, during the period of May 2013 through August 2014, engaged in the business of cashing checks, drafts or money orders for consideration of more than fifty cents ($0.50) per check without licensure for a general facility or limited facility at 45 Shunpike Road, Cromwell, 295 Hartford Turnpike, Vernon, 589 Bridgeport Avenue, Milford, 44 Providence Pike, Putnam, 100 Main Street North, Southbury, 595 Straits Turnpike, Watertown, and 681 Main Street, Torrington, Connecticut, in violation of Section 36a-581(a) of the Connecticut General Statutes;
WHEREAS, the Commissioner believes that such allegation would support initiation of enforcement proceedings against Kmart, including proceedings to issue a cease and desist order against Kmart pursuant to Sections 36a-587(b) and 36a-52(a) of the Connecticut General Statutes, and impose a civil penalty of up to one hundred thousand dollars ($100,000) per violation on Kmart pursuant to Sections 36a-587(b) and 36a-50(a) of the Connecticut General Statutes;
WHEREAS, initiation of such enforcement proceedings may constitute a “contested case” within the meaning of Section 4-166(4) of the Connecticut General Statutes, as amended by Public Act 14-87;
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, Kmart does not admit liability for any violations of law and believes that it has defenses to the allegations, however, Kmart enters into this Consent Order in the interest of resolving the matter;
WHEREAS, Kmart herein represents that before starting its check cashing business, Kmart conducted a fifty-state survey and properly recognized that it would need a license to cash checks in Connecticut for a fee of more than fifty cents ($0.50) per check but through inadvertent system errors, charged two dollars ($2) per check for a period of time and then one dollar ($1) per check before recognizing its error;
WHEREAS, Kmart herein represents that it never intended to charge a fee for check cashing in Connecticut and ceased charging a fee as of August 25, 2014. Kmart also represents that it plans to never charge a fee for check cashing in Connecticut;
WHEREAS, Kmart herein represents that it has reinforced its audit and oversight functions to ensure that no fees are charged for check cashing in Connecticut;
WHEREAS, both the Commissioner and Kmart acknowledge the possible consequences of formal administrative proceedings, and Kmart voluntarily agrees to consent to the entry of the sanctions imposed below without admitting or denying any allegation contained herein and solely for the purpose of obviating the need for further formal administrative proceedings concerning the allegation contained herein;
WHEREAS, Kmart herein represents to the Commissioner that it has not engaged in the business of cashing checks, drafts or money orders for consideration without licensure for a general facility or limited facility since August 2014;
WHEREAS, Kmart specifically assures the Commissioner that the violation described herein shall not occur in the future;
AND WHEREAS, Kmart, through its execution of this Consent Order, voluntarily agrees to waive its procedural rights, including a right to notice and an opportunity for hearing as it pertains to the allegation set forth herein, and voluntarily waives its right to seek judicial review or otherwise challenge or contest the validity of this Consent Order.
CONSENT TO ENTRY OF SANCTIONS
WHEREAS, Kmart, through its execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing the following sanctions:
| 1. | No later than the date this Consent Order is executed by Kmart, Kmart shall remit to the Department of Banking by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut”, the sum of Ten Thousand Dollars ($10,000) as a civil penalty; |
| 2. | No later than the date this Consent Order is executed by Kmart, Kmart shall remit to the Department of Banking by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut, the sum of Five Thousand One Hundred Dollars ($5,100) as payment for back licensing fees; and |
| 3. | Kmart shall not engage in the business of cashing checks, drafts or money orders for consideration, except as an incident to the conduct of any other lawful business where not more than fifty cents ($.50) is charged for the cashing of such check, draft or money order, without obtaining a license to operate a check cashing general facility or limited facility for each location where such business is to be conducted. |
CONSENT ORDER
NOW THEREFORE, the Commissioner enters the following:
| 1. | The Sanctions set forth above be and are hereby entered; |
| 2. | 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 Kmart based upon the allegation contained herein; provided that issuance of this Consent Order is without prejudice to the right of the Commissioner to take enforcement action against Kmart 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 Kmart and reflected herein is subsequently discovered to be untrue; |
| 3. | Nothing in the issuance of this Consent Order shall adversely affect the ability of Kmart to apply for or obtain a license or renewal license for a general facility or limited facility under Part IV of Chapter 668, Sections 36a-580, et seq. of the Connecticut General Statutes, provided all applicable legal requirements for such license are satisfied; and |
| 4. | This Consent Order shall become final when issued. |
Issued at Hartford, Connecticut
this 26th day of January 2015. _______/s/_________
Bruce H. Adams
Acting Banking Commissioner
I, Kristin Coleman, state on behalf of Kmart Corporation, that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of Kmart Corporation; that Kmart Corporation agrees freely and without threat or coercion of any kind to comply with the sanctions entered and terms and conditions ordered herein; and that Kmart Corporation voluntarily agrees to enter into this Consent Order, expressly waiving the procedural rights set forth herein as to the matters described herein.
By: ________/s/___________
Name: Kristen Coleman
Title: Senior Vice President & General Counsel
State of: Illinois
County of: Cook
On this the 22nd day of January 2015, before me, Debra Cherry, the undersigned officer, personally appeared Kristin Coleman who acknowledged himself/herself to be the SVP & GC of Kmart Corporation, a corporation, and that he/she as such SVP & GC, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself/herself as SVP & GC.
In witness whereof I hereunto set my hand.
_________/s/_________
Notary Public: Debra Cherry
Date Commission Expires: 2/17/2015