The Department of Banking News Bulletin

STATE BANK ACTIVITY

Branch Activity

Section 36a-145 of the Connecticut General Statutes requires certain applications for a branch, or for a limited branch at which loans will be made, be accompanied by a plan detailing how adequate services to meet the banking needs of all community residents will be provided.  Plans are submitted when such applications are filed and are available for public inspection and comment at this Department for a period of 30 days.  Questions concerning branch activity should be directed to the Financial Institutions Division, (860) 240-8180.

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY

Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing Issued

On March 18, 2013, the Banking Commissioner issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-13-7971-S) against Mohr & Moore, LLC of Plano Texas and William Elmer Moore of Plano, Texas.  Respondent Moore was the president and control person of Mohr & Moore, LLC.  The action alleged that from at least June 2010 forward, the respondents violated Section 36b-16 of the Connecticut Uniform Securities Act by offering and selling unregistered commodity investment contracts and/or investment contracts related to trading in foreign currency exchange investments.

The action also alleged that the respondents violated the antifraud provisions in Section 36b-4(a) of the Act by failing to disclose to purchasers and prospective purchasers any risk factors related to the investment; any financial information on Mohr & Moore, LLC; that Robert Mihailovich, principal and founder of Trade Star Incorporated and the trading software platform that Mohr & Moore, LLC utilized, was a convicted felon; that Mohr & Moore, LLC subsequently executed a Limited Power of Attorney with Parthenon Capital as sub-trading agent; that Parthenon’s owner and operator had a criminal history; and that the investment contracts offered and sold by the respondents were not registered under the Act.

Each of the respondents was afforded an opportunity to request a hearing on the Order to Cease and Desist, Order to Make Restitution and Notice of Intent to Fine.

Registrations as Investment Adviser and as Investment Adviser Agent Summarily Suspended; Notice of Intent to Suspend or Revoke Registration Issued

On March 18, 2013, the Banking Commissioner issued an Order summarily suspending the investment adviser registration of J. Capital Advisors, LLC.  The firm, which does business under the name J. Capital Advisors Wealth Management, is located in Haddam, Connecticut.  On the same day, the Commissioner summarily suspended the investment adviser agent registration of Aaron Jousan Johnson, president and control person of the firm.  Accompanying the summary suspension was a Notice of Intent to Suspend or Revoke the investment adviser and the investment adviser agent registrations of the respondents.

The action alleged that, in violation of Section 36b-14(d) of the Connecticut Uniform Securities Act and Section 36b-31-14f(b) of the Regulations thereunder, the respondents, despite repeated requests by Division staff, failed to open the firm’s records to examination by the agency.  The action also alleged that the respondents engaged in dishonest or unethical practices by deducting excessive, undisclosed client advisory fees from client accounts.  In addition, the action alleged that the respondents violated Section 36b-31-14e(a) of the Regulations by failing to update the firm’s Form ADV to disclose the status of its business operations, when it was open for business and the scope of its client activity.

The summary suspension would remain in effect pending the final determination of proceedings to revoke the respondents’ registrations.   Each of the respondents was afforded an opportunity to request a hearing on the summary suspension and on the Notice of Intent to Suspend or Revoke Registration.

Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing Issued

On March 18, 2013, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CF-13-8051-B) against Accelerated Mentoring LLC, now or formerly of Boise, Idaho.  Also named in the order were Clancey Braxton Yohman, managing member of Accelerated Mentoring LLC, and Josh Jensen, a representative of the company.  Accelerated Mentoring LLC, previously known as Internet Sales Institute LLC, was in the business of selling Internet-based training, personal coaching and software to enable purchasers to start their own “work at home” e-commerce business.

The action alleged that the program offered and sold by the respondents was a “business opportunity” under the Connecticut Business Opportunity Investment Act; that the respondents violated Section 36b-67(1) of the Act by offering and selling unregistered business opportunities; that respondents Accelerated Mentoring LLC and Yohman violated Section 36b-67(2) of the Act by making unsubstantiated earnings or income claims; and that respondents Accelerated Mentoring LLC and Yohman violated the antifraud provisions in Section 36b-67(6) of the Act by failing to provide critical disclosures to prospective purchasers.  Each of the respondents was afforded an opportunity to request a hearing on the Order to Cease and Desist and Notice of Intent to Fine.

Orders Imposing Fine Entered

On March 19, 2013, the Banking Commissioner issued four individual Orders Imposing Fine against 1) Stead-Fast Custom Linings, LLC (“Linings”) of East Haven, Connecticut; 2) John Calash and Susan Calash of Madison, Connecticut, majority owners of Linings; and 3) Christopher Borgo of Boca Raton, Florida.  None of the respondents appeared or contested the imposition of the fines.

Each of the respondents was the subject of a December 17, 2012 Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-12-7892-S).  The December 17, 2012 action had alleged that John Calash and Susan Calash devised a plan in January 2007 to convert Linings into a public company that traded on the Pink Sheets; that during the summer of 2007, John Calash, with the assistance of Christopher Borgo, sold unregistered membership interests in Linings to at least one investor; that John Calash merged Linings into Beere Financial Group, Inc., a Nevada shell corporation trading on the Pink Sheets; and that in September 2007, John Calash renamed the merged entity Steadfast Holdings Group Inc. and then sold $767,500 in unregistered Holdings shares to investors in a private placement.  The action had also alleged that 1) from February 2008 through April 2011, John Calash and Susan Calash, in their capacities as President and Secretary of Holdings, issued themselves thousands of shares of Holdings, which had the effect of diluting the value of the outstanding shares of Holdings; 2) John and Susan Calash eventually sold their controlling interest in Holdings in April 2011 for a profit of approximately $200,000.  The action had further alleged that 1) Linings, Holdings, John Calash and Christopher Borgo offered and sold unregistered securities in violation of Section 36b-16 of the Connecticut Uniform Securities Act; 2) John Calash and Christopher Borgo violated Section 36b-6(a) of the Act by transacting business as unregistered agents of issuer; 3) Linings and Holdings violated Section 36b-6(b) of the Act by engaging unregistered agents of issuer; and 4) the respondents violated the antifraud provisions in Section 36b-4(a) of the Act by failing to make adequate risk disclosures to prospective investors and, in the case of John Calash and Susan Calash, failing to disclose the dilutive effect their actions had on investor securities holdings.

In imposing a $50,000 fine against Stead-Fast Custom Linings, LLC, the Commissioner found that Stead-Fast Custom Linings, LLC committed one violation of Section 36b-16 of the Act, one violation of Section 36b-6(b) of the Act and one violation of Section 36b-4(a) of the Act.

In fining John Calash $100,000, the Commissioner found that John Calash committed one violation of Section 36b-16 of the Act, one violation of Section 36b-6(a) of the Act and one violation of Section 36b-4(a) of the Act.

In directing Susan Calash to pay a $30,000 fine, the Commissioner found that Susan Calash committed one violation of Section 36b-4(a) of the Act.

Christopher Borgo was directed to pay a fine of $20,000 after the Commissioner found that Christopher Borgo committed one violation of Section 36b-16 of the Act, one violation of Section 36b-6(a) of the Act and one violation of Section 36b-4(a) of the Act.

CONSUMER CREDIT DIVISION ACTIVITY

Consent Orders

On February 28, 2013, the Commissioner entered into a Consent Order with Professional Bureau of Collections of Maryland Inc. (“Professional Bureau of Collections”), Greenwood Village, Colorado.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, the Commissioner alleged that Professional Bureau of Collections (a) made a material statement in its 2011 renewal application by responding “no” to the disclosure question in the application with respect to consumer-related litigation, when, in fact, during the period of January 2010 to October 2012, Professional Bureau of Collections was the subject of at least 44 consumer-initiated lawsuits, and (b) failed to notify the Commissioner, in writing, of changes in the information provided in its renewal application not later than 10 business days after the occurrence of the event that resulted in such information becoming inaccurate, in violation of Section 36a-801(b)(1) of the 2012 Supplement to the General Statutes.  As part of the Consent Order, Professional Bureau of Collections was ordered to pay $5,000 as a civil penalty.

On March 6, 2013, the Commissioner entered into a Consent Order with New Milford Mortgage Company, LLC (NMLS # 110092) (“New Milford Mortgage”), New Milford, Connecticut.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, on December 17, 2012, the Commissioner issued a Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing against New Milford Mortgage.  The Commissioner alleged that New Milford Mortgage failed to file certain annual information and failed to timely file certain quarterly information required by standard mortgage call reports in violation of Section 36a-534b(c)(3) of the 2012 Supplement to the General Statutes and/or Section 36a-534b(c)(3), as amended by Public Act 12-96.  As part of the Consent Order, New Milford Mortgage paid $2,500 as a civil penalty.

Notice of Automatic Suspension, Temporary Order to Cease and Desist, Notice of Intent to Revoke Consumer Collection Agency License and Notice of Intent to Issue Order to Cease and Desist

On March 5, 2013, the Commissioner issued a Notice of Automatic Suspension, Temporary Order to Cease and Desist, Notice of Intent to Revoke Consumer Collection Agency License, Notice of Intent to Issue Order to Cease and Desist and Notice of Right to Hearing (“Notice”) in the Matter of:  Hill Top Collections, Inc. d//b/a HTC (“Respondent”), New York, New York.  The Notice was the result of an investigation by the Consumer Credit Division.  The Notice alleges that Respondent failed to maintain a surety bond during the entire period of its consumer collection agency license, in violation of Section 36a 802(a) of the Connecticut General Statutes.  The Commissioner also found that public welfare required the issuance of a Temporary Order to Cease and Desist.  Respondent was afforded an opportunity to request a hearing with regard to the allegation set forth in the Notice.

On March 12, 2013, the Commissioner issued a Notice of Automatic Suspension, Temporary Order to Cease and Desist, Notice of Intent to Revoke Consumer Collection Agency License, Notice of Intent to Issue Order to Cease and Desist and Notice of Right to Hearing (“Notice”) in the Matter of:  Butler, Robbins & White, LLC (“Respondent”), Ft. Lauderdale, Florida.  The Notice was the result of an investigation by the Consumer Credit Division.  The Notice alleges that Respondent failed to maintain a surety bond during the entire period of its consumer collection agency license, in violation of Section 36a 802(a) of the Connecticut General Statutes.  The Commissioner also found that public welfare required the issuance of a Temporary Order to Cease and Desist.  Respondent was afforded an opportunity to request a hearing with regard to the allegation set forth in the Notice.

Notice of Intent to Issue Order to Cease and Desist and Notice of Intent to Issue Order Imposing Civil Penalty

On March 12, 2013, the Commissioner issued a Notice of Intent to Issue Order to Cease and Desist and Notice of Intent to Issue Order Imposing Civil Penalty (“Notice”) In the Matter of:  Montgomery & Meyers PA Corporation (Respondent”), Los Angeles, California.  The Notice was the result of an investigation by the Consumer Credit Division.  The Notice alleges that Respondent acted within this state as a consumer collection agency without a consumer collection agency license, in violation of Section 36a-801(a) of the Connecticut General Statutes.  Respondent was afforded an opportunity to request a hearing with regard to the allegation set forth in the Notice.

Order Revoking Consumer Collection Agency License and Order to Cease and Desist

On March 12, 2013, the Commissioner issued an Order Revoking Consumer Collection Agency License and Order to Cease and Desist (“Order”) in the Matter of:  Highwood Associates Credit Resolution LLC d/b/a Highwood Associates (“Respondent”), Glastonbury, Connecticut.  The basis of the Order was that Respondent failed to maintain a surety bond that runs concurrently with the period of its consumer collection agency license in Connecticut from 265 Georgetown Drive, Glastonbury, Connecticut, in violation of Section 36a-802(a) of the Connecticut General Statutes.  The Order revokes Respondent’s license to act as a consumer collection agency in Connecticut from such location and orders Respondent to cease and desist from violating Section 36a-802(a) of the Connecticut General Statutes.

Temporary Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Issue Order to Cease and Desist and Notice of Intent to Impose Civil Penalty

On March 12, 2013, the Commissioner issued a Temporary Order to Cease and Desist, 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 (“Notice”) in the Matter of:  CashCall, Inc. (NMLS # 38512) (“Respondent”), Anaheim, California.  The Notice was the result of an investigation by the Consumer Credit Division.  The Notice alleges that Respondent failed to identify the third party entity that made consumer loans in Connecticut when offering such loans to Connecticut residents and made the untrue statement on its website that all loans are made pursuant to Respondent’s California lender license, in violation of Section 36a-53b of the Connecticut General Statutes; offered consumer loans, assisted Connecticut borrowers to obtain such loans or, in whole or in part, arranged such loans through a third party or acted as agent for a third party, without obtaining the required license, in violation of Section 36a 555 of the Connecticut General Statutes; and charged and received interest at a rate greater than 12% on consumer loans to Connecticut residents in amounts less than $15,000, in violation of Section 36a-573(a) of the Connecticut General Statutes.  The Commissioner also found that the public welfare required the issuance of a Temporary Order to Cease and Desist against Respondent.  Respondent was afforded an opportunity to request a hearing with regard to the allegations set forth in the Notice.