The Department of Banking News Bulletin

This bulletin constitutes the only official notification you will receive from this office concerning any of the following applications. Any observations you may have are solicited. Any comments should be in writing to Howard F. Pitkin, Banking Commissioner, at the Connecticut Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800 or via E-mail. Written comments will be considered only if they are received within ten days from the date of this bulletin.

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY

Order to Cease and Desist Becomes Permanent; Respondents Fined $400,000

On May 13, 2013, the Banking Commissioner entered a post-hearing Order (Docket No. CF-13-7985-S) against First Financial LLC of Branford, Connecticut and Feisal Sharif, managing member of First Financial LLC.  The respondents had been the subject of a January 3, 2013 Order to Cease and Desist and Notice of Intent to Fine (Docket No. CF-13-7985-S) alleging that, from at least January 2007 forward, respondent Sharif, alone and under the auspices of First Financial LLC, pooled the funds of at least 80 investors for the purported purpose of investing those funds in an account managed by First Financial LLC and Sharif, and that Sharif guaranteed monthly and yearly returns of 1 percent to 15 percent.  The January 3, 2013 action had also alleged that, in reality, Sharif commingled investor funds, paid off earlier investors with later investors' money and diverted investor funds for his personal use.  According to  the action, to hide his conduct, Sharif allegedly created and provided some investors with fictitious account statements reflecting false and inflated account balances.  In addition, the respondents allegedly failed to disclose to investors any risk factors related to the investment, any financial information concerning the respondents and that investor funds would be applied to pay for the respondents' personal expenses and to pay off earlier investors.

Although the respondents requested a hearing on the allegations in the January 3, 2013 action, and were subsequently granted a continuance to March 27, 2013, neither respondent appeared at the March 27, 2013 hearing.

Having read the hearing record, the Commissioner found that since 2007, investors had invested more than $6 million with First Financial LLC; that respondent Sharif used over $600,000 of that invested amount for his personal expenses; and that investors received no documented disclosure concerning their investment with First Financial LLC.  The Commissioner concluded that each respondent sold unregistered securities in violation of Section 36b-16 of the Connecticut Uniform Securities Act and that each respondent violated the antifraud provisions in Section 36b-4(a) of the Act.  Consequently, the Commissioner directed that each respondent be fined $200,000 for a total of $400,000, and that the January 3, 2013 Order to Cease and Desist be made permanent as to each respondent effective May 13, 2013.

Orders Imposing Fine

On May 16, 2013, the Banking Commissioner entered four separate default Orders Imposing Fine against 1) Method Films, Inc. a/k/a Method Films, LLC a/k/a Method Film, LLC (“Method Films”) of Sunny Isles Beach, Florida and El Paso, Texas; 2) Thierry Thelemaque, of El Paso, Texas, president of Method Films; 3) Stilas Financial Services, S.A. of New York, New York; and 4) Matthew Bennett Greene of London, United Kingdom.  Respondent Greene was the founder, president and chief legal counsel of Stilas Financial Services, S.A.

On March 11, 2013, the Banking Commissioner had 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-13-7997-S) against the respondents.  The March 11, 2013 action had alleged that, in September 2008 and October 2008, respondents Method Films and/or Thelemaque offered and sold Method Films securities to one or more Connecticut investors.  The offering proceeds would be used to finance the production of one or more films, including a movie entitled “Enigma.”  The securities that were offered consisted of (a) an Investor Agreement pursuant to which Method Films, through its agent Thelemaque, agreed to split Enigma gross revenues in excess of $20,000 with investors in return for a $100,000 investment; and (b) a related Promissory Note pursuant to which obligors Method Films and Thelemaque promised to pay one or more investors $1.1 million on or before September 30, 2009 – a return of one thousand percent on a $100,000 investment.  The action had further alleged that respondents Method Films and Thelemaque violated Section 36b-16 of the Connecticut Uniform Securities Act by offering and selling unregistered securities.  In addition, the action had alleged that respondents Stilas Financial Services, S.A. and Greene materially aided Method Films’ and Thelemaque’s violation of Section 36b-16 of the Act, in part by accepting investor monies remitted for the purpose of investing in the Method Films offering.  In addition, the action had alleged that, in violation of Section 36b-6 of the Act, respondent Method Films employed respondent Thelemaque as an unregistered agent of issuer, and that respondent Thelemaque transacted business in that unregistered capacity.

According to the action, respondent Thelemaque allegedly forwarded to one or more prospective investors a purported agreement by Stilas Financial Services, S.A. to finance the Enigma film project, leading investors to believe that the film project would proceed with the support of Stilas Financial Services, S.A.  The action further alleged that the respondents violated the antifraud provisions in Section 36b-4(a) of the Act by failing to disclose, among other things, any financial information concerning the respondents; the estimated cash proceeds of the offering; any risk factors related to the investment in general or the film industry in particular; the remuneration to be paid to the principals of Method Films; the basis upon which a $100,000 investment in a $1.1 million Promissory Note could yield a rate of return of 1,000 percent; or the fact that respondent Thelemaque was not registered as an agent of issuer or in any other capacity to sell securities in Connecticut.

None of the respondents requested a hearing on the Notice of Intent to Fine.

In fining Method Films $50,000, the Commissioner found that Method Films violated Sections 36b-16, 36b-4(a) and 36b-6(b) of the Connecticut Uniform Securities Act.   Stilas Financial Services, S.A. was fined $50,000 after the Commissioner found that that entity violated the antifraud provisions in Section 36b-4(a) of the Act and materially aided Method Films and Thelemaque in violating Section 36b-16 of the Act.  Respondent Thierry Thelemaque was directed to pay a $50,000 fine following a finding that he violated Sections 36b-16, 36b-4(a) and 36b-6(a) of the Act.  Respondent Greene was fined $50,000 after the Commissioner concluded that Greene violated the antifraud provisions in Section 36b-4(a) of the Act and materially aided Method Films and Thelemaque in violating Section 36b-16 of the Act.

Orders Imposing Fine

On May 16, 2013, the Banking Commissioner entered two separate default Orders Imposing Fine 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 respondents had been the subject of a March 18, 2013 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).  The March 18, 2013 action had 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 had 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.

Neither respondent requested a hearing on the Notice of Intent to Fine.

In fining Mohr & Moore, LLC $50,000, the Commissioner found that Mohr & Moore, LLC violated the antifraud provisions in Section 36b-4(a) of the Act and the securities registration requirement in Section 36b-16 of the Act.  William Elmer Moore was directed to pay a $50,000 fine as well after the Commissioner found that Moore violated Sections 36b-16 and 36b-4(a) of the Act.

CONSUMER CREDIT DIVISION ACTIVITY

Consent Orders

On April 26, 2013, the Commissioner entered into a Consent Order with Great Western Financial Services, Inc. (NMLS # 82156) (“Great Western”), Plano, Texas.  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.  The Commissioner alleged that Great Western failed to timely file certain annual 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, Great Western paid $2,500 as a civil penalty.

On May 1, 2013, the Commissioner entered into a Consent Order with M&G Mortgage Services Inc (NMLS # 90740) (“M&G”), Farmington, 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.  The Commissioner alleged that M&G failed to timely file certain annual 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, M&G paid $2,500 as a civil penalty.

On May 1, 2013, the Commissioner entered into a Consent Order with First Choice Mortgage Services, LLC (NMLS # 70986) (“First Choice”), Stratford, Connecticut.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, on December 11, 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.  The Commissioner alleged that First Choice failed to timely file certain annual 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, First Choice paid $2,500 as a civil penalty.

On May 1, 2013, the Commissioner entered into a Consent Order with Rose Marie Hollander, Attorney at Law d/b/a Consult Law Group (“Hollander”), Fountain Valley and Newport Beach, California.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, on August 10, 2012, the Commissioner issued a Temporary Order to Cease and Desist, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing.  The Commissioner alleged that Hollander engaged in debt negotiation in this state without obtaining the required license, in violation of Section 36a-671(b) of the Connecticut General Statutes, in effect prior to October 1, 2011.  As part of the Consent Order, Hollander was permanently barred from engaging or offering to engage in debt negotiation in Connecticut in any capacity.

Temporary Order to Cease and Desist, Order of Summary Suspension, Order to Make Restitution, Notice of Intent to Revoke Consumer Collection Agency License, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty

On May 1, 2013, the Commissioner issued a Temporary Order to Cease and Desist, Order of Summary Suspension, Order to Make Restitution, Notice of Intent to Revoke Consumer Collection Agency License, 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:  AmerAssist A/R Solutions, Inc. (“AmerAssist”), Columbus, Ohio.  The Notice was the result of an examination by the Consumer Credit Division.  The Notice alleges that AmerAssist made a statement to the Division in violation of Section 36a-53a of the Connecticut General Statutes, failed to notify the Commissioner of the change in information provided in its most recent renewal application in violation of Section 36a-801(b)(1) of the Connecticut General Statutes, commingled monies in its Connecticut debtor trust account and operating accounts, in violation of Section 36a-805(a)(12) of the Connecticut General Statutes and Section 36a-809-7(b) of the Regulations, withheld monies allegedly for Connecticut sales tax purposes, in violation of Section 36a-805(a)(9) of the Connecticut General Statutes, and failed to demonstrate that the licensee is financially responsible, as required pursuant to Section 36a-801(b)(1) of the Connecticut General Statutes.  The Commissioner also found that the public safety and welfare imperatively required emergency action to summarily suspend AmerAssist’s license to act as a consumer collection agency in this state and required the issuance of a Temporary Order to Cease and Desist.  AmerAssist was afforded an opportunity to request a hearing with regard to the allegations set forth in the Notice.

Temporary Order to Cease and Desist, Order of Summary Suspension, Notice of Intent to Revoke Consumer Collection Agency License, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty

On May 1, 2013, the Commissioner issued a Temporary Order to Cease and Desist, Order of Summary Suspension, Notice of Intent to Revoke Consumer Collection Agency License, 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:  Tek-Collect Incorporated d/b/a TekCollect (“TekCollect”), Columbus, Ohio.  The Notice was the result of an examination by the Consumer Credit Division.  The Notice alleges that TekCollect made statements to the Division in violation of Section 36a-53a of the Connecticut General Statutes, failed to notify the Commissioner of the change in information provided in its most recent renewal application in violation of Section 36a-801(b)(1) of the Connecticut General Statutes, paid monies from its Connecticut debtor trust accounts, in violation of Section 36a-805(a)(12) of the Connecticut General Statutes and Section 36a-809-7(b) of the Regulations, and that an officer or principal employee of TekCollect was convicted of a felony, which constitutes a basis to deny an application for a consumer collection agency license, pursuant to Section 36a-801(b)(1) of the Connecticut General Statutes.  The Commissioner also found that the public safety and welfare imperatively required emergency action to summarily suspend TekCollect’s license to act as a consumer collection agency in this state and required the issuance of a Temporary Order to Cease and Desist.  TekCollect was afforded an opportunity to request a hearing with regard to the allegations set forth in the Notice.