Bulletin # 2655 - Week Ending January 9, 2015

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, Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800.  Written comments will be considered only if they are received within ten days from the date of this 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.

CONSUMER CREDIT DIVISION ACTIVITY

Consent Orders

On December 24, 2014, the Commissioner entered into a Consent Order with Sabrina Rafo (“Rafo”).  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, on October 16, 2014, 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 against Rafo, among others.  The Commissioner alleged that Rafo engaged in debt negotiation in this state without the required license, in violation of Section 36a 671(b) of the Connecticut General Statutes, as amended by Public Act 14-7.  As part of the Consent Order, Rafo repaid fees to identified Connecticut residents in identified amounts.

On December 24, 2014, the Commissioner entered into a Consent Order with Network Capital Funding Corporation (NMLS # 11712) (“Network Capital Funding”), Irvine, California.  The Consent Order was based on examination by the Consumer Credit Division.  As a result of such examination, on July 17, 2014, the Commissioner issued a Temporary Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Revoke or Refuse to Renew Mortgage Correspondent Lender License, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing (collectively “Order and Notice”).  The Commissioner alleged that Network Capital Funding:  failed to pay certain loan proceeds and failed to timely pay other loan proceeds, in violation of Section 36a-758 of the Connecticut General Statutes; accrued interest charges prior to payment of loan proceeds, in violation of Section 36a-498e(2) of the Connecticut General Statutes; engaged the services of mortgage loan originators who were not licensed, in violation of Section 36a-486(b)(1) of the Connecticut General Statutes; failed to disclose the identity of mortgage loan originators, in violation of subdivisions (2) and (10) of Section 36a-498e of the Connecticut General Statutes, and in violation of Sections 36a 53a and 36a 53b of the Connecticut General Statutes; altered certain loan documents, in violation of Section 36a 498e(2) of the Connecticut General Statutes; failed to timely compile reports as directed by the Commissioner, in violation of Section 36a-498f(b) of the Connecticut General Statutes; and failed to otherwise cooperate with the Commissioner, in violation of Section 36a-17(d) of the Connecticut General Statutes.  As a result of information provided in connection with the Order and Notice, and as a result of subsequent investigation after issuance of the Order and Notice, the Commissioner believed that there was a basis for various additional allegations against Network Capital Funding and Tri Minh Nguyen (“Nguyen”), as further specified in the Consent Order.  Network Capital Funding and Nguyen did not admit or deny any of the allegations in the Order and Notice or any of the additional allegations in the Consent Order.  As part of the Consent Order, Network Capital Funding shall pay identified restitution and shall remit $175,000 as a civil penalty.

Order to Cease and Desist and Order Imposing Fine

On January 6, 2015, the Commissioner issued an Order to Cease and Desist and Order Imposing Civil Penalty (“Order”) in the Matter of:  Great Plains Lending, LLC (“Great Plains”), Red Rock, Oklahoma, John R. Shotton (“Shotton”) and Clear Creek Lending (“Clear Creek”), Stillwater, Oklahoma (collectively, “Respondents”).  The basis of the Order was that Great Plains:  engaged in the business of making loans of money or credit in Connecticut without obtaining the required license, in violation of Section 36a-555(1) of the Connecticut General Statutes; made, offered or assisted Connecticut borrowers to obtain unsecured consumer loans, in violation of Section 36a-555(2) of the Connecticut General Statutes; and charged, contracted for and received interest at a rate greater than 12% on at least three unsecured consumer loans to Connecticut residents, in violation of Section 36a-573(a) of the Connecticut General Statutes.  The Order was also based on allegations that Shotton participated in Great Plains’ violations of Sections 36a-555(1), 36a-555(2) and 36a-573(a) of the Connecticut General Statutes, subjecting Shotton to the provisions of such sections, and that Clear Creek offered or assisted Connecticut borrowers to obtain small loans in Connecticut without the obtaining the required license, in violation of Section 36a-555(2) of the Connecticut General Statutes.  Great Plains was ordered to cease and desist from violating subdivisions (1) and (2) of Section 36a-555 and Section 36a-573(a) of the Connecticut General Statutes, and to pay a civil penalty of $700,000.  Shotton was ordered to cease and desist from participating in the violation of subdivisions (1) and (2) of Section 36a-555 and Section 36a 573(a) of the Connecticut General Statutes, and to pay a civil penalty of $700,000.  Clear Creek was ordered to cease and desist from violating Section 36a-555(2) of the Connecticut General Statutes and to pay a civil penalty of $100,000.  In addition, the Order to Make Restitution previously issued against Great Plains on October 24, 2014, remains in effect and became permanent on November 13, 2014.

SECURITIES AND BUSINESS INVESTMENTS DIVISION

Consent Order

On January 5, 2015, the Banking Commissioner entered a Consent Order (No. CO-14-8188-S) with respect to Mittler & Mercaldo Investment Advisors, a Connecticut-registered investment adviser located in Danbury, Connecticut.  The Consent Order alleged that, between 2006 and 2014, the firm employed an unregistered investment adviser agent in contravention of Section 36b-6(c) of the Connecticut Uniform Securities Act.  The investment adviser agent subsequently became registered, and the firm represented to the Division that it had retained a consultant to assist with regulatory compliance.  The Consent Order required that the firm pay $5,600 to the department.  Of that amount, $5,000 constituted an administrative fine and $600 would be applied to reimburse the agency for past due registration fees.  The Consent Order also directed the firm to cease and desist from regulatory violations.

Dated:  Tuesday, January 13, 2015

Howard F. Pitkin
Banking Commissioner