April 20, 2023

Court Dismisses 1st Alliance Lending’s Administrative Appeal; Affirms Department of Banking’s Findings 

HARTFORD — Yesterday, Judge John L. Cordani of the New Britain Superior Court dismissed 1st Alliance’s appeal of the Connecticut Department of Banking’s administrative action against the mortgage lender, upholding the Commissioner’s findings in the case. In his decision Judge Cordani affirmed that 1st Alliance had violated the Secure And Fair Enforcement (SAFE) Act, the Fair Credit Reporting Act, the Truth in Lending Act, and had failed to cooperate with Department investigators. Further, Judge Cordani concluded that the Commissioner was within its statutory authority to revoke 1st Alliance’s license and impose a $750,000 civil penalty. 

Banking Commissioner Jorge Perez said “I am pleased with the court’s decision since this has always been about protecting consumers. We have remained confident in our positions, which the courts have now affirmed. I want to thank the Attorney General’s office for their hard work, time, and commitment in representing the Department. Mostly, I want to recognize the incredible efforts of my staff who have worked on this case for the past five years. Judge Cordani’s decision vindicates their work. It is my sincere hope that the court’s decision brings the matter to a close”. 

“The Superior Court dismissed 1st Alliance’s administrative appeal.  As a result, the Banking Commissioner’s final decision, which imposed a civil penalty and revoked 1st Alliance’s license for its numerous violations of our mortgage lending laws, stands.  I want to thank the assistant attorneys general in my office for their diligent work on this complex matter” said Attorney General William Tong. 

The appeal arose from a final decision dated  April 16, 2021 which was followed by a supplemental decision on April 5, 2022. The Commissioner found 1st Alliance had violated state and federal law. Specifically, those violations included:

• 1st Alliance’s business model unlawfully encouraged lesser trained employees to perform mortgage loan origination activities without the licenses required by the Connecticut SAFE Act.
• 1st Alliance failed to provide written notice, known as adverse action notices, when denying credit to a consumer or refusing to grant credit in the amounts or on the terms requested by the consumer as required under the Fair Credit Reporting Act.
• 1st Alliance prematurely required consumers to verify information related to their application prior to providing the required loan cost estimates and other disclosures in violation of the Connecticut’s Truth In Lending Act, which as the court noted deprived consumers of the ability to “more effectively shop for the best loan terms” before being “lock[ed] into a purchase agreement.”
• 1st Alliance improperly refused to comply with a lawful investigatory subpoena issued by the Department (its regulator) and provided misleading responses to the Department’s document requests regarding the company’s termination of its employees.

In affirming these violations, the court found that 1st Alliance’s numerous and clear violations of federal and state laws “arose from systemic issues.”  Moreover, the Court remarked that 1st Alliance’s “practices push[ed] [its] employees to the very brink of non-compliance by design.  Unsurprisingly, the record reveals that the . . . risks manifested into actual violations. . . .  [1st Alliance] purposefully designed its business operations in a manner that increased the likelihood of violations” to lower its expenses and ensure “aggressive sales”.

Finally, the Court noted that in a separate administrative proceeding the Connecticut Supreme Court held that the Commissioner had properly revoked 1st Alliance’s license due to its failure to maintain a surety bond as required by Connecticut law. 

A lawsuit filed by the federal Consumer Financial Protection Bureau (CFPB) against 1st Alliance and its principal – John DiIorio – alleging similar violations remains pending in the United States District Court for the District of Connecticut. 

Media Contact

Matt Smith, 860-240-8105
matthew.smith@ct.gov