| * * * * * * * * * * * * * * * * * * * * IN THE MATTER OF: 1ST AMERICAN DEBT SOLUTIONS THE PUREWAL LAW GROUP SETTLEMENT CORPORATION * * * * * * * * * * * * * * * * * * * * |
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
* * * * |
TEMPORARY ORDER TO NOTICE OF INTENT TO ISSUE NOTICE OF INTENT TO IMPOSE AND NOTICE OF RIGHT TO HEARING |
I. LEGAL AUTHORITY AND JURISDICTION
The Banking Commissioner (“Commissioner”) is charged with the administration of Sections 36a-671 to 36a-671d, inclusive, of the Connecticut General Statutes contained in Part II of Chapter 669 of the Connecticut General Statutes, “Debt Adjusters and Debt Negotiation”.
Pursuant to the authority granted by Section 36a-17(a) of the Connecticut General Statutes, the Commissioner, through the Consumer Credit Division of the Department of Banking, has investigated the activities of Respondents to determine if they have violated, are violating or are about to violate the provisions of the Connecticut General Statutes within the jurisdiction of the Commissioner.
Section 36a-17(a) of the Connecticut General Statutes provides:
Section 36a-17(a) of the Connecticut General Statutes provides:
The commissioner, in the commissioner’s discretion, may make such public or private investigations or examinations within or outside this state, concerning any person subject to the jurisdiction of the commissioner, as the commissioner deems necessary to carry out the duties of the commissioner.
Section 36a-52 of the Connecticut General Statutes provides, in pertinent part, that:
(a) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of the general statutes within the jurisdiction of the commissioner, . . . the commissioner may send a notice to such person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The notice shall be deemed received by the person on the earlier of the date of actual receipt, or seven days after mailing or sending. Any such notice shall include: (1) A statement of the time, place, and nature of the hearing; (2) a statement of the legal authority and jurisdiction under which the hearing is to be held; (3) a reference to the particular sections of the general statutes . . . alleged to have been violated; (4) a short and plain statement of the matters asserted; and (5) a statement indicating that such person may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice. If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice, unless the person fails to appear at the hearing. After the hearing, the commissioner shall determine whether an order to cease and desist should be issued against the person named in the notice. If the person does not request a hearing within the time specified in the notice or fails to appear at the hearing, the commissioner shall issue an order to cease and desist against the person. No such order shall be issued except in accordance with the provisions of chapter 54.
(b) If the commissioner finds that the public welfare requires immediate action, the commissioner may incorporate a finding to that effect in the notice sent in accordance with subsection (a) of this section and issue a temporary order requiring the person to cease and desistfrom the activity which constitutes such alleged violation and to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this section. Such temporary order shall become effective on receipt and, unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or dismissal of the matters asserted in the notice.
Section 36a-50(a) of the Connecticut General Statutes provides, in pertinent part, that:
(1) Whenever the commissioner finds as the result of an investigation that any person has violated any provision of the general statutes within the jurisdiction of the commissioner, . . . the commissioner may send a notice to such person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The notice shall be deemed received by the person on the earlier of the date of actual receipt or seven days after mailing or sending. Any such notice shall include: (A) A statement of the time, place, and nature of the hearing; (B) a statement of the legal authority and jurisdiction under which the hearing is to be held; (C) a reference to the particular sections of the general statutes . . . alleged to have been violated; (D) a short and plain statement of the matters asserted; (E) the maximum penalty that may be imposed for such violation; and (F) a statement indicating that such person may file a written requestfor a hearing on the matters asserted within fourteen days of receipt of the notice.
(2) If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice unless such person fails to appear at the hearing. After the hearing, if the commissioner finds that the person has violated any such provision, . . . the commissioner may, in the commissioner’s discretion and in addition to any other remedy authorized by law, order that a civil penalty not exceeding one hundred thousand dollars per violation be imposed upon such person. If such person does not request a hearing within the time specified in the notice or fails to appear at the hearing, the commissioner may, as the facts require, order that a civil penalty not exceeding one hundred thousand dollars per violation be imposed upon such person.
(3) Each action undertaken by the commissioner under this subsection shall be in accordance with the provisions of chapter 54.
Section 36a-671a(c) of the Connecticut General Statutes provides, in pertinent part, that:
Upon complaint, the Banking Commissioner may review any fees or charges assessed by a person offering debt negotiation services and order the reduction of such fees or charges or repayment of such amount of the fees or charges that the commissioner deems excessive, taking into consideration the fees that other persons performing similar debt negotiation services charge for such services and the benefit to the consumer of such services. . . .
II. MATTERS ASSERTED
| 1. |
1st American is a New Jersey limited liability company with a place of business at 5000 Atrium Way, Suite 5, Mount Laurel, New Jersey. |
| 2. |
LNOA is a California professional corporation with a place of business at 22320 Foothill Boulevard, Suite 400, Hayward, California. |
| 3. |
SCOA is a California corporation with a place of business at 22320 Foothill Boulevard, Suite 400, Hayward, California. |
| 4. |
1st American offers to engage in debt negotiation services in this state via various media, including the Internet. |
| 5. |
1st American’s website states, among other things, that “[w]e offer an affordable debt settlement alternative to credit counseling, debt consolidation, bankruptcy and debt negotiation”. Under “Frequently Asked Questions”, 1st American’s website further states that “[d]ebt settlement is reducing the amount of debt owed by negotiating a lower total amount with your creditors. . . . Legal Settlement Solutions will refer you to an attorney network that will directly provide these services for you”. |
| 6. |
On or about March 25, 2010, a Connecticut resident, while physically present in Connecticut, entered into a Contract for Services with LNOA for debt settlement services (“Contract for Services”). As part of such contract, the Connecticut resident completed a “Legal Network of America – Special Purpose Account Application”, which lists the Sponsor as “USCR – 1st American Debt Solutions” and authorizes a third-party to debit $461.74 from such resident’s designated bank account at a designated financial institution. |
| 7. |
Paragraph k) of the Contract for Services, under the heading “Servicing Company”, states that “LNOA has contracted with SCOA to service your account. SCOA will deliver LNOA’s Customer Service Support, negotiate your debts and will perform other functions all of which will be under the direct supervision of LNOA attorneys”. |
| 8. | On or about April 11, 2010, the Connecticut resident, referred to in paragraph 6 above, filed a complaint with the Commissioner against 1st American and LNOA concerning the fees paid for debt negotiation services. |
| 9. | On April 28, 2010, the Connecticut resident sent an e-mail to Nick Puglia, Senior Debt Consultant at 1st American, in which the resident indicated she no longer wished to continue with the program and no progress was made with her creditor. Although $540.73 had been withdrawn from the Connecticut resident’s account by a third-party on April 28, 2010, the Connecticut resident sent another e-mail to Mr. Puglia requesting the return of $470. |
| 10. | From at least October 1, 2009 to the present, LNOA engaged in debt negotiation in this state on behalf of at least seventy-six (76) Connecticut residents who negotiated or agreed to contract terms while in this state concerning their unsecured debt and who remitted approximately $122,930 to LNOA. |
| 11. | From November 12, 2009 through June 30, 2010, at least seventy-six (76) Connecticut residents remitted payments to LNOA in excess of amounts that debt negotiators may charge for services pursuant to the Schedule of Maximum Fees established by the Commissioner on or about October 1, 2009. |
| 12. | At no time relevant hereto was 1st American licensed to engage or offer to engage in debt negotiation in this state, nor did 1st American qualify for an exemption from such licensure. |
| 13. | At no time relevant hereto was LNOA licensed to engage or offer to engage in debt negotiation in this state, nor did LNOA qualify for an exemption from such licensure. |
| 14. | At no time relevant hereto was SCOA licensed to engage or offer to engage in debt negotiation in this state, nor did SCOA qualify for an exemption from such licensure. |
| 15. |
At no time relevant hereto did Respondents perform or successfully complete the services specified in the Contract for Services entered into with the Connecticut resident referred to in paragraph 6 above.
|
III. STATUTORY BASIS FOR ORDER TO CEASE
AND DESIST AND IMPOSITION OF CIVIL PENALTY
AND DESIST AND IMPOSITION OF CIVIL PENALTY
Section 36a-671(a) of the Connecticut General Statutes provides, in pertinent part, that:
As used in this section and sections 36a-671a to 36a-671d, inclusive, (1) “debt negotiation” means, for or with the expectation of a fee, commission or other valuable consideration, assisting a debtor in negotiating or attempting to negotiate on behalf of a debtor the terms of a debtor’s obligations with one or more mortgagees or creditors of the debtor; . . . (2) “debtor” means any individual who has incurred indebtedness or owes a debt for personal, family or household purposes . . . .
Section 36a-671(b) of the Connecticut General Statutes, effective prior to October 1, 2011, provided in pertinent part, that:
No person shall engage or offer to engage in debt negotiation in this state without a license issued under this section for each location where debt negotiation will be conducted. . . . A person is engaging in debt negotiation in this state if such person: . . . (2) has a place of business located outside of this state and the debtor is a resident of this state who negotiates or agrees to the terms of the services contract in person, by mail, by telephone or via the Internet while physically present in this state . . . .
Section 36a-671a(b) of the Connecticut General Statutes prior to July 13, 2011, provided in pertinent part, that:
Whenever it appears to the commissioner that any person has violated, is violating or is about to violate the provisions of sections 36a-671 to 36a-671d, inclusive, . . . the commissioner may take action against such person . . . in accordance with sections 36a-50 and 36a-52.
| 1. |
1st American’s engaging or offering to engage in debt negotiation in this state without obtaining the required license, as more fully described in paragraphs 1, 4, 5, 6, 8, 9, 12 and 15, of the Matters Asserted, constitutes a violation of Section 36a-671(b) of the Connecticut General Statutes. Such violation forms the basis to issue an order to cease and desist pursuant to Sections 36a-671a(b) and 36a-52(a) of the Connecticut General Statutes and impose a civil penalty pursuant to Sections 36a-671a(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon 1st American in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation. |
| 2. |
LNOA’s engaging in debt negotiation in this state without obtaining the required license, as more fully described in paragraphs 2, 6, 7, 8, 10, 11, 13 and 15 of the Matters Asserted, constitutes a violation of Section 36a-671(b) of the Connecticut General Statutes. Such violation forms the basis to issue an order to cease and desist pursuant to Sections 36a-671a(b) and 36a-52(a) of the Connecticut General Statutes and impose a civil penalty pursuant to Sections 36a-671a(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon LNOA in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation. |
| 3. |
SCOA’s engaging in debt negotiation in this state without obtaining the required license, as more fully described in paragraphs 3, 7 and 14 and 15 of the Matters Asserted, constitutes a violation of Section 36a-671(b) of the Connecticut General Statutes. Such violation forms the basis to issue an order to cease and desist pursuant to Sections 36a-671a(b) and 36a-52(a) of the Connecticut General Statutes and impose a civil penalty pursuant to Sections 36a-671a(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon SCOA in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.
|
IV. FINDING AND STATUTORY BASIS FOR
TEMPORARY ORDER TO CEASE AND DESIST
TEMPORARY ORDER TO CEASE AND DESIST
The Commissioner finds that public welfare requires immediate action to issue a temporary order requiring 1st American and LNOA to cease and desist from violating Section 36a-671(b) of the Connecticut General Statutes and to take such other action as set forth herein to effectuate the purposes of Section 36a-52(b) of the Connecticut General Statutes, in that the interests of Connecticut residents are being materially prejudiced by 1st American and LNOA’s receipt of fees in excess of the Schedule of Maximum Fees established by the Commissioner. The Commissioner also finds the payment of $540.73 in fees by the Connecticut resident to be excessive, upon consideration of the fact that the Schedule of Maximum Fees only permits a debt negotiator of unsecured debt to collect total aggregate fees, including the initial fee and service fees, not to exceed ten percent (10%) of the amount by which the consumer’s debt is reduced as part of each achieved settlement as agreed to in the Contract for Services, the Contract for Services was not successfully completed and the Connecticut resident received no benefit from such contract.
V. 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
INTENT TO ISSUE ORDER TO CEASE AND DESIST, NOTICE OF INTENT
TO IMPOSE CIVIL PENALTY AND NOTICE OF RIGHT TO HEARING
WHEREAS, the Commissioner has reason to believe that Respondents have engaged in acts or conduct which forms the basis to issue an order to cease and desist pursuant to Sections 36a-671a(b) and 36a-52(a) of the Connecticut General Statutes and impose a civil penalty pursuant to Sections 36a-671a(b) and 36a-50(a) of the Connecticut General Statutes;
AND WHEREAS, the Commissioner has made the finding required under Section 36a-52(b) of the Connecticut General Statutes.
THE COMMISSIONER THEREFORE ORDERS, pursuant to Section 36a-52(b) of the Connecticut General Statutes, that 1st American Debt Solutions Limited Liability Company a/k/a Legal Settlement Solutions, LLC immediately CEASE AND DESIST from violating Section 36a-671(b) of the Connecticut General Statutes. This Temporary Order shall become effective upon receipt by 1st American Debt Solutions Limited Liability Company a/k/a Legal Settlement Solutions, LLC, and, unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or dismissal of the matters asserted in this Temporary Order.
THE COMMISSIONER FURTHER ORDERS, pursuant to Section 36a-52(b) of the Connecticut General Statutes, that The Purewal Law Group A Professional Corporation d/b/a Legal Network of America (LNOA) immediately CEASE AND DESIST from violating Section 36a-671(b) of the Connecticut General Statutes. This Temporary Order shall become effective upon receipt by The Purewal Law Group A Professional Corporation d/b/a Legal Network of America (LNOA), and, unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or dismissal of the matters asserted in this Temporary Order.
THE COMMISSIONER FURTHER ORDERS, pursuant to Sections 36a-52(b) and 36a-671a(c) of the Connecticut General Statutes, that: Not later than 10 days from receipt of this Order, 1st American Debt Solutions Limited Liability Company a/k/a Legal Settlement Solutions, LLC and The Purewal Law Group A Professional Corporation d/b/a Legal Network of America (LNOA) shall:
| 1. |
Provide repayment of $540.73 to the Connecticut resident identified in Exhibit A and provide repayment of all fees received from the Connecticut residents identified in Exhibit B by cashier’s check, certified check or money order; and |
| 2. |
Provide to Carmine Costa, Director, Consumer Credit Division, Department of Banking, 260 Constitution Plaza, Hartford, Connecticut 06103-1800, or carmine.costa@ct.gov, evidence of such repayments and a list of all Connecticut residents with whom either of them have entered into agreements for debt negotiation services to date where such agreements were entered into on or after October 1, 2009. Such submission shall include: (a) a copy of each agreement, and (b) a list of each debtor’s name and address and full itemization of each debtor’s payments made pursuant to the agreement, specifying the dates, amounts and recipients of such payments. |
NOW THEREFORE, notice is hereby given to Respondents that the Commissioner intends to issue an order requiring Respondents to CEASE AND DESIST from violating Section 36a-671(b) of the Connecticut General Statutes and impose a CIVIL PENALTY upon Respondents as set forth herein, subject to each Respondent’s right to a hearing on the allegations set forth above.
A hearing will be granted to each Respondent if a written request for a hearing is received by the Department of Banking, Consumer Credit Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800, within fourteen (14) days following each Respondent’s receipt of this 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 as set forth in Sections 36a-52(a) and 36a-50(a) of the Connecticut General Statutes. This 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 shall be deemed received on the earlier of the date of actual receipt, or seven days after mailing or sending. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If any Respondent will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”. Once a written request for a hearing is received, the Commissioner may issue a notification of hearing and designation of hearing officer that acknowledges receipt of a request for a hearing, designates a hearing officer and sets the date of the hearing in accordance with Section 4-177 of the Connecticut General Statutes and Section 36a-1-21 of the Regulations of Connecticut State Agencies. If a hearing is requested, the hearing will be held on January 30, 2012, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
The hearing will be held in accordance with the provisions of Chapter 54 of the Connecticut General Statutes, unless Respondents fails to appear at the requested hearing. At such hearing, Respondents will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.
If 1st American does not request a hearing within the time prescribed, the Commissioner will issue an order that 1st American cease and desist from violating Section 36a-671(b) of the Connecticut General Statutes, and may order a civil penalty not to exceed One Hundred Thousand Dollars ($100,000) per violation be imposed upon 1st American.
If LNOA does not request a hearing within the time prescribed, the Commissioner will issue an order that LNOA cease and desist from violating Section 36a-671(b) of the Connecticut General Statutes, and may order a civil penalty not to exceed One Hundred Thousand Dollars ($100,000) per violation be imposed upon LNOA.
If SCOA does not request a hearing within the time prescribed, the Commissioner will issue an order that SCOA cease and desist from violating Section 36a-671(b) if the Connecticut General Statutes, and may order a civil penalty not to exceed One Hundred Thousand Dollars ($100,000) per violation be imposed upon SCOA.
If SCOA does not request a hearing within the time prescribed, the Commissioner will issue an order that SCOA cease and desist from violating Section 36a-671(b) if the Connecticut General Statutes, and may order a civil penalty not to exceed One Hundred Thousand Dollars ($100,000) per violation be imposed upon SCOA.
So ordered at Hartford, Connecticut
this 13th day of December 2011. ________/s/_________
Howard F. Pitkin
Banking Commissioner
this 13th day of December 2011. ________/s/_________
Howard F. Pitkin
Banking Commissioner
CERTIFICATION
I hereby certify that on this 13th day of December 2011, the foregoing 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 was sent by registered mail, return receipt requested, to 1st American Debt Solutions Limited Liability Company a/k/a Legal Settlement Solutions, LLC, 5000 Atrium Way, Suite 5, Mount Laurel, New Jersey 08054, registered mail no. RB028020654US; The Purewal Law Group A Professional Corporation d/b/a Legal Network of America (LNOA), 22320 Foothill Boulevard, Suite 400, Hayward, California 94541, registered mail no. RB028020668US; Spiegel & Utrera, P.A., Agent for Service of Process for The Purewal Law Group A Professional Corporation, d/b/a Legal Network of America (LNOA), 4727 Wilshire Boulevard, Suite 601, Los Angeles California 90010, registered mail no. RB028020671US; and Settlement Corporation of America, 22320 Foothill Boulevard, Suite 400, Hayward, California 94541, registered mail no. RA878574729US.
________/s/_________
Doniel Kitt
Prosecuting Attorney
Prosecuting Attorney