Bulletin 2845 - August 31, 2018

State of Connecticut
Department of Banking

The Department of Banking News Bulletin

Bulletin # 2845 - Week Ending August 31, 2018

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

STATE BANK ACTIVITY

Interstate Loan Production Office

On August 27, 2018, the Commissioner approved the application of SunTrust Bank , a Georgia-chartered commercial bank and wholly-owned subsidiary of SunTrust Banks, Inc., Atlanta, Georgia, to establish a loan production office at Four Greenwich Office Park, Greenwich, Connecticut pursuant to Section 36a-412(d) of the Connecticut General Statutes.

Acquisition and Merger

On August 30, 2018,
PeoplesBancorp, MHC
, a Massachusetts mutual holding company and bank holding company headquartered in Holyoke, Massachusetts, filed an acquisition statement and application pursuant to Sections 36a-184 and 36a-411 of the Connecticut General Statutes to acquire First Suffield Financial Inc. , a bank holding company headquartered in Suffield, Connecticut. The acquisition will take place through the merger of a Connecticut corporation to be formed for the purpose of this transaction as a wholly-owned subsidiary of PeoplesBancorp, MHC , with and into First Suffield Financial Inc. Subsequent to the merger, First Suffield Financial Inc. will be dissolved. Also on August 30, 2018, PeoplesBank , a Massachusetts-chartered savings bank and wholly-owned subsidiary of PeoplesBancorp, MHC , filed an application pursuant to Section 36a-412 of the Connecticut General Statutes for the merger of The First National Bank of Suffield , a national association headquartered in Suffield, Connecticut and wholly-owned subsidiary First Suffield Financial Inc. , with and into PeoplesBank .

CONSUMER CREDIT DIVISION ACTIVITY

Consent Orders

On August 22, 2018, the Commissioner entered into a Consent Order with PBCM of West Virgini a (NMLS # 1658069) (“PBCM”), Glen Allen, Virginia. The Consent Order was based on an investigation by the Consumer Credit Division. As a result of such investigation, on May 24, 2018, 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 (“Notice”) against PBCM. The Commissioner alleged that PBCM submitted financial and bank statements which directly conflicted with subpoenaed bank records, which constituted making statements to the Commissioner which were, at the time and in light of the circumstances under which they were made, false or misleading in a material respect, in violation of Section 36a-53a of the Connecticut General Statutes. As part of the Consent Order, PBCM paid $10,000 as a civil penalty and is permanently barred from acting directly or indirectly as a consumer collection agency in this state. In addition, Sarely Justice , PBCM’s president, was permanently barred from acting as a control person, qualified individual or branch manager for any consumer collection agency acting in Connecticut.

On August 22, 2018, the Commissioner entered into a Consent Order with Debt Management, Inc. d/b/a Capital Recovery Systems (NMLS # 931163) (“DMI”), Mansfield, Massachusetts. The Consent Order was based on an investigation by the Consumer Credit Division. As a result of such investigation, on June 29, 2018, the Commissioner issued an Order of Summary Suspension, Temporary Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Revoke Consumer Collection Agency License, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing (“Notice”) against DMI. The Commissioner alleged that DMI: (1) charged Connecticut consumer debtors convenience fees not authorized by the debtor’s contract with the creditor, in violation of Section 36a-805(a)(12) of the 2018 Supplement to the General Statutes or the Connecticut General Statutes, as applicable, and Section 36a-809-12(1) of the Regulations; (2) engaged in conduct that created a false impression to Connecticut consumer debtors that it was a law firm and intended to take legal action when DMI had no intentions or authorization to take legal action, constituting an unfair or deceptive act or practice in violation of Section 36a-806(a) of the 2018 Supplement to the General Statutes, and false, deceptive or misleading practices in violation of subdivisions (3), (5), (10) and (13) of Section 36a-809-11 of the Regulations; (3) referred to itself as “The Offices of CRS” and “CRS” in communications with Connecticut consumer debtors, which is neither DMI’s legal name nor the name authorized by its license in Connecticut, in violation of Section 36a-801(i) of the 2018 Supplement to the General Statutes or the Connecticut General Statutes, as applicable, and Section 36a-809-11(14) of the Regulations; (4) engaged in conduct which the natural consequence was to harass a Connecticut consumer debtor in connection with the collection of a debt, in violation of Section 36a-809-10 of the Regulations; (5) commingled monies in its trust account for the benefit of creditors, in violation of Section 36a-811(b) of the Connecticut General Statutes; (6) acted as a consumer collection agency from an unlicensed location, in violation of subsections (a) and (i) of Section 36a-801 of the 2018 Supplement to the General Statutes or the Connecticut General Statutes, as applicable; (7) communicated with a third party regarding a consumer debtor’s account without such debtor’s authorization, in violation of Section 36a-809-9(d)(2) of the Regulations; (8) failed to establish, enforce and maintain policies and procedures for supervising employees and office operations that were reasonably designed to achieve compliance with applicable consumer collection laws and regulations, in violation of Section 36a-805(a)(16) of the 2018 Supplement to the General Statutes; and (9) failed to disclose clearly in communications with Connecticut consumer debtors that it was
attempting to collect a debt and that any information obtained would be used for that purpose, in violation of Section 36a-809-11(11) of the Regulations.

As part of the Consent Order, among other things, DMI paid $75,000 as a civil penalty, requested surrender of its consumer collection agency license in Connecticut, and is barred for a period of three years from directly or indirectly acting as a consumer collection agency in Connecticut. In addition, DMI’s president, majority owner and control person James George Fox, III , is barred for a period of three years from acting directly or indirectly as a manager, owner, supervisor, control person or qualified individual of any consumer collection agency acting in Connecticut. Any application for licensing following the three year bar shall be at the sole discretion of the Commissioner.

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY

Leland Energy, Inc., Leland Tennessee Holdings, Inc., Opportunity Drilling & Acquisition Fund, LLP and Stephen M. Thompson Fined $400,000 in Toto for Oil and Gas Securities Violations

On August 29, 2018, four separate Orders Imposing Fine (Docket No. CF-18-8308-S) were entered against Leland Energy, Inc. of 8950 West Olympic Boulevard, #415, Beverly Hills, California 90211; Opportunity Drilling & Acquisition Fund, LLP of 2360 Corporate Circle, Suite 400, Henderson, Nevada 89074-7722; Leland Tennessee Holdings, Inc. , managing partner of Opportunity Drilling & Acquisition Fund, LLP ; and Stephen M. Thompson , president of Leland Energy, Inc. and Leland Tennessee Holdings, Inc. and a control person of Opportunity Drilling & Acquisition Fund, LLP. The respondents were involved in investing in the oil and gas industry.

The action had been preceded by a June 7, 2018 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing alleging that the respondents 1) violated Section 36b-16 of the Connecticut Uniform Securities Act by selling unregistered interests in Opportunity Drilling & Acquisition Fund, LLP to a Connecticut resident; and 2) violated the antifraud provisions in Section 36b-4(a) of the Act by representing to the Connecticut investor that he would not incur any losses on his investment, and by failing to disclose several prior regulatory actions taken against Thompson and/or Leland Energy, Inc. by the Federal Trade Commission and the states of Wisconsin, Pennsylvania, California and Rhode Island.

Since none of the respondents requested a hearing on the Order to Cease and Desist, the Order to Cease and Desist became permanent as to each of them on July 28, 2018.

Similarly, none of the respondents requested a hearing on the Notice of Intent to Fine, and the Orders Imposing Fine were entered by default. Finding that each respondent had violated Sections 36b-16 and 36b-4(a) of the Act, the Commissioner fined each of them $100,000.

Dated: Wednesday, September 5, 2018

Jorge L. Perez
Banking Commissioner