Bulletin 3261 - August 21, 2026

State of Connecticut
Department of Banking

The Department of Banking News Bulletin

Bulletin # 3261 - Week Ending August 21, 2026

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 directed to Jorge L. Perez, Banking Commissioner. Written comments will be considered only if they are received within ten business days from the date of this bulletin.

CONSUMER CREDIT ACTIVITY

Clarity Debt Resolution, Inc

On August 14, 2026, the Commissioner entered into a Consent Order (“Consent Order”) with Clarity Debt Resolution, Inc (NMLS # 2332349), (“Clarity”), Irvine, California. As a result of information obtained during an examination of a licensee, the Commissioner alleged that, from at least June 2023 to the present, Clarity engaged in activity in violation of Section 36a-671(b) of the Connecticut General Statutes. As part of the Consent Order, Clarity paid $7,600 as a civil penalty and $2,400 as back licensing fees.

CDS Debt Relief LLC a/k/a CDS Debt Relief, LLC d/b/a CDS Financial, David Lugo and Kevin Lugo

On August 18, 2026, the Commissioner issued a
Temporary Order to Cease and Desist, Order to Make Restitution, Order to Provide Disgorgement, 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”), in the matter of CDS Debt Relief LLC a/k/a CDS Debt Relief, LLC d/b/a CDS Financial (“CDS Financial”), West Palm Beach, Florida and Saugus, Massachusetts, and its managers and control persons David Lugo and Kevin Lugo (collectively, “Respondents”). The Order and Notice was the result of an investigation by the Consumer Credit Division initiated as a result of a consumer complaint filed with the Department of Banking.

The Commissioner alleged in the Order and Notice, with respect to debt negotiation activity, that: (1) CDS Financial engaged or offered to engage in debt negotiation with at least 12 Connecticut debtors without obtaining the required license in violation of Section 36a-671(b) of the Connecticut General Statutes; (2) CDS Financial charged fees in excess of amounts permitted by the Schedule of Maximum Fees in violation of Section 36a-671b(b) of the Connecticut General Statutes; (3) CDS Financial entered into a contract with at least 1 Connecticut debtor which did not include the “Debtor’s three-day right to cancel” disclosure required in Connecticut in violation of Section 36a 671b(a) of the Connecticut General Statutes; (4) CDS Financial and David Lugo employed a scheme, device or artifice to defraud or mislead Connecticut debtors in connection with debt negotiation, in that they enrolled Connecticut consumer debtors in a program under which CDS Financial promised to provide debt negotiation and related services, withdrew payments from the debtors’ bank accounts intended to be used to settle or pay off debts, deposited such funds into an account of CDS Financial, and then misappropriated such funds by spending the funds on operating expenses, direct payments to David Lugo and other personal expenses in violation of subdivision (1) of Section 36a-671f of the Connecticut General Statutes; (5) CDS Financial failed to comply with the debt negotiation provisions of Sections 36a-671 to 36a-671e, inclusive, of the Connecticut General Statutes in violation of subdivision (4) of Section 36a-671f of the Connecticut General Statutes; and (6) David Lugo and Kevin Lugo, as control persons of CDS Financial, failed to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable debt negotiation laws and regulations in violation of subdivision (9) of Section 36a-671f of the Connecticut General Statutes.

The Commissioner alleged in the Order and Notice, with respect to debt negotiation activity, that: (1) CDS Financial engaged in the business of debt adjustment in connection with at least 12 Connecticut debtors without obtaining the required license in violation of Section 36a 656(a) of the Connecticut General Statutes; (2) CDS Financial and David Lugo employed a scheme, device or artifice to defraud or mislead Connecticut consumers in connection with debt adjustment, in that they enrolled Connecticut debtors in a program under which CDS Financial promised to provide debt adjustment and related services, withdrew payments from the debtors’ bank accounts intended to be used to settle or pay off debts, deposited such funds into an account of CDS Financial and then misappropriated such consumer funds by spending the funds on operating expenses, direct payments to David Lugo and other personal expenses in violation of subdivision (7) of Section 36a-661 of the Connecticut General Statutes; (3) CDS Financial failed to comply with the debt adjustment provisions of Sections 36a-655 to 36a-665, inclusive, of the Connecticut General Statutes, including, but not limited to, that CDS Financial failed to comply with Section 36a-659 of the Connecticut General Statutes by depositing payments received from debtors who are residents of Connecticut for the benefit of creditors into CDS Financial’s general operating account instead of a separate bank account for the benefit of debtors in violation of subdivision (10) of Section 36a-661 of the Connecticut General Statutes; and (4) David Lugo and Kevin Lugo, as control persons of CDS Financial, failed to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable debt adjustment laws and regulations in violation of subdivision (15) of Section 36a-661 of the Connecticut General Statutes.

The Commissioner alleged in the Order and Notice, with respect to money transmission activity, that: (1) CDS Financial engaged in the business of money transmission without a license by receiving monies from consumers to be held and then transmitted to creditors on behalf of the consumers in the future in violation of Section 36a-597(a) of the Connecticut General Statutes; (2) CDS Financial and David Lugo employed a scheme, device or artifice to defraud or mislead Connecticut consumers, engaged in unfair or deceptive practices towards Connecticut consumers in connection with money transmissions and obtained property by fraud or misrepresentation, in that CDS Financial received money or monetary value from Connecticut consumer intended for future transmission to the consumers’ creditors pursuant to a contract between CDS Financial and the consumers, and then failed to transmit or otherwise hold the consumer’s money or monetary value, instead misappropriating the consumer funds by placing such funds in CDS Financial’s operating account and converting such funds for its own use in operating expenses, cash withdrawals, direct payments to David Lugo and other personal expenses in violation of subdivisions (1), (2) and (3) of Section 36a-607(c) of the Connecticut General Statutes, respectively; (3) CDS Financial failed to comply with the money transmission provisions of Sections 36a-595 to 36a-614, inclusive, of the Connecticut General Statutes and failed to perform written agreements with parties to a money transmission transaction in violation of subdivisions (4) and (8) of Section 36a-607(c) of the Connecticut General Statutes, respectively; and (4) David Lugo and Kevin Lugo, as control persons of CDS Financial, failed to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable money transmission laws and regulations in violation of subdivision (10) of Section 36a 607(c) of the Connecticut General Statutes.

The Commissioner also alleged in the Order and Notice that CDS Financial failed to make its records available to the Commissioner or otherwise cooperate with the Department’s Investigation, in violation of Section 36a-17(e) of the Connecticut General Statutes.

The Commissioner found that the public welfare required immediate action to issue a Temporary Order to Cease and Desist against Respondents. Respondents were afforded an opportunity to request a hearing with regard to the allegations set forth in the Order and Notice.

Dated: Tuesday, August 25, 2026

Jorge L. Perez
Banking Commissioner