Assistant Chief Counsel

CCC-241434

California Superior Local Rules

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight MARY ANN SMITH Deputy Commissioner SEAN M. ROONEY Assistant Chief Counsel JUDY L.

HARTLEY (CA BAR NO. 110628) Senior Corporations Counsel ADAM WRIGHT (CA BAR NO. 262378) Department of Business Oversight Corporations Counsel 320 West 4 th Street, Ste. 750 Los Angeles, California 90013-2344 Telephone: (213) 576-7604 Fax: (213) 576-7181 Attorneys for Complainant BEFORE THE DEPARTMENT OF BUSINESS OVERSIGHT OF THE STATE OF CALIFORNIA In the Matter of the Accusation of THE COMMISSIONER OF BUSINESS OVERSIGHT, Complainant, vs.

CASHCALL, INC., Respondent. ) ) ) ) ) ) ) ) ) ) ) ) ) ) File No.: 603-8780; 603-H991; 603-J333; 603 - J386; 603-J514; and 603-J823 ACCUSATION The Complainant is informed and believes, and based upon such information and belief, alleges and charges Respondents as follows: I 1. Respondent CashCall, Inc. (• CashCall‚ ) is a finance lender licensed by the Commissioner of Business Oversight (•Commissioner‚) pursuant to the California Finance Lenders Law of the State of California (California Financial Code ƒ 17000 et seq.) (•CFLL‚). CashCall currently has six (6) licenses issued under the CFLL.

The main licensed office of CashCall is located at One City Boulevard, Suite 1000, Orange, California 92868.

-2- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight 2. On or about November 23, 2010, the Commissioner, by and through staff, commenced a regulatory examination of the books and records of CashCall (• regulatory examination‚). Under the provisions of the CFLL, interest rates are only regulated on loans under $2,500. Accordingly, a CFLL licensed lender can charge whatever interest rate it chooses on loans of bona fide principal amounts of $2,500 or more. Material Misrepresentations and/or Omissions to Consumers 3.

The regulatory examination disclosed that CashCall, with the intent to induce members of the public to enter into unregulated personal loans, advertised, published, distributed or broadcasted, or caused or permitted to be advertised, published, distributed, or broadcast, statements and/or representations regarding the terms and conditions of the loans that were false, misleading or deceptive and/or omitted material information that were necessary to make the statements and/or representations made not false, misleading, or deceptive in violation of Financial Code

section 22161 as follows: a. CashCall routinely advertised on television and radio that it made personal loans •up to‚ $2,600, but when consumers telephoned CashCall or went to its website they were told that CashCall does not make loans under $2,600. b. CashCall routinely represented, when consumers stated they only wanted a loan for less than $2,600, that on the day of funding or shortly thereafter, they could just give back whatever amount they did not want (prepayment), which would reduce the principal balance resulting in significant interest savings.

However, CashCall failed to inform the consumers that because the loan was for • $2,600‚ , CashCall could charge any interest rate it choose (and did charge up to 179%), but that loans of less than $2,500 would carry a maximum interest rate of approximately 30%. c. Cashcall routinely represented to consumers seeking to borrow less than $2,600 that by making a prepayment, the loan term would be substantially reduced (paid off in several months versus three years) resulting in significant interest savings.

It was explained that the term of the loan would be reduced because the prepayment would reduce the principal balance at the onset resulting in more of the monthly payments going towards principal, but CashCall then failed on numerous occasions to take initially scheduled monthly payment(

s) resulting in an extended loan term and less

-3- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight interest savings. See also paragraph 9 below. False Reports to the Commissioner 4. During the course of the regulatory examination, CashCall was requested to submit a loan report covering the period of January 1, 2008 through December 31, 2010. The initial loan report submitted to the Commissioner in February 2011, disclosed, with respect to loans for $2,600.00, that 502 borrowers made an initial payment on the same day their loan was funded.

As such, the Commissioner was concerned that CashCall was making loans for a bona fide principal amount of less than $2,500, but charging interest rates and fees allowed only for loans of a bona fide principal amount of $2,500 or more. Accordingly, on or about August 11, 2011, the Commissioner made demand on CashCall to perform a self-audit for the period covering January 1, 2008 through to the present and refund all interest and administrative fee overcharges. 5.

According to CashCall, its self-audit covering the period of January 1, 2008 through August 31, 2011, disclosed only 6 loans wherein the borrower made an initial payment on the same day their loan was funded. The self-audit information conflicted with the initial loan report submitted by CashCall in February 2011, which disclosed 502 such borrowers for a shorter time period.

However, CashCall was now stating that the •prepayment date‚ set forth in the initial loan report provided on or about February 9, 2011 was actually the date upon which the payment was credited to the borrower„s account and not the actual date of the •prepayment‚. 6. Due to the conflicting information provided by CashCall, the Commissioner made demands on CashCall to submit further information and documentation. In particular, on or about December 2, 2011, demand was made upon CashCall to provide an accurate loan report.

On or about December 6, 2011, CashCall provided a revised loan report for the period of January 1, 2008 through December 31, 2010, which it re-submitted on or about December 12, 2011 to include borrower addresses. The revised loan report disclosed only 2 borrowers having made an initial payment on the same day their loan was funded. However, a review of loan records sampled during the regulatory examination 1 disclosed that CashCall, in the revised report, misrepresented the 1 The number of loans sampled during the regulatory examination numbered twenty-one. The documents reviewed included the underwriting

summary, promissory note, transaction history and conversation log for 5 borrowers, the promissory note, transaction history, conversation log, and recordings of telephone communications for the remaining 16 borrowers. The Department also obtained recordings of telephone communications for 10 other borrowers.

-4- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight prepayment date in 100% (21 of 21) of the loans sampled in violation of Financial Code sections 22159(

b) and 22170(a). Examples are as follows: a. In loan number 651232 , the revised loan report states a prepayment date of August 30, 2008, but the transaction log discloses that the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,000 from the borrower„s bank account on April 21, 2008; the date of funding. The original loan report submitted by CashCall had set forth a prepayment date of April 21, 2008. b.

In loan number 1854545 , the revised loan report states a prepayment date of March 26, 2008, but the transaction log discloses that the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,400 from the borrower„s bank account on March 25, 2008; the date of funding. The original loan report submitted by CashCall had set forth a prepayment date of March 25, 2008. c.

In loan number 1859087 , the revised loan report states a prepayment date of April 11, 2008, but the transaction log discloses that the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,725 from the borrower„s bank account on April 10, 2008; the date of funding. The original loan report submitted by CashCall had set forth a prepayment date of April 10, 2008. d.

In loan number 1861863 , the revised loan report states a prepayment date of February 12, 2008, but the transaction log discloses that the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,100 from the borrower„s bank account on February 11, 2008; the date of funding. The original loan report submitted by CashCall had set forth a prepayment date of February 11, 2008. e.

In loan number 1874559 , the revised loan report states a prepayment date of January 10, 2008, but the transaction log discloses that the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,500 from the borrower„s bank account on January 9, 2008; the date of funding. The original loan report submitted by CashCall had set forth a prepayment date of January 9, 2008.

-5- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight f. In loan number 4166107 , the revised loan report states a prepayment date of August 4, 2010, but the transaction log and telephone recordings disclose that the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,178 from the borrower„s bank account on August 3, 2010. The original loan report submitted by CashCall had set forth a prepayment date of August 3, 2010. g.

In loan number 4698250 , the revised loan report states a prepayment date of November 9, 2010, but the transaction log and telephone recordings disclose that the borrower authorized CashCall to electronically debit a prepayment in the amount of $525 from the borrower„s bank account on November 8, 2010; the date of funding. The original loan report submitted by CashCall had set forth a prepayment date of November 8, 2010. h.

In loan number 4817668 , the revised loan report states a prepayment date of December 6, 2010, but the transaction log and telephone recordings disclose that the borrower authorized CashCall to electronically debit a prepayment in the amount of $800 from the borrower„s bank account on December 4, 2010. The original loan report submitted by CashCall had set forth a prepayment date of December 4, 2010. i.

In loan number 4928001 , the revised loan report states a prepayment date of December 6, 2010, but the telephone recordings disclose that the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,000 from the borrower„s bank account on December 3, 2010; the date of funding. The original loan report submitted by CashCall had set forth a prepayment date of December 3, 2010. j.

In loan number 4888026 , the revised loan report states a prepayment date of December 2, 2010, but the telephone recordings disclose that the borrower authorized CashCall to electronically debit a prepayment in the amount of $900 from the borrower„s bank account on December 1, 2010. The original loan report submitted by CashCall had set forth a prepayment date of December 1, 2010. k.

In loan number 4107506 , the revised loan report states a prepayment date of July 13, 2010, but the telephone recordings disclose that the borrower authorized CashCall to electronically debit a prepayment in the amount of $525 from the borrower„s bank account on

-6- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight July 12, 2010; the date of funding. The original loan report submitted by CashCall had set forth a prepayment date of July 12, 2010. l. In loan number 4483223 , the revised loan report states a prepayment date of October 18, 2010, but the telephone recordings disclose that the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,000 from the borrower„s bank account on October 15, 2010; the date of funding.

The original loan report submitted by CashCall had set forth a prepayment date of October 15, 2010. 7. It was also noted that the prepayment amount was misrepresented in both loan reports in violation of Financial Code sections 22159(

b) and 22170(

a) in at least 6 of the loans for which either loan records and/or telephone recordings were reviewed. The misrepresentations are as follows: a. In loan number 4107506 , both loan reports state a prepayment amount of $330.00, but the telephone recordings disclose that the borrower authorized CashCall to electronically debit a prepayment in the amount of $525 from the borrower„s bank account on July 12, 2010; the date of funding. [See also paragraph 9.a. below.] b.

In loan number 4191188 , both loan reports state a prepayment amount of $746.50, but the transaction log and telephone recordings disclose that the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,000 from the borrower„s bank account on August 12, 2010; six days after funding. c.

In loan number 4483223 , both loan reports state a prepayment amount of $805.00, but the transaction log and telephone recordings disclose that the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,000 from the borrower„s bank account on October 15, 2010; three days after funding and during the welcome call. [See also paragraphs 8.e. and 9.b. below] d.

In loan number 4717338 , both loan reports state a prepayment amount of $785.50, but the telephone recordings disclose that the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,000 from the borrower„s bank account on November 12, 2010; three days after funding. [See also paragraph 9.c. below.]

-7- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight e. In loan number 4790238 , both loan reports state a prepayment amount of $664.56, but the telephone recordings disclose that the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,100 from the borrower„s bank account on November 18, 2010; one day after funding. [See also paragraph 9.d. below.] f.

In loan number 4928001 , both loan reports state a prepayment amount of $717.25, but the telephone recordings disclose that the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,000 from the borrower„s bank account on December 3, 2010; the date of funding and welcome call. Moreover, the borrower paid off the loan in full on December 31, 2010 before the first scheduled monthly installment was due. False Representations to the Commissioner 8.

On or about September 2, 2011, CashCall also represented to the Commissioner that it is •CashCall„s policy to credit any payments authorized during the welcome call as of the date of the loan funded.‚ Records from the sampled loan transactions disclose that this is another misrepresentation on the part of CashCall in violation of Financial Code 22170(a). Examples are as follows: a.

In loan number 4166107 , the transaction log and telephone recordings reveal that the borrower authorized a prepayment in the amount of $1,178 during the welcome call on August 3, 2010, but was charged $78.00 in interest indicating that the prepayment was not credited as of the date the loan funded. b. In loan number 4817668 , the transaction log and telephone recordings reveal that the borrower authorized a prepayment in the amount of $800 during the welcome call on December 4, 2010, but was charged $9.75 in interest indicating that the prepayment was not credited as of the date the loan funded. c.

In loan number 4249965 , the transaction log and telephone recordings reveal that the borrower authorized a prepayment in the amount of $1,000 during the welcome call on August 19, 2010, but was charged $9.75 in interest indicating that the prepayment was not credited as of the date the loan funded.

-8- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight d. In loan number 4225624 , the transaction log and telephone recordings reveal that the borrower authorized a prepayment in the amount of $1,325 during the welcome call on September 8, 2010, but was charged $9.75 in interest indicating that the prepayment was not credited as of the date the loan funded. e.

In loan number 4483223 , the transaction log and telephone recordings reveal that the borrower authorized a prepayment in the amount of $1,000 during the welcome call on October 15, 2010, but was charged $29.25 in interest indicating that the prepayment was not credited as of the date the loan funded. f. In loan number 5108266 , the transaction log and telephone recordings reveal that the borrower authorized a prepayment in the amount of $1,250 before or during the welcome call on December 30, 2010, but was charged $9.75 in interest indicating that the prepayment was not credited as of the date the loan funded.

Other Material Misrepresentations to Consumers 9. The regulatory examination also disclosed that CashCall, during the •welcome call‚ or when customers called in to make a prepayment, made statements and/or representations regarding the terms and conditions of the loans were false, misleading or deceptive in violation of Financial Code

section 22161 as follows: a. In loan number 4107506 , the borrower authorized Cashcall to electronically debit a prepayment in the amount of $525 from the borrower„s bank account on July 12, 2010; the date of funding. CashCall, despite reiterating to the borrower that monthly installments would still be taken as scheduled, applied $195 of the prepayment to cover the first monthly installment scheduled to be taken via Automated Clearing House (•ACH‚) payment thereby reducing the interest savings sought by the borrower in making a prepayment. b.

In loan number 4483223 , the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,000 from the borrower„s bank account on October 15, 2010; three days after funding and during the welcome call. CashCall, despite reiterating to the borrower that monthly installments would still be taken as scheduled, applied the $1,000 to principal as requested minus interest of $29.25 (interest that should not have been charged

-9- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight - see paragraph 8.e. above) and then did not take the ACH payment for the first scheduled monthly installment thereby reducing the interest savings sought by the borrower in making a prepayment. c. In loan number 4717338 , the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,000 from the borrower„s bank account on November 12, 2010; three days after funding.

CashCall, despite reiterating to the borrower that monthly installments would still be taken as scheduled, applied the $1,000 minus accrued interest of $29.25 to principal as requested and then did not take the ACH payment for the first scheduled monthly installment thereby reducing the interest savings sought by the borrower in making a prepayment. d. In loan number 4790238 , the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,100 from the borrower„s bank account on November 18, 2010; one day after funding.

CashCall, despite reiterating to the borrower that making a prepayment would not change the scheduled monthly installments, applied the $1,100 minus accrued interest of $9.75 to principal as requested and then failed to take the ACH payment for the first scheduled installment thereby reducing the interest savings sought by the borrower in making a prepayment. e. In loan number 4698250 , the borrower authorized CashCall to electronically debit a prepayment in the amount of $525 from the borrower„s bank account on November 8, 2010; the date of funding.

CashCall, despite reiterating to the borrower that monthly installments would still be taken as scheduled, applied the $525 to principal as requested and then did not take the ACH payment for the first scheduled monthly installment thereby reducing the interest savings sought by the borrower in making a prepayment. f. In loan number 4249965 , the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,000 from the borrower„s bank account on August 19, 2010; the day after funding and during the welcome call.

CashCall, despite reiterating to the borrower that monthly installments would still be taken as scheduled, applied the $1,000 to principal as requested minus interest of $9.75 (interest that should not have been charged - see

-10- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight paragraph 8.c. above) and then did not take the ACH payment for the second scheduled installment thereby reducing the interest savings sought by the borrower in making a prepayment. g. In loan number 4225624 , the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,325 from the borrower„s bank account on September 8, 2010; the day after funding and during the welcome call.

CashCall, despite reiterating to the borrower that monthly installments would still be taken as scheduled, applied the $1,325 to principal as requested minus interest of $9.75 (interest that should not have been charged - see paragraph 8.d. above) and then did not take the full ACH payment for the first scheduled installment thereby reducing the interest savings sought by the borrower in making a prepayment. h. In loan number 3817310 , the borrower authorized CashCall to electronically debit a prepayment in the amount of $1,100 from the borrower„s bank account on February 17, 2010; nine days after funding.

On or about February 22, 2010, the borrower authorized CashCall to electronically debit a further prepayment in the amount of $1,000.00 from the borrower„s bank account. CashCall, despite reiterating to the borrower that monthly installments would still be taken as scheduled, applied the $1,100 and $1,000 to principal as requested minus accrued interest of $87.75 and $29.77 respectively and then did not take the full ACH payment for the first scheduled installment thereby reducing the interest savings sought by the borrower in making prepayments. i.

In loan number 3944275 , the borrower authorized CashCall to electronically debit a prepayment in the amount of $800 from the borrower„s bank account on April 28, 2010; two days after funding. CashCall, despite being told by the borrower that he wanted the full monthly payments taken as scheduled, applied the $800.00 to principal as requested minus accrued interest of $19.50 and then did not take the ACH payment for the first scheduled installment thereby reducing the interest savings sought by the borrower in making a prepayment. 10. In those instances where CashCall told a customer(

s) that it would not be taking the first monthly scheduled payment because the customer had made a significant prepayment 2 , CashCall failed to inform the customer as to the effect of not having the regularly scheduled 2 This statement was contrary to representations made during the sales pitch.

-11- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight payment taken further violating Financial Code

section 22161. 11. The regulatory examination further disclosed that CashCall was otherwise making materially false or misleading statements or representations in regards to the terms or conditions of unregulated personal loans in violation of Financial Code sections 22161 in that: a. CashCall required consumers to agree to repayment of the loan by means of electronic fund transfers as a condition of loan approval, when the Electronic Fund Transfer Act (15 U.S.C.

section 1693 et seq. (•EFTA‚), in particular,

Section 1693k and Regulation E, 12 C.F.R.

section 1005.10(e)(1) prohibits conditioning the extension of credit on the customer„s agreement to repayment by means of electronic fund transfers. b. CashCall routinely represented to consumers that they had to notify CashCall in writing at least three business days in advance in order to cancel an electronic fund transfer authorization, when EFTA only requires oral notice in order to cancel electronic fund transfer authorizations (15 U.S.C.

section 1693e(

a) and 12 C.F.R.

section 1005.10(c)

(1) Failure to Provide Records 12. In furtherance of the regulatory examination, on March 4, 2014, a written demand was made to CashCall to provide a detailed explanation of its loan origination process as it pertains to unsecured loans and to provide all training materials provided to loan agents and collection staff and any and all materials provided to consumer services representatives. On or about March 21, 2014, CashCall responded that it has previously provided detailed information about its loan origination process. However, CashCall has only provided a

summary chart of its loan origination process. To date, CashCall has failed to provide any training materials as demanded in the March 4, 2014 letter in violation of Financial Code

section 22701. False Filings 13. CashCall originates residential mortgage loans in addition to unsecured loans. As such, Financial Code

section 22100(e), CashCall was required to transition its CFLL license by registering with and maintaining a unique identifier issued by the National Mortgage Licensing System and Registry (•NMLS‚). On or about March 3, 2010, CashCall submitted the Uniform Mortgage Lender/Broker Application (•Form MU1‚) to the Commissioner through the NMLS for

-12- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight purposes of transitioning its CFLL license. Jordana Boag, associate counsel, on behalf of and with the authority of CashCall, signed the Form MU1 under penalty of perjury, or unsworn falsification to authorities, or similar provisions provided by law, that the information provided in the MU1 was current, true, and complete. 14.

CashCall, in the March 3, 2010 Form MU1 responded •NO‚ to Disclosure Question (F)(1) that asks •[h]as any domestic or foreign court (1) in the past ten years enjoined the entity or a control affiliate in connection with any financial services-related activity?‚ The term •financial services-related‚ is defined in pertinent part as • pertaining to . . . consumer lending . . ..‚ However, on or about August 24, 2009, CashCall was enjoined in Los Angeles County Superior Court case number BC420115 brought by the California Department of Justice.

In that action, CashCall was permanently enjoined from committing numerous illegal acts and practices relating to the offering and collection of consumer loans. Financial Code

section 22170(

b) makes it a violation to knowingly make an untrue statement to the Commissioner or NMLS. CashCall did not disclose the Final Judgment and Permanent Injunction obtained by the California Department of Justice in August 2009 until on or about November 12, 2010. 15. CashCall further violated Financial Code

section 22170(

b) on March 3, 2010 when it responded •NO‚ to Disclosure Questions (C)(4) and (C)(5) on Form MU1, which questions ask: • (

C) In the past ten years, has any State or federal regulatory agency or foreign financial regulatory authority: (4) entered an order against the entity or a control affiliate in connection with a financial services-related activity?‚ and •(5) denied, suspended, or revoked the entity„s or a control affiliate„s registration or license or otherwise, by order, prevented it from associating with a financial services - related business or restricted its activities?‚ On or about June 23, 2009, the Maryland Commissioner of Financial Regulation had issued a

Summary Order to Cease and Desist against CashCall, which prohibited CashCall from engaging in credit services business activities with Maryland consumers. CashCall did not disclose the 2009 Maryland Order until on or about May 9, 2011. 16. CashCall again violated Financial Code

section 22170(

b) on March 3, 2010 when it responded •NO‚ to Disclosure Question (

G) on Form MU1, which question asks •[i]s the entity or a control affiliate named in any pending financial services-related action that could result in a …yes„

-13- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight answer to any part of (F)?‚ On or about October 8, 2008, the West Virginia Attorney General filed a Complaint for Injunction, Consumer Restitution, Civil Penalties and other Appropriate Relief against CashCall regarding lending activities of CashCall. CashCall did not disclose the October 2008 West Virginia civil action until on or about September 12, 2012. 17. Pursuant to Financial Code

section 22108 and California Code of Regulations, title 10,

section 1409.1, CashCall was required to promptly notify the Commissioner through NMLS of any change in the information contained in its Form MU1, other than financial information. CashCall violated Financial Code

section 22108 and California Code of Regulations, title 10,

section 1409.1 on numerous occasions as follows: a. On or about September 27, 2011, the Kansas Commissioner of Banking, Consumer & Mortgage Lending Division issued a

Summary Order Revoking Supervised Loan License, to Cease and Desist, Pay Civil Penalties, etc. against CashCall. CashCall did not disclose the September 2011 Order action until on or about May 7, 2012. b. On or about October 11, 2011, CashCall entered into a Consent Order with the Alaska Department of Commerce, Community and Economic Development, Division of Banking wherein CashCall was assessed a penalty in the amount of $2,000 for failing to disclose the permanent injunction obtained by the California Department of Justice and described in paragraph 13 above.

CashCall did not disclose the October 2011 Consent Order until on or about May 7, 2012. c. On or about March 12, 2013, the Connecticut Banking 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 (later amended on June 5, 2013 to include additional allegations and a Notice Intent to Revoke Mortgage Lender Licenses) against CashCall.

CashCall did not disclose the March 2013 Order until on or about May 6, 2013 despite having filed an amended disclosure explanation on or about April 15, 2013. d. On or about August 23, 2013, the Georgia Attorney General obtained an Interlocutory Injunction Order against Cashcall in a civil action filed against CashCall in July 2013. The Interlocutory Injunction Order prohibits CashCall from engaging in any business that consists in

-14- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight whole or in

part in the making, offering, arranging or acting as an agent in the making of unsecured loans of $3,000 or less in Georgia. CashCall has yet to disclose the August 23, 2013 Georgia Interlocutory Injunction Order despite having filed amended disclosure explanations on or about September 23, 2013, October 25, 2013, November 26, 2013, December 20, 2013, and May 14, 2014. e.

On or about December 23, 2013, the Florida Attorney General and the Florida Office of Financial Regulation filed a civil action against CashCall seeking injunctive relief along with restitution and civil penalties for violations involving consumer lending. CashCall has yet to disclose the December 23, 2013 Florida civil action despite having filed an amended disclosure explanation on or about May 14, 2014. 18. CashCall violated Financial Code

section 22170(

b) again on or about May 14, 2013, when it filed an amended disclosure explanation that: a. Described the March 23, 2013 Connecticut Order (see paragraph 17.c. above) as having been settled and the order lifted. In fact, as noted in paragraph 16.c. above, the 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 was amended on June 5, 2013 to include additional allegations and a Notice of Intent to Revoke Mortgage Lender Licenses.

Additionally, the matter went to hearing on June 19, 2013 wherein afterwards on or about February 4, 2014, Findings of Fact, Conclusions of Law, and Order were issued in favor of the Connecticut Banking Commissioner and ordering that (

i) the Temporary Cease and Desist Order issued against CashCall become permanent, (ii) CashCall make restitution, (iii) the mortgage lender license of CashCall be revoked, and (iv) CashCall pay a penalty of $350,000. Thereafter, on or about April 2, 2014, the matter was settled with no admissions or denials on the part of Cashcall. However, the Consent Order issued as a result of the settlement contained an Order that (

i) CashCall cease and desist from violating certain statutes related to consumer lending, (ii) CashCall make restitution, (iii) CashCall pay Connecticut a penalty of $350,000, and (iv) Cashcall„s mortgage lender license was revoked. b. Described the August 12, 2013 civil action brought against it by the New York Attorney General as pending. In fact, on or about February 14, 2104, the New York Supreme Court

-15- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight had entered a Consent Order and Judgment against CashCall based upon a settlement entered into between CashCall and New York whereby CashCall was (

i) permanently enjoined from, among other things, (

a) targeting residents with advertisements, offers, or solicitations for loans with interest rates greater that that prescribed by law, (

b) making, financing, or collecting on loans to residents with interest rates greater than that prescribed by law, (

c) engaging in the business of making loans until licensed; and (

d) engaging in any deceptive, fraudulent, or illegal practices in connection with the promotion of financial goods and services; (ii) ordered to pay restitution up to $7,000,000.00; and (iii) pay penalties of $1,500.000.00. Disciplinary Actions 19.

In addition to the nine civil and administrative actions discussed above, during the course of the Commissioner„s regulatory examination, there have been at least twelve further civil or administrative actions brought against CashCall by the states of Arkansas, Colorado, Illinois, Iowa, Massachusetts, Minnesota, New Hampshire, North Carolina, Oklahoma, Pennsylvania, and Washington, and the federal Consumer Financial Protection Bureau.

These actions involve the lending and servicing activities of CashCall, and allegations of unlicensed lending, usury violations, engaging in deceptive, fraudulent or illegal practices in promoting financial goods and services, and false license applications. At least three of the twenty-one civil and/or administrative actions have become final, including the Alaska administrative action described in paragraph 16.b. above, the Connecticut administrative action described in paragraphs 17.c. and 18.a. above, and the New York civil action described in paragraph 18.b. above. 20. Financial Code

section 22705.1 provides: (

a) For any licensee, a disciplinary action taken by the State of California, another state, an agency of the federal government, or another country for an action substantially related to the activity regulated under this division may be grounds for disciplinary action by the commissioner. A certified copy of the record of the disciplinary action taken against the licensee by the State of California, another state, an agency of the federal government, or other country shall be conclusive evidence of the events related therein. (

b) Nothing in this

section shall preclude the commissioner from applying a specific statutory provision in this division providing for discipline against a licensee as a result of disciplinary action taken against a licensee by the State of California, another state, an agency of the federal government, or

-16- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State of California € Department of Business Oversight another country. II California Financial Code

section 22714 provides in pertinent part: (

a) The commissioner shall suspend or revoke any license, upon notice and reasonable opportunity to be heard, if the commissioner finds any of the following:

(1) The licensee has failed to comply with any demand, ruling, or requirement of the commissioner made pursuant to and within the authority of this division.

(2) The licensee has violated any provision of this division or any rule or regulation made by the commissioner under and within the authority of this division. III Complainant finds that, by reason of the foregoing, Respondent CashCall, Inc. (

i) has violated Financial Code sections 22108, 22159(b), 22161(

a) and (b), 22170(

a) and (b), and 22701 and California Code of Regulations, title 10,

section 1409.1, (ii) has failed to comply with a demand of the Commissioner, and (iii) has been disciplined by other states, and based thereon, grounds exist to suspend the finance lenders licenses of CashCall, Inc. WHEREFORE, IT IS PRAYED that the finance lenders licenses of CashCall be suspended for a period of up to 12 months; Dated: June 4, 2014 JAN LYNN OWEN Los Angeles, CA Commissioner of Business Oversight By _____________________________ Judy L. Hartley Senior Corporations Counsel

Document details

Collection	California Superior Local Rules
Citation	CCC-241434
Type	court_rule
Language	en
Format	pdf
Source	CA_LOCAL
Identifier	327ac82cd1055ed237cba51918d141513c72f40c

Source file is stored in the law ingest library (pdf).