By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
RETAIL INSTALLMENT SALES
FINANCE COMPANY
LICENSING
Docket No. 2010-238

ORDER TO SHOW CAUSE
AND NOTICE OF INTENT
TO REVOKE RETAIL
INSTALLMENT SALES
FINANCE COMPANY
LICENSE


In the Matter of
FAIR FINANCE COMPANY
Akron, Ohio

Retail Installment Finance Company License No. RI0504


ADMINISTRATIVE COMPLAINT

The Commonwealth of Massachusetts Division of Banks (the "Division"), by and through the Commissioner of Banks of the Commonwealth of Massachusetts (the "Commissioner"), for its Order to Show Cause and Notice of Right to a Hearing ("Order and Notice"), alleges as follows:

  1. The Division brings this action under Massachusetts General Laws chapter 255D, sections 7 and 8 to revoke Fair Finance Company's ("Fair Finance" or the "Corporation") retail installment sales finance company license RI0504 due to Fair Finance's failure to comply with the provisions of Massachusetts General Laws chapter 255D and failure to maintain and demonstrate the financial responsibility, character, reputation, integrity and general fitness to command the confidence of the public and to warrant the belief that the retail installment sales finance business will be operated lawfully, honestly and fairly, in violation of Massachusetts General Laws, chapter 255D, section 2 and the Division's regulation 209 CMR 20.03.

    JURISDICTION AND VENUE

  2. The Division is an agency of the Commonwealth of Massachusetts with jurisdiction over matters relating to the licensing and regulation of those engaged in the business of a retail installment sales finance company pursuant to Massachusetts General Laws chapter 255D, section 2.
  3. At all relevant times, Fair Finance has been engaged in the business of a retail installment sales finance company in Massachusetts.

    RESPONDENT

  4. At all relevant times, Fair Finance has been a foreign corporation conducting business in the Commonwealth with its main office located at 815 East Market Street, Akron Ohio.
  5. Fair Finance is licensed by the Commissioner as a retail installment sales finance company under Massachusetts General Laws chapter 255D section 2. According to records maintained on file with the Division, the Commissioner initially issued a retail installment finance company license; license number RI0504 on or about November 29, 2002.

    REGULATORY BACKGROUND

  6. On February 8, 2010, an involuntary bankruptcy petition under chapter 7 of the Bankruptcy Code was filed in the United States Bankruptcy Court for the Northern District of Ohio against Fair Finance (Case No. 10-5049).
  7. On February 16, 2010, Fair Finance and the petitioning creditors filed joint stipulations of fact with the Bankruptcy Court for the purposes of the petitioning creditors' pending motion seeking appointment of an interim trustee. According to the stipulations, Fair Finance suspended it regular business operations in November 2009 due to the seizure of computers and records by the FBI.
  8. On February 24, 2010, Fair Finance consented to the entry of an order for relief in the chapter 7 bankruptcy case.
  9. M.G.L. chapter 255D, section 3 requires that all retail installment sales finance companies file an annual report with the commissioner on or before April 15 of each year. Fair Finance failed to file its annual report for 2009.
  10. On or about June 16, 2010, the Division attempted to contact Fair Finance by telephone regarding the Corporation's failure to file its annual report. The Division was unable to contact Fair Finance because the Corporation's telephone number of record was no longer in service.
  11. On or about June 16, 2010, following the failed attempts to contact Fair Finance regarding its annual report, the Division investigated the matter further and, in so doing, became aware of the bankruptcy petition referenced in Paragraph 6.
  12. Massachusetts General Law chapter 255D, section 7 states, in part:

    A [retail installment sales finance company] license may be suspended or revoked by the commissioner on the following grounds: ... (2) failure to comply with the provisions of this chapter; ... (5) the existence of any fact or condition which, if it had existed at the time of the original application for such license, clearly would have warranted the commissioner in refusing to issue such license.

  13. Massachusetts General Laws chapter 255D, section 2 states, in part:

    The Commissioner may reject any application for a license or any application for the renewal of a license if he is not satisfied that the financial responsibility, character, reputation, integrity and general fitness of the applicant... are such as to command the confidence of the public and to warrant the belief that the business for which the application for a license is filed will be operated lawfully, honestly and fairly.

  14. The Division's regulation 209 CMR 20.04(2) states, in part:

    (2) The commissioner may deny such an application [for a retail installment sales finance company] if the Applicant has:

    (a) violated any provisions of M.G.L. ... c. 255D or 209 CMR 20.00;

    (c) conducted, or will conduct, its business in any unsafe and unsound manner;

  15. The Division's regulation 209 CMR 20.06(1) states, in part:

    A Licensee shall be required to notify the Division within one business day of the occurrence of any of the following significant developments

    a) Licensee filing for bankruptcy or reorganization.

  16. To date, Fair Finance failed to inform the Division about the bankruptcy petition filed against the Corporation or of any of the other events referenced in Paragraphs 6 through 8.
  17. Based upon information and belief, Fair Finance is in liquidation and is no longer operational.

    VIOLATIONS

  18. The Division hereby re-alleges and incorporates by reference Paragraphs 1 through 17 of this Order and Notice as though fully set forth.
  19. CHARGE ONE: Fair Finance has failed to demonstrate the financial responsibility, character, reputation, integrity, and general fitness such as to command the confidence of the public and to warrant a determination that it will operate honestly, fairly, soundly and efficiently in the public interest in violation of Massachusetts General Laws chapter 255D, section 2 and 209 CMR 20.03.
  20. CHARGE TWO: Fair Finance has conducted its business in an unsafe and unsound manner and, had such facts and conditions existed at the time of the Corporation's original application for a retail installment sales finance company, the Commissioner would have been warranted in refusing to issue such license, pursuant to 209 CMR 20.04(2).
  21. CHARGE THREE: By failing to notify the Division of the involuntary bankruptcy petition filed against Fair Finance, the Corporation, is in violation of 209 CMR 20.06 (1) (a).
  22. CHARGE FOUR: The facts and conditions set forth in Paragraphs 1 through 17 present sufficient grounds for the revocation or suspension of Fair Finance's retail installment finance company license pursuant to Massachusetts General Laws chapter 255D, sections 7 and 8.

    PRAYER FOR RELIEF

  23. WHEREFORE, the Division, by and through the Commissioner , prays for a final decision as follows:
    1. For a final Agency decision awarding temporary and preliminary injunctive relief, and any other ancillary relief, as may be necessary to protect public interest during pendency of this matter.
    2. For a final Agency decision in favor of the Division and against Fair Finance for each Charge set forth in this Order and Notice.
    3. For a final Agency decision revoking Fair Finance's retail installment sales finance company license RI0504, to conduct business as a retail installment sales finance company in Massachusetts.

    NOTICE OF RIGHT TO A HEARING

  24. You or your authorized representative are required to file an Answer or otherwise respond to the Charges contained in this Order and Notice within twenty-one (21) days of the effective date of this Order and Notice, pursuant to the Standard Adjudicatory Rules of Practice and Procedure, 801 CMR 1.01(6)(d). Failure to file an answer may result in a default judgment against you. The Answer, and any subsequent filings that are made in conjunction with this proceeding, shall be directed to the Administrative Hearing Officer, Division of Banks, with a copy to Prosecuting Counsel.
  25. You are hereby notified that hearing on this Order and Notice will be scheduled at a time and date to be determined. You will be provided with at least 10 days' prior written notice of the time and location of such hearing, in compliance with M.G.L. chapter 255D, section 8. The hearing will be conducted in accordance with M.G.L. chapter 30A and the Standard Adjudicatory Rules of Practice and Procedure, 801 CMR 1.00 et seq. Failure to appear at the hearing will result in the entry of an order of default, summary decision and/or decision on the pleadings against you for the relief requested in the Order and Notice.

All papers filed with the Division shall be addressed to the attention of:

Administrative Hearing Officer
Division of Banks
1000 Washington Street, 10th Floor
Boston, Massachusetts 02118

Prosecuting Counsel for this matter is:

Valerie M. Carbone, Esq.
Division of Banks
1000 Washington Street, 10th Floor
Boston, Massachusetts 02118

Dated at Boston, Massachusetts, this 29th day of June, 2010

By: Cynthia A. Begin
Senior Deputy Commissioner
Non-Depository Institution Supervision