By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LOAN
ORIGINATOR LICENSING
Docket No. 2011-002

FINDINGS OF FACT
AND TEMPORARY ORDER
TO CEASE AND DESIST &
ORDER TO SHOW CAUSE

In the Matter of
RICHARD MALCOLM KANE

Mortgage Loan Originator License No. MLO49374


The Commissioner of Banks ("Commissioner") having determined that RICHARD MALCOLM KANE, ("Richard Kane" or "the Licensee") has engaged in, or is engaged in, or is about to engage in, acts or practices constituting violations of Massachusetts General Laws chapter 255F, 209 CMR 41.00 et seq., and other applicable state and federal statutes and regulations, hereby issues the following FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE DESIST as well as an ORDER TO SHOW CAUSE AND NOTICE OF RIGHT TO A HEARING (collectively referred to as the "Order") pursuant to General Laws chapter 255F section 11(a).

I. FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST

A. FINDINGS OF FACT AND REGULATORY BACKGROUND

  1. The Division of Banks ("Division") has jurisdiction over the licensing and regulation of persons and entities engaged in the business of a mortgage loan originator in Massachusetts pursuant to Massachusetts General Laws chapter 255F, section 2 and its implementing regulation at 209 CMR 41.00 et seq.
  2. Richard Kane is licensed by the Commissioner as a mortgage loan originator under Massachusetts General Laws chapter 255F, section 2. According to records maintained on file with the Division, and as recorded in the Nationwide Mortgage Licensing System ("NMLS"), the Commissioner initially issued a mortgage loan originator license, license number MLO49374, to Richard Kane to engage in the business of a mortgage loan originator on or about March 9, 2010. The Division's records indicate that as of October 19, 2010 to the date of this Order, Richard Kane is sponsored by New England Regional Mortgage Corporation ("New England Regional").
  3. The Division's records indicate that between May 27, 2008 and March 29, 2010. Richard Kane was employed by New England Regional. The Division's records further indicate that between March 30, 2010 through October 14, 2010, Richard Kane was sponsored and employed as a mortgage loan originator by Greenpark Mortgage Corporation ("Greenpark Mortgage").
  4. On or about November 2, 2010 and December 1, 2010 the Division's consumer assistance unit received a consumer complaint ("Complaint") from a Massachusetts consumer regarding the activities of Richard Kane while he was employed at Greenpark Mortgage.
  5. As a result of the Complaint, the Division commenced an investigation into Richard Kane's activities, as well as his license history.
  6. The Division's investigation revealed that Richard Kane failed to comply with applicable state and federal laws, rules, and regulations governing the conduct of those engaged in the business of a mortgage loan originator in Massachusetts.

    (i) Unfair or Deceptive Acts or Practices-Obtaining Information from a Reporting Agency Under False Pretenses

  7. The Division's regulation 209 CMR 41.10(8) states:

    It is a prohibited act or practice for a Mortgage Loan Originator to directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud any person.

  8. Massachusetts General Laws chapter 93A, section 2(a) states:

    Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.

  9. The Division's regulation 209 CMR 41.10(9) states:

    It is a prohibited act or practice for a Mortgage Loan Originator to engage in any unfair or deceptive practice toward any person.

  10. Massachusetts General Laws chapter 93, section 66 states:

    Any person who knowingly and willfully obtains information relative to a consumer from a consumer reporting agency under false pretenses shall be punished by a fine of not more than five thousand dollars or by imprisonment for not more than one year, or both.

  11. Massachusetts General Laws chapter 93, section 68 states:

    Failure to comply with the provisions of sections fifty through sixty-seven shall constitute an unfair trade practice under the provisions of clause (a) of section two of chapter ninety-three A.

  12. The Complaint referenced in paragraph 4 of this Order alleged that on or around October 1, 2010, Richard Kane requested a consumer credit report from a consumer credit reporting agency on behalf of a consumer without the consumer's knowledge or consent.
  13. The Complaint alleged that during October 2009, the consumer and her sibling ("Consumers") had completed a refinance transaction through Richard Kane's previous employer, New England Regional. According to the Complaint, Richard Kane was the mortgage loan originator of record for that transaction.
  14. The Complaint alleged that on or about October 8, 2010, the Consumers received a mailing from Greenpark Mortgage which included a Uniform Residential Loan Application ("1003 Form"), and other disclosures including but not limited to a Credit Score Disclosure Form, Request for Release of a Transcript of Tax Return Form and a Good Faith Estimate Form for a refinance transaction.
  15. The Division's review of the mortgage loan documents provided with the Complaint revealed that Richard Kane identified himself as the mortgage loan originator on the 1003 Form. The 1003 Form completed by Richard Kane indicated that he had collected the information necessary to complete the 1003 Form "in a telephone interview," with the Consumers.
  16. The Complaint alleged that the Consumers had not completed a 1003 Form in a telephone interview with Richard Kane nor had the Consumers authorized Richard Kane to obtain their credit reports from a credit reporting agency.
  17. The Division's review of e-mail correspondence provided in conjunction with the Complaint included an October 9, 2010, e-mail from the Consumer to Richard Kane notifying him that the Consumers had received mortgage loan documents from Greenpark Mortgage which identified him as the mortgage loan originator, for the refinance of a mortgage. The correspondence stated that neither consumer had "ever communicated or had a conversation with [Richard Kane] indicating that they wanted to refinance with Richard Kane or Greenpark Mortgage." Additionally, the e-mail alleged that Richard Kane had previously e-mailed the Consumers on September 30, 2010 and the consumers purposely did not respond to the e-mail because they were not interested in completing a refinance transaction.
  18. On or about November 3, 2010, the Division commenced an investigation of the matter by conducting an onsite visitation of Greenpark Mortgage to discuss the matters alleged in the Complaint. In response to the Division's inquiry, a representative of Greenpark Mortgage submitted a response dated November 8, 2010 whereby Greenpark Mortgage indicated that they had received a complaint from the Consumers regarding the matters alleged via electronic mail on October 14, 2010.
  19. Greenpark Mortgage notified the Division that upon an internal investigation of the matters alleged, Greenpark Mortgage determined that Richard Kane had obtained the Consumers' non public personal information from New England Regional, Richard Kane's previous employer.
  20. It is unknown if Richard Kane obtained unauthorized consumer credit reports on behalf of other consumers, or if he is continuing this practice to date.
  21. The Division's records indicate that Richard Kane was "discharged" from Greenpark Mortgage on or around October 14, 2010 and is currently sponsored by New England Regional.

    (ii) Unlawful Removal of Consumers' Personal Information

  22. Massachusetts General Laws chapter 255F, section 14(f) states:

    No person subject to this chapter shall knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information unless otherwise authorized by law or regulation.

  23. The Division's regulation 209 CMR 41.10(4) states:

    It is a prohibited act or practice for a Mortgage Loan Originator to download or remove borrowers' or mortgage loan applicants' loan files or other information from the premises or the computer systems of the Employing Entity, unless the Mortgage Loan Originator has obtained the written permission of the Employing Entity.

  24. As set forth in paragraphs 12 through 21 above, Richard Kane knowingly and without authorization removed consumer loan files from the premises of New England Regional and utilized the information contained therein to fabricate and submit a new application for a residential mortgage refinance loan on behalf of Greenpark Mortgage. There is no evidence that he obtained the written permission of New England Regional to remove the consumer's loan files or any of the contents contained therein.
  25. It is unknown if Richard Kane has removed other consumers' loan files from his prior employer's premises.

    (iii) Making False, Perjurious Statements in Connection with Mortgage Loan Originator License Application(s)

  26. Massachusetts General Laws, chapter 255F, section 15(j) states:

    It shall be a violation of this chapter for any person to: . . . (j) make any false statement or knowingly and willfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the Nationwide Mortgage Licensing System and Registry or in connection with any investigation conducted by the commissioner or another governmental agency.

  27. The Division's regulation 209 CMR 41.10(15) states:

    It is a prohibited act or practice for a Mortgage Loan Originator to make any false statement or knowingly and willfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the Nationwide Mortgage Licensing System and Registry or in connection with any investigation conducted by the Commissioner or another governmental agency.

  28. In executing the application for licensure on the NMLS on February 26, 2010, Richard Kane attested that all information and statements contained therein, were current, true, accurate and complete, and were made under the penalties of perjury.
  29. In executing the application for licensure on the NMLS on February 26, 2010, Richard Kane agreed that if he made a false statement of a material fact in his application, said application may be denied by the Division.
  30. Richard Kane answered "no" to Disclosure Question (D)(1) on the NMLS application which asks: "Have you ever been convicted of or pled guilty or nolo contendere ("no contest") in a domestic, foreign, or military court to any felony?"
  31. On or about May 27, 2008, Richard Kane submitted an application for licensure via the Nationwide Mortgage Licensing System (NMLS). According to documentation reviewed by the Division during the May 27, 2008 application process Richard Kane had pled guilty to two felony offenses on or about June 13, 2007. As a result, the court sentenced Richard Kane to three months probation and he was required to pay restitution. The Division's records indicate that on or about November 3, 2009, Richard Kane withdrew the May 27, 2008 license application.
  32. According to documentation received from the Commonwealth of Massachusetts Suffolk Superior Court, on or about December 9, 2009, Richard Kane through counsel filed a "motion for a new trial and to withdraw his guilty plea or in the alternative a motion to revise and revoke" the aforementioned guilty pleas of June 13, 2007. A review of the court records indicate that on December 9, 2009, the court allowed Richard Kane's motion and his pleas of guilty on June 13, 2007 were revoked. Richard Kane then offered to plead guilty to the same two felony offenses. The court accepted Richard Kane's plea offer but made no finding of guilt. The cases were continued without a finding for two years and Richard Kane was placed on two years of probation. Upon information and belief, Richard Kane remains on probation as of the date of this Order.
  33. Notwithstanding the fact that the Suffolk Superior Court revoked Richard Kane's June 13, 2007 guilty pleas on December 9, 2009, the disclosure question (D)(1) specifically asked if the applicant for licensure had "ever been convicted of or pled guilty to any felony."
  34. Richard Kane's deliberate failure to disclose his criminal background interfered with the Division's ability to conduct a complete and informed investigation into his qualifications for licensure.

    (iv) Failure to Update NMLS Record Regarding the Occurrence of a Significant Event

  35. Massachusetts General Laws, chapter 255F, section 15(j) states:

    It shall be a violation of this chapter for any person to: . . . (j) make any false statement or knowingly and willfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the Nationwide Mortgage Licensing System and Registry or in connection with any investigation conducted by the commissioner or another governmental agency.

  36. The Division's regulation 209 CMR 41.10(15) states:

    It is a prohibited act or practice for a Mortgage Loan Originator to make any false statement or knowingly and willfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the Nationwide Mortgage Licensing System and Registry or in connection with any investigation conducted by the Commissioner or another governmental agency.

  37. In executing the application for licensure on the NMLS, Richard Kane attested that he would keep the information contained in the application form current and that he would file accurate supplementary information on a timely basis.
  38. Richard Kane has the capability to update his application information on the NMLS at any time.
  39. Richard Kane answered "no" to Disclosure Question (M) on the NMLS application which asks: "Have you ever voluntarily resigned, been discharged, or permitted to resign after allegations were made that accused you of: (1) violating statute(s), regulation(s), rule(s), or industry standards of conduct? 2) fraud, dishonesty, theft, or the wrongful taking of property?" [Emphasis supplied].
  40. According to information entered into the NMLS by Greenpark Mortgage, Richard Kane's sponsorship was terminated on October 14, 2010. The reason given by Greenpark Mortgage for the termination was "discharged".
  41. By a letter to the Division dated November 8, 2010, Greenpark Mortgage clarified that Richard Kane's termination of employment was a result of the allegations set forth in the Complaint referenced above.
  42. As of the date of this Order, Richard Kane has failed to update his answer to disclosure question (M) on the NMLS application.

    B. CONCLUSIONS OF LAW

  43. Based upon the information contained in Paragraphs 1 through 42, taken collectively; by obtaining unauthorized consumer credit reports, removing consumer loan files from his employer's premises, failing to disclose material information to the Division on an application for licensure and interfering with the Division's ability to conduct a complete and informed investigation into his qualifications for licensure; and failing to update material information on his NMLS record, Richard Kane has failed to demonstrate the character, reputation, integrity, and general fitness such as to command the confidence of the community and to warrant a determination that he will operate honestly, fairly, soundly and efficiently in the public interest in violation of Massachusetts General Laws chapter 255F, section 4 and the Division's regulation 209 CMR 41.05.
  44. Based upon the information contained in Paragraphs 1 through 42, by requesting a consumer credit report from a consumer credit reporting agency on behalf of a consumer under false pretenses and without their knowledge and/or consent, Richard Kane has violated the Division's regulation 209 CMR 41.10(8) and 209 CMR 41.10(9), General Laws chapter 93A, section 2 and General Laws chapter 93, section 66.
  45. Based upon the information contained in Paragraphs 1 through 42, by removing mortgage loan applicants' loan files or other consumer information from the premises of his prior employer without authorization, Richard Kane has violated Massachusetts General Laws chapter 255F, section 14(f) and the Division's regulation 209 CMR 41.10(4).
  46. Based upon the information contained in Paragraphs 1 through 42, by making a false statement on his February 26, 2010 mortgage loan originator license application which was filed via the NMLS, Richard Kane violated Massachusetts General Laws, chapter 255F, section 15(j) and the Division's regulation 209 CMR 41.10(15).
  47. Based upon the information contained in Paragraphs 1 through 42, by failing to update his information on the NMLS to reflect that he was discharged from Greenpark Mortgage due to allegations from a consumer accusing him of fraud, dishonesty, and the wrongful taking of property, Richard Kane has violated Massachusetts General Laws, chapter 255F, section 15(j) and the Division's regulation 209 CMR 41.10(15).
  48. Based upon the information contained in Paragraphs 1 through 42, the public interest will be harmed by delay in issuing an Order under General Laws chapter 255F, section 11(a) because, it is unknown how many other consumers' loan files Richard Kane had obtained and to what extent he may continue to obtain unauthorized consumer credit reports on behalf of other consumers, or if he is continuing this practice.
  49. Based upon the information contained in Paragraphs 1 through 42, the Commissioner has determined that:
    1. Richard Kane has engaged in, or is about to engage in, acts or practices which warrant the belief that Richard Kane is not operating honestly, fairly, soundly and efficiently in the public interest in violation of standards governing the licensing and conduct of a mortgage loan originator including, but not limited to, the provisions of M.G.L. chapter 255F and the Division's regulations at 209 CMR 41.00 et seq.; and
    2. The public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST to Richard Kane.
  50. Based upon the information contained in Paragraphs 1 through 42, had the foregoing been known to the Division at the time of Richard Kane's February 26, 2010, mortgage loan originator license application, the Commissioner would have been warranted in refusing to issue such license. Further, the facts and conditions set forth in Paragraphs 1 through 42 present sufficient grounds for the revocation of Richard Kane's mortgage loan originator license pursuant to Massachusetts General Laws chapter 255F, section 11(a) and the Division's regulation at 209 CMR 41.10(21) and the issuance of an order prohibition pursuant to Massachusetts General Laws chapter 255F, section 11(d).

    C. ORDER TO CEASE AND DESIST

    After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:

  51. ORDERED that Richard Kane shall immediately cease from negotiating, soliciting, arranging, providing or accepting any Massachusetts residential mortgage loan application, or assisting any consumer in completing such application, or otherwise operate as a mortgage loan originator, as that term is defined under General Laws chapter 255F.
  52. IT IS FURTHER ORDERED that Richard Kane shall immediately transfer all pending Massachusetts residential mortgage loan applications originated by him to his Sponsoring Entity of record, New England Regional Mortgage Corporation for placement with a mortgage loan originator licensed in Massachusetts.
  53. IT IS FURTHER ORDERED that Richard Kane shall submit to the Division a detailed record, prepared as of the date of submission, of any pending residential mortgage loan applications originated by him for property located in Massachusetts. The information provided shall include all information on file regarding his open application list, including but not necessarily limited to, the following: the names of all individuals from whom Richard Kane has accepted an application for a residential mortgage loan; the applicants' addresses and telephone numbers; the amount of each loan; application status (i.e. filed, submitted to lenders, cleared to close, etc.); scheduled closing dates; and the name of the licensed mortgage loan originator to whom the loan was transferred.
  54. IT IS FURTHER ORDERED that this Temporary Order shall become effective immediately and shall remain in effect unless set aside, limited, or suspended by the Commissioner or upon court order after review under Massachusetts General Laws chapter 30A.
  55. IT IS FURTHER ORDERED that this Temporary Order shall not be construed as approving any act, practice, or conduct not specifically set forth herein which was, is, or may be in violation of relevant state or federal laws and regulations.

    II. ORDER TO SHOW CAUSE AND NOTICE OF RIGHT TO A HEARING

    A. VIOLATIONS

    NOW, THEREFORE, based upon the Findings of Fact set forth above, the Division hereby sets forth the following Charges against Richard Kane:

  56. The Division hereby re-alleges and incorporates by reference the Findings of Fact presented in Paragraphs 1 through 42 of the Order as though fully set forth.
  57. The Division hereby re-alleges and incorporates by reference the Conclusions of Law presented in Paragraphs 43 through 50 of the Order as though individually set forth as separate Charges providing the basis of this Order to Show Cause.

    B. ORDER TO SHOW CAUSE

  58. WHEREAS, finding it necessary and appropriate and in the public interest, and consistent with the purposes of the laws governing licensed mortgage loan originators in the Commonwealth;
  59. WHEREAS, Pursuant to General Laws chapter 255F, section 11(d), the Commissioner may issue a written notice of intention to prohibit a person from any further actions, in any manner, as a mortgage loan originator in Massachusetts or to prohibit that person from being employed by, as agent of, or operating on behalf of a mortgage loan originator or any other business which requires a license from the Commissioner; and
  60. WHEREAS, finding that the Charges set forth above, if found to be true and correct, form the legal basis for the action sought to be taken under General Laws General Laws chapter 255F, section 11(d).
  61. IT IS HEREBY ORDERED that Richard Kane shall show cause why his mortgage loan originator license, MLO49374 should not be revoked pursuant to General Laws chapter 255F, section 11.
  62. IT IS FURTHER ORDERED that Richard Kane shall show cause why he should not be prohibited from any further actions, in any manner, as a mortgage loan originator in Massachusetts or from being employed by, as agent of, or operating on behalf of a mortgage loan originator or any other business which requires a license under chapter 255E or 255F or any other business which requires a license from the Commissioner.

    C. PRAYER FOR RELIEF

  63. WHEREFORE, the Division, by and through the Commissioner , prays for a final decision as follows:
    1. For a final Agency decision in favor of the Division and against Richard Kane for each Charge set forth in this Order;
    2. For a final Agency decision revoking Richard Kane's mortgage loan originator license, number MLO49374 to conduct business as a mortgage loan originator in Massachusetts;
    3. For a final Agency decision prohibiting Richard Kane from any further actions, in any manner, as a mortgage loan originator in Massachusetts or from being employed by, as agent of, or operating on behalf of a mortgage loan originator or any other business which requires a license under chapter 255E or 255F or any other business which requires a license from the Commissioner;
    4. For costs and fees of the Division's investigation of this matter; and for such additional equitable relief as the Presiding Officer may deem just and proper.

    D. NOTICE OF RIGHT TO A HEARING

  64. Richard Kane or his authorized representative may file a written request for a hearing as to the Temporary Order to Cease and Desist within twenty-one (21) days. If no hearing is requested within this twenty-one (21) day period, the Temporary Order shall become permanent and final until it is modified or vacated by the Commissioner.
  65. Richard Kane or his authorized representative is required to file an Answer or otherwise respond to the Charges contained in this Order within twenty-one (21) days of its effective date, pursuant to the Standard Adjudicatory Rules of Practice and Procedure, 801 CMR 1.01 (6)(e). Failure to file an Answer may also result in a default judgment against Richard Kane in the matter of the revocation of his mortgage loan originator license and the issuance of an Order of Prohibition. The Answer, and any subsequent filings that are made in conjunction with this proceeding, shall be directed to the Division, with a copy to Prosecuting Counsel.

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

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

    Prosecuting Counsel for this matter is:
     

    Aimee Desai, Esq.
    Division of Banks
    1000 Washington Street, 10th Floor
    Boston, Massachusetts 02118
  66. You are further advised that Richard Kane has the right to be represented by counsel or other representative, to call and examine witnesses, to introduce exhibits, to cross-examine witnesses who testify against Richard Kane, and to present oral argument. The hearing will be held at a date and time to be determined and will be conducted according to Massachusetts General Laws, chapter 30A, sections 10 and 11, and the Standard Adjudicatory Rules of Practice and Procedure, 801 CMR 1.01 and 1.03.

Dated at Boston, Massachusetts, this 28th day of January, 2011

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

This Order was terminated pursuant to a Consent Order on June 10, 2011.