Consent Order  Geoff Gray Corporation

Date:	05/05/2011
Organization:	Division of Banks
Docket Number:	2011-020
Location:	Salem, NH

Geoff Gray Corporation, Salem, NH - Consent order

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MOTOR VEHICLE SALES FINANCE
COMPANY LICENSING
Docket No. 2011-020

CONSENT ORDER

In the Matter of
GEOFF GRAY CORPORATION
Salem, New Hampshire

Motor Vehicle Sales Finance Company License No. MV0582

WHEREAS, GEOFF GRAY CORPORATION, Salem, New Hampshire ("GGC" or the "Corporation"), a licensed motor vehicle sales finance company under Massachusetts General Laws chapter 255B, section 2, has entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER ("Consent Agreement") with representatives of the Division of Banks ("Division") dated May 5, 2011, whereby, solely for the purpose of settling this matter, and without admitting any allegations or implications of fact or the existence of any violation of state or federal laws and regulations governing the conduct and operation of a motor vehicle sales finance company, GGC agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");


WHEREAS, an examination of GGC commenced pursuant to General Laws chapter 255B, section 3, on January 19, 2010, to assess the Corporation's level of compliance with applicable Massachusetts statutes and the Division's regulations governing the conduct of those engaged in the business of a motor vehicle sales finance company in the Commonwealth;


WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division's examination/inspection of GGC alleged non-compliance with applicable state and federal statutes, rules, and regulations governing the conduct of those engaged in the business of a motor vehicle sales finance company in Massachusetts and required that GGC respond to the Report and take certain corrective action;


WHEREAS, GGC applied for renewal of its motor vehicle sales finance company license on October 29, 2010;

WHEREAS, after reviewing the financial information submitted with GGC's application for renewal, the Division became concerned with GGC's ability to maintain the minimum financial requirements for holding a motor vehicle sales finance company license in Massachusetts;

WHEREAS, the Division determined that a thorough review of the Corporation's renewal application would require further information from GGC;

WHEREAS, on January 10, 2011, January 11, 2011, January 14, 2011, and January 19, 2011, the Division's examiners conducted onsite reviews of GGCs books and records to assess GGC's response to the 2010 examination/inspection and to conduct further analysis of the Corporation's financial records;

WHEREAS, the Division's review revealed significant weaknesses in the Corporation's internal controls regarding financial records and reporting which prevented the Division from assessing the Corporation's true financial condition;


WHEREAS, the Division has serious concerns regarding the Corporation's ability to demonstrate the minimum financial responsibility requirements for holding a motor vehicle finance company license in Massachusetts.
 

ORDER

NOW COME the parties in the above-captioned matter, the Division and GGC, and stipulate and agree as follows:

 

1. GGC agrees to the indefinite suspension of its Massachusetts motor vehicle sales finance company license, unless and until such time as the Corporation has complied with all provisions included in this Consent Order and the Division is satisfied that the Corporation has demonstrated the minimum requirements for holding a motor vehicle sales finance company license in Massachusetts. During the period that the suspension is in effect, GGC shall refrain from engaging in the business of purchasing Massachusetts retail installment contracts.
    
2. To the extent that GGC wishes to resume the business of a motor vehicle sales finance company, GGC may submit a written request for reinstatement to the Commissioner. The Commissioner shall consider the information provided in conjunction with the request for reinstatement and it shall be in the Commissioner's sole discretion to determine whether it would then be appropriate to permit GGC to resume business as a motor vehicle sales finance company in the Commonwealth. In determining whether GGC has satisfactorily demonstrated that it meets or exceeds the minimum standards for reinstatement of the motor vehicle sales finance company license, the Commissioner will:
   
    
   1. Consider whether GGC has successfully developed and implemented revised internal policies and accounting systems as set forth in this Consent Order; and
       
   2. The Commissioner, may, in his sole discretion determine that in order to evaluate the measures implemented by GGC, the Division conduct an examination/inspection of GGC's books, records, accounts, procedures, and policies prior to any reinstatement of the Corporation's motor vehicle sales finance company license. Notwithstanding GGC's suspended status at the time of the examination/inspection, it is understood that such examination/inspection shall be conducted under the provisions set forth in General Laws chapter 255B, section 3.
       
3. Within twenty (20) days of the effective date of this Consent Order, GGC shall identify for approval an independent, qualified accounting firm ("Accounting Firm") to provide services to GGC relative to compliance with this Consent Order. It is understood that GGC shall obtain the prior written approval from the Commissioner of the Accounting Firm to be utilized by the Corporation.
    
4. As a prerequisite for a request for reinstatement of its motor vehicle sales finance company license, GGC must engage the Accounting Firm to prepare and submit to the Division a forensic audit of the financial statements for the fiscal year ended December 31, 2010 and issue an Opinion Audit ("Audit") in conformity with accounting principles generally accepted in the United States of America.
    
5. Within five (5) business days of the effective date of this Consent Order, GGC shall submit to the Commissioner a detailed inventory record as of the date of submission, of all of the motor vehicle sales contracts currently held and/or serviced by the Corporation for consumers in Massachusetts. The records to be produced shall include but not necessarily be limited to, the following: the borrower's addresses and telephone numbers; the loan number; the account balance; the Vehicle Identification Number (VIN) number; the location of the motor vehicle title certificate; and the location of the funds currently held for each account.
   
    
   1. Within ten (10) days of the engagement of the Accounting Firm, GGC shall submit to the Commissioner the aforementioned detailed inventory record, which has also been verified by the Accounting Firm.
       
6. GGC shall immediately cease transferring the servicing rights of Massachusetts retail installment loans to Oak Rock Financial, LLC ("Oak Rock"), as Oak Rock is not registered as a third party loan servicer in Massachusetts.
    
7. GGC agrees to work in conjunction with Oak Rock to effectuate the transfer of all servicing rights for all Massachusetts retail installment loans that Oak Rock currently services to a qualified motor vehicle sales finance company, financial institution, or a registered third party loan servicer; such transfer to be completed within forty five (45) days of the effective date of this Consent Order. In order to ensure an orderly transition of servicing rights, GGC shall submit a plan (the "Plan") to the Division detailing the transfer process. The Plan must be filed for approval with the Division within fourteen (14) days from the effective date of this Consent Order. Prior to the transfer of the retail installment contracts, GGC shall provide written notification to the Commissioner of the selected servicer or servicers for the Division's review and approval.
    
8. Within ten (10) days of the transfer of servicing rights, as set forth above, GGC shall work with the new servicers to send notifications to those consumers whose retail installment loans have been transferred. GGC or the new servicer on its behalf shall notify the consumer of the transfer prior to the date the first payment is due at the new servicer's address. Such notices shall include:
   
    
   1. The name and address of the new servicer; T
       
   2. he date GGC and/or Oak Rock will stop accepting payments; T
       
   3. he date the new servicer will begin accepting payments;
       
   4. Telephone numbers for both GGC and the new servicer that the consumer can use to call toll-free or collect for more information about the transfer; and
       
   5. A statement that the transfer will not affect any terms or conditions of the consumer's retail installment loan, except those directly related to the servicing of the loan.
       
9. On the last business day of each subsequent week after the effective date of this Consent Order, GGC shall provide the Commissioner with:
   
    
   1. An updated, written status report of the operations and the current financial condition of the Corporation;
       
   2. A description of the form, content, and manner of any actions taken to address the provisions of this Consent Order, as well as a description of any operational changes implemented and the results thereof; and
       
   3. an updated written status report of the retail installment contracts whose servicing rights have been transferred during the reporting period. The status report shall include: i. the entity to whom the retail installment contracts have been transferred; ii. the borrower's addresses and telephone numbers; iii. the loan number; and iv. the account balance.
       
10. GGC shall refrain from engaging, either directly or indirectly, in the business of making small loans in the Commonwealth, as such activity is defined pursuant to M.G.L. chapter 140, section 96. Compliance with this Section of the Consent Order shall also require that GGC refrains from making small loans through Rimz-U-Like of Lowell, Massachusetts, or any other affiliate of the Corporation.
     
11. Upon the effective date of this Consent Order, GGC shall implement or revise its practices and procedures, as necessary, to ensure that its financial books and records are accurately maintained and available for review by the Division's examiners upon request.
     
12. The reporting requirements to the Division referenced in this Consent Order shall remain in effect and shall not be amended or rescinded without the prior written modification, termination, or suspension of the applicable provision of this Consent Order from the Commissioner.
     
13. GGC may petition the Division for an extension of the deadlines referenced in this Consent Order. Such request must be submitted in writing and shall be subject to the Division's discretion, and granted for good cause shown.
     
14. Nothing in this Consent Order shall be construed as permitting GGC to violate any law, rule, regulation, or regulatory bulletin to which GGC is subject.
     
15. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to revoke GGC's motor vehicle sales finance company license under General Laws chapter 255B, sections 7 and 8, while this Consent Order is in effect unless the Division is made aware of material information that is not addressed in this Consent Order, or if GGC fails to comply with the terms of this Consent Order.
     
16. This Consent Order shall become effective immediately upon the date of its issuance.
     
17. The provisions of this Consent Order shall be binding upon GGC and its officers and/or directors, and their successors or assigns. T
     
18. he provisions of this Consent Order shall remain effective and enforceable except to the extent that, and until such time as the Consent Order or any provisions thereof shall have been modified, terminated, suspended, or set aside by the Commissioner or upon an order of a court of competent jurisdiction. T
     
19. his Consent Order and the Consent Agreement are the complete documents representing the resolution of this matter. There are no other agreements between the Division and GGC.

 

 

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:

 

Dated at Boston, Massachusetts, this 5th day of May, 2011

 

By: David J. Cotney Commissioner of Banks