Temporary Order to Cease and Desist  Walker Associates

Date:	05/15/2009
Organization:	Division of Banks
Docket Number:	2009-013
Location:	Boston, MA

Walker Associates, Boston, MA - Temporary Order to Cease and Desist

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
DEBT COLLECTOR LICENSING
Docket No. 2009-013

FINDINGS OF FACT AND TEMPORARY
ORDER TO CEASE AND DESIST

In the Matter of
WALKER ASSOCIATES, INC.
Boston, Massachusetts

Debt Collector License No. DC0002

The Commissioner of Banks ("Commissioner") having determined that WALKER ASSOCIATES INC., located at 2 Oliver Street, 3 ^rd floor, Boston, Massachusetts, and ("Walker Associates" or the "Corporation"), has engaged, or is engaged in, or is about to engage in, acts or practices constituting violations of Massachusetts General Laws chapter 93, sections 24 through 28, inclusive, and applicable regulations found at 209 CMR 18.00 et seq., hereby issues the following FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST ("TEMPORARY ORDER") pursuant to General Laws chapter 93, section 24J.

A. FINDINGS OF FACT

1. The Division of Banks ("Division"), through the Commissioner, has jurisdiction over the licensing and regulation of persons and entities engaged in the business of a debt collector in Massachusetts pursuant to Massachusetts General Laws chapter 93, section 24A.
2. At all relevant times, Walker Associates was a corporation conducting business in the Commonwealth. Walker Associates is licensed by the Commissioner as a debt collector as required by Massachusetts General Laws chapter 93, section 24A. According to records maintained on file with the Division, the Commissioner issued Walker Associates' initial license to engage in the business of a collection agency at 2 Oliver Street, 3 ^rd Floor, Boston, Massachusetts on September 29, 1986 with original license number CA0002. In 2004, pursuant to statutory and regulation changes affecting the licensing of debt collectors in Massachusetts, the Division changed Walker Associates' license number to DC0002.
3. According to the Division's records, Stephen P. Colahan is the president and a forty percent (40%) shareholder of Walker Associates.
4. On May 5, 2009, a Grand Jury, impaneled in the Suffolk County Superior Court, Suffolk County, Massachusetts, returned an indictment against Mr. Colahan charging him with three felony counts including: one count of larceny over $250 by single scheme in violation of Massachusetts General Laws chapter 266, section 30 and with two counts of procurement fraud in violation of Massachusetts General Laws chapter 266, section 67A.
    

   (i) Felony Indictments Affecting a Determination of the Licensee's Financial Responsibility, Character, Reputation, Integrity and General Fitness to Engage in the Licensed Business

5. Massachusetts General Laws chapter 93, section 24I(a) states:

   (a)The commissioner may suspend or revoke a license issued pursuant to this chapter if the commissioner finds that: (1) the licensee has violated this chapter or any rule or regulation adopted hereunder, or any other law applicable to the conduct of its business; or (2) any fact or condition exists which, if it had existed at the time of the original application for the license, would have warranted the commissioner in refusing to issue the license.

6. Massachusetts General Laws chapter 93 section 24B states, in part:

   The commissioner may reject an application for a [debt collector] license or an 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 and of the owners, partners or members thereof, if the applicant be a partnership or association, and of the officers and directors, if the applicant be a corporation, 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.

7. The Commonwealth's Statement of the Case issued by the Massachusetts Attorney General's office, alleged that for approximately five years, while Walker Associates was under contract with the City of Boston to collect delinquent taxes, Mr. Colahan as president of Walker Associates took money out of the bank account into which Walker Associates deposited all of the City of Boston's collections, and used that money to cover Walker's business expenses. The Statement of the Case alleged that over the five year period, Mr. Colahan transferred over $2.7 million to Walker Associates' account.
    

   (ii) Failure to Notify the Division of the Occurrence of Significant Developments

8. The Division's regulation 209 CMR 18.08(1)(b) states, in part:

   (1) A debt collector . . . shall notify the Commissioner immediately, and in writing within one business day, of the occurrence of any of the following significant developments: (b) [t]he filing of a criminal indictment any way related to the activities of the debt collector or registered third party loan servicer, any partner, member, officer, director, or equivalent, or principal employee, including, but not limited to, the handling and/or reporting of moneys received and/or instruments sold.

9. As of the effective date of this Temporary Order, the Division has not received notification from Walker Associates of the occurrence of the events referenced above in Paragraphs 4 and 7 of this Temporary Order.
    

   (iii) Failure to Maintain a Surety Bond

10. Massachusetts General Laws chapter 93, section 24A(a) states:

    (a) No person shall directly or indirectly engage in the commonwealth in the business of a debt collector, or engage in the commonwealth in soliciting the right to collect or receive payment for another of an account, bill or other indebtedness, or advertise for or solicit in print the right to collect or receive payment for another of an account, bill or other indebtedness, without first obtaining from the commissioner a license to carry on the business, nor unless the person or the person for whom he or it may be acting as agent has on file with the state treasurer a good and sufficient bond.

11. Massachusetts General Laws chapter 93 section 28 states:

    Whoever fails to comply with any provision of this section or sections twenty-four to twenty-seven, inclusive, or any regulation promulgated in accordance with the provisions of section twenty-four, shall be punished by a fine of not more than five hundred dollars or by imprisonment for not more than three months, or both.

    Failure to comply with any provision of this section or of section twenty-four to twenty-seven, inclusive, or any regulation promulgated in accordance with the provisions of section twenty-four shall constitute an unfair or deceptive act or practice under the provisions of paragraph (a) of section two of chapter ninety-three A.

12. On May 12, 2009, the Division received a Massachusetts Statutory Bond Cancellation ("Cancellation") from the surety company which Walker Associates had maintained its surety bond. The Cancellation indicated that the cancellation would be effective as of June 14, 2009.

    B. CONCLUSIONS OF LAW

13. Based upon the information contained in paragraphs 1 through 12, Walker Associates, has failed to demonstrate the character, reputation, integrity, and general fitness that would warrant the belief that the business will be operated honestly, fairly, and soundly in the public interest in violation of Massachusetts General Laws chapter 93, sections 24B(a) and 24G(a), and the Division's regulation 209 CMR 18.03(2)(c).
14. Based upon the information contained in paragraphs 1 through 12, Walker Associates failed to notify the Commissioner in writing, within one business day, that Mr. Colahan an officer and shareholder of the Corporation, had been indicted of a felony, in violation of the Division's regulation 209 CMR 18.08(1)(b).
15. Based upon the information contained in Paragraphs 1 through 12, Walker Associates has failed to maintain a good and sufficient bond in violation of the Massachusetts General Laws chapter 93, section 24A(a).
16. Based upon the information contained in Paragraphs 1 through 12, had the foregoing existed at the time of Walker Associates' original debt collector application, such conditions would have warranted a denial by the Commissioner of the license application and are grounds for the suspension or revocation of Walker Associates' debt collector license number DC0002, pursuant to Massachusetts General Laws chapter 93, section 24I.
17. Based upon the information contained in paragraphs 1 through 12, the Commissioner has determined that:
    1. Walker Associates has engaged, or is about to engage in, acts or practices which warrant the belief that the Corporation is not operating honestly, fairly, soundly and efficiently in the public interest in violation of standards governing the licensing and conduct of a collection agency including, but not limited to, the provisions of the Division's regulations at 209 CMR 18.00 et seq.
    2. The public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST to Walker Associates.

    C. ORDER TO CEASE AND DESIST

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

18. ORDERED that Walker Associates and any and all employees, independent contractors, or agents operating on behalf of Walker Associates, and their successors or assigns, shall immediately cease engaging in the activities of a debt collector in the Commonwealth of Massachusetts, as defined under Massachusetts General Laws chapter 93, section 24, except as otherwise expressly permitted by the terms of this TEMPORARY ORDER. Therefore, Walker Associates is ordered to immediately cease collecting any consumer collection accounts from debtors located within Massachusetts and to cease soliciting the right to collect or receive payment for another of an account, bill or other indebtedness, or advertise for or solicit in print the right to collect or receive payment for another of an account, bill or other indebtedness soliciting or accepting, either directly or indirectly, any third party debt collection accounts for any debtors located within Massachusetts.
19. IT IS FURTHER ORDERED that Walker Associates, shall not dispose of any of the Corporation's assets located in the Commonwealth of Massachusetts without the prior written approval of the Commissioner.
20. IT IS FURTHER ORDERED that Walker Associates shall, within ten (10) days of the effective date of this TEMPORARY ORDER, provide the Division with a complete record, including a verification of receipt, of all funds collected on behalf of clients from December 31, 2008 through the effective date of this TEMPORARY ORDER.
21. IT IS FURTHER ORDERED that Walker Associates shall, within ten (10) days of the effective date of this TEMPORARY ORDER, provide the Division with a record of all clients and/or creditors and a detailed record of all accounts held for collection by Walker Associates on behalf of such clients.
22. IT IS FURTHER ORDERED that this TEMPORARY ORDER TO CEASE AND DESIST 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 General Laws chapter 30A.
23. IT IS FURTHER ORDERED that a hearing will be scheduled on this matter to determine whether or not such TEMPORARY ORDER shall become permanent and final only upon receipt of a written request for such a hearing from the Corporation within twenty (20) days of the effective date of this TEMPORARY ORDER. If no hearing is requested within this twenty (20) day period, this TEMPORARY ORDER shall become permanent and final until it is modified or vacated by the Commissioner.

 

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 15th day of May, 2009

By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts