OFR 1st Quarter 2005

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OFR 1st Quarter 2005 Powered By Docstoc
					Office of Financial Regulation
           Quarterly Report to

  The Financial Services Commission

            Don B. Saxon
            March 31, 2005
                                                 Office of Financial Regulation
           The Office of Financial Regulation (Office or OFR) is dedicated to safeguarding the private financial
           interests of the public by licensing, chartering, examining and regulating depository and non-
           depository financial institutions and financial service companies. The Office protects consumers from
           illegal financial activities of non-depository institutions and companies, while preserving the integrity
           of Florida’s markets and financial service industries.
                                                                                  Significant Events
                                                                  Visited Bank of Florida, Ft. Lauderdale
                 Major Initiatives                                Spoke at OFR Annual Banking Meeting
                                                                  Spoke at OFR Annual Investigators Meeting
National Association of State Credit Union
                                                                  Attended Florida Bankers Association (FBA) Director’s Workshop
 Supervisors presented its initial accreditation certificate      Attended the Association of Registration Management (ARM)
 of OFR in January 2005                                            Conference
                                                                  Attended the Conference of State Bank Supervisors (CSBS)
                                                                   Washington Fly-In
              221 Final Orders Issued                             Attended the North American Securities Administrators
                    (1/01 – 03/31/2005)                            Association (NASAA) 2005 Winter Enforcement Meeting
                                                                  Attended the Federal Reserve Debate & Confirm Banking
                                                                   Industry Outlook Workshop
                        Investigations        15                  Participated in the NASAA Continuing Education Working Group
               9                          Financial                Meeting
           Securities                    Institutions             Participated in Central Registration Depository (CRD) Steering
                                                                   Committee Meeting
                                                                  Participated in National Association of Securities Dealers (NASD)
                                                                   Licensing and Registration Council Meeting
                                                                  Participated in NASAA Joint Technology Working Group Meeting
                                                                  Participated in New York Stock Exchange (NYSE) Meeting
                                                                  Participated in OFR Area Financial Manager Meeting
                                                                  Met with NASAA Corporate Office
                                 90                               Met with representatives from the Investor Protection Trust
                              Finance                             Attended Florida Export Finance Corporation Board Meeting
                                                                  Met via teleconference with General Accounting Office on Anti-
                                                                   Money Laundering Exam process
                                                                  Attended International Bankers Advisory Board Meeting
                                                                  Spoke at FBA Annual Capitol Day
                                                                                                       Financial Institutions
                                        Ensure the safety and soundness of the state financial institution system. Support efforts
                                             to promote Florida’s domestic and international financial services industries.
                                  Number of Institutions                                                                                 Significant Events

                                                                  196                                             76% of customer satisfaction surveys returned rated OFR 2 or better
                                                                                                                   on a scale of 1-5 (1 being highest, 5 being lowest)
                                                                                                                  Institutions Under Formal Administrative Action: 6
                                                                                                                  Application for Commerce Bank of Southwest Florida (Ft. Myers) filed
                                        50                                                                         January 13th
                                                                                                                  Application for Banco Lationamericano de Expotaciones, S.A. (Miami)
       Credit Union            Foreign Bank Office                Bank                       Trust Company         filed January 14th

                              Financial Data (as of 6/30/04)                                                      Application for Providence Bank (Winter Haven) filed January 20th
60                                                                                                                Application for Coutts Bank von Ernst Ltd. (Miami) filed January 20th
50                                                                                                                Application for The Victoria Mutual Building Society (Miami) filed
                                                   42.1                                           Credit Unions    January 25th
                                                                                                  Foreign Bank
                                                                                                  Offices         Application by Sunrise Bank (Cocoa Beach) filed January 27th
30                                                                                                Banks

             17.0                                                                                                 Application by First Capital Bank (Marianna) filed January 31st
20    15.8                                  14.1
                                                                                                                  Application by Seaside Bank & Trust (Orlando) filed February 1st
                                                                                                                  Application by CNL Bank, First Coast (Jacksonville) filed February 10th

                                                                                                                  Liberty Bank (Clearwater) opened February 22nd
             Assets                     Deposits                        Capital

             Licensing & Chartering: July 1 - March 31, 2005                                                      Alarion Bank (Ocala) opened February 28th
16                                                   15

                                                                                                                  Nature Coast Bank (Crystal River) opened March 7th
                                  10                                                                Pending
                                                                                                                  Stonegate Bank (Ft. Lauderdale) opened March 7th

                                                                                                                  Application by Bank of Coral Gables (Coral Gables) filed March 8th
                   6                                                                                Complete
 6                            5         5
                                                                                                                  Application by GulfSouth Bank (Destin) filed March 15th
 4                                                                          3            3

                                                                                   1                              Application by Florida Bank of Commerce (Orlando) filed March 24th
      Acquisition              Branch                 De Novo                   Merger
                                                             Bureau of Financial Investigations
                             Conduct financial investigations into allegations of fraudulent and unlicensed activity.

                                                                                        Significant Events Significant Events
  Fiscal Year 04-05 January 1 – March 31, 2005
                                                                               Pensacola: Lifetime Capital, Inc. - Lifetime Capital obtained over $110 million from
  Investigations Opened: 109                                                    investors by misrepresenting the life expectancy of terminally ill persons. Two corporate
                                                                                executives, David Svete and Ron Girardot, were found guilty by a federal jury of mail
  Investigations Closed: 176                                                    fraud, money laundering, and interstate transportation of stolen property. A third employee,
  Enforcement Actions: 66 Cases Closed with Actions                             who pled guilty to conspiracy to defraud, cooperated with the prosecution of the case. At a
                                                                                hearing scheduled for May 2005, Svete and Girardot face potential sentences of 125 years
  81.9 Years Prison and 95.7 Years Probation Imposed                            imprisonment and $42 million in fines and restitution.
                                                                               Miami - First Financial Services, Inc. - On March 31, 2005, John Pateras from First
  ******************************************                                    Financial Services, Inc., was arrested in Miami. Pateras was charged with 20
  On-going investigations: 409 *                                                counts of securities fraud, 1 count of organized fraud, and 1 count of aggravated white-
                                                                                collar crime. Between 1998 and December 2003, Pateras operated a nationwide securities
  * Note – Includes Preliminary Investigative Reviews                           scheme through 3 different companies. He induced 30 people nationwide, including 4
                                                                                Floridians, to invest $580,000 in financial ventures with reliance on false representations.
Open Investigations by Type                                                     The case was worked jointly with the U.S. Postal Inspection Service.
                                               Banking - Unlicensed            Orlando: Patricia Grant - Patricia Grant, Edgar Grant, and Geisha Morris were
                                  5                                             arrested for allegedly falsifying documents to obtain mortgage loans and properties in
                          Banking - Licensed
                                                                                Orange, Broward, and Palm Beach counties. Their conspiracy allegedly defrauded
                                                                3               mortgage lenders of more than $3 million by submitting false employment information,
                            60                       Securities - Registered    forged bank statements, and other documents in order to obtain loans. All three defendants
                           Other                                                face charges of racketeering, conspiracy to commit racketeering, organized fraud, grand
                                                                                theft, and mortgage fraud.
                                                                               West Palm Beach: Lambert Asset Management - On January 25, 2005, Thomas
                                                                  193           Mitchell Lambert III, pled guilty to 6 counts of mail fraud in the U.S. District
           96                                                 Securities -
  Finance - Unlicensed                                        Unregistered
                                                                                Court, Southern District. Lambert raised over $250,000 from 5 Florida investors. He
                                                                                deposited these funds into his personal bank account and used the money for his own
                                                                                benefit. Lambert used the U.S. mail to send bogus monthly statements to the investors
                                                                                showing growth in their accounts. This was a joint investigation with the U.S. Postal
                                                                                Inspection Service.
                                 50                                            West Palm Beach: Florida Secured Funding Corporation, Inc. - On February 1, 2005,
                         Finance - Licensed                                     Tim Sacora was arrested for 13 federal counts of scheme to defraud, mail and wire fraud.
                                                                                The investigation revealed that Sacora used investor’s money to maintain an extravagant
                                                                                lifestyle. There were over 95 Florida investors; nationwide investors losses exceeded $7
  Other: The Bureau of Financial Investigations conducted its                   million. This was a joint investigation with the Ft. Myers U.S. Attorney, IRS, and FBI.
    Annual Training, February 28-March 4, 2005.
                                                     Bureaus of Finance and Securities Regulation
                                         Regulate non-depository financial service companies & related industries; protect
                                     consumers from illegal financial activities; protect the investing public from investment &
                                                 securities fraud while facilitating capital formation in the State.

                             Number of Exams                                                               Significant Events
                        Securities         Finance      Money Transmitters
     450                                                                          For the quarter ended 3/31/05, the Bureau of Finance Regulation assessed 24
                            462                                                    administrative fines to various entities totaling $123,750.
     400                                                               418
     300                                                                          On March 21, 2005, Carlos A. Shibata, a former Miami stock broker, signed a
     250                                                                           stipulation and consent agreement with the Office in which he agreed not to apply
     200                                                                           for registration as a broker or investment adviser for a period of 15 years. This
     150                                                     176                   action was a result of his guilty plea to two counts of wire fraud in the U.S. District
                 105                                                               Court of the Southern District of Florida. While Shibata was employed by Smith
      50                                                                     82
       0                             35                                            Barney as a registered broker, he diverted $290,471 from a client’s securities
                                                                                   brokerage account at Smith Barney to an account he controlled at E*Trade Bank
                        Opened                                     Closed          on February 13, 2004. Shibata later attempted to wire an additional $150,000
7/1/04-3/31/05                                                                     from the same account in order to purchase a 2004 Lamborghini at The Collection
                                                                                   in Coral Gables.
                           Number of Complaints
                    Securities            Finance     Money Transmitters
                                                                                  On March 18, 2005, the Office entered into a stipulation and consent agreement
                                                                                   with Apex Lending, Inc. Apex consented to cease and desist from future
                                                                                   violations of Mortgage Brokers and Lending Act (Chapter 494, F.S.), to pay an
                           1084                                982                 administrative fine totaling $75,000, and agreed to a 2 year probation of its
                                                                                  In March, the Money Transmitter Regulatory Unit held its first Annual Examiner
         500                                                                       Training Program in Orlando. The training program focused on Bank Secrecy
         400                                                                       Act, Anti-Money Laundering, and Deferred Presentment (Payday Lending) issues.
         100      137
                                     12                                 10
                          Opened                              Closed
                                                                               Bureau of Regulatory Review
                    Review all applications to conduct business as a financial service company or securities
                  firm; review license applications for individuals; and impose licensing restrictions or deny
July 1, 2004 – March 31, 2005                     licensure based on findings.
Licenses Approved 62,026                                Renewals, Filings & Public Record
Denied/Withdrawn       2,783                             Requests Received:       74,314
Licensed w/Restrictions 73                                                                                                 Significant Events
                                     Applications Processed
                   Money Transmitters
                                                                 1,736                              The Office took action against 37 Retail Installment (Chapter 520) entities for
                                                            Pre-need Sales
                                                                                                     unlicensed activity resulting in administrative fines of $55,575. The majority of
               Securities Issues                                                                     these actions were against motor vehicle retail installment sellers and retail
                                                                                                     installment sellers who were previously licensed but failed to renew and
                                                                                                     continued to operate without a license .

                                                                                                    Securities branch offices were required to renew their licenses for the 2005-
                                                                                                     2006 license year with a deadline of March 31, 2005. As of the deadline,
                                                                                Securities Agents    approximately 94% had renewed with 53% utilizing the Office’s electronic
                                                                                                     renewal process.

                                                                                                    During the quarter, the Office finalized development and conducted user
                Securities Dealers                                                                   acceptance testing of a web-based process for receiving mortgage broker
                                                                                                     applications on-line. It is anticipated that the new process will be implemented
                               Mortgage Broker Exam                                                  in April, 2005.
                                                 2004 - 2005



       1,712    1,633       1,474       1,470   1,702     1,486    1,366     1,656      1,947


       711       672         759        720     727        731               668        815
 500                                                                628

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                               # No Shows                  # Taking Exam