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Office of Financial Regulation
Quarterly Report to
The Financial Services Commission
Don B. Saxon
Commissioner
March 31, 2008
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 financial
fraud, while preserving the integrity of Florida’s markets and financial service industries.
Major Initiatives Significant Events
• OFR implemented the f irst release of the Regulatory
Attended North American Securities Administrators Association
Enforcem ent and Licensing (RE AL) System. This phase
(NASAA) Winter Enf orcement Meeting
enables mortgage brokers and lenders to apply or renew their
Attended the Miami-Dade Mayor’s Task Force on Mortgage Fraud
registration and update license inf ormation online.
Attended NASAA/Central Registration Depository (CRD) Steering
• OFR assisted the Florida Department of Education (DOE) in
Meeting
securing a $175,000 grant f rom the Investor Protection Trust
Attended Association of Registration Management (ARM) Annual
(IPT). FL DOE will use the grant f unds to develop a new
Conf erence
mathematics course to include the Financial Literacy Body of
Participated in Financial Industry Regulatory Authori ty (FINRA)
Knowledge standards and benchmarks approved by the Florida
Dispute Resolution Panel
Commissioner of Education and State Board of Education. The
Presented “Current Federal and State Regulatory Framework for
course will have an emphasis on investing, accounting, and
Mortgage Lending” during the Mortgage Lending HOPE Task Force
f inancial security.
Meeting
Met with the Florida Association of Mortgage Brokers (FAMB)
Met with the Office of Statewide Prosecution
134 Final Orders Issued Participated in NASAA Continuing Education Working Group
(1/1 – 3/31/2008) Meeting
Met with representatives of Financial Industry Technical Services
8 (FITS)
Securities 21 Met with court-appointed receiver f or Bergman Mortgage
Financial Institutions Corporation
Attended Anderen Bank Grand Opening Ceremony
Attended Jefferson Bank of Florida Ribbon Cutting Ceremony
Spoke at Florida Banker’s Association (FBA) 9th Annual Bank
Director’s Conf erence
105 Representatives f rom all areas of OFR participated in a f inancial
Finance literacy phone bank conducted by Tampa’s WFLA TV. A total of 965
phone calls were received during the two-day phone bank, and OFR
received 66 f ollow-up intake f orms as a result.
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.
Significant Events
• Participated in career fairs at the University of Florida
and University of Central Florida
Financial Institutions Performance • Participated in a Small Credit Union Conference in
Orlando
120%
100% 100%
• Presented at the Central Florida Compliance
100% 93% 95%
90% 90% Association (Orlando)
80% • Participated in a Compliance Conference Call with the
60% Florida Credit Union League (FCUL)
40% • Attended a meeting of the Anti-Money Laundering
20%
Association (Winter Park)
• An application for an International Administrative Office
0%
% new applications that are % of banks receiving exam % of credit unions receiving
(Orlando) for Banco do Brasil, S.A. was filed February
statutorily complete that are report within 45 days after exam report within 30 days 20th
processed within conclusion of exam after conclusion of exam
Administrative Procedure • An application for TIB Trust Company (Naples) was
Act requirements filed February 29th
Standard 3rd Quarter Results • An application for First Green Bank (Eustis) was filed
March 24th
• An application for Performance First Business Bank
(Pensacola) was filed March 26th
• First Colony Bank of Florida (Maitland) opened
January 28th
• Prime Meridian Bank (Tallahassee) opened February
4th
• Institutions under formal administrative action: 5
Division of Securities
Licenses and regulates securities firms to protect consumers from illegal securities
activities while facilitating capital formation
Significant Events
Regulatory Review Performance
100% 100% 99% 100% • Trinity Wealth Management and Roger Darrell Jones - Jones
100% 90%
80%
75% pled no contest to 1 count of grand theft. He was placed on 12
60%
months probation and ordered to pay fines of $1834. His license
45% 42%
40%
was permanently revoked and he is not to reapply for licensure.
20%
This action was the result of Jones systematically receiving
0%
money from an elderly, widowed investment advisory client who
% of applications % of filing requests % of applicants not # of actions taken as was diagnosed with Alzheimer's.
processed within processed within granted registration result of licensing . • Jose Rafael Mirabal and Ernesto J. Casco – A 19 count
Administrative designated standard who subsequently are review process (as %
Procedure Act number of days subject of additional of 3rd quarter goal) indictment charging Mirabal and Casco with conspiracy to solicit
requirements regulatory disclosure foreign investors to purchase purported World Bank bonds was
Standard 3rd Quarter Results unsealed in Miami. The defendants were charged with several
counts of conspiracy, wire fraud, and money laundering.
According to the indictment, between 2002 and 2006, Mirabal
Examination Performance and Casco solicited at least 12 foreign nationals living abroad
96% 100% 100%
100% 92% 95% and sold them bonds, purportedly issued by the World Bank.
90%
80% 75% 75% The monies received from investors were not used to purchase
60%
World Bank bonds. Instead, the money was used for their
37%
personal benefit, including the purchase of local real estate.
40% 30%
• William Chien, owner of the defunct broker dealer Cybervest
20% Securities, Inc., pled guilty in Miami federal court to a 13 count
0% indictment charging him with wire fraud and securities fraud in
% complaints % compliance % of enforcement # compliance % compliance
closed or referred exams closed, or exam referrals that exams completed exams resulting in
connection with the theft of $700,000 of client funds.
within 180 days referred to Legal resulted in (as % of 3rd action • Oppenheimer & Co. was fined $15,000 for failing to timely
or enforcement enforcement quarter goal)
exam within 180 action
register 3 branch offices.
days • M&I Brokerage Services, Inc. was fined $20,000 for failing to
Standard Results 3rd Quarter timely register 10 branch offices.
Division of Finance
Licenses and regulates business activities of non-depository financial services
companies and other related industries
Regulatory Review Performance
Significant Events
• Examinations of 84 financial services entities (i.e., mortgage lenders and brokers,
150% consumer finance companies, etc.), resulted in $103,500 in fines assessed and
131%
$20,550 refunded to consumers.
125%
100% 100% 97% 100% • Complaint investigations resulted in $165,634 in refunds to consumers.
90%
100% • Bureau of Regulatory Review took action for unlicensed activity against 8 Retail
75% Installment, 22 Motor Vehicle Installment Sellers, as well as 3 Sales Finance
companies, resulting in administrative fines totaling $68,500.
50%
• OFR re voked the registration of the Check Cashing and Mone y Center, Inc. for
25% significant statutoryviolations.
0% Tampa: A Final Order was issued against Safe Harbour Foundation of Florida,
% of applications processed w ithin % of filing requests processed w ithin # of actions taken as a result of licensing Inc., Silverstone Lending, LLC and Peter J. Porcelli, II, of Clearwater, Florida. Safe
Administrative Procedure Act requirements designated standard number of days review process (as % of 3rd quarter goal) Harbour Foundation operated as a not-for-profit corporation which purportedly aided
homeowners facing foreclosure. The entities participated in a scheme to make loans
Standard 3rd Quarter Results containing unauthorized and excessive fees, often exceeding 30% of the loan amount
and violating Chapter 494, Florida Statutes. Silverstone’s Mortgage Lender license
was revoked and Porcelli’s principal representative designation was terminated. All
parties agreed not to apply for a license for 10 years, and Porcelli agreed not to be
Examination Performance involved in any business regulated under Chapter 494, Florida Statutes, for 10 years.
Miami: OFR worked a joint investigation of Southeast Capital Mortgage Company,
120% et al, with the Florida Office of Attorney General (FOAG). The major issues with the
125% 100% 94% 100%
87% investigation included concerns of mortgage loan fraud and foreclosure assistance
100% 75% 82% 75% 76% 75% fraud, as well as equity skimming. On January 22, the FOAG filed a lawsuit under
75% Chapters 494, and 501, Florida Statutes, naming Southeast Capital Mortgage
50% Company as one of the defendants who facilitated the scheme that defrauded at least
80 homeowners out of approximately$1.7 million in home equity.
25%
Ft. Lauderdale: “Operation Whose House” is a joint investigation conducted by the US
0% Attorney’s Office, OFR, US Postal Inspectors, Florida Department of Law Enforcement
% of licensees % of licensees % of licensees # for cause exams # routine exams (FDLE) and the Secret Service. It resulted in a federal indictment charging mail and
examined where examined on for examined on routine completed (as % of completed (as % of wire fraud, and identity fraud involving mortgage fraud where 8 people were found
agency action is cause basis where basis where agency 3rd quarter goal) 3rd quarter goal) guilty and sentenced to 10 years in prison. Yvette and Delroy Patterson, the
taken agency action is action is taken masterminds, fled to Jamaica to avoid prosecution. An extradition request was
taken approved and the Pattersons were arrested on March 6 by the Ministry of Foreign
Affairs in Jamaica on outstanding federal warrants. They await their next court
Standard Results 3rd Quarter appearance scheduled for June 5, 2008.
Bureau of Financial Investigations
Conducts financial investigations into allegations of fraudulent and unlicensed activity.
Significant Events
Financial Investigations Performance Ft. Lauderdale: D & H Investments of South Florida - In February, 6 defendants pled guilty in a
100% mortgage fraud case involving properties in Broward County. The organiz ers, Ruben Jimenez and
100% 95% Antonio Ram os, pled guilty to conspiracy to commit money laundering and face 10 years in federal
80%
84% prison. Jimenez has an active mortgage broker license w hic h w ill be surrendered to OFR via the U.S.
80% Attorney's Offic e. This mortgage scheme involved 12 fraudulent loans submitted to out-of-state lenders
totaling $8,300,000. Four “straw buyers” also pled guilty to money laundering charges.
60% Jacksonville: Thomas Cuomo was arrested in March for mortgage fraud and conducting
an organized scheme to defraud. Cuomo w as previously arrested for mortgage fraud and money
40% laundering in February 2007 as a result of a prior investigation conducted by the Bureau. In the latest
charges, investigators allege that after his fir st arrest, Cuomo obtained 4 mortgages totaling
$252,000 and engaged in a scheme to defraud lenders by misrepresenting his income on loan
20%
applications.
Miami: Progressive Real Estate 2000, Inc. - In March, Adrienne McSweeney, Curt Francis and
0%
Tashina Latouche were arrested and charged w ith one count of Organiz ed Scheme to Defraud. These
% of documented violations referred for % of referrals that result in enforcement
action action arrests were the results of a joint investigation with the Ft. Lauderdale Police Department involving 2
mortgage brokers and 2 mortgage loan processors who were part of a alleged mortgage fraud ring. This
Standard Results 3rd Quarter investigation focused on 3 real estate transactions on properties located in Dade and Broward counties.
Mortgages were illegally obtained using false HUD-1 statements, fraudulent verif ications of
employment, and other fraudulent documents.
Orlando: Creative Financial Solutions – In March, the principal of Creative Financial, a title agency
employee and an individual alleged to have acted as a straw buyer were arrested and charged
with multiple counts of grand theft. The defendants allegedly perpetrated a scheme to fraudulently obtain
OPEN INVESTIGATIONS BY TYPE mortgage loans valued at over $2.9 million, most of whic h are now in foreclosure. Investigators believe
Securities -
492 CASES
Unregistered, 188
approximately $425,000 w as misappropriated to the personal benefit of defendants.
Tampa: Trans Continental Airlines, Inc. - In March, Lou Pearlman, former president of Trans
Continental Airlines (TCA), entered a guilty plea in the United States District Court to conspiracy, money
laundering, and making false claims during bankruptcy proceedings. Pearlman accepted responsibility for
Finance - Licensed,
masterminding a fraudulent $300 million investment scheme know n as the Employee Investment Savings
70
Account program. From 1989 through January 2007, Pearlman falsely represented to several hundred
Securities - investors their investments were insured by the Federal Deposit Insurance Corporation (FDIC) and/or
Registered, 3 Lloyds of London, and TCA w as a successful company. Pearlman also admitted he had falsified financial
statements to obtain over $100 million in bank loans to finance his various entities and keep his Ponzi
scheme alive. Pearlman faces a possible 25 year prison sentence.
West Palm Beach: Melissa Miranda/Fagan – In March, Melissa Miranda pled guilty to 1 count of
Organized Scheme to Defraud. The charges stem from various mortgage frauds committed in connection
Assists & with property in Hialeah, West Palm Beach and Port St. Lucie. Miranda and 5 co-defendants defrauded
Preliminary
lenders by preparing false loan documents to include HUD-1s, appraisals and verif ications of
Investigations, 120 Finance -
employment. Co-defendant, Arturo Ildefonso, was recently sentenced to 18 months in state
Unlicensed, 111
prison. Miranda was sentenced to 3 years in prison, followed by 10 years probation, and $1.4 million in
restitution. Miranda w as banned from the real estate business and ordered to pay investigative and
prosecution costs.
As of 3/31/08
Important Statistics for January 1 – March 31, 2008
Financial Institutions
Licensing & Chartering Number of Institutions - March 31, 2008
35 250
31 215
30
200
25
150
20 18
15 100 84
10 9
8
6 41
5 5 50
5 4
3 3
2 2 13
0 0
Acquisition Branch New Applications Merger Credit Union Foreign Bank Office Bank Trust Company
Pending (as of 3/31) Approved Complete
Financial Data (as of December 31, 2008)
80
68.6
70
60
52.5
50
40
30
20.0
18.5 15.8
20 15.6
10 7.8
2
0
Assets Deposits Capital
Credit Unions Foreign Bank Offices Banks
Important Statistics for January 1 – March 31, 2008
Securities Regulation Finance Regulation
Licenses Approved: 44,715 Applications Received: 5,569
Denied/Withdrawn: 344 Licenses Approved: 6,455
Licensed w/Restrictions: 34 Denied/Withdrawn: 438
Firm and Branch Renewals Processed: 286,696
Bureau of Finance Regulation
Bureau of Securities Regulation (Excluding Money Transmitters)
144
150 132 1000 809
125 800 674
100 86
600
75 62
50
400
200 90 59
25
0 0
Examinations Complaints Examinations Complaints
Opened Closed
Opened Closed
Bureau of Financial Investigations
Investigations Opened: 37 Bureau of Money Transmitter Regulation
Investigations Closed: 35 49 48
Enforcement Actions: 10 Cases Closed with
50
Actions 40
37.8 Years Imprisonment and 26.3 Years Probation 30
20 15
Imposed 11
$10.2 Million in Restitution – Court Ordered and 10
Voluntary 0
Examinations Complaints
Opened Closed
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