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Alivad Associates, Inc. , a licensed Casher of Checks, has entered into a Settlement Agreement with the Superintendent of Banks in lieu of a hearing to fine the licensee or revoke its license for certain violations of law.
Included in the Settlement Agreement is the payment of a fine of $25,000.


State of New York
Banking Department

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In the Matter of

Alivad Associates, Inc.

A Licensed Check Casher Pursuant
To Article IX-A of the New York State
Banking Law

(Respondent)

SETTLEMENT AGREEMENT

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WHEREAS, Alivad Associates, Inc., with its principal office at 6218 New Utrecht Avenue, Brooklyn, New York 11219 ("Alivad", the "Respondent" or the "Licensee") is licensed pursuant to Article IX-A of the New York Banking Law by the Superintendent of Banks (the "Superintendent") of the New York State Banking Department (the "Department"); and

WHEREAS, Carol Davila and John Davila each own 50% of the Licensee (together, the "Principals");

WHEREAS, the Currency and Foreign Transactions Reporting Act (31 United States Code Section 5311 et seq.) and the implementing regulations promulgated thereunder by the United States Department of the Treasury ( 31 of the Code of Federal Regulations Section 103.11 et seq.) (collectively referred to as the Bank Secrecy Act ("BSA")) requires inter alia that check cashers file currency transaction reports (31 Code of Federal Regulations 103.22); and

WHEREAS, the Department alleges and the Licensee acknowledges that it inadequately completed and failed to file seven currency transaction reports in the year 2001 in violation of the cited regulations; and

WHEREAS, as a result of an examination of Alivad, as of June 4, 2002 (the "June 4 Examination") the following violations of the Banking Law and related regulations (the "Violations") were cited to Alivad:

  1. Violations of the BSA relating to the rules relating to the reporting of transactions in currency as set forth in 31 Code of Federal Regulations Section 103.22;
  2. Violation of Banking Law, Section 367.4 and Part 400.6 (a)(4) of the Superintendent’s Regulations ("Part 400"), which require every license to continuously maintain for each licensed premises net liquid assets of $10,000;
  3. Violation of Part 300, which requires that every organization licensed under the Banking Law shall submit to the Superintendent immediately upon the discovery of, in pertinent part, embezzlement, misapplication, larceny, forgery, fraud, dishonesty, making of false entries and omission of true entries in which any director, trustee, partner, officer, employee or agent of such organization is involved;
  4. Violation of Part 400.3 (b)(2), which requires that the date items are microfilmed shall be identified by means of a date card inserted into the machine before the items are microfilmed and that such date shall be the date on which these items were cashed;
  5. Violation of Part 400.3 (b)(5), which requires that, as a condition of using microfilm equipment to record all the checks, drafts, and money orders cashed in the business, the name and home address or business address of the individual, partnership or corporation for which the check, draft or money order is cashed shall be indicated on the item before it is microfilmed, and, where the licensee maintains an index card or computer record with the current home or business address of its customers, complete details of the checks cashed, as required by Part 400.3 (a), shall be maintained in a written form or typed form for each such check, draft or money order exceeding $1,500.00;
  6. Violation of Part 400.3 (b) (6), which requires that, as a condition of using microfilm equipment to record all the checks, drafts and money orders cashed, the fee collected for cashing each check, draft or money order must be indicated on the face of the item before it is microfilmed;
  7. Violation of Part 400.3 (b) (7), which requires that, as a condition of using microfilm equipment to record all the checks, drafts and money orders cashed in the business, an inventory log enumerating certain information for every roll of film microfilmed shall be maintained;
  8. Violation of Part 400.3 (b) (11) (ii), which requires that, as a condition of using microfilm equipment to record all the checks, drafts and money orders cashed in the business, the license must verify that all microfilm records are maintained in an accurate and legible form;
  9. Violation of Part 400.3 (f), which requires that a "general ledger" containing all assets, liabilities, capital, income and expense accounts shall be kept and shall be posted from the "daily records of checks cashed", "summary of business" and any other records of original entry at least monthly, and, in addition, such record shall be kept so as to facilitate the preparation of an accurate trial balance;
  10. Violation of Part 400.5 (b), which requires that all checks, drafts, and money orders cashed on any one day and deposited on the same day or the next day must be deposited under a separate deposit total and not commingled with any other day’s business;
  11. Violation of Part 400.6 (b)(3), which states that no licensee shall cash any check or draft of any drawer if the licensee has any reason to believe that such a check or draft is likely to be dishonored;
  12. Violation of Part 400.6 (c), which requires that each check casher shall provide receipts, including certain enumerated information, to customers for every check cashed;
  13. Violation of Part 400.6 (d), which requires every licensee to display on its premises a sign made of certain enumerated materials, not less than 18 inches wide and 12 inches high, with lettering of at least one inch in size disclosing certain requisite information;
  14. Violation of Part 400.8, which requires that every licensee inform the Department, in writing, within 10 days of the occurrence, of the name of any director, stockholder, officer, owner, partner, employee or other individual connected with the business of the licensee who terminates or alters his or her status with the licensee, and the name of any individual who becomes connected with the business as a director, stockholder, officer, employee or in any other capacity;
  15. Violation of Part 400.13 (h) (4), which requires that all licensees acting under the authority of Part 400.13, shall clearly display on their premises in full public view, a sign for each money transmission activity, which shall be no less than 18 inches wide and 12 inches high, prominently indicating, in pertinent part, that, if the licensee is transferring funds to a utility company for payment of utility bills, such payments are not considered paid until received by the utility company;
  16. Violation of Part 400.13 (l) which requires that the books and records of any licensee relating to its activities as an agent for a licensed money transmitter shall be kept separate and distinct from those relating to any other business of the licensee and shall be readily available for examination by the Superintendent; and

WHEREAS, the June 4, 2002 Examination additionally disclosed certain weaknesses in its internal control environment, which left the Licensee vulnerable to a substantial defalcation by employee theft in the amount of approximately $1,600,000; and

WHEREAS, as a result of the violations alleged above, Alivad is operating in an unauthorized and unsafe manner and, further, as a result of the defalcation referred to in the prior paragraph, Alivad’s financial condition has weakened to the point of possible insolvency; and

WHEREAS, the parties hereto wish to resolve this matter on the terms set forth hereinafter.

NOW, THEREFORE IT IS STIPULATED AND AGREED BY THE PARTIES HERETO AS FOLLOWS:

THAT, WITHOUT ADMITTING OR DENYING the aforementioned allegations, Respondent freely and voluntarily waives its right to a hearing on the Violations cited and Respondent and the Principals fully understand the terms and conditions of this Settlement Agreement.

THAT, Respondent agrees as follows:

  1. Alivad agrees to pay a fine in the amount of $25,000; such fine shall be paid upon execution of this Settlement Agreement by an electronic transfer, instructions for which are to be provided;
  2. The Licensee shall take all steps necessary to see that Alivad attains the minimum liquidity requirements of Banking Law, Section 367.4 and Part 400.6 (a)(4) of the Superintendent’s Regulations for each location operated by it. In the event that the Licensee fails to attain the minimum liquidity required for each of its locations, the License will surrender no later than December 31, 2002 all or as many of its licenses as are required to achieve compliance with all applicable liquidity requirements of the Banking Law and related regulations; and
  3. Not later than thirty (30) days after the signing of this Settlement Agreement, the Licensee shall correct all other alleged violations and weaknesses noted in the June 4, 2002 Examination, shall appoint a compliance officer as required under the U.S. Patriot Act and shall establish a written audit program.

THAT: 

1. All communications regarding this Settlement Agreement shall be sent to:

Paul J. Fazio
Deputy Superintendent of Banks
Licensed Financial Services Division
New York State Banking Department
Two Rector Street
New York, New York 10006

John Davila
President
Alivad Associates, Inc.
6218 New Utrecht Avenue
Brooklyn, New York 11219

  1. The provisions of this Settlement Agreement shall not bar, estop or otherwise prevent the Superintendent, or any state or federal agency or department, from taking any other action affecting the Licensee, any of its current or former officers, directors, employees, or insiders, or their successors or assigns with respect to the matters relating to this Settlement Agreement.
  2. No extension or waiver of the terms of this Settlement Agreement shall be binding on the Department except if in writing, signed by the Superintendent.
  3. Each provision of this Stipulation shall remain effective and enforceable until stayed, modified, terminated or suspended in writing by the Superintendent.
  4. The effective date of this Stipulation is the date on which it is signed by the Superintendent or her Deputy.
  5. The provisions of this Settlement Agreement are derived from an examination subject to the confidentiality provisions of Section 36(10) of the Banking Law and, accordingly, the terms of this Settlement Agreement are, therefore, confidential and may not be released unless such release is first approved in writing by the Superintendent.

Agreed to and Accepted:

Dated:__________________. By: ___________________________
Paul J. Fazio
Deputy Superintendent of Banks
New York State Banking Department
Dated:__________________. By: ___________________________
John Davila,
President
Alivad Associates, Inc.
Dated:__________________. By: ___________________________
Carol Davila
Dated:__________________. By: ___________________________
John Davila

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