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SDM Check Cashing Corp., a licensed Casher of Checks, has entered into a Settlement Agreement with the Superintendent of Banks in lieu of a hearing to revoke its license for certain violations of law. Included in the Settlement Agreement is the payment of a fine of $500,000.


State of New York
Banking Department

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In the Matter of   

SDM CHECK CASHING CORP. (N.Y.)  


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

               (Respondent)

SETTLEMENT AGREEMENT

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WHEREAS, SDM Check Cashing Corp. (N.Y.) (“SDM” or the “Licensee”), with corporate headquarters at 170 Hamilton Avenue, Suite 202, White Plains, New York  10601, was granted a license on September 11, 1998 to engage in business as a licensed casher of checks pursuant to Article IX-A of the New York Banking Law (the “Banking Law”) by the Superintendent of Banks (the “Superintendent”) of the New York State Banking Department (the “Banking Department”); and 

WHEREAS, as a result of an examination of SDM, as of May 7, 2002, the following violations of the Banking Law and related regulations and of the Currency and Foreign Transactions Reporting Act (31 United States Code Section 5311 et seq.) and the accompanying regulations issued by the United States Department of the Treasury (31 Code of Federal Regulations Part 103.11 et seq.) (collectively, the “Bank Secrecy Act” (“BSA”)), were cited to SDM:  violations of the BSA relating to the rules governing the reporting of transactions in currency as set forth in 31 Code of Federal Regulations Part 103.22; numerous and repeated violations of Banking Law Section 373.1(b), relating to cashing of checks in excess of certain enumerated allowed amounts; numerous and repeated violations of Part 400.3 of the Superintendent’s Regulations (“Part 400”), relating to the books, records and microfilm of the Licensee; numerous and repeated violations of Part 400.5(b), relating to the commingling of more than one business day’s receipts within the Licensee’s daily deposit; repeated violations of Part 400.6(b)(3), relating to the cashing of checks which have an expectation of being dishonored; violations of Part 400.13(h)(4), relating to the lack of certain enumerated disclosures when acting as the agent of a money transmitter; and 

WHEREAS, SDM has had repeat violations of the Banking Law and related regulations, as cited to SDM in a report of examination, as of June 25, 1999 and in a report of special examination, conducted on March 9, 2000 and March 10, 2000, which resulted in SDM entering into a Stipulation, dated March 22, 2000, by and between SDM and the Banking Department; and   

WHEREAS, as a result of the violations alleged above, SDM is operating in an unauthorized and unsafe manner: and 

WHEREAS, the firm Ohrenstein & Brown, LLP ( the “Ohrenstein Firm”), outside counsel to SDM, will be engaged by SDM to monitor certain compliance matters of SDM; 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, upon receipt by the Banking Department of acceptable written confirmation that SDM has established a line of credit, as required by the Banking Law and related regulations, the Suspension Order, dated October 22, 2002, served by the Banking Department on SDM, immediately shall be lifted. 

THAT, Respondent agrees as follows: 

  1. Without admitting or denying the aforementioned allegations, SDM freely and  voluntarily waives its right to a hearing on the violations cited above and SDM fully understands the terms and conditions of this Settlement Agreement. 

  2. SDM agrees to pay a fine in the aggregate amount of $500,000 in the following manner:  $250,000 within one week of the date of the lifting of the Suspension Order, dated October 22, 2002, issued by the Banking Department against SDM; $150,000 within sixty (60) days of the date of the first payment made under the terms of this Settlement Agreement; and $100,000 within ten (10) months of the date of the second payment made under the terms of this Settlement Agreement.  Each payment is to be made by electronic transfer, in immediately available funds, pursuant to transfer instructions received from the Banking Department.  Failure to make timely payment, in whole or in part, shall result in immediate revocation of SDM’s licenses. 

  3.  No later than forty-five (45) days from the date of execution of this Settlement Agreement, SDM shall attain the minimum liquidity requirements of Banking Law Section 367.4 and Part 400.6 (a)(4) for each location operated by it. 
  4. No later than forty-five (45) days from the date of execution of this Settlement Agreement, SDM shall address to the full satisfaction of the Banking Department all items mentioned in the letter, dated October 22, 2002, from the Banking Department to SDM (the “October 22, 2002 Letter”), relating to an examination of SDM conducted as of May 7, 2002.  Filing of Currency Transaction Reports shall be properly and timely submitted commencing the date of execution of this Settlement Agreement.  
  5. No later than forty-five (45) days from the date of execution of this Settlement   Agreement, the Licensee shall correct all other alleged violations and weaknesses  noted in the October 22, 2002 Letter.  No additional penalty to be imposed. 
  6. That SDM  commits to submit to the Banking Department no later than forty-five (45) days from the date of execution of this Settlement Agreement a compliance program (the “Compliance Program”), in form and substance satisfactory to the Banking Department.  SDM further commits to the implementation of said Compliance Program and to retain the Ohrenstein Firm to assist in the design of said Compliance Program and to review such Compliance Program and to monitor the performance of SDM in all material respects under such Compliance Program.  As part of its retainer agreement with SDM, the Ohrenstein Firm agrees to provide the Banking Department with quarterly written reports relating to its monitoring role of SDM, with the first such quarterly monitoring report due no later than ninety (90) days from the date of execution of this Settlement Agreement.  It is understood and agreed that the Ohrenstein Firm will not guarantee SDM’s compliance under the Compliance 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

David Blumfelt
President
SDM Check Cashing Corp. (N.Y.)
170 Hamilton Avenue, Suite 202
White Plains, New York  10601 

Manfred Ohrenstein, Esq. 
Ohrenstein & Brown, LLP
One Penn Plaza, 46th Floor  
New York, New York  10119   

 

2.        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 not relating to this Settlement Agreement or any criminal aspect of the concerned matters in this Settlement Agreement . 

3.        No extension or waiver of the terms of this Settlement Agreement shall be binding on the Banking Department except if in writing, signed by the Superintendent.  

4. Each provision of this Settlement Agreement shall remain effective and enforceable until stayed, modified, terminated or suspended in writing by the Superintendent.   

5.      The effective date of this Settlement Agreement is the date on which it is executed by the Superintendent or her Deputy.

6.   The provisions of this Settlement Agreement are not confidential.

Agreed to and Accepted: 

Dated:__________________. By: ___________________________
Daniel A. Muccia
First Deputy Superintendent of Banks 
New York State Banking Department  
Dated:__________________. By: ___________________________
David Blumfelt
PresidentSDM Check Cashing Corp. (N.Y.)  
Dated:__________________. By: ___________________________
Manfred Ohrenstein, Esq.
Ohrenstein & Brown, LLP  

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