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New York State Banking Department Issues Order against CB Budget Planning Corp.

STATE OF NEW YORK
BANKING DEPARTMENT


In the Matter of   

CB Budget Planning Corp.

A Budget Planner licensed
pursuant to Article 12-C of the  
New York Banking Law

Order Issued Pursuant to
New York Banking Law
Section 39


Whereas, CB Budget Planning Corp. (“CB Budget”), located at 3001 Expressway Drive North, Islandia, NY 11749 was granted a license on February 5, 1998 to engage in the business of budget planning under Article 12-C of the Banking Law; and  

Whereas, pursuant to Section 580.4 of the Banking Law and Parts 402.5 and 402.7 of the Superintendent’s Regulations, as a condition for the issuance and retention of a budget planner license, CB Budget must file with the Superintendent of Banks (“Superintendent”) a surety bond or pledge a deposit in the principal amount of $250 thousand, or such larger or smaller amount as the Superintendent may require; and

Whereas, CB Budget’s surety bond in the amount of $750 thousand, issued by Travelers Casualty and Surety Company of America, was canceled by the issuer effective September 1, 2006; and

Whereas, in February 2007, CB Budget pledged a deposit in the amount of $25 thousand at North Fork Bank (currently Capital One Bank) to the Superintendent, at which time a surety bond or pledge deposit in the amount of $100 thousand was required based on the average balance of CB Budget’s trust account containing its New York clients’ payments during the fourth calendar quarter of 2006; and

Whereas, it was agreed that CB Budget would cease accepting new New York clients and would make monthly deposits to the aforementioned pledge deposit account in the amount $10 thousand each month during May, June and July of 2007 and a final deposit in August to satisfy the pledge requirement; and

Whereas, CB Budget made a deposit of $10 thousand in May 2007 and another deposit of $10 thousand in July 2007 into the aforementioned pledge deposit account, bringing the total pledge amount to $45 thousand; and

Whereas, the monthly account statement of March 2008 issued by Capital One Bank showed a withdrawal of $45 thousand on March 6, 2008 and a zero ending balance in the aforementioned pledge deposit account; and

Whereas, the aforementioned withdrawal of $45 thousand on March 6, 2008 was made without the Superintendent’s required consent; and

Whereas, a surety bond or pledge deposit in the amount of at least $68 thousand is currently required of CB Budget based on the average balance of CB Budget’s trust account containing its New York clients’ payments during the fourth calendar quarter of 2007; and

Whereas, CB Budget’s failure to maintain a surety bond or pledge deposit in the amount of at least $68 thousand is a violation of Section 580.4 of the Banking Law and Parts 402.5 and 402.7 of  the Superintendent’s Regulations; and

Whereas, Part 402.13(b) of the Superintendent’s Regulations requires each licensee to, on a quarterly basis, report to the Superintendent the highest daily amount of debtor funds held by the licensee for disbursement to creditors by no later than 10 business days after the end of the preceding quarter; and

Whereas, in response to the CB Budget’s request, the New York State Banking Department (”Banking Department”) granted approval in April 2006 to change the criteria used for setting the surety bond/pledge deposit requirement from the highest daily balance to the average balance in its New York trust account; and

Whereas, CB Budget has failed to report to the Superintendent the average daily amount of debtor funds held in its New York trust account during the quarter ended March 31, 2008, in violation of Part 402.13(b) of the Superintendent’s Regulations; and

Whereas, Section 17.2 of the Banking Law provides that all general expenses of the Banking Department incurred in connection with the supervision of any licensed entities shall be charged to and paid by licensed entities in such proportions as the Superintendent shall deem just and reasonable; and

Whereas, CB Budget has failed to fully pay 10 outstanding past due Banking Department general assessment bills totaling $82,612.77, in violation of Section 17.2 of the Banking Law; and

Whereas, in order to provide for the operations of CB Budget in a safe and sound manner, the Superintendent believes that prompt action is necessary to protect the public interest and to address the Banking Department’s supervisory concerns, regarding CB Budget and that additional enforcement action(s) may be necessary to address other supervisory concerns that may come to the attention of the Superintendent;

NOW, THEREFORE, it is hereby ordered that:

Due to the critical nature of the circumstances surrounding CB Budget’s failure to maintain a surety bond or pledge deposit of the required amount, and for the benefit of public interest, this Order shall become effective upon the date of its execution.

Witness, my hand and official seal of the Banking Department at the City of New York, this 21st day of May in the Year Two Thousand Eight.

___________________________
Regina A. Stone
Deputy Superintendent of Banks

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