Table of Contents
Index of Schedules
Fighting Terrorism
Regulatory Amendments
Holocaust Claims Processing Office
Commitment to Lower Manhattan
Fighting Terrorism
Criminal Investigations Bureau
Enforcement Actions
Consumer Outreach
Banking Development Districts
Banking Board Membership
Office Locations

Enforcement Actions

Banking Department Fined Western Union $8 Million for Violating Bank Secrecy, USA Patriot, New York Banking Laws
After an extensive investigation conducted by CIB and the Licensed Financial Services Division, the Banking Department reached a Consent Agreement with Western Union for violating the BSA, the USA PATRIOT Act, and various sections of the New York State Banking Law. The Consent Agreement included a fine of $8 million and required Western Union to enhance its existing BSA compliance program. This was the largest fine ever levied against a money service business.

Governor Pataki, Attorney General Spitzer Announce Historic $484 Million Agreement with Household International, Inc. Largest Predatory Lending Settlement in History
The Banking Department and Attorney General Elliot Spitzer, as part of a multi-state group comprised of financial regulators and state attorneys general, reached an unprecedented settlement with Household International following lengthy investigations that uncovered various predatory lending practices nationwide. The Agreement provided $484 million to borrowers in all fifty states including approximately $37 million in restitution for an estimated 25,000 New York borrowers. It is by far the largest settlement in the history of predatory lending enforcement actions across the country.

The Department entered into a separate Agreement with Household as a result of improper and illegal fees charged by Household in New York. The Agreement called for an additional $3 million in consumer restitution, $2.6 million in a settlement amount payable to New York State, and $1 million for a consumer education fund.

Banking Department Participates in Coordinated Settlement with Federal Trade Commission, Five States, and Class Action Litigants Against Former Mortgage Banker First Alliance Mortgage Company (FAMCO); $60 Million in Consumer Restitution
The Department participated in a nationwide settlement with FAMCO; its primary shareholders; the Federal Trade Commission (FTC); the states of Arizona, California, Florida, Illinois, and Massachusetts; private parties of the class action; and private plaintiffs for its deceptive lending practices. The FTC administered a fund of up to $60 million to provide restitution to borrowers nationwide who were adversely affected by FAMCO's deceptive practices.

Approximately 18,000 borrowers were impacted, including 2,000 New Yorkers. One settlement provision mandated that the owners of the company personally contribute $20 million to the settlement fund - an unprecedented payment in the residential mortgage banking industry. The settlement further provided that the owners and several other former FAMCO employees be prohibited from engaging in the residential mortgage business in New York for ten years.

SDM Check Cashing Corp. Fined $500,000
The New York State Banking Department fined SDM Check Cashing Corp. (SDM) $500,000 for numerous violations of the federal Bank Secrecy Act and the New York Banking Law and related regulations. The Department entered into a settlement agreement that required SDM to pay a fine of $500,000 and to establish a compliance program that included the accurate and timely filing of CTRs.

Banking Department Issues Cease and Desist Order Against Genesee Regional Bank
The Department issued a Cease and Desist Order against Genesee Regional Bank of Rochester for unsafe and unsound practices, inadequate internal controls, and unsatisfactory risk management policies and procedures. The Federal Deposit Insurance Corporation (FDIC) took a separate action against Genesee Regional Bank. Under the Order, the Bank was required to furnish written progress reports to the Superintendent and the Regional Director detailing the form, content, and manner of actions taken to secure compliance with the Order.

AAA De Clara Funding Corp. Surrenders License with Prejudice
The Department announced the surrender of the Mortgage Express broker Fred J. De Clara d/b/a AAA De Clara Funding Corp's registration with prejudice for circumventing Part 41. The Department uncovered seventeen Part 41 loans that were made to consumers throughout New York State. As a result, De Clara Funding Corp. refunded $86,000 to borrowers. After a Department investigation, it was determined that broker fees payable to AAA De Clara Funding Corp. were allegedly disguised as credit card payments from loan proceeds. When truthfully disclosed, the loans were high cost loans.

Trans Global Mortgage Corporation Fined $50,000, Ordered to Pay over $100,000 in Consumer Restitution
A settlement agreement was reached with Trans Global Mortgage Corporation for failing to return excess appraisals and credit report fees as well as for failing to properly disclose broker fees and/or premiums. The company returned over $115,000 to 287 New York borrowers and was fined $50,000. The Department's examinations over the course of two years revealed that Trans Global Mortgage Corp. was charging excess fees to borrowers for appraisals and credit reports. In addition to paying consumer restitution and a fine, Trans Global was ordered to implement a compliance program within thirty days of the Agreement, and in addition, to retain an approved compliance firm for two years.

FHB Funding/eHome Credit Corp. Fined $50,000 and Ordered to Make Over $200,000 in Consumer Restitution
FHB Funding/eHome Credit Corp. (FHB), a licensed mortgage banker, was fined $50,000 and ordered to make $213,736 in consumer restitution payments to residents of New York and seven other states. The Department alleged that FHB failed to comply with state and federal banking regulations, failed to maintain proper books and records, and failed to make refunds to borrowers who rescinded their loans.


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 State of the Financial Services Industry | 2002 Regulatory Amendments | Holocaust Claims Processing Office Accomplishments | Department's Continued Commitment to Lower Manhattan | Fighting Terrorism | Criminal Investigations Bureau Accomplishments | Enforcement Actions | Consumer Outreach | Banking Development Districts | Banking Board Membership | Office Locations >

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