Monthly Bulletin – October 2022
Volume 10, Number 3
DFPI Takes Actions On Crypto Asset Accounts and Businesses
On Sept. 27, the DFPI announced that it issued desist and refrain orders against 11 different entities for violations of California securities laws.
Each of the 11 entities allegedly offered and sold unqualified securities and ten of them also made material misrepresentations and omissions to investors. Nine of these entities solicited funds from investors to purportedly trade crypto assets on behalf of the investors. One of the entities solicited crypto assets to develop metaverse software and one entity claimed to be a decentralized finance, or DeFi, platform.
The 11 entities in these actions are examples of high yield investment programs (HYIPs). These are investment frauds that typically promise high returns with low risk and overly consistent returns, provide little details about the people running the HYIP, use vague language to describe how the HYIP makes money, offer referral bonuses, facilitate deposits and withdrawals with crypto assets, and use social media to gain attention and attract investors.
On Sept. 26, the DFPI announced it joined seven state securities regulators to bring actions against the Nexo Group (Nexo) in connection with its Earn Interest Product accounts.
These accounts allow investors to deposit crypto assets with Nexo; in exchange, they would earn interest on those deposits. Nexo has offered annual interest rates of up to 36% on investors’ deposited crypto assets, which are significantly higher than rates for short-term, investment-grade, fixed-income securities or bank savings accounts. The DFPI determined that Nexo offered its Earn Interest Product accounts to California residents without first qualifying these accounts as securities.
On Sept. 7, the DFPI Enforcement Division issued a consumer advisory regarding high yield investment programs using crypto as a hook to lure investors, in the form of a promise that the scammer somehow has a “program” that is purportedly able to generate high returns in short periods of time when in fact the program is merely a “Ponzi” scheme.
Joint DFPI/FTC Mortgage Enforcement Action
On Sept. 19, a federal court unsealed a joint complaint by the DFPI and the Federal Trade Commission (FTC) against a recidivist mortgage assistance relief scam. The complaint alleges that defendants Roger Scott Dyer and Dominic Ahiga (a.k.a. Michael Dominic Grinnell) falsely promised to reduce homeowners’ mortgage payments and prevent foreclosures, defrauding distressed homeowners by an estimated $6.3 million. The defendants conducted business through multiple entities located in the Los Angeles area from 2018-2022. The court issued a temporary restraining order to halt the scheme and freeze assets and appointed a receiver to assist with taking over the defendants’ businesses and administer any potential relief for victims. This marks the first joint DFPI and FTC action that relies in part on the enforcement powers of the California Consumer Financial Protection Law (CCFPL). For more information, read the DFPI Press Release.
Some Escrow Reports Due Oct. 13
Escrow agents are required to submit to the Commissioner an annual report prepared by an independent certified public accountant or an independent public accountant (Financial Code section 17406) within 105 days of the close of the escrow agent’s fiscal year. The annual report includes audited financial statements and required supplemental information.
If your fiscal year ended on June 30, 2022, your annual report is due Oct. 13, 2022. Please have your CPA email your report to ESCAnnualReportFiling@dfpi.ca.gov by the deadline using a secured, encrypted delivery system. The use of a secured dropbox is also acceptable. If your CPA is unable to submit the annual report electronically, it can be mailed to Sultanna Wan, Senior Financial Institutions Examiner, Escrow Law, Department of Financial Protection and Innovation, 320 West Fourth Street, Suite 750, Los Angeles, CA 90013.
Penalties for failure to file the annual report by the due date or to include required information are $100 per day for the first five days a report is late and $500 per day thereafter (Financial Code section 17408). Failure to file a report or to include any required information may also result in the suspension or revocation of an escrow agent’s license or prompt an immediate examination (Financial Code section 17602.5). For questions about the annual reports, call Sultanna Wan at (213) 576-7647.
Broker-Dealer/Investment Adviser Renewals Due Soon
A reminder that 2023 registration renewal statements and fees for the Broker Dealer/Investment Adviser (BDIA) program are due by Dec. 12, 2022.
All registered firms may view and print their preliminary renewal statements through E-Bill on FINRA’s WebCRD/IARD system. The preliminary renewal statement becomes available on November 7, 2022. The DFPI will be sending out courtesy renewal reminder on Nov. 21. Annual renewal fees are due for broker-dealers, investment advisers and exempt reporting advisers.
Full payment of each Preliminary Renewal Statement must be posted to a firm’s FINRA Renewal Account by Dec. 12. Firms are encouraged to submit their payments no later than Dec. 10 to make sure payments post to renewal accounts by the deadline. Renewal fees must be posted by Dec. 12 for a firm’s registration to remain in effect during calendar year 2023.
For more information on the 2023 renewal program for investment advisers and exempt reporting advisers, including a renewal calendar, payment methods and FAQs, visit the CRD/IARD website at https://www.iard.com/renewals.
For more information on the 2023 renewal program for broker-dealers, visit the CRD web site at http://www.finra.org/industry/renewal.
Kim-Phuong Hoang Promoted to Credit Union Portfolio Manager
Kim-Phuong Hoang was promoted to Financial Institutions Manager – Portfolio Manager based out of DFPI’s Sacramento office. She assumed her new position on August 8, 2022.
Ms. Hoang began her career with the Department in 2004 as a Financial Institutions Examiner, moved up the ranks to a Senior Financial Institutions Examiner in 2009, and now to Financial Institutions Manager. Kim graduated from California State University, Sacramento, with a Bachelor of Arts degree in Business Administration with a concentration in Finance. She became a Certified Public Accountant in 2019.
Phobe Trinh Promoted to Credit Union Portfolio Manager
Phoebe Trinh was promoted to Financial Institutions Manager – Portfolio Manager for the Office of Credit Unions based out of DFPI’s Los Angeles Spring Street office. She assumed her new position on August 9. 2022.
Ms. Trinh has over 18 years with the Department having started her career with the Office of Credit Unions as a Financial Institutions Examiner in 2003. She received a promotion to Senior Financial Institutions Examiner in 2009 and has been serving as Credit Union Specialist since 2010. She earned her Bachelor of Arts in Business Administration with emphasis in Accounting from California State University Los Angeles. Ms. Trinh received a Commissioners Award for Excellence and Productivity in 2015.
Dianne Carroll Promoted to Credit Union Examinations Manager
Dianne Carroll was promoted to the position of Financial Institutions Manager – Examinations Manager based out of the DFPI’s Los Angeles Spring Street office. She assumed her new position on August 9, 2022.
Ms. Carroll joined the Department with the Office of Credit Unions in 2012 as a Financial Institution Examiner, and steadily moved up the ranks to Senior Financial Institutions examiner, and now to Financial Institutions Manager. She earned her Bachelor of Arts degree in Business Administration and Consumer Affairs from California State University Long Beach. Prior to joining the Department, Dianne worked as a finance director for a non-profit organization serving foster care youth and their families. She currently spends her spare time volunteering her expertise in accounting and business administration.
DFPI Hosting Multiple Student Loan Webinars in October
The DFPI is partnering with consumer advocates, government organizations, and California legislative offices to host multiple student loan webinars throughout October. Topics to be covered in these webinars include the California Student Borrower Bill of Rights, how to apply for the Public Service Loan Forgiveness (PSLF) waiver, the Biden-Harris Administrations Student Debt Relief application, and protecting yourself from student loan scams and fraud. With the PSLF waiver deadline coming at the end of this month and student loan repayments resuming next year, start applying for your student loan benefits and stay informed with the latest information. Space is limited, so register now! Register and share these great learning opportunities:
- October 10, 6 pm – Student Loan Workshop
- October 11, 12 pm – Student Loan Workshop
- October 11, 6 pm – Student Loan Workshop
- October 18, 4 pm – Student Loan Workshop
- October 20, 12 pm – Student Loan Resources for California Government Workers
- October 24, TBD – Student Loan Workshop
- October 26, 12pm – Applying for Student Debt Relief
For videos of past workshops, visit the DFPI “Californians with Student Loans” playlist set up on our YouTube Channel: https://www.youtube.com/playlist?list=PL9JLpvE-qjAYszf6F2mQdF1LSz-YP3RPi.
DFPI’s REES Task Force Awarded CLA Outstanding Achievement in Public Law
On Oct. 3, the California Lawyers Association (CLA) awarded its 2022 Outstanding Achievement in Public Law (OAPL) Award to the DFPI’s Real Estate Educational Services (REES) task force. The REES team led an historic 45-state agency task force in conjunction with the Conference of State Bank Supervisors (CSBS) to uncover qualifications fraud by over 600 mortgage loan originators nationwide. The task force team’s innovative use of resource sharing and creation of a nationwide settlement process resulted in over 500 settlements with implicated loan originators that included penalties and the surrender of licenses. The DFPI reached disciplinary settlements with over 170 licensees and revoked nine loan originator licenses. An article on the award is posted to the DFPI website, including a photo of the participating DFPI staff at the awards ceremony.
DFPI Receives NASAA Award for Safeguards Metals Action
On Sept. 20, Enforcement Counsel Danielle Stoumbos and Kelly Suk were awarded a North American Securities Administrators Association (NASAA) Team Award for their leadership on the Safeguard Metals litigation.
The California DFPI as a lead state, along with the Commodity Futures Trading Commission and 29 other state regulators, filed a federal civil lawsuit in the Central District of California against Safeguard Metals LLC and its principal for perpetrating a $68 million fraudulent scheme against more than 450 primarily elderly individuals nationwide. Safeguard Metals, a precious metals dealer, is alleged to have advised clients to dissolve their traditional retirement accounts to roll over into self-directed IRAs to purchase highly inflated and fraudulently marked up coins sold by the company.
The alleged $68 million scheme, which includes $26 million in markups alone, took place from between October 2017 through at least July 2021. The DFPI alleged violations of federal and state commodities laws and state securities laws. The complaint seeks a permanent injunction, disgorgement, restitution, rescission, and penalties.
Social Media “Finfluencers” – Who Should Consumers Trust?
Many Millennials and Gen Z-ers are using social media sources for information about investing rather than relying on more traditional sources such as brokerage or investment advisory firms. Influencers have taken notice and social media has become saturated with financial content. However, consumers should be aware of the risks involved with taking advice from unlicensed financial advisers. Financial influencers or “finfluencers” often don’t have the experience or qualifications to guide people on what’s best for them.
Consumers should be aware of the risks involved with taking advice from unlicensed financial advisers. The DFPI has posted an article on the topic at the DFPI website.
Commercial Bank Activity
Icon Business Bank
Proposed location: Street address to be determined in the vicinity of Riverside, Riverside County
Correspondent: James B. Jones
Carpenter & Company, 23 Corporate Plaza Drive, Suite 150 #D-11, Newport Beach, CA 92660
United Community Bank
Street address to be determined, Community of Encino, Los Angeles, Los Angeles County
Acquisition of Control
Patriot Financial Partners, GP IV, L.P., Patriot Financial Partners IV, L.P., Patriot Financial Partners Parallel IV, L.P., Patriot Financial Partners GP IV, LLC, Patriot Financial Advisors, LLC, Patriot Financial Advisors, L.P., to acquire control of Avidbank Holdings, Inc.
Strategic Value Investors, LP (the “Fund”); Strategic Value Bank Partners, LLC; Strategic Value Private Investors, LP; Strategic Value Private Partners, LLC; and Messrs. Benjamin Mackovak and Martin Adams, to acquire control of Community Bank of the Bay
Change of Name
Bank of Hemet, The, to change its name to HCN Bank
Icon Bank, to change its name to Icon Business Bank
Application amended: 9/22/22
Foreign (Other Nation) Bank Activity
ING Bank N.V.
333 S. Grand Avenue, Los Angeles (Representative office)
MUFG Bank, Ltd. (Representative offices)
- 6 Pointe Drive, Brea
- 10100 Santa Monica Boulevard, Los Angeles
- 18300 Von Karman Avenue, Irvine
- 2882 Sand Hill Road, Menlo Park
- 1980 Saturn Street, Monterey Park
- 1221 Broadway, Oakland
- 303 Twin Dolphin Drive, Redwood City
- 12760 High Bluff Drive, San Diego
- 21700 Oxnard Street, Woodland Hills
- 530 B Street, San Diego
Premium Finance Company Activity
New Premium Finance Company
Peak Premium Financing Corporation
660 Newport Center Drive, Newport Beach
X Capital Lending, Inc.
660 Newport Center Drive, Newport Beach
Rajni Kapur to acquire control of Principal Premium Financing, Inc.
Acquisition of Control
Rajni Kapur to acquire control of Principal Premium Financing, Inc.
Trust Company Activity
New Trust Company
Los Angeles Private Trust Company
Street address to be determined, Los Angeles
Money Transmitter Activity
Expensify Payments LLC
Change of Name
Pronto Money Transfer Inc. to change its name to Inter & Co Payments, Inc.
CLOTHILDE V. HEWLETT Commissioner, Department of Financial Protection and Innovation
The October 2022 Monthly Bulletin covers the month ended September 30, 2022.
It is issued pursuant to Financial Code section 376.
The Monthly Bulletin is available at no charge via e-mail.
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