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OAH 16-1005-21890-2 |
STATE OF
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE DEPARTMENT OF COMMERCE
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In the Matter of Jason
McCallum, Justin McCallum, |
FINDINGS OF FACT, CONCLUSIONS, AND RECOMMENDATION |
This matter came before
Administrative Law Judge Manuel J. Cervantes (ALJ) on May 5, 2011, at 1:30 p.m.,
at the Office of Administrative Hearings (OAH), pursuant to a Notice and Order
for Hearing and Order to Show Cause, filed March 10, 2011.
Michael J. Tostengard, Assistant
Attorney General, appeared on behalf of the Department of Commerce (Department).
None of the Respondents appeared after due notice. On May 11, 2011,the ALJ received the
Department’s written motion for a default recommendation. The record closed on May
25, 2011, upon the lapse of Respondent’s last day for filing a response.
STATEMENT OF ISSUE
1.
Did Respondents engage in unlicensed loan
modification activities in at least 118 instances, thereby repeatedly violating
Minn. Stat. § 58.04, subds. 1 and 3 (2010)?
2.
Did Respondents habitually fail to complete the
tasks it was paid in advance to perform, thereby repeatedly demonstrating
untrustworthiness and incompetence in violation of Minn. Stat. § 58.12, subd. 1(b)(2)(v)
(2010)?
3. Did Respondents advertise a money back guarantee, yet routinely failed to provide refunds on services not rendered despite written and oral requests, thereby repeatedly demonstrating untrustworthiness and incompetence and engaging in fraudulent, deceptive, coercive and dishonest practices in violation of Minn. Stat. § 58.12, subd. 1(b)(2)(iv)(v) (2010)?
4. Did Respondents fail to disclose to each customer the percentage of customers who actually received a loan modification during the 12-month period ending 10 business days before the date of the contracts in question were signed or while charging advance fees, thereby violating Minn. Stat. § 58.16, subd. 2(a)(6) (2010)?
5. Did Respondents fail to respond to questions, concerns, and inquiries made by its customers who had paid advance fees and then disconnect its phone lines without notice, thereby demonstrating untrustworthiness and incompetence in violation of Minn. Stat. § 58.12, subd. 1(b)(2)(v) (2010)?
6. Did Respondents charge and collect a fee prior to fully performing each and every service the Respondents were contracted to perform, thereby repeatedly violating Minn. Stat. § 325N.04(1) (2010)?
7.
Were Respondents subject to administrative
actions in
Based
on the hearing record, the Administrative Law Judge makes the following:
FINDINGS
OF FACT
1.
Respondents are
not licensed by the Department in any capacity. Respondents Jason McCallum,
Justin McCallum and Chad Buchanan are all owners and officers of Respondent
Save My Home USA Co., Inc. Respondents have been known to operate under the
following: Save My Home USA; Savemyhomeusa; and 2MM, LLC.
2.
The Department
conducted an investigation of Respondents and learned that Respondents
contacted approximately 118
3.
On August 25, 2010, the Department sent
an administrative subpoena to Respondents at their last known address. No
response was received. The telephone lines used by Respondents have been
disconnected. It does not appear that the company is doing any more business in
4.
As part of its
loan modification program, the Respondents offered and advertised a money back
guarantee to its customers if the loan was not successfully modified. Upon
information and belief, of the customers who did not receive a loan
modification, no one received a refund despite the fact that many requested refunds.
The following is a table of 23 customers interviewed by the Department concerning
the Respondents’ business activities.
|
Customer |
Fee Paid to SMH |
Received Loan Modification |
Refund Requested |
Refund Received |
|
J.B. L.B. C.B. M.&L.B. J.B. A.&R.B. B.B. |
$2,995 $2,995 $2,100 $2,100 $2,300 $3,990 $3,095 |
N N N N N N N |
Y Y Y Y Y Y Y |
N N N N N N N |
|
Customer |
Fee Paid SMH to |
Received Loan Modification |
Refund Requested |
Refund Received |
|
C.C.
|
$2,395 |
N |
Y |
N |
|
J.C.
|
$2,000 |
N |
N |
N |
|
B.D.
|
$2,200 |
Y |
N/A |
N/A |
|
T.D.
|
$2,395 |
N |
Y |
N |
|
P.D.
|
$2,000 |
N |
Y |
N |
|
J.D.
|
$1,000 |
N |
Y |
N |
|
J.F.
|
$1,895 |
N |
Y |
N |
|
K.F.
|
$3,990 |
N |
Y |
N |
|
S.
& M.J. |
$2,995 |
N |
Y |
N |
|
M.G.
|
$2,995 |
N |
Y |
N |
|
A.G.
|
$1,500 |
N |
Y |
N |
|
M.G.
|
$2,500 |
N |
Y |
N |
|
T.H.
|
$2,500 |
N |
Y |
N |
|
D.H.
|
$2,000 |
N |
Y |
N |
|
L.G.
|
$2,095 |
N |
Y |
N |
|
J.S.
|
$2,995 |
N |
Y |
N |
Only one of the 23 customers listed above received a loan modification.
6. Numerous
customers who paid an advance fee stated that prior to the completion of their
loan modification services, Respondents’ phone lines were disconnected without
notice.
7. The
Respondents have been the subject of administrative actions in
Based on these Findings of Fact, the ALJ makes the following:
CONCLUSIONS
OF LAW
1. The Administrative Law Judge and the
Commissioner of Commerce have jurisdiction in this matter pursuant to Minn.
Stat. §§ 14.50, 45.027, and 58.12.
2. The Notice and Order for Hearing, Order for Prehearing Conference, Order to Show Cause, and Statement of Charges was proper, and the Department has complied with all relevant procedural legal requirements.
3. Pursuant to Minn. R. 1400.6000, a contested
case may be decided adversely to a party who defaults. Upon default, the allegations and claims set
forth in the Notice of and Order for Hearing, Order for Prehearing Conference, Order
to Show Cause, and Statement of Charges may be taken as true or deemed proved
without further evidence.
4. Based upon the facts set forth in the
Statement of Charges, enumerated above, Respondents violated Minn. Stat.
§ 58.04, subds. 1 and 3, by engaging
in unlicensed loan modification activities in at least 118 instances.
5.
Based upon the
facts set forth in the Statement of Charges enumerated above, Respondents violated
Minn. Stat. § 58.12, subd. l(b)(2)(v), by habitually failing to complete the
tasks it was paid in advance to perform, thereby repeatedly demonstrating
untrustworthiness and incompetence.
6.
Based upon the
facts set forth in the Statement of Charges enumerated above, Respondents
violated Minn. Stat. § 58.12, subd. 1(b)(2)(iv)(v), by advertising a money back
guarantee, yet routinely failing to provide refunds on services not rendered
despite written and oral requests, thereby repeatedly demonstrating
untrustworthiness and incompetence and engaging in fraudulent, deceptive,
coercive, and dishonest practices.
7.
Based upon the facts set forth in the
Statement of Charges enumerated above, Respondents violated Minn. Stat. §
58.16, subd. 2(a)(6), by failing to disclose to each customer the percentage of
customers who actually received a loan modification during the 12-month period
ending 10 business days before the date of the contracts in question were
signed or while charging advance fees.
8.
Based upon the facts set forth in the
Statement of Charges enumerated above, Respondents violated Minn. Stat. §
58.12, subd. 1(b)(2)(v), by failing to respond to questions, concerns, and
inquiries made by its customers who had paid advance fees and then , without
notice, disconnected its phone lines thereby demonstrating untrustworthiness
and incompetence.
9.
Based upon the
facts set forth in the Statement of Charges enumerated above, Respondents
violated Minn. Stat. § 325N.04(1), by charging and collecting a fee prior to
fully performing each and every service the Respondents were contracted to
perform.
10.
Based upon the
facts set forth in the Statement of Charges enumerated above, Respondents
violated Minn. Stat. § 58.12, subd. 1(b)(2)(vii), by being the subject of administrative
actions in
11.
This Order is in
the public interest.
Based upon these Conclusions, the Administrative Law Judge
makes the following:
RECOMMENDATION
The Administrative Law Judge recommends that the
Commissioner of Commerce discipline, censure, and/or impose an appropriate
civil penalty against
Respondents Jason McCallum
and Justin
Dated: June 14 2011
/s/ Manuel J. Cervantes
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MANUEL
J. CERVANTES Administrative
Law Judge |
Reported: No Digital Recording
NOTICE
This report is a
recommendation, not a final decision.
The Commissioner of the Minnesota Department of Commerce will make the
final decision after a review of the record.
The Commissioner may adopt, reject or modify the Findings of Fact,
Conclusions, and Recommendations. Under
Minn. Stat. § 14.61, the final decision of the Commissioner shall not be made
until this Report has been made available to the parties to the proceeding for
at least ten days. An opportunity must
be afforded to each party adversely affected by this Report to file exceptions
and present argument to the Commissioner.
Parties should contact Michael Rothman, Commissioner, Department of
Commerce,
(651) 296–6025 to learn about
the procedure for filing exceptions or presenting argument.
If the Commissioner fails to
issue a final decision within 90 days of the close of the record, this Report
will constitute the final agency decision under Minn. Stat. § 14.62, subd. 2a.
The record closes upon the filing of exceptions to the Report and the
presentation of argument to the Commissioner, or upon the expiration of the
deadline for doing so. The Commissioner
must notify the parties and the Administrative Law Judge of the date on which
the record closes.
Under Minn. Stat. § 14.62, subd. 1, the agency is required
to serve its final decision upon each party and the Administrative Law Judge by
first class mail or as otherwise provided by law.