Consumer Financial Protection Bureau v. RPM Mortgage, Inc. et al
Filing
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FINAL JUDGMENT. Signed by Magistrate Judge Maria-Elena James on 6/8/2015. (rmm2S, COURT STAFF) (Filed on 6/9/2015)
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
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Consumer Financial Protection Bureau,
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Plaintiff,
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Case No. 4:15-cv-02475
STIPULATED FINAL JUDGMENT
AND ORDER
v.
RPM Mortgage, Inc. and Erwin Robert
Hirt, individually,
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Defendants.
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The Consumer Financial Protection Bureau ("Bureau") commenced this civil
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action on June 4, 2015, to obtain injunctive and monetary relief from RPM Mortgage,
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Inc. ("RPM") and Erwin Robert Hirt (collectively, "Defendants"). The Complaint alleges
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violations of the Loan Originator Compensation Rule, 12 C.P.R. § 226.36(d)(l)(i)(2011)
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(recodified as 12 C.P.R.§ 1026.36(d)(l)(i) (2011)), and§ 1036(a) ofthe Consumer
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Financial Protection Act of2010 (CFPA), 12 U.S.C. § 5536(a)(l)(A).
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The parties, by and through respective counsel, agree to the entry of this Stipulated
Final Judgment and Order ("Order").
THEREFORE, it is ORDERED:
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FINDINGS AND CONCLUSIONS
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1.
This Court has jurisdiction over the parties and the subject matter of this
2.
The Bureau and Defendants agree to entry of this Order, without
action.
adjudication of any issue of fact or law, to settle and resolve all matters in dispute arising
from the conduct alleged in the Complaint to the date this Order is entered.
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3.
Defendants neither admit nor deny any allegations in the Complaint, except
as specifically stated in this Order. For the purposes of this Order, Defendants admit the
facts necessary to establish the Court's jurisdiction over them and the subject matter of
this action.
4.
Defendants waive service under Rule 4(d) of the Federal Rules of Civil
Procedure, and waive all rights to seek judicial review or otherwise challenge or contest
the validity of this Order. Defendants also waive any claim they may have under the
Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action
to the date of this Order. Each Party will bear its own costs and expenses, including
without limitation attorneys' fees.
5.
Entry of this Order is in the public interest.
DEFINITIONS
The following definitions apply to this Order:
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"Affected Consumer" means any person (i) who obtained a closed-end
mortgage loan for personal, family, or household use through a Loan Originator, (ii)
whose Loan Originator received a positive expense-account contribution from RPM
associated with such mortgage loan between April 6, 2011 and the Effective Date, and
(iii) whose Loan Originator received an Expense Account Payment from RPM between
April 6, 2011 and the Effective Date.
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"Effective Date" means the date on which this Order is entered on the
docket.
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"Enforcement Director" means the Assistant Director of the Office of
Enforcement for the Consumer Financial Protection Bureau, or his delegee.
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"Loan Originator" means an employee of RPM who meets the definition of
"loan originator" in the Truth in Lending Act, 15 U.S.C. § 1601 et seq., and its
implementing regulations.
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"Expense Account Payment" means a debit from a Loan Originator's
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expense account that was associated with a bonus or supplemental commission payment
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to that originator from RPM or a price concession relating to mortgage loans closed by
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that originator, as described in the Complaint.
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"Related Consumer Action" shall mean a private action by or on behalf of
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one or more consumers or an enforcement action by another governmental entity brought
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against any of the Defendants, or against any Loan Originator, by or on behalf of a
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consumer based on substantially the same facts alleged in the Complaint.
12.
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"RPM" means RPM Mortgage, Inc. and any successors or assigns.
ORDER
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A.
Injunctive Relief
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IT IS ORDERED that Defendants and RPM's officers, agents, servants,
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employees, and all other persons in active concert or participation with them who have
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actual notice of this Order, whether acting directly or indirectly, are permanently enjoined
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from paying compensation to a Loan Originator in violation of the Truth in Lending Act,
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15 u.s.c. § 1601 et seq., and its implementing regulations and§ 1036(a) ofthe
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Consumer Financial Protection Act of2010 (CFPA), 12 U.S.C. § 5536(a)(l)(A).
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B.
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Monetary Relief
14.
IT IS FURTHER ORDERED that a judgment for equitable monetary relief
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is hereby entered in favor of the Bureau and against Defendants, jointly and severally, in
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the amount of $18,000,000.
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15.
Within 7 days of the Effective Date, Defendants must pay to the Bureau, by
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wire transfer to the Bureau or to the Bureau's agent, and according to the Bureau's wiring
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instructions, $2,000,000 in partial satisfaction of the judgment as ordered in Paragraph 14
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ofthis Order.
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16.
Defendants must also pay to the Bureau, by wire transfer to the Bureau or to
the Bureau's agent, and according to the Bureau's wiring instructions, $16,000,000 in full
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satisfaction of the judgment as ordered in Paragraph 14 of this Order no later than
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September 30, 2015.
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Any funds received by the Bureau in satisfaction of this judgment will be
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deposited into a fund or funds administered by the Bureau or its agent, according to
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applicable statutes and regulations, to be used for redress for Affected Consumers,
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including but not limited to refund of moneys, restitution, damages, or other monetary
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relief, and for any attendant expenses for the administration of any such redress.
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If the Bureau, in its sole discretion, determines that redress to Affected
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Consumers is wholly or partially impracticable or if funds remain after redress is
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(including consumer-information remedies) reasonably related to the violations alleged in
the Complaint. Any funds not used for such equitable relief will be deposited in the
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United States Treasury as disgorgement. Defendants will have no right to challenge any
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actions that the Bureau or its representatives may take under this paragraph.
completed, the Bureau may apply any remaining funds for other equitable relief
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19.
Payment of redress to any Affected Consumer under this Order may not be
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conditioned on that Affected Consumer waiving any right.
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C.
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Civil Money Penalties
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Based on the factors in§ 1055(c)(3) ofthe CFPA, 12 U.S.C. § 5565(c)(3), a
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RPM in the amount of$1,000,000.
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Based on the factors in§ 1055(c)(3) ofthe CFPA, 12 U.S.C. § 5565(c)(3), a
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judgment for a civil money penalty is hereby entered in favor of the Bureau and against
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Erwin Robert Hirt in the amount of $1,000,000.
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Within 7 days of the Effective Date, Defendants shall pay their respective
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penalties in the form of a wire transfer to the Bureau or to such agent as the Bureau may
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direct, and in accordance with wiring instructions to be provided by counsel for the
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Bureau.
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23.
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The civil money penalties paid under this Order shall be deposited in the
Civil Penalty Fund ofthe Bureau in accordance with§ 1017(d) ofthe CFPA, 12 U.S.C. §
5497(d).
24.
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Defendants shall treat the civil money penalties as a penalties paid to the
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government for all purposes. Regardless of how the Bureau ultimately uses those funds,
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Defendants shall not:
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a.
claim, assert, or apply for a tax deduction or tax credit with regard to
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any federal, state, or local tax for any civil money penalty that Defendants
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pay under this Order; or
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b.
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indemnification from any source, including but not limited to payment made
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pursuant to any insurance policy, with regard to any civil money penalty that
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Defendants pay under this Order.
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D.
seek or accept, directly or indirectly, reimbursement or
Other Monetary Provisions
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In the event of any default on Defendants' obligations to make payment
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under this Order (including any redress payment), interest, computed under 28 U.S.C. §
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1961, as amended, will accrue on any outstanding amounts not paid from the date of
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default to the date of payment, and will immediately become due and payable.
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Defendants must relinquish all dominion, control, and title to the funds paid
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to the fullest extent permitted by law and no part of the funds may be returned to
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Defendants.
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27.
Under 31 U.S.C. § 7701, Defendants, unless they have already has done so,
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must furnish to the Bureau their social-security numbers or taxpayer-identification
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numbers, which may be used for purposes of collecting and reporting on any delinquent
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amount arising out of this Order.
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Within 30 days of the entry of a final judgment, consent order, or settlement
in a Related Consumer Action of which Defendants have actual knowledge, Defendants
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shall notify the Bureau as described below in Section H (Notices) of the final judgment,
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consent order, or settlement in writing. That notification shall indicate the amount, if
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any, that Defendants or Loan Originators paid or are required to pay to consumers and
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describe the consumers or classes of consumers who will be paid, if any.
29.
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Hirt agrees that under§ 604(a)(1) ofthe Fair Credit Reporting Act, 15
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U.S.C. § 1681b(a)(l), the Bureau may obtain from any consumer-reporting agency a
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consumer report concerning him. The Bureau may use any such report to collect on and
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report any amount not paid as required by this Order.
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E.
Reporting Requirements
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IT IS FURTHER ORDERED that for 5 years from the Effective Date,
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RPM must notify the Bureau of any of the following: a dissolution, assignment, sale,
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merger, or other action that would result in the emergence of a successor company; the
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creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or
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practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by
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or against RPM; or a change in RPM's name or address. RPM must provide this notice
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at least 30 days before the development or as soon as practicable after learning about the
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development, whichever is sooner.
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31.
Within 7 days of the Effective Date, RPM shall designate at least one
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telephone number and an email, physical, and postal address as points of contact, which
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Bureau representatives may use to communicate with it.
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32.
For 3 years from the Effective Date, RPM shall report any change in the
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information required to be submitted under Paragraph 31 at least 30 days before such
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change; provided, however, that with respect to any proposed change about which RPM
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learns less than 30 days before the date such action is to take place, it shall notify the
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Bureau as soon as is practicable after obtaining such knowledge.
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33.
For 3 years from the Effective Date, Hirt shall notify the Bureau of: (a) any
change in name, including aliases or fictitious names; (b) any change in residence, postal
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address, email address, or telephone number; (c) any change in title or role in any
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business activity, including any business for which he perform services, whether as an
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employee, officer, or otherwise, and any entity in which he has any ownership interest,
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identifying for each its name, physical address, and Internet address; or (d) the filing of
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any bankruptcy petition or proceeding by or against him.
34.
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Within 7 days of the Effective Date, Hirt shall:
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a.
identify a contact telephone number, email address, and home
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address;
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b.
identify all titles and roles for all business activities, including any
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business for which he performs services whether as an employee or
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otherwise and any entity in which he has any ownership interest; and
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c.
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title, role, responsibilities, participation, authority, control, and any
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ownership.
35.
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describe in detail his involvement in each such business, including
For 3 years from the Effective Date, Hirt shall report any change in the
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information required to be submitted under Paragraph 34 at least 30 days before such
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change; provided, however, that with respect to any proposed change about which he
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learns less than 30 days before the date such action is to take place, he shall notify the
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Bureau as soon as is practicable after obtaining such knowledge.
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F.
Order Distribution and Acknowledgement
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IT IS FURTHER ORDERED that within 7 days of the Effective Date,
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Defendants must submit to the Enforcement Director an acknowledgment of receipt of
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this Order, sworn under penalty of perjury.
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37.
Within 30 days of the Effective Date, RPM must deliver a copy of this Order
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to each of its board members and executive officers, as well as to any managers,
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employees, service providers, any business entity that has common or overlapping
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ownership with RPM, and other agents and representatives who have responsibilities
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related to the subject matter of this Order.
38.
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For 5 years from the Effective Date, RPM must deliver a copy of this Order
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to any business entity resulting from any change in structure referred to in Section E, any
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future board members and executive officers, as well as to any managers, employees,
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service providers, and other agents and representatives who will have responsibilities
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related to the subject matter of this Order before they assume their responsibilities.
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copy of this Order, ensuring that any electronic signatures comply with the requirements
39.
RPM must secure a signed and dated statement acknowledging receipt of a
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of theE-Sign Act, 15 U .S.C. § 7001 et seq., within 30 days of delivery from each of its
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board members, executive officers, and managers who received a copy of this Order
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under Paragraph 3 7, and from all persons receiving a copy of this Order under Paragraph
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38. Additionally, within 40 days of the Effective Date, RPM must certify to the Bureau
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that it has complied with the requirements of Paragraph 37.
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G.
Recordkeeping
40.
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IT IS FURTHER ORDERED that Defendants must create and retain for
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at least 5 years from the Effective Date all documents and records necessary to
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demonstrate full compliance with each provision of this Order, including documents
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detailing the amounts, dates, and components of all compensation paid to Loan
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Originators and how such compensation was calculated, and all other submissions to the
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Bureau.
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41.
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Defendants must make the documents identified in Paragraph 40 available to
the Bureau upon the Bureau's request.
H.
Notices
42.
IT IS FURTHER ORDERED that unless otherwise directed in writing by
the Bureau, Defendants must provide all submissions, requests, communications, or
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other documents relating to this Order in writing, with the subject line, "In re RPM
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Mortgage, Inc. and Erwin Robert Hirt, File No. 2013-0962-02" and send them either:
a.
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By overnight courier (not the U.S. Postal Service), as follows:
Assistant Director for Enforcement
Consumer Financial Protection Bureau
ATTENTION: Office ofEnforcement
1625 Eye Street, N.W.
Washington D.C. 20006; or
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By first class mail to the below address and contemporaneously by
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email to Enforcement Compliance@cfpb.gov:
Assistant Director for Enforcement
Consumer Financial Protection Bureau
ATTENTION: Office ofEnforcement
1700 G Street, N.W.
Washington D.C. 20552
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I.
Cooperation with the Bureau
43.
IT IS FURTHER ORDERED that Defendants must cooperate fully to help
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the Bureau determine the identity, location, and any and all other available information
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which the Bureau deems relevant concerning each Affected Consumer. Defendants must
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provide such information in their or their agents' possession or control within 30 days of
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receiving a written request from the Bureau.
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44.
Defendants must cooperate fully with the Bureau in this matter and in any
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investigation related to or associated with the conduct described in the Complaint.
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Defendants must provide truthful and complete information, records, evidence, and
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testimony. Defendants must cause its officers, employees, representatives, or agents to
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appear for interviews, discovery, hearings, trials, and any other proceedings that the
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Bureau may reasonably request upon 5 days written notice, or other reasonable notice, at
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such places and times as the Bureau may reasonably designate, without the service of
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compulsory process.
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J.
Compliance Monitoring
45.
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IT IS FURTHER ORDERED that, for purposes of monitoring Defendants'
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compliance with this Order, Defendants must submit, within 30 days of receipt of a
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written request from the Bureau, additional compliance reports or other requested
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information, which must be made under penalty of perjury; provide sworn testimony; or
produce documents.
46.
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Defendants, unless Defendants retains counsel related to these communications.
47.
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For purposes of this Section, the Bureau may communicate directly with
Defendants must permit Bureau representatives to interview any employee
or other person affiliated with Defendants who has agreed to such an interview. The
person interviewed may have counsel present.
48.
Nothing in this Order limits the Bureau's lawful use of compulsory process
under 12 U.S.C. § 5526 and 12 C.F.R. § 1080.6.
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49.
Defendants agrees to be subject to the Bureau's supervisory authority under
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12 U.S.C. § 5514. Consistent with 12 C.F.R. § 1091.111, Defendants may not petition
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for termination of supervision under 12 C.F.R. § 1091.113.
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K.
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Release
50.
The Bureau releases and discharges Defendants from all potential liability
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for law violations that the Bureau has or might have asserted based on the practices
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alleged in the Complaint, to the extent such practices occurred before the Effective Date
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and the Bureau knows about them as of the Effective Date. The Bureau may use the
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practices alleged in the Complaint in future enforcement actions against Defendants and
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its affiliates, including, without limitation, to establish a pattern or practice of violations
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or the continuation of a pattern or practice of violations or to calculate the amount of any
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penalty. This release does not preclude or affect any right of the Bureau to determine and
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ensure compliance with the Order, or to seek penalties for any violations of the Order.
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L.
Retention of Jurisdiction
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modification, and enforcement of this Order.
IT IS SO ORDERED.
aria-E
Judge M
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es
lena Jam
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United States District Judge
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JUNE 8, 2015
UNIT
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DATED:
S DISTRICT
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The Court will retain jurisdiction of this matter for purposes of construction,
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