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CDS Debt Relief LLC a/k/a CDS Debt Relief, LLC d/b/a CDS Financial,
David Lugo and Kevin Lugo
On October 6, 2026, the Commissioner issued an Order to Cease and Desist and Order Imposing Civil Penalty (“Order”), in the matter of CDS Debt Relief LLC a/k/a CDS Debt Relief, LLC d/b/a CDS Financial (“CDS Financial”), West Palm Beach, Florida and Saugus, Massachusetts, and its managers and control persons David Lugo and Kevin Lugo (collectively, “Respondents”).
The basis of the Order with respect to debt negotiation activity was that: (1) CDS Financial engaged or offered to engage in debt negotiation with at least 12 Connecticut debtors without obtaining the required license in violation of Section 36a-671(b) of the Connecticut General Statutes; (2) CDS Financial charged fees in excess of amounts permitted by the Schedule of Maximum Fees in violation of Section 36a-671b(b) of the Connecticut General Statutes; (3) CDS Financial entered into a contract with at least 1 Connecticut debtor which did not include the “Debtor’s three-day right to cancel” disclosure required in Connecticut in violation of Section 36a‑671b(a) of the Connecticut General Statutes; (4) CDS Financial and David Lugo employed a scheme, device or artifice to defraud or mislead Connecticut debtors in connection with debt negotiation, in that they enrolled Connecticut consumer debtors in a program under which CDS Financial promised to provide debt negotiation and related services, withdrew payments from the debtors’ bank accounts intended to be used to settle or pay off debts, deposited such funds into an account of CDS Financial, and then misappropriated such funds by spending the funds on operating expenses, direct payments to David Lugo and other personal expenses in violation of subdivision (1) of Section 36a-671f of the Connecticut General Statutes; (5) CDS Financial failed to comply with the debt negotiation provisions of Sections 36a-671 to 36a-671e, inclusive, of the Connecticut General Statutes in violation of subdivision (4) of Section 36a-671f of the Connecticut General Statutes; and (6) David Lugo and Kevin Lugo, as control persons of CDS Financial, failed to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable debt negotiation laws and regulations in violation of subdivision (9) of Section 36a-671f of the Connecticut General Statutes.
The basis of the Order with respect to debt adjustment activity was that: (1) CDS Financial engaged in the business of debt adjustment in connection with at least 12 Connecticut debtors without obtaining the required license in violation of Section 36a‑656(a) of the Connecticut General Statutes; (2) CDS Financial and David Lugo employed a scheme, device or artifice to defraud or mislead Connecticut consumers in connection with debt adjustment, in that they enrolled Connecticut debtors in a program under which CDS Financial promised to provide debt adjustment and related services, withdrew payments from the debtors’ bank accounts intended to be used to settle or pay off debts, deposited such funds into an account of CDS Financial and then misappropriated such consumer funds by spending the funds on operating expenses, direct payments to David Lugo and other personal expenses in violation of subdivision (7) of Section 36a-661 of the Connecticut General Statutes; (3) CDS Financial failed to comply with the debt adjustment provisions of Sections 36a-655 to 36a-665, inclusive, of the Connecticut General Statutes, including, but not limited to, that CDS Financial failed to comply with Section 36a-659 of the Connecticut General Statutes by depositing payments received from debtors who are residents of Connecticut for the benefit of creditors into CDS Financial’s general operating account instead of a separate bank account for the benefit of debtors in violation of subdivision (10) of Section 36a-661 of the Connecticut General Statutes; and (4) David Lugo and Kevin Lugo, as control persons of CDS Financial, failed to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable debt adjustment laws and regulations in violation of subdivision (15) of Section 36a-661 of the Connecticut General Statutes.
The basis of the Order with respect to money transmission activity was that: (1) CDS Financial engaged in the business of money transmission without a license by receiving monies from consumers to be held and then transmitted to creditors on behalf of the consumers in the future in violation of Section 36a-597(a) of the Connecticut General Statutes; (2) CDS Financial and David Lugo employed a scheme, device or artifice to defraud or mislead Connecticut consumers, engaged in unfair or deceptive practices towards Connecticut consumers in connection with money transmissions and obtained property by fraud or misrepresentation, in that CDS Financial received money or monetary value from Connecticut consumer intended for future transmission to the consumers’ creditors pursuant to a contract between CDS Financial and the consumers, and then failed to transmit or otherwise hold the consumer’s money or monetary value, instead misappropriating the consumer funds by placing such funds in CDS Financial’s operating account and converting such funds for its own use in operating expenses, cash withdrawals, direct payments to David Lugo and other personal expenses in violation of subdivisions (1), (2) and (3) of Section 36a-607(c) of the Connecticut General Statutes, respectively; (3) CDS Financial failed to comply with the money transmission provisions of Sections 36a-595 to 36a-614, inclusive, of the Connecticut General Statutes and failed to perform written agreements with parties to a money transmission transaction in violation of subdivisions (4) and (8) of Section 36a-607(c) of the Connecticut General Statutes, respectively; and (4) David Lugo and Kevin Lugo, as control persons of CDS Financial, failed to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable money transmission laws and regulations in violation of subdivision (10) of Section 36a‑607(c) of the Connecticut General Statutes.
An additional basis of the Order was that CDS Financial failed to make its records available to the Commissioner or otherwise cooperate with the Department’s Investigation, in violation of Section 36a‑17(e) of the Connecticut General Statutes.
Respondents failed to request a hearing within the prescribed time period and the allegations against each Respondent were deemed admitted. As a result, the Commissioner: (1) ordered CDS Financial to cease and desist from violating Sections 36a-17(e), 36a-597(a) and 36a-656(a) of the Connecticut General Statutes, subdivisions (1), (2), (3), (4) and (8) of Section 36a-607(c) of the 2026 Supplement to the General Statutes, subdivisions (7) and (10) of Section 36a-661 of the Connecticut General Statutes, Sections 36a-671(b), 36a-671b(a) and 36a-671b(b) of the 2026 Supplement to the General Statutes, and subdivisions (1) and (4) of Section 36a-671f of the Connecticut General Statutes; (2) ordered David Lugo to cease and desist from violating subdivisions (1), (2), (3) and (10) of Section 36a-607(c) of the 2026 Supplement to the General Statutes, subdivisions (7) and (15) of Section 36a‑661 of the Connecticut General Statutes, and subdivisions (1) and (9) of Section 36a-671f of the Connecticut General Statutes; (3) ordered Kevin Lugo to cease and desist from violating subdivision (10) of Section 36a-607(c) of the 2026 Supplement to the General Statutes, subdivision (15) of Section 36a-661 of the Connecticut General Statutes, and subdivision (9) of Section 36a-671f of the Connecticut General Statutes; (4) imposed a civil penalty of $1,200,000 upon CDS Financial; (5) imposed a civil penalty of $600,000 upon David Lugo; and (6) imposed a civil penalty of $300,000 upon Kevin Lugo. In addition, the Order to Make Restitution and Order to Provide Disgorgement, both issued against Respondents on August 18, 2026, became permanent on September 9, 2026.
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