Connecticut’s banking regulator has ordered a debt relief company to stop doing business in the state, alleging it collected payments from at least 12 Connecticut consumers but used some of the money for personal expenses rather than settling their debts.
Banking Commissioner Jorge L. Perez issued a temporary cease and desist order Aug. 18 against CDS Debt Relief LLC, which does business as CDS Financial, and its managers, David Lugo and Kevin Lugo. The order also directs the company and the two men to repay Connecticut consumers and surrender revenue generated through the business.
The order has been served, but no hearing has been requested, Department of Banking spokesperson Matthew Smith said. The respondents have 14 days after receiving the order to request a hearing.
CDS Financial lists addresses in West Palm Beach, Florida, and Saugus, Massachusetts. The company has never been licensed to provide debt negotiation, debt adjustment or money transmission services in Connecticut or any other state, according to the order.
The Department of Banking began investigating in August 2024 after a Connecticut man complained that he had made seven monthly payments of $1,000 to CDS Financial but received no debt-relief services.
The man had enrolled $46,934 in unsecured debt under a contract requiring 36 monthly payments of $1,000, the order says. When he contacted the company about his account, his calls were repeatedly disconnected and his emails went unanswered, while creditors continued contacting him.
Bank records cited in the order point to a broader pattern. From February through July 2024, about 1,569 consumer payments totaling $488,751 were deposited into a single CDS Financial operating account from debtors across the country. The department found no evidence in the account records that CDS Financial used the money to pay off any consumers’ debts.
During the same six-month period, $62,700 was transferred from the account to David Lugo’s personal checking and savings accounts, according to the order. Another $95,008 was withdrawn in cash.
The account also was used to make $113,100 in American Express payments, $32,216 in Discover payments, $3,311 in Capital One payments and $8,143 in payments to Toyota Financial Services for a personal vehicle, the order says.
The records show payments were withdrawn from the bank accounts of consumers in Enfield, Niantic, Meriden, Easton, Wilton, Wallingford, Bridgeport, Litchfield, Naugatuck and Southington. Those payments totaled $11,858 during the six-month period reviewed by the department.
The order also cites a Waterbury woman’s January 2025 complaint to the Better Business Bureau, in which she wrote that she had lost contact with the company and was “out $8,000.”
CDS Financial’s contract called for a fee equal to 25% of a consumer’s enrolled debt. Connecticut’s fee schedule caps charges by debt negotiators at 10% of the amount by which a consumer’s debt is reduced.
The department said CDS Financial did not respond to three emails sent in 2024 or to a certified letter sent in December 2025. Smith said the department does not know whether the company is still enrolling consumers.
The Department of Banking also declined to say whether the matter had been referred to prosecutors or another agency.
If CDS Financial or the Lugos request a hearing, it is scheduled for Oct. 14. If no hearing is requested, the allegations in the order will be deemed admitted, and the restitution and disgorgement provisions will become permanent. Perez also could impose civil penalties of up to $100,000 per violation.
