ALJDEC

00A-108241-LOT · Arizona Lottery · 2000-12-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 28, 2000 APPEARANCES: Francis P. Koopman, Esq. represented Frank Licatini. Assistant Attorney General LaDonna Ockinga represented the Arizona Lottery. ADMINISTRATIVE LAW JUDGE: Daniel G. Martin _____________________________________________________________________ Frank Licatini appealed the Arizona Lottery’s decision to revoke his lottery retailer’s license. Based on the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order: FINDINGS OF FACT On April 8, 1998, the Arizona Lottery (the “Lottery”) issued a Lottery Retailer’s License (the “License”) to Frank Licatini. After receiving the License, Mr. Licatini conducted lottery retailing at a 7-Eleven franchise located in Phoenix, Arizona. On March 10, 2000, a Maricopa County Grand Jury handed down an indictment accusing Mr. Licatini of having violated several provisions of this State’s gambling laws. At the same time, the Grand Jury indicted Steven Cammarata, the alleged “bookmaker” with whom Mr. Licatini had been associating, for similar violations. By correspondence dated May 19, 2000, the Lottery advised Mr. Licatini that it had learned of the indictment and that it was temporarily suspending the License until Mr. Licatini was either exonerated or convicted. Shortly thereafter, Mr. Licatini surrendered his lottery terminal and the other lottery products in his possession, and ceased lottery retail operations.

On July 5, 2000, Mr. Licatini entered into a plea agreement with the State of Arizona under which he pled guilty to Benefiting from Gambling, a Class 1 Misdemeanor, in violation of A.R.S. §§ 13-3301, -3304, -707 and -802. On August 16, 2000, Maricopa County Superior Court Judge David Cole found Mr. Licatini guilty of Benefiting from Gambling, a Class 1 Misdemeanor. Judge Cole suspended imposition of sentencing and placed Mr. Cole on probation for a period of 2 years commencing August 16, 2000. The facts and circumstances giving rise to Mr. Licatini’s indictment and conviction are as follows: In November, 1999, Mr. Licatini referred an undercover police officer (Phoenix Police Officer William White) to Mr. Licatini’s “bookmaker,” Mr. Cammarata. At this time, Mr. Licatini had been placing bets with Mr. Cammarata for approximately 3 months (primarily on football games). As a bonus for Mr. Licatini’s referral of Officer White (who Mr. Licatini did not know was an undercover officer), Mr. Cammarata gave Mr. Licatini’s “account” a credit based on the amount of Officer White’s bets. This credit was the benefit that supported Mr. Licatini’s conviction for Benefiting from Gambling. By correspondence dated August 23, 2000, the Lottery advised Mr. Licatini that it was revoking the License. The Lottery claimed that Mr. Licatini’s conviction impaired his reputation for honesty and integrity, and therefore constituted grounds for revocation under Arizona Administrative Code (“A.A.C.”) R19-3-203(A)(4). [1] On December 7, 2000, following Mr. Licatini’s request for hearing on the Lottery’s revocation of the License, the Lottery issued a formal Notice of Hearing setting this matter for hearing on December 28, 2000. In that Notice of Hearing, the Lottery alleged as grounds for revocation of the License that Mr. Licatini had violated A.A.C. R19-3-203(A)(10)(a) (conviction of a crime involving gambling) and A.A.C. R19-3-203(A)(5) (commission of acts that impair the licensee’s reputation for honesty and integrity). In support of its charge that Mr. Licatini’s reputation for honesty and integrity has been impaired, the Lottery asserted that Mr. Licatini has an addiction to gambling. The sole basis for the Lottery’s contention in this regard consists of the Presentence Report issued in connection with Mr. Licatini’s conviction (Exhibit 9). The Administrative Law Judge reviewed the Presentence Report, and finds the single reference to gambling addiction (at page 1 ( a hearsay statement by the reporting officer, Adult Probation Officer Deric Hall, that Officer William White “feels” Mr. Licatini has an addiction to gambling), to be insufficient evidence to support the Lottery’s claim.[2] Mr. Licatini testified in his own behalf. That testimony, coupled with undisputed information contained in the Presentence Report, yields the following salient facts: l. Mr. Licatini has owned and operated the 7-Eleven franchise at which he was conducting his lottery retail operation under the License for approximately 2½ years. m. Mr. Licatini has been a successful 7-Eleven franchisee. n. Prior to the events giving rise to the Lottery’s revocation of the License, Mr. Licatini had not had any complaints or problems in connection with his lottery retail operation. o. None of the conduct giving rise to Mr. Licatini’s conviction for Benefiting from Gambling involved Mr. Licatini’s lottery retail operation.[3] p. Mr. Licatini ’s conviction for Benefiting from Gambling was his first encounter with the criminal justice system. q. Mr. Licatini has attended counseling relating to his gambling (a term of his probation), and has otherwise complied with the terms of his probation. Mr. Licatini argued that under the facts and circumstances of this case, revocation of the License is too severe a sanction. Mr. Licatini urged that a lesser disciplinary penalty be imposed. CONCLUSIONS OF LAW A.R.S. § 5-504(B) authorizes the adoption of rules governing the Lottery’s operations. In accordance with this authority, the Lottery promulgated rules governing Lottery retailers at A.A.C. R19-3-201 et seq. A.A.C. R19-3-203(A) (Revocation, Suspension, or Renewal Denial of Retailer’s License) provides, in pertinent part: A. A retailer’s license may be revoked, suspended, or denied renewal by the Director for any of the following reasons: . . . 5. The retailer commits an act that impairs the retailer’s reputation for honesty and integrity; . . . 10. The retailer or an officer, or controlling agent of the retailer: a. Is convicted of a felony, felony theft that is designated as a misdemeanor, or a crime involving gambling or fraudulent schemes and artifices.

There is no dispute that Mr. Licatini has been convicted of a crime involving gambling. Thus, grounds exist under A.A.C. R19-3-203(A)(10)(a) for the Lottery to take disciplinary action against the License. The parties dispute whether grounds exist under A.A.C. R19-3- 203(A)(5) for the Lottery to take disciplinary action against the License. The Lottery urged that Mr. Licatini’s reputation for honesty and integrity is impaired by his alleged addiction to gambling. As set forth in Finding of Fact No. 10, above, the Administrative Law Judge finds that the Lottery failed to establish such addiction by any probative evidence. But the assertion is, in any event, irrelevant. A.A.C. R19-3-203(A)(5) speaks to an “act” that impairs the retailer’s reputation for honesty and integrity. Thus, it is not the fact of a gambling addiction that would be relevant, but acts committed in furtherance of that addiction. In this case, however, the Administrative Law Judge need not make any conclusions as to whether Mr. Licatini’s bets with Mr. Cammarata were made in furtherance of an addiction to gambling ( the essential fact is that Mr. Licatini committed an illegal act. This act in and of itself impairs Mr. Licatini’s reputation for honesty and integrity, and thus constitutes grounds for discipline under A.A.C. R19-3-203(A)(5). The Lottery’s counsel urged that the Lottery’s revocation of the License should be upheld because the Lottery has a legislative mandate to maintain the integrity of the Lottery. In support of this argument, counsel directed the Administrative Law Judge to A.R.S. § 5-504. Nothing in A.R.S. § 5-504 speaks directly to the mandate urged by counsel, although A.R.S. § 5-504(B) instructs the Lottery commission to “oversee [the] state lottery to produce the maximum amount of net revenue consonant with the dignity of the state.” Nonetheless, the Administrative Law Judge agrees that the provisions of Title 5, Chapter 5, and the rules promulgated thereunder, read together, dictate that Lottery licensees hold themselves to high standards of integrity, and that on the factual record in this case, Mr. Licatini has failed to do so. The Administrative Law Judge concludes, based on the evidence presented and the established violations of A.A.C. R19-3-203, that the Lottery’s decision to revoke the License cannot be said to be arbitrary or improper, and therefore should be affirmed. In reaching the foregoing conclusion, the Administrative Law Judge considered the mitigating circumstances urged by Mr. Licatini. However, even assuming that Mr. Licatini’s conduct and subsequent conviction are an anomaly in an otherwise law-abiding life, the Administrative Law Judge cannot ignore the recency of the conviction nor the fact that Mr. Licatini’s conduct is and was specifically proscribed by the rules applicable to Lottery licensees. RECOMMENDED ORDER The Administrative Law Judge recommends that the Executive Director affirm and uphold the Lottery’s decision to revoke the Retailer’s License issued to Frank Licatini.

Done this day, January 4, 2001.

______________________________________ Daniel G. Martin Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2000, to:

Geoffrey Gonsher, Executive Director Arizona Lottery ATTN: Loraine Wade 4740 East University Drive Phoenix, AZ 85034

By ___________________________ ----------------------- [1] The citation to A.A.C. R19-3-203(A)(4) was a typographical error. The intended citation was to A.A.C. R19-3-203(A)(5). [2] At page 3 of the Presentence Report, Officer Hall states “It appears [Mr. Licatini] has a gambling problem.” Officer Hall does not, however, state specifically that Mr. Licatini is addicted to gambling.

[3] The Lottery presented evidence that at one point, Mr. Licatini left an envelope containing proceeds from one of Officer White’s bets at the 7- Eleven store for pick up by Officer White. Otherwise, however, none of the conduct giving rise to Mr. Licatini’s conviction involved the 7-Eleven.

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826