ALJDEC

01A-126-INS · Department of Insurance · 2001-07-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 3, 2001 APPEARANCES: Christy C. Brown, Esq., for William Phillip Murphy; Shelby L. Cuevas for the Arizona Department of Insurance ADMINISTRATIVE LAW JUDGE: Lewis D. Kowal _____________________________________________________________________ FINDINGS OF FACT On January 31, 2001, William Phillip Murphy (“Mr. Murphy”) filed an application for a property and casualty insurance agent’s license (the “Application”) with the Arizona Department of Insurance (“Department”). In the Application, Mr. Murphy disclosed he had been convicted of felonies and provided in an accompanying statement information concerning his criminal record. On December 22, 1997, in United States v. William Phillip Murphy, United States District Court, District of Arizona, Case Number CR-97-034-PHX-RGS (“Case No. CR-97-034-PHX-RGS”), Mr. Murphy entered into an Amended Plea Agreement wherein he pled guilty to Possession With Intent to Distribute Methamphetamine, a class C felony offense. The above-mentioned Amended Plea Agreement provided for Mr. Murphy to receive a sentence between 36 and 52 months of imprisonment, and that a third conviction of a serious drug offense would make him an Armed Career Criminal under 18 U.S.C. §924(e) in the future if he is ever caught with a firearm, which has a mandatory fifteen year to life sentence. . . . . . . On January 16, 1998, in Case No. CR-97-034-PHX-RHG, the District Court entered Judgment convicting Mr. Murphy of Possession of Methamphetamine with Intent to Distribute, in violation of 21 U.S.C. §841(a)(1) and imposing a sentence of imprisonment of 39 months. The Court also ordered that upon Mr. Murphy’s release from prison he would be placed on supervised probation for a period of 36 months and that he had to comply with standard probation conditions and special conditions. On April 5, 2001, the Department denied the Application. The basis for the denial was that Mr. Murphy has a record of conviction of a final judgment of a felony involving moral turpitude. On May 4, 2001, the Department received Mr. Murphy’s request for a hearing on the Department’s denial of the Application. During the hearing, Mr. Murphy presented evidence as to his good character. By placing his character at issue, it was determined that records of other criminal convictions submitted as exhibits by the Department were relevant and would be considered by the Administrative Law Judge. The previous criminal history of Mr. Murphy is as follows: a) On November 18, 1987, in State of Arizona v. William Murphy, Maricopa County Superior Court No. CR87-10068 (“CR-97- 10068”), Mr. Murphy pled guilty to Possession of Marijuana, a class 6 undesignated offense. j) In Case No. CR87-10068, the Court found Mr. Murphy guilty of Possession of Marijuana, a class 6 undesignated offense, imposed a suspended sentence, and placed Mr. Murphy on probation for three years. k) On January 13, 1989, the Court revoked Mr. Murphy’s probation in Case No. CR87-10068 and sentenced him to imprisonment for .75 years. l) On October 3, 1989, in State of Arizona v. William P. Murphy, Maricopa County Superior Court Case No. CR89-00718 (“Case No. CR89-00718”), the Court found Mr. Murphy guilty of Count 1, Endangerment, a class 6 felony, and Count IV, Possession of Dangerous Drugs, Methamphetamine, a class 4 felony. The Court sentenced Mr. Murphy to 1.5 years of imprisonment on Count I and 4 years of imprisonment on Count IV, to run concurrently. m) On November 2, 1989, in State of Arizona v. William Murphy, Maricopa County Superior Court Case No. CR89-08607 (“Case No. CR89-08607”), Mr. Murphy entered into a Plea Agreement wherein he pled guilty to Counts I-III, Aggravated Assault, class 3 felonies. n) On November 21, 1989, in Case No. CR89-08607, the Court found Mr. Murphy guilty of Counts I-III, Aggravated Assault, imposed a suspended sentence, and placed Mr. Murphy on probation for five years. As a term of probation, Mr. Murphy was sentenced to incarceration in the Maricopa County Jail for a period of six months. That sentence ran concurrently with the sentence imposed in Case No. CR89-00718. o) On January 13, 1995, the Court discharged Mr. Murphy from probation in Case No. CR89-08607. In the Order discharging Mr. Murphy from probation in that matter, it was noted that Mr. Murphy had failed to comply with term #1, to obey all laws and contact his probation officer within 72 hours if questioned or arrested by any law enforcement officer, term #7, to not possess, control, or own any firearm, ammunition, explosive, deadly weapon or prohibited weapon, and term #12e, to pay a mandatory assessment of $300.00 to the Court. p) On June 7, 1991, in United States v. William Phillip Murphy, United States District Court district of Arizona, No. CR-90-344- PHX-PGR (“Case No. CR-90-344-PHX-PGR”), Mr. Murphy entered into a plea agreement wherein he pled guilty to Possession of a Firearm by Felon. q) The District Court in Case No. CR-9-0-344-PHX-PGR issued a Judgment in a Criminal Case convicting Mr. Murphy of Possession of a Firearm by Felon, in violation of 18 U.S.C. §922. r) In Case No. CR-90-344-PHX-PGR, the Court sentenced Mr. Murphy to imprisonment for 12 months, which sentence ran concurrently with the state sentence he was serving, followed by three years of supervised release with special conditions. s) On August 20, 1992, in Case No. CR-90-344-PHX-PGR, the Court issued an Order releasing Mr. Murphy on his own personal recognizance subject to specified terms and conditions. t) On December 15, 1992, in Case No. CR-90-344-PHX-PGR, the Court found that Mr. Murphy violated the conditions for release and issued an Order reinstating Mr. Murphy on supervised release and imposed additional terms. u) On March 14, 1995, in Case No. CR-90-344-PHX-PGR, the Court entered an Order terminating Mr. Murphy’s supervised release.

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During the hearing, Mr. Murphy expressed remorse over the activities underlying the above-mentioned convictions and asserted that since the time of the convictions to the present date, he has changed and is not the same person who committed those illegal activities. Mr. Murphy testified as to the circumstances involving some of the above- mentioned convictions. He admitted that the activities underlying the convictions were from being at liquor establishments and being around illegal drugs, and individuals who used illegal drugs recreationally. Mr. Murphy also testified that he no longer uses illegal drugs and has disassociated himself from the individuals he previously associated with during the time when the illegal activities were committed. In support of his contention that he has changed his lifestyle, Mr. Murphy testified that he has completed a drug counseling program while serving time in prison, and, while on supervised release, he completed a TASK program that provided group therapy once a week. Mr. Murphy also testified that he is currently on probation, that he has not used any illegal substances within the past five years, and that he has always passed random drug testing in prison and while on probation. 14. Mr. Murphy presented five character witness in support of the instant appeal: a) Jane Rostan (“Ms. Rostan”), a friend of the Murphy family; b) Sandra Liebig (“Ms. Liebig”), a business acquaintance; c) John Corie (“Mr. Corie”), a neighbor and friend of the Murphy family, d) John Hoover, Jr. (“Mr. Hoover”), a business acquaintance; and e) Vicki Murphy (“Mrs. Murphy”), Mr. Murphy’s mother. 15. Ms. Rostan testified that she has previously been licensed in Arizona as an insurance agent and worked with Mrs. Murphy at an insurance agency. She became friends of the Murphy family in the 1970s and knows Petitioner through her friendship with his mother. Ms. Rostan has observed Petitioner at social functions and used to see Petitioner a couple of times a week. Although Ms. Rostan was aware that Petitioner had a felony conviction involving drugs, she was unaware of Petitioner’s complete criminal history.

16. Ms. Liebig is a licensed insurance agent and broker in the State of Arizona who began a business relationship with Petitioner’s mother in 1996 and currently maintains that relationship. She has known Petitioner for approximately 2 years and worked with him closely one year ago concerning the establishment of a business relationship with a new bond company. Since that time, she has not had close contact with Petitioner. 17. Ms. Liebig has acted as an insurance agent for Petitioner and was aware that Petitioner had pled guilty to felonies and served time in prison. Ms. Liebig testified that she observed Mrs. Murphy’s business evolve and improve because of Petitioner’s computer skills and knowledge. 18. Mr. Hoover testified that he is a licensed real estate broker and has been an associate broker for a realty company for the past 11 years. He first met Petitioner in late 1985 or early 1986 while visiting Mrs. Murphy at her office. During the 1980’s and 1990’s he has seen Petitioner on occasion at Mrs. Murphy’s office. 19. In 1998, Mr. Hoover was involved in selling Petitioner’s home. He was impressed with the fact that after Petitioner had an offer to purchase the home, Petitioner revealed a drainage problem that was not readily observable, which cost Petitioner approximately $1,000.00 to correct. Mr. Hoover has seen Petitioner twice since Petitioner was released from prison and is of the impression that Petitioner is now more mature, self-confident and at ease with himself. 20. Mr. Corie testified that he has been the next door neighbor of Mrs. Murphy as of 1980 and has known Petitioner since that time. He has socialized with Petitioner over the years at Murphy family functions and holidays. During those times, he observed Petitioner conducting himself appropriately. He now observes that Petitioner acts in a “professional” manner. Prior to the hearing, he was unaware of all of Petitioner’s felony convictions though he knew Petitioner had spent some time in prison and had a criminal background. 21. Mrs. Murphy testified that she has observed that Petitioner has turned his life around upon being released from prison. Mrs. Murphy also testified that if the Petitioner were granted an insurance agent’s license, he could operate her bond business. Mrs. Murphy would then act as a consultant to that business as long as he needs her. It is also her intention for her and her husband to draw a salary from the bond business for a number of years to recoup what they have invested in the business. Thus, aside from being a family member who has an interest in seeing Petitioner become licensed and pursue a career, she would receive an economic benefit if Petitioner an insurance agent’s license. 22. Petitioner’s character witnesses testified as to his honesty, truthfulness, and good character. They also testified that they believe he is deserving of an insurance agent’s license and would refer individuals to him for the purchase of insurance. 23. The character witnesses who testified on behalf of Petitioner were biased in that they were either social friends, business acquaintances, had business and financial ties to Mrs. Murphy, or members of the Murphy family. Thus, the testimony of those witnesses are discounted but given some weight by the Administrative Law Judge. 24. Petitioner testified that he has never been convicted of any criminal act involving fraud, misappropriation or theft of funds, and that his prior criminal activity and background do not reflect negatively on his ability to engage in the business of selling insurance. 25. During the hearing, Petitioner accepted responsibility for his prior criminal activities, and asserted that he has already been punished for them. 26. Petitioner’s evidence of his good character is outweighed by consideration being given to the fact that the conviction upon which the Department based the denial of the Application was Petitioner’s most recent conviction, for which he is still on probation, and that such conviction occurred after a fairly extensive history of criminal convictions. 26. The more compelling evidence presented established that Petitioner has, since 1987 through 1998, been convicted of felony crimes, showing him to be a person of dubious character. 27. The weight of the evidence of record established that Petitioner is pursuing a path of rehabilitation and is encouraged to continue with such efforts. . . . . . . CONCLUSIONS OF LAW 1. Petitioner argues that under the relevant case law, sale or distribution of illegal drugs constitute crimes of moral turpitude but that the conviction in Case No. CR97-034-PHX-RGS falls short of being a crime of moral turpitude and the amount of methamphetamine he had in his possession shows that he was not involved in the sale or distribution of that drug. However, the fact remains that Mr. Murphy entered into a plea agreement by which he pled guilty of Possession of Methamphetamine with Intent to Distribute, which was accepted by the District Court. Under the circumstances, this tribunal cannot and will not look beyond the conviction. Although not convicted of actually selling or distributing illegal drugs, Petitioner was convicted of the felony of intending to distribute methamphetamine. It is determined that the commission of a crime of possession of an illegal drug with the intent to distribute the drug, which constitutes a felony, such as the one at issue, sufficiently rises to the level contemplated within A.R.S. §20-290(C)(6) as a crime involving moral turpitude. Thus, the conviction in Case No. CR-97-034-PHX-RGS constitutes record of conviction of a felony involving moral turpitude. 3. Under the circumstances, it is determined that the Department had sufficient grounds under A.R.S. .§20-290(C)(6) to deny the Application. 4. The preponderance of the evidence establishes that, at this time, Petitioner does not possess the requisite character and qualifications to hold an insurance agent’s license. 5. Petitioner has not met his burden of proving by a preponderance of the evidence that the Department’s denial of the Application should be reversed.

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RECOMMENDED ORDER Based on the above, it is recommended that the Department’s denial of the Application be affirmed. Done this day, July 13, 2001.

______________________________________ Lewis D. Kowal Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2001, to:

Department of Insurance Charles R. Cohen ATTN: Curvey Burton 2910 North 44th Street, Ste. 210 Phoenix, AZ 85018

By ___________________________

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