ALJDEC decisions subject to certification as final

06A-185-INS · Department of Insurance · 2006-12-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 20, 2006 APPEARANCES: Assistant Attorney General Jennifer Boucek on behalf of the Arizona Department of Insurance; Ivory O. Crow his own behalf ADMINISTRATIVE LAW JUDGE: Lewis D. Kowal _____________________________________________________________________

PROCEDURAL ISSUE The parties stipulated to having the caption of this matter amended to reflect that Ivory O. Crow is a respondent and not a petitioner. The Administrative Law Judge ruled that the caption of this matter be amended to reflect that stipulation. FINDINGS OF FACT 1. Arizona Department of Insurance (“Department”) Investigator Bob Hill (“Investigator Hill”) received a business card from Nicole Galbraith (“Ms. Galbraith”), a licensed bail bond agent, showing that Ivory Crow (“Respondent”) was operating a bail bond business. See Exhibit 1. 2. Investigator Hill examined the above-mentioned business card and searched the licensing records of the Department to determine if Respondent was licensed to transact bail bond business in the State of Arizona. 3. Investigator Hill’s review of the Department’s records revealed that Respondent was not licensed to transact insurance business in the State of Arizona. 4. The business card Investigator Hill received from Ms. Galbraith (Exhibit 1) contained the following information:

CROW Custom Bail Bonds Bonds Service to Fit Your Needs Hour a Day- Weekends- Holidays to serve you better

NO COLLATERAL NEEDED! Call: Ivory Crow 430-1661 Leave a Message (480) 986-0842.

5. After Investigator Hill called Respondent several times to arrange for Respondent to come to the Department for an interview, Respondent agreed to meet with Investigator Hill. On August 9, 2006, Respondent appeared before Investigator Hill and Investigator Hill’s Supervisor, Arnold Sniegowski (“Supervisor Sniegowski”). 7. The interview was conducted in Supervisor Sniegowski’s office and Investigator Hill recorded the interview. At the commencement of the interview, Respondent was sworn under oath. 8. Investigator Hill testified that the cassette tape recorder that was used to record the interview was located on a desk and placed within plain view of Respondent. 9. During the interview, Investigator Hill questioned Respondent about the use of the above-mentioned business card and of his business arrangement with Affordable Bail Bonds (“Affordable”) and other bail bond businesses. 10. During the hearing, Respondent objected to having the transcript of the above-mentioned interview (Exhibit 2) being used against him because he was not advised that the interview was being recorded or informed that his statements could be used against him by the Department. 11. The Administrative Law Judge finds that based on the fact that the cassette recorder was on the desk before the Respondent in plain view during the interview, Respondent was aware that the interview was being recorded. The Administrative Law Judge finds that it should have been obvious to Respondent that the purpose and reason for the interview, as indicated at the outset of the interview by the statements made by Investigator Hill[1], was to determine what activities were being performed by Respondent regarding bail bond transactions. Further, Respondent failed to cite any legal authority to show that any of his rights have been violated or that the Department had a legal obligation to warn Respondent as to the purpose of the interview and how it could affect Respondent. 12. At the August 9, 2006 interview, Respondent admitted that he collected bail bond premium monies and used the above-mentioned business card. He also admitted that he was not licensed by the Department. Exhibit 2 at 4-8. 13. During the hearing, Respondent testified that he did not use the business card depicted in Exhibit 1 and that he showed the card to Richard Dickerson (“Mr. Dickerson”) of Affordable, who informed him that he could not use that card. Respondent testified that after discussing the matter with Mr. Dickerson, he destroyed the cards. He made other business cards that differed than Exhbit 1 in that the newer cards contained different information and he used those business cards. 14. The record does not reflect all of the information contained in the second set of business cards[2] that Respondent testified about during the hearing that he used in transactions involving bail bond business. 15. During the August 9, 2006 interview, Respondent acknowledged that he had been conducting business with Mr. Dickerson for about ten years and, during that time, he brought in ten to fifteen clients per month. He informed the clients that he could arrange for a bond to be posted to have a person released from jail. He would post the deed to his home collateral and, in return, would collect the premium and 35% of the bond amount, of which he kept 25% as his fee for posting the collateral. Respondent also testified that he would present the premium and 10% of the bond amount to Affordable, he would pay the filing and recording fees and that Affordable would arrange for the filing and recording with the County Recorder’s Office. 16. During the hearing, Respondent testified that prior to the August 9, 2006, he had not checked his records and the information he presented to the Department at the August 9, 2006 interview may not have been entirely accurate. 17. Respondent testified that during the past ten years, he brought in one or two persons a month to Affordable for a bail bond transaction. 18. During the August 9, 2006 interview, Respondent acknowledged having used the business cards as represented in Exhibit 1 for advertisement to attract people to use him to obtain bail bonds. See Exhibit 2 at 7. However, during the hearing, Respondent testified that he never used the business card and that he obtained business through referrals. 19. Respondent failed to explain that if he did not use the business cards represented in Exhibit 1 and destroyed the cards, how Ms. Galbraith came to possess the business card that she provided to Investigator Hill. APPLICABLE LAW 1. The term “solicit” means “attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company.” A.R.S. § 20-281(15). 2. The term “negotiate” means “the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits terms or conditions of the contract if the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers.” A.R.S. § 20-281(10). 3. A.R.S. § 20-282 provides: A person shall not sell, solicit or negotiate insurance in this state for any class or classes of insurance unless the person is licensed for that line of authority in accordance with this article.

4. A person shall not accept a commission, service fee, brokerage or other valuable consideration for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under this article and is not so licensed. A.R.S. § 20-298(B).

5. Insurance is defined as "a contract by which one undertakes to indemnify another or to pay a specified amount upon determinable contingencies.” A.R.S. § 20-103(A). 6. The term bail transaction is defined in A.A.C R20-6-601(B)(1) includes the “solicitation and inducement, preliminary negotiation and effectuation of a contract of surety insurance and the transaction of matters subsequent thereto and arising therefrom - all in connection with the release of persons arrested or confined.”

7. A.R.S. § 20-444 (A) provides: No person shall make, publish, disseminate, circulate or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, any advertisement, announcement, sales material or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading. 8. A.R.S. § 20-456 provides in pertinent part: A. If after a hearing the director finds that the person charged has engaged or is engaging in any act or practice defined in or prohibited under this article as an illegal or unfair method of competition or an unfair or deceptive act or practice, the director shall order the person to cease and desist from the proscribed acts or practices. B. If the act or practice is a violation of section 20-443, 20- 443.01, 20-444, 20-445, 20-446, 20-447, 20-448, 20-448.01, 20- 448.02, 20-449, 20-451, 20-452 or 20-467 or a general business practice of committing or performing acts or omissions proscribed by sections 20-461 and 20-468 and 20-469, the director may also impose a civil penalty of not more than one thousand dollars for each act or violation but not to exceed an aggregate penalty of ten thousand dollars unless the person intentionally violates any section enumerated in this subsection, in which case the director may impose a civil penalty of up to five thousand dollars for each act or violation but not to exceed an aggregate penalty of fifty thousand dollars in any six month period. C. No order of the director pursuant to this section or order of a court to enforce it, or holding of a hearing, may in any manner relieve or absolve any person affected by the order or hearing from any other liability, penalty or forfeiture under law.

9. The provisions of A.R.S. § 20-295 cited by the Department in the Notice of Hearing issued in this matter provide:

A. The director may deny, suspend for not more than twelve months, revoke or refuse to renew an insurance producer's license or may impose a civil penalty in accordance with subsection F of this section or any combination of actions for any one or more of the following causes:

* * * 2. Violating any provision of this title or any rule, subpoena or order of the director.

* * * G. The licensee shall pay any civil penalty to the director who shall deposit it, pursuant to sections 35-146 and 35-147, in the state general fund. The civil penalty is in addition to any other applicable penalty or restraint either in this article or in any other law and may be recovered in a civil action brought by the director. For the purposes of subsection F of this section, a single publication, exhibition or utterance of any matter in violation of this title is deemed one violation or failure, including an edition of a newspaper, book or magazine, a single representation to an audience, a single broadcast over radio or television or a single exhibition of a motion picture. H. The director shall retain the authority to enforce this title and impose any penalty or remedy authorized by this title against any person who is under investigation for or charged with a violation of this title even if the person's license has been surrendered or has lapsed by operation of law.

CONCLUSIONS OF LAW 1. Respondent’s conduct, as set forth above, constitutes the selling, soliciting or negotiating of insurance in Arizona without a license in violation of A.R.S. § 20-282. 2. Respondent’s acceptance of a 25% fee from persons involved in bail bond transactions constitutes the receipt of a service fee for selling or soliciting insurance in the State of Arizona without a license, in violation of A.R.S. § 20-298(B). 3. Respondent’s conduct by using a business card that implies he is conducting bail bond business constitutes the dissemination, circulation, or placement before the public of untrue, deceptive or misleading assertions, representations, or statements with respect to the business of insurance within the meaning of A.R.S. § 20-244(A). 4. The conduct of Respondent, as set forth above, constitutes the violation of any provision of A.R.S., Title 20 within the meaning of A.R.S. § 20-295(A)(2). 5. The Department proved by a preponderance of the evidence that during the past ten years Mr. Crow has engaged in the solicitation and negotiation of insurance business in the State of Arizona for a service fee without having been issued a license by the Department and he is not exempt from licensure. 6. Grounds do not exist for the Director of the Department to impose a civil penalty pursuant to A.R.S. §§ 20-295(A) and (G), which specifically refer to licensees because Respondent has never held an insurance license. However, pursuant to A.R.S. § 20-295(H), grounds exist the Director of the Department to impose a civil penalty against Respondent as a person under investigation. 7. The weight of the evidence of record does not establish with sufficient certainty the exact number of transactions Respondent was involved in which he was soliciting or negotiating bail bond business for which he received a service fee. However, the record established that, at a minimum, for the past ten years Respondent has engaged in the solicitation and negotiation of at least one bail bond transaction per year, for a total of ten bail bond transactions. 8. Pursuant to A.R.S. § 20-465, the Director has the authority to issue a Cease and Desist Order against Respondent and impose civil penalties for a violation of A.R.S. § 20-444. The Department did not request that a Cease and Desist Order be issued against Respondent but did seek through the instant hearing to impose a civil penalty against him.

ORDER Based on the above, within forty-five days of the effective date of the Order entered in this matter, Respondent shall pay to the Department a civil penalty in the sum of $3,000.00, $2,500.00 of which is attributed to ten violations of A.R.S. §§ 20-282 and 20-298(B), and $500.000 of which is attributed to a violation of A.R.S. § 20-444. Done this day, January 8, 2007.

______________________________________ Lewis D. Kowal Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2006, to:

Department of Insurance Christina Urias, Director 2910 North 44th Street, Ste. 210 Phoenix, AZ 85018

By ___________________________

----------------------- [1] “[W]e will be interviewing you today Sir regarding your relationship with Affordable Bail Bonds, Richard Dickerson, and possibly other bail bond agents. Exhibit 2 at 1, lines 17-18. [2] The business cards he used after he destroyed the ones represented in Exhibit 1.

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