ALJDEC decisions subject to certification as final

08A-120-INS · Department of Insurance · 2008-10-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 11, 2008 held open until October 7, 2008

APPEARANCES: Liane Kido, Assistant Attorney General representing the Department of Insurance; Michael Caballero, Sr., Petitioner; Steven Fromholtz, Department witness

ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang _____________________________________________________________________ FINDINGS OF FACT 1. The Petitioner applied for a license to sell insurance on April 10, 2008. On a question regarding whether he had ever been convicted of a felony, the Petitioner answered, "Yes." Petitioner provided documentation of his felony conviction. 2. On June 11, 2008, the Department of Insurance issued a denial letter to the Petitioner informing him that his application was being denied. Petitioner filed an appeal from that decision on June16, 2008. 3. According to the findings of Department Licensing Supervisor and Investigator Steven Fromholz, the Petitioner was convicted of one count of conspiracy to possess and distribute drugs in February 1997. He found that the last overt act by the Petitioner was around 1995 and the first overt act was in 1991. He found that judgment was entered on October 24, 1997 when the Petitioner was sentenced to 51 months in jail, four years of supervised release and $100 in financial penalties. Because of the conviction, the activities involved in the crime, the fact that it was done for the purpose of making as much money as possible, and the Department's duty to protect the public, the application was denied. 4. The Petitioner appeared at hearing and testified that he was doing some work at a very young age for people who were selling drugs. He had the impression that if he did not actually see the drugs, he was not breaking the law, but he left that situation in August 1993, not 1995 as the court records indicate. He said it was a very large case with a lot of defendants and a lot of information so he does not blame the attorneys for getting that fact wrong, but, he said, the records are wrong, and his last overt act was in 1993. After leaving that situation, the Petitioner returned to Arizona and did various jobs. He had been working for the jail system in Florence for 8 1/2 months when he was arrested along with the others involved in the drug ring. He served time in prison but left on early release in February 2000. He was in a halfway house for 2 months. 5. Petitioner testified that he has had several jobs and responsibilities since then. He said that last year he made $74,000 at All- tel, but his mother got sick and he was not allowed time off to see her, so he took a voluntary demotion in order to spend more time with his family in Tucson. He said he is a different person now and doesn't just want to make money. He has not been on probation since February 2004. 6. Mr. Fromholz testified that he was not aware that the Petitioner was released a year early or that he had taken a demotion to be with his family. He said that, if true, information like this would have impacted the Department's decision, but it was not available when the Department denied the application. 7. The Petitioner was allowed additional time to submit documentation to establish the facts that he testified to. He submitted documentation from the U.S. District Court, District of Arizona, that established that he was released from the supervision of the U.S. Probation Office on August 17, 2004. He also submitted a letter of support from Eric Whitmoyer, a co-worker who became Petitioner's supervisor at All-Tel Express Locations, LLC. Mr. Whitmoyer described Petitioner as having ambition, drive and a positive attitude. He said that Petitioner displayed tact, diligence, drive and determination and that Petitioner was successfully entrusted with numerous responsibilities. He confirmed that Petitioner voluntarily took a demotion in order to meet family obligations. The letter states that it was written as a reference for Petitioner, so it is understandably focused on job skills. Nevertheless, it confirms that Petitioner placed the needs of his family above his career ambitions in January 2008. CONCLUSIONS OF LAW 1. This matter is within the jurisdiction of the Director of the Arizona Department of Insurance pursuant to A.R.S. §§ 20-161 and 41-1092 et seq. 2. Pursuant to A.R.S. §§ 20-295(A)(6), the Director may deny an application for a license to sell insurance on the grounds of a felony conviction. According to the testimony of Mr. Fromholtz, the Department’s witness, in making the decision, the Department takes into account the amount of time that has passed since the conviction and since the sentence was served. It also considers factors that reflect the personality of the applicant. He acknowledged that the Department was not aware that the Petitioner had voluntarily left a higher paying job for the sake of his family when the denial decision was made. He also stated that the Petitioner’s additional year since completing his sentence, if true, would have been taken into account as well. 3. In this case, the record shows that Petitioner was born in 1972. Therefore, the Petitioner was around 19 years old when he began his criminal activities and left when he was around 21 or 22. He would have been released from prison when he was around 28 and left probation when he was around 32. He would be around 36 now, at least 14 years since he left his life of crime, 12 years if the court records are correct. 4. The weight of the evidence established that Petitioner did leave the legal system in August 2004, a year earlier than at first believed, and he did leave a lucrative position in order to be closer to his family. Clearly, Petitioner's values have matured as he's grown older. There is no evidence that he has broken the law in at least 12 years, which is generally considered a sufficient period of time to rehabilitate. And his youth at the time of his criminal activity may hopefully have been due to immature selfishness rather than a hardened moral deficiency. As Petitioner pointed out, he stopped his illegal activities on his own, not because he was arrested. This appears to be new information at the time of the hearing that should be considered as well. Additionally, the Petitioner has demonstrated personal character by abandoning greed to attend to his family ties. Petitioner’s evidence was sufficient to establish that his felony conviction, in itself, no longer implies that he is unfit to hold an insurance license in the State of Arizona so long as he meets all other qualifications for holding a license. Therefore, in light of the evidence presented at hearing, much of which was not available at the time of the license denial, it is recommended that the Director exercise her discretion in favor of the Petitioner and grant his application for an insurance license so long as he meets all other qualifications. RECOMMENDED DECISION Based upon the foregoing considerations, the undersigned Administrative Law Judge hereby recommends that this appeal be granted insofar as Petitioner's application for licensure should be processed in the normal course of business, and the determination to deny the application based solely on his felony conviction should be overturned.

Done this day, October 27, 2008

OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Dorinda M. Lang Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2008, to:

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

By ___________________________ -----------------------

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