ALJDEC decisions subject to certification as final

08F-2004.068-ACY · State Board of Accountancy · 2008-01-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 18, 2007 APPEARANCES: Assistant Attorney General Seth Hargraves on behalf of the Arizona Board of Accountancy; James C. Marshall on his own behalf of and on behalf of James C. Marshall, P.C. ADMINISTRATIVE LAW JUDGE: Lewis D. Kowal _____________________________________________________________________ FINDINGS OF FACT 1. James C. Marshall (“Mr. Marshall”) is the holder of certificate number 2715-E (“Certificate”), issued by the Arizona State Board of Accountancy (“Board”) which enables Mr. Marshall, as an individual, to practice as a certified public accountant in the State of Arizona. 2. James C. Marshall, P.C. (“Firm”) is the holder of firm registration number 408-C (“Registration”), issued by the Board which enables the Firm to hold itself out as a certified public accounting firm in the State of Arizona. 3. Based on a complaint filed with the Board, an investigation was conducted against Mr. Marshall and the Firm (“Respondents”) which resulted in a Decision and Order (By Consent) issued by the Board on July 11, 2005 (“Decision and Order”).[1] 4. The Decision and Order made certain findings of violations of the State’s laws pertaining to the regulation of certified public accountants and accounting firms. Among other things, the Decision and Order placed the Certificate and the Registration on probation for five years and required Respondents to reimburse the Board its costs of investigation and proceedings ($5,803.10) and pay an administrative penalty in the amount of $50,000.00 within twelve months. 5. At a September 11, 2006, Board meeting Mr. Marshall requested an extension until October 31, 2006 to reimburse the Board’s costs of investigation and proceedings and pay the administrative penalty required in the Decision and Order. The request was granted by the Board. 6. At a November 13, 2006 Board meeting, the Board discussed Mr. Marshall’s letter wherein he requested an additional extension of time to pay the costs of investigation and proceedings ($5,803.10) and penalty of $50,000.00. The Board decided to offer another Decision and Order (By Consent) which would suspend the Certificate and the Registration until the above-mentioned costs and penalty were paid, provided that such time shall not exceed twelve months. The Board also decided if the Decision and Order (By Consent) was not accepted within thirty days, then a Complaint and Notice of Hearing would be issued. 7. On December 20, 2006, the Board issued a Superseding Decision and Order[2] (By Consent) (“Superseding Decision and Order”) which, among other things, suspended the Certificate and the Registration for one year and required: Completion of a peer review during the period of suspension, a peer reviewer be contacted within 30 days, submission to the Board within days of a scheduled peer review, payment of the costs of investigation and proceedings and penalty within one year, for Respondents to cooperate fully with the Board’s administrative staff, investigative reviewers and attorneys in providing relevant documentation of Respondents’ compliance with the Superseding Decision and Order, for Respondents to respond promptly to any request for documents made by the Board determined necessary to demonstrate compliance with the Order, and for Mr. Marshall to apply for renewal of the Certificate. 8. The Superseding Decision and Order also provided that the Respondents’ failure to comply with any provision of the Order shall be deemed a violation of the Superseding Order and that the Board may proceed to take the matter to a noncompliance hearing for revocation of the Certificate and Registration. 9. The Certificate was due to be renewed in August 2006. 10. Mr. Marshall testified that, in the past, the Board routinely notified him when the Certificate was due to be renewed and he did not receive such renewal notification for the period of August 31, 2006 through August 31, 2008. 11. Valerie Elliott (“Ms. Elliott”), Executive Director of the Board, testified that a staff member of the Board routinely sends out notification when a certificate is to be renewed. In this case, because Mr. Marshall had discipline taken against the Certificate, he was not placed on the list for notification that the Certificate needed to be renewed. 12. The Board sent out a letter on September 12, 2007, informing Mr. Marshall that there was a staff error and the $35.00 renewal late fee was waived. In the letter, the Board provided a renewal filing deadline of October 12, 2007 and enclosed renewal forms to be accompanied with a $300.00 renewal fee. 13. Mr. Marshall testified that in December 2007, he received a letter from the Board advising him that he had thirty days to file the renewal for the Certificate. According to Mr. Marshall, this was the first time he received notification from the Board that the Certificate needed to be renewed. 14. Ms. Elliott testified that the December 2007 letter was sent in error and the staff member who sent it out did not review Mr. Marshall’s file and did not realize that Mr. Marshall had already been provided an opportunity to renew the Certificate. 15. Ms. Elliott also testified that Mr. Marshall’s opportunity to renew the Certificate with respect to lifting the above-mentioned Suspension Order is distinct from the requirement under the Superseding Decision and Order for Mr. Marshall to renew the Certificate. 16. On August 3, 2007, The Board sent notification to Mr. Marshall via certified mail return receipt requested[3] that he should complete the enclosed affidavit regarding compliance with the Superseding Decision and Order. 17. On September 25, 2007, the Board sent Mr. Marshall a notification referencing the August 3, 2007 mailing and affidavit of compliance stating that there has been no response to that notification. 18. In the September 25, 2007 notification, the Board stated that at the October 15, 2007 Board meeting, the Board would review failure to respond to the Board’s affidavit of compliance, noncompliance with the Superseding Decision and Order, and whether further disciplinary action is warranted. 19. On October 15, 2007, the Board notified Mr. Marshall by letter sent certified mail return receipt requested[4] that the Certificate was suspended pursuant to a Suspension Order for failing to timely register and pay the biennial registration renewal fee. The Board also informed Mr. Marshall that it had imposed a $35.00 late fee for registration that would lift the suspension and reinstate the Certificate. 20. On October 15, 2007, the Board decided to file a Complaint and Notice of Hearing for revocation against Respondents. 21. Mr. Marshall testified that he sent in the compliance affidavit on October 2, 2007. In contrast to such testimony, Ms. Elliott testified that the Board did not receive the compliance affidavit from Mr. Marshall. 22. Ms. Elliott testified that all mailings and notifications to Mr. Marshall and the Firm were mailed to the mailing of address of record the Board had for the Respondents. 23. Mr. Marshall testified that his failure to pay the costs of investigation and proceedings and penalty has to do with his financial inability to do so. Mr. Marshall works as a certified financial officer for company and has received restricted stock of an approximate value of $250,000.00 but such stock is restricted for a specified time period. Currently, he cannot afford to pay the Board what he agreed to under the above-mentioned Decisions and Orders. 24. Mr. Marshall testified that his office is located within a suite of offices and the person who handles the mail for the suite of offices is not his employee. Mail is received by that person who then places the mail into his assigned mail slot. Mr. Marshall did not recall seeing certain mailings made by the Board and believed that he did not receive such mailings. He only recalled seeing the renewal notification he received from the Board in December 2007. 25. Ms. Elliott testified that Mr. Marshall had the option of specifying the mailing address for him in the most recent renewal for the Certificate and, knowing how the mail was handled at his office, opted for having the mailing address of record designated as the office’s mailing address instead of Mr. Marshall’s home address. 26. Mr. Marshall testified that he attempted to obtain a peer reviewer and made contact with a number of reviewers as of April 17, 2007 and they were either unable to or did not want to be a peer reviewer. There is no indication in the record that Mr. Marshall made that known to the Board prior to the hearing. 27. The Board, to date, has not received any payment regarding the costs and penalty required in the above-mentioned Decisions and Orders. CONCLUSIONS OF LAW 1. Respondents’ failure to respond to the Board’s request for a response to the compliance affidavit and Respondents’ failure to respond to communications from the Board within 30 days of mailing by certified mail constitute violations of A.R.S. §§ 32-741(A)(15), 32-741(A)(9), namely, A.A.C. R4-1-455.03(F). 2. Respondents’ failure to respond to the Board’s request for a response to the compliance affidavit is a violation of the December 20, 2006 Superseding Decision and Order, which constitutes a violation of A.R.S. § 32-741(A)(9). 3. Mr. Marshall’s failure to renew the Certificate and pay the biennial registration fee is a violation of the Superseding Decision and Order, which constitutes a violation of A.R.S. § 32-741(A)(9). 4. The conduct of Respondents, as set forth in the above Findings of Fact and Conclusions of Law, constitute discreditable acts within the meaning of A.A.C R4-1-455.03(A)(1) and (A)(3). 5. The conduct of Respondents as found above constitute grounds for revocation of the Certificate and Registration pursuant to the Superseding Decision and Order and A.R.S. §§ 32-741(A), 32-742(A) and (B)(1), 32-731, 32-732, and 32-734. ORDER Based on the above, on the effective date of the Order entered in this matter, the Certificate and Registration shall be revoked. Done this day, January 7, 2008.

______________________________________ Lewis D. Kowal Administrative Law Judge

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

State Board of Accountancy Valerie Elliott, Executive Director 100 N. 15th Ave Suite 165 Phoenix, Arizona 85007

By ___________________________

----------------------- [1] The Decision and Order was sent by certified mail return receipt requested. The green card showing receipt of such mailing was signed for by N. Lowry on July 14, 2005. [2] The Superseding Decision and Order was sent by certified mail return receipt requested. The green card showing receipt of such mailing was signed by N. Lowry on December 21, 2006. [3] The green card showing receipt of such mailing was signed for by N. Lowry on August 6, 2007. [4] The green card showing receipt of such mailing was signed for by Mary Randall on October 16, 2007.

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