ALJDEC decisions subject to certification as final

18A-145-INS · Department of Insurance · 2019-01-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 26, 2018, at 8:30 AM APPEARANCES: Ramses Rivera (“Mr. Rivera” or “Respondent”); Deian Ousounov (“Mr. Ousounov,” Assistant Attorney General for Arizona Department of Insurance, “Department”); and Aqueelah Currie (“Ms. Currie,” witness for the Department). ADMINISTRATIVE LAW JUDGE: Linda Marie Brown _____________________________________________________________________ Respondent appealed the Department’s denial of his application for added lines of authority of Property and Casualty to his existing license, and revocation of Respondent’s Arizona insurance producer license in lines of authority of Life and Personal lines. Having considered the hearing record in this matter, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following Recommended Order. FINDINGS OF FACT On or about May 10, 2016, the Department issued an insurance producer license to Respondent with lines of authority in Life and Personal Lines, Insurance Producer Number 17936909 (“License”), due to expire on July 31, 2019.[1] On October 23, 2018, Respondent submitted a second application to the Department to add lines of authority in Property and Casualty to his existing license.[2] In a letter dated September 5, 2018 and received by the Department on October 29, 2018, Respondent provided additional disclosures surrounding a bankruptcy, and provided additional clarification into his arrest that took place sometime in May 2005.[3] On November 1, 2018, the Department issued its DENIAL letter to Respondent, pursuant to A.R.S. §§ 20-295(A)(1), (3), (6), and (8) without limitation, citing: i. “Providing incorrect, misleading, incomplete or materially untrue information in the license application; ii. Obtaining or attempting to obtain a license through misrepresentation or fraud; iii. Having been convicted of a felony; iv. Using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere.”[4] The DENIAL notice also provided Respondent with information on where to obtain a copy of his Arizona DPS Criminal History Records, and advised Respondent of his Appeal Rights.[5] On November 1, 2018, Respondent submitted his appeal request for an opportunity to be heard at a State Fair Hearing. The Department referred the matter to the Office of Administrative Hearings to conduct a State Fair Hearing before an Administrative Law Judge. HEARING EVIDENCE AND TESTIMONY Aqueelah Currie, Licensing Supervisor, testified that she oversees review of applications for Arizona Insurance License, and applications that come through with a “Yes” answer to the series of background questions to make a determination on whether the license should issue or not. If it is determined not to issue the license, the Department then meets with staff attorneys to make a broader decision. [6] Ms. Currie explained that an Arizona insurance license applicant, such as Mr. Rivera, is asked a series of background questions specific to whether the applicant has been convicted of felonies, misdemeanors, bankruptcies, etc. If the applicant answers “YES” to any of the background questions, the application then goes for further review. She testified the Department will overlook certain things in a background review such as an altercation. She testified that an applicant is also required to submit a full set of fingerprints to the Department. These fingerprints are sent to the Arizona Department of Public Safety (“ADPS”) to have ADPS run a state and Federal background check.[7] Because a background check may take some time, the Department grants an over-the-counter license to an applicant. In doing so, the Department relies on the truthfulness of the applicant’s personal statements to the series of background questions. If the applicant answers, Yes, to any of the questions, then the Department will require a detailed written statement along with any supporting documents. If an applicant misrepresents information on the initial application, it could take months before it becomes known to the Department.[8] Ms. Currie referred to Mr. Rivera’s initial online application submitted in 2016, and testified Mr. Rivera did not answer the questions truthfully. Because she believes Mr. Rivera was convicted of a felony, he should have answered, “Yes” to question 1(B).[9], [10] Question 1 (B) reads, “Have you ever been convicted of a felony, had a judgment withheld or deferred, or are you currently charged with committing a felony? You may exclude juvenile adjudications (offenses where you were adjudicated delinquent in a juvenile court).[11] In review of the State’s Exhibit 3, Ms. Currie testified she believes the use of the word “altercation” was misused. In further review of Mr. Rivera’s personal statement dated May 5, 2016, he stated he was convicted of a misdemeanor and the charge was for an altercation. As she testified earlier, an “altercation” would not raise a red flag. For this reason, the supervisor likely granted Mr. Rivera his over-the-counter license.[12], [13] She testified that if Mr. Rivera used the word, larceny, he would not have received his license at that time because he had a debt conviction from an employer so that would have raised a red flag.[14] She restated that Mr. Rivera would not have been granted an over-the-counter license because the nature of the charge[15] involves theft and the Department is charged with protecting consumers from persons who could have the potential to cause harm to consumers.[16] On or about October 23, 2018, Mr. Rivera submitted a new online application to add lines of authority in Property and Casualty. As in his initial application of April 15, 2016, Mr. Rivera responded, “yes,” to question 1(A), “Have you ever been convicted of a misdemeanor, had a judgment withheld or deferred, or are you currently charged with committing a misdemeanor? You may exclude the following misdemeanor convictions or pending misdemeanor charges: traffic citations, driving under the influence (DUI), driving while intoxicated (DWI), driving without a license, reckless driving, or driving with a suspended or revoked license. You may also exclude juvenile adjudications (offenses where you were adjudicated delinquent in a juvenile court). And, again, answered, “No,” to question 1(B) on the application.[17] In this instance, Mr. Rivera disclosed he had a bankruptcy and further stated in his personal statement[18] that “he held money that did not belong to him.”[19] Ms. Currie further testified that in Mr. Rivera’s second application, he disclosed much more information in his personal statement than in his initial application, and that this “holding of money” raises red flags.[20] Ms. Currie indicated that based on the charge[21], the facts expressly indicate that Mr. Rivera sold a car that was $7,000. He was paid $5,000 in cash and it looks like he stole that $5,000 cash from the company he was working for at that time.[22] She further testified based on the final disposition of the charge, the grand larceny charges were reduced to petit larceny.[23], [24] Mr. Rivera was provided an opportunity to question Ms. Currie, and asked her regarding Exhibit 7, the certificate of disposition, and began to testify that petit larceny is a misdemeanor and that he did not answer question 1(B) deceitfully.[25] The Department’s exhibits 1 through 9 were entered into evidence with no objection. At hearing, Mr. Rivera testified that this was the first time he requested a copy of the certificate of disposition, as well as confirming that he was not present for the court proceedings and did not even know how the conviction read. And that is why part of this was ignorance and was never deceit. Mr. Rivera emphasized that he handled thousands and thousands of dollars and personal information for hundreds of different customers over the last 14 years, and he was finance manager of dealership, worked with American Express credit card companies, was a small business consultant.[26] CONCLUSIONS OF LAW This matter is a disciplinary proceeding wherein the Department must prove by a preponderance of the evidence that Respondent violated the State’s Insurance Laws. See A.A.C. R2-19-119. During the application process, the Department charges that Respondent’s provided incorrect, misleading, incomplete or materially untrue information in the license application. See A.R.S. § 20-295(A)(1). Respondent’s conduct, as set forth above, constitutes obtaining or attempting to obtain a license through misrepresentation or fraud. See A.R.S. § 20-295(A)(3). Respondent testified that he did not intentionally seek to misrepresent but that his response was based on ignorance and failure to obtain or request a copy of the charge and final disposition. However, the Tribunal finds this is not enough to mitigate failure to fully disclose all information, particularly facts surrounding funds belonging to his employer at the time of taking. Respondent’s conduct, as set forth above, constitutes having been convicted of a felony. See A.R.S. § 20-295(A)(6). While the Tribunal notes that the final disposition of the conviction was reduced to a misdemeanor as set forth in the State’s Exhibit 7, this does not negate the fact that the Respondent had full knowledge of the underlying facts upon his initial application followed by his application for additional lines of authority requesting be added to his existing license but failed to fully disclose his actions involving money not belonging to him, and the full nature of the charges against him at that time. Additionally Respondent’s conduct constitutes use of fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere, within the meaning of A.R.S. § 20-295(A)(8) by having failed to provide complete information in the license application. Respondent’s conduct, 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). Grounds exist for the Director of the Department to suspend, revoke, or refuse to renew or issue the License pursuant to A.R.S. § 20-295(A). ORDER Based upon the above, Respondent’s License shall be revoked on the effective date of the Order entered in this matter. In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be five (5) days from the date of that certification. Done this day, January 15, 2019.

/s/ Linda Marie Brown Administrative Law Judge

Transmitted electronically to:

Keith A. Schraad, Interim Director Arizona Department of Insurance

----------------------- [1]State’s Exhibit 2. [2] State’s Exhibit 4. [3] State’s Exhibit 5. [4] State’s Exhibit 8. [5] Id. [6] Hearing Audio Transcript: Position 08:58 – 09:58. [7] Hearing Audio Transcript: Position 10:07-10:59. [8] Hearing Audio Transcript: Position 11:45-13:10. [9] State’s Exhibit 1. [10] Hearing Audio Transcript: Position 13:15-14:01. [11] State’s Exhibit 1. [12] State’s Exhibit 3. [13] Hearing Audio Transcript: Position 15:49-16:20. [14] Hearing Audio Transcript: Position 16:40-17:00. [15] State’s Exhibits 6 and 7. [16] Hearing Audio Transcript: Position 22:00-23:50. [17] State’s Exhibit 4. [18] State’s Exhibit 5. [19] Hearing Audio Transcript: Position 21:00-21:29. [20] Hearing Audio Transcript: Position 22:05-22:20. [21] State’s Exhibit 6. [22] Hearing Audio Transcript: Position 24:49-26:00. [23] State’s Exhibit 7. [24] Hearing Audio Transcript: Position 26:20-26:35. [25] Hearing Audio Transcript: Position 31:20-31:53. [26] Hearing Audio Transcript: Position 42:25-43:09.

-----------------------

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826