FINACT19A-2018.090-ACY.pdf

19A-2018.090-ACY · State Board of Accountancy · 2019-07-01

BEFORE THE ARIZONA STATE BOARD OF ACCOUNTANCY In the Matter of Certified Public OAH Docket No. 19A-2018.090-ACY Accountant Certificate No. 18886-R ASBA File No. 2019.090 Issued to: ROBERT EMIL MAROTTI DECISION AND ORDER Respondent.

On June 25, 2019, this matter came before the Arizona State Board of Accountancy (“Board”) for consideration of Administrative Law Judge (“ALJ”) Jenna Clark’s proposed Findings of Fact, Conclusions of Law and Recommended Order (“ALJ’s Decision”). Robert Marotti (“Respondent”) appeared on behalf of himself.

Assistant Attorney General Seth Hargraves appeared on behalf of the State. The Board received independent legal advice from Assistant Attorney General John Tellier. The Board, having considered the ALJ’s Decision and the entire record in this

matter, hereby issues the following Findings of Fact, Conclusions of Law and Order (“Decision and Order”). FINDINGS OF FACT The Findings of Fact as set forth in the ALJ’s Decision are adopted and

incorporated herein with a modification to Page 3, Paragraph 11 to read “The Board argued that revocation was appropriate as evidence established that Respondent could not be regulated by the Board”.2 CONCLUSIONS OF LAW

The Conclusions of Law as set forth in the ALJ’s Decision are adopted in their

entirety and incorporated herein. // 1 A true and correct copy of the ALJ’s Decision is attached and certain parts of it are incorporated here as set forth above. 2 The Board voted to modify the ALJ’s Decision to correct a typographical error in the Findings of Fact. ORDER Based on the foregoing, the Board ORDERS that Respondent Certified Public Accountant Certificate No. 18886-R be REVOKED. IT IS FURTHER ORDERED that Respondent shall be required to reimburse the Board $26.28 within thirty (30) days of the effective date of this Decision and Order. This amount reflects the costs and attorney’s fees the Board incurred in prosecuting this matter. NOTICE OF APPEAL RIGHTS Respondent is hereby notified that they have the right to move for a rehearing or review by filing a motion with the Board’s Executive Director within thirty (30) days after service of this Decision and Order. A.R.S. § 41-1092.09. The motion must set forth legally sufficient reasons for granting a rehearing. A.A.C. R4-1-114(C). Service of this Decision and Order is effective on the date of personal service or five (5) days after the date of mailing. If a motion for rehearing is not filed, the Board’s Decision and Order becomes effective thirty (30) days after it is mailed to Respondent. Respondent is further notified that the filing of a motion for rehearing is required

to preserve any rights of appeal to the Superior Court. DATED this 28th day of June, 2019. ARIZONA STATE BOARD OF ACCOUNTANCY By: ___________________________________ Julie S. Klewer, CPA, Board President Original of the foregoing Decision and Order (and attachment) th filed this 28 day of June, 2019 with: Monica L. Petersen Executive Director Arizona State Board of Accountancy th 100 N. 15 Avenue, Suite 165 Phoenix, AZ 85007 Copy of the foregoing th Decision and Order (and attachment) e-filed this 28 day of June, 2019 with: Greg Hanchett, Director Arizona Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, AZ 85007 Copy of the foregoing Decision and Order (and attachment) mailed via U.S. First Class Mail and Certified Mail #[account number redacted] 4715 this 28th day of June, 2019, to: Robert Emil Marotti PricewaterhouseCoopers LLP 1850 N. Central Ave, #700 Phoenix, AZ 85004 Copy of the foregoing Decision and Order (and attachment) emailed this 28th day of June, 2019 to: Scott Donald Assistant Attorney General [email redacted] Seth Hargraves Assistant Attorney General [email redacted] John Tellier Assistant Attorney General Independent Advisor [email redacted] By: ___________________________________ IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of No. 19A-2018.090.ACY

Certified Public Accountant ADMINISTRATIVE LAW JUDGE Certificate No. 18886-R DECISION Issued to: ROBERT EMIL MAROTTI, Respondent.

HEARING: April 24, 2019 at 10:00 AM. APPEARANCES: No appearance(s) on behalf of Robert Marotti (“Respondent”). Assistant Attorney General Scott Donald, Esq., appeared on behalf of the Arizona State Board of Accountancy (“Board”) with Christopher Rasmussen as a witness. ADMINISTRATIVE LAW JUDGE: Jenna Clark. _____________________________________________________________________ Having heard the evidence and testimony and having considered the 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 to the Executive Director of the Board.

FINDINGS OF FACT

BACKGROUND AND PROCEDURE

1. Pursuant to ARIZ. REV. STAT. §§ 32-701 et seq., the Board is the authority

for regulating the practice of Certified Public Accountants in the State of Arizona.

Pursuant to ARIZ. REV. STAT. §§ 32-701 et seq., and ARIZ. ADMIN. CODE R401-101 et seq., the Board has personal and subject matter jurisdiction over Respondent. Additionally, pursuant to ARIZ. REV. STAT. §§ 32-741 and 32-742 the Board had the authority to discipline Respondent. 2. Respondent is the holder of Certified Public Accountant (“CPA”) Certificate No. 18886-R, issued by the Board. 3. Administrative Notice is taken of Respondent’s certificate record as reflected on the Board’s public website on April 24, 2019. Such prior record reflects that

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 Respondent’s certificate was issued on March 26, 2018, and is schedule for renewal in September of 2020.1 There is no disciplinary history noted for the license. 4. On March 26, 2018, the Board approved Respondent’s application to

become a CPA. A congratulatory letter was sent to Respondent on March 26, 2018,

which outlined prorated continuing professional education (“CPE”) requirements for

Respondent’s September 30, 2018, biennial renewal due date.2 The letter states, in

pertinent part, “[T]he table below informs you as to how much CPE you are required to

take and report to the Board between the issue date of March 26, 2018, and your

biennial renewal due date of September 30, 2018. Any required CPE can only be

taken after the issue date of your certificate.”3 (Emphasis in original.) 5. On October 02, 2018, Board staff received a registration renewal form from Respondent dated September 28, 2018, for the 2018-2020 renewal period wherein Respondent reported taking twenty-six (26) CPE hours overall.4 Following a review of the reported CPE, Board staff determined that a total of seven (7) CPE hours were taken prior to the certification approval date of March 26, 2018. Accordingly, the following two shortages5 were identified: a. Respondent is short (1) CPE hour overall. b. Respondent is short four (4) CPE hours in accounting, auditing, taxation, consulting services, or business law. 6. On December 03, 2018, the Board reviewed the matter and voted to offer Respondent a Decision and Order (By Consent) (“CONSENT ORDER”) for suspension for six months for non-compliance with CPE requirements.6 7. On December 12, 2018, the Board sent the CONSENT ORDER to Respondent via regular and certified United States postal mail for his response within thirty (30) days.7 The Board did not receive a response from Respondent.

1 See https://www.azaccountancy.gov/CPADirectory/LicenseeDirectory.aspx?category=0%2fMktTCYVsxzN1% 2fKjFZ7hA%3d%3d&search=T73qvBQ2oJIYVhh3a2kG%2bA%3d%3d. See Board Exhibit 1. Id. See Board Exhibit 2. See Board Exhibit 3. 6 See Board Exhibit 4. 8. On February 11, 2019, the Board considered Respondent’s non-response to the CONSENT ORDER and voted to proceed to a formal administrative hearing.8 9. Per the COMPLAINT AND NOTICE OF HEARING, the Board referred this matter

to the Office of Administrative Hearings, an independent state agency, on March 26,

2019, for an evidentiary hearing on April 24, 2019, to determine whether the Board has

good cause to take disciplinary action against Certificate No. 18886-R issued to

Respondent.

HEARING EVIDENCE

10. At the hearing, the Board submitted six exhibits and presented the

testimony of Mr. Rasmussen, Assistant Director of Regulation and Compliance. No

testimony or exhibits were offered by or on behalf of Respondent.

11. The Board argued that revocation was appropriate as evidence

established that Respondent could be regulated by the Board.

CONCLUSIONS OF LAW 1. This matter was properly brought before the Office of Administrative Hearings pursuant to ARIZ. REV. STAT. §§ 41-1092 et seq. 2. Pursuant to ARIZ. REV. STAT. § 41-1092.07(G)(2), the Board has the burden of proof in this matter. Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.9 The standard of proof is a preponderance of the evidence.10 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”11 A preponderance of the evidence is also, “evidence which is of greater weight or more convincing than evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.”12

See Board Exhibit 5. See Board Exhibit 6. See ARIZ. ADMIN. CODE R2-19-119(B)(2). See ARIZ. ADMIN. CODE R2-19-119(A). MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). 12 BLACK’S LAW DICTIONARY at page 1064 (6th ed. 1990). 4. ARIZ. REV. STAT. § 32-701(12)(g) provides that "disciplinary action" means any other regulatory sanctions imposed by the board in combination with, or as an alternative to, relinquishment, revocation or suspension of a certificate or registration,

including the imposition of reimbursement of the board's costs of investigations and

proceedings initiated under this chapter, including attorney fees.

5. ARIZ. REV. STAT. § 32-730(C) provides, in pertinent part, that “at the time

of registration, every certified public accountant, as a prerequisite to biennial

registration, shall submit to the board satisfactory proof in a manner prescribed by the

board that the registrant has completed the continuing professional education

requirements established by the board.”

6. ARIZ. REV. STAT. § 32-741(A)(5) provides that after notice and an

opportunity for a hearing, the board may revoke or suspend any certificate granted

under this chapter and may take disciplinary action concerning the holder of any

certificate for “[a]ny cause other than failure to pay license or registration fees.”

7. ARIZ. REV. STAT. §§ 32-741(A)(9) and 32-741(A)(15) provide that after

notice and an opportunity to be heard, the Board could impose discipline against a

certificate holder for a “[k]nowing violation of any decision, order or rule issued or adopted by the board” or “[f]ailing to respond or furnish information in a timely manner to the board or its designated agent, if the information is legally requested by the board and is in the registrant’s possession or control.” 8. ARIZ. ADMIN. CODE R4-1-453(C)(2) provides that “[a] registrant shall complete a minimum of 50 percent of the required hours in the subject areas of accounting, auditing, taxation, business law, or consulting services with a minimum of 16 hours in the subject areas of accounting, auditing, or taxation.” 9. ARIZ. ADMIN. CODE R4-1-455.03(D) provides, in pertinent part regarding communications, that “[w]hen requested, a certified public accountant or public accountant shall respond to communications from the Board within 30 days after the communication is mailed by registered or certified mail.”

9. It is established law that wherever statutory authority conflicts with agency rule-making, the rule must yield to the statute.13 However, a regulation setting forth 30 days as the time frame necessary to constitute a “timely” response under the statute

does not conflict with the statute.

10. Respondent is deemed to have knowledge of the Board’s rules.14

11. The Board established by a preponderance of the evidence that the

registration renewal form it received from Respondent on October 02, 2018, clearly

identified that Respondent was short seven requisite CPE hours to be earned between

March 26, 2018, and September 30, 2018, and that Respondent failed to respond to

the Board within thirty days of the CONSENT ORDER being issued on December 03,

2018, in violation of ARIZ. ADMIN. CODE R4-1-455.03(D).

12. Because Respondent violated ARIZ. ADMIN. CODE R4-1-455.03(D), the

Board has authority to revoke his Certified Public Accountant Certificate under ARIZ.

REV. STAT. § 32-741(A)(9).

13. Because Respondent violated ARIZ. ADMIN. CODE R4-1-455.03(D), the

Board has authority to require reimbursement of the Board's costs of investigations and

proceedings, including attorney fees, under ARIZ. REV. STAT. § 32- 701(10)(g).15 RECOMMENDED ORDER Based on the foregoing facts and conclusions of law, IT IS RECOMMENDED that on the effective date of the Board’s FINAL ORDER, the Board revoke CPA Certificate No. 18886-R for the failure to submit a timely response to the Board. IT IS FURTHER RECOMMENDED that on the effective date of the FINAL ORDER, Respondent shall be required to pay the Board’s costs and attorney’s fees incurred in

See Canon Sch. Dist. No. 50 v. W.E.S. Constr. Co., 177 Ariz. 526, 869 P.2d 500 (1994); Fullen v. Indus. Comm’n, 122 Ariz. 425, 595 P.2d 657 (1979); R.L. Augustine Constr. Co., Inc. v. Peoria Unified Sch. Dist. No. 11, 188 Ariz. 368, 370, 936 P.2d 554, 556 (1997); Ariz. Health Care Cost Containment Sys. Admin. v. Carondelet Health Sys., 188 Ariz. 266, 271-72, 935 P.2d 844, 849-50 (App. 1996). See ARIZ. ADMIN. CODE R4-1-102(A). ARIZ. REV. STAT. § 32-701(10)(g) defines “disciplinary action” to include “[r]eimbursement of the board's costs of investigations and proceedings initiated under this chapter, including attorney fees.” prosecuting the two violations in this matter pursuant to ARIZ. REV. STAT. § 32- 701(10)(g). 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 days from the date of that certification.

Done this day, May 02, 2019.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to:

Monica L. Petersen, Executive Director Arizona State Board of Accountancy