ALJDEC decisions subject to certification as final

19F-127-REL · Department of Real Estate · 2019-01-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 15, 2019 APPEARANCES: James Grace Gatsby on his own behalf; Deian Ousounov, Esq. for the Department of Real Estate ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT 1. On November 5, 2018, the Arizona Department of Real Estate (“Department”) issued a Notice of Hearing setting the above- captioned matter for hearing on December 11, 2018 at the Office of Administrative Hearings in Phoenix, Arizona. The matter was continued and the hearing was conducted on January 15, 2019. 2. The Notice of Hearing provided that the hearing was being held to determine whether grounds exist to affirm the intent to deny Petitioner James Grace Gatsby’s application for a real estate salesperson’s license. 3. Mr. Gatsby was previously known as James-Dinero Grace, Dinero James, and Dinero Grace. Throughout this Decision he is referred to as Mr. Gatsby. 4. Through the Notice of Hearing, the Department alleges that Mr. Gatsby has violated Ariz. Rev. Stat. sections 32-2153(B)(1), (B)(2), (B)(5), (B)(7), and (B)(10). 5. The Department presented the testimony of senior investigator Wayne Jackson. Mr. Gatsby appeared and testified on his own behalf. 6. On September 7, 2018, the Department received Mr. Gatsby’s application for a salesperson’s license. 7. In response to question 1 on the application, which asks whether the applicant has ever had a professional or occupational license or registration revoked, Mr. Gatsby had crossed out a “yes” answer and checked and initialed the “no” box. 8. In response to question 5 on the application, which asks whether the applicant had ever entered a consent decree that prohibited or restricted them from engaging in any profession or occupation, Mr. Gatsby answered “yes.” 9. In response to question 12 on the application, which asks whether the applicant had ever been convicted of a felony, Mr. Gatsby answered “yes.” 10. With his application, Mr. Gatsby included two disclosure statements, one providing details about a June 12, 2010 conviction, with the second disclosure showing that this conviction was directly related to his insurance producer’s license being revoked. 11. On or about January 11, 2010, Mr. Gatsby entered into a Consent Order with the Arizona Department of Insurance (the First Consent Order). 12. In the First Consent Order, Mr. Gatsby acknowledged that: (1) he was the sole member of Citysure Western Insurance Center LLC; (2) that he did not hold an Arizona producer’s license at times relevant to the consent order; (3) that he had submitted to the Department of Insurance a License Application naming Jesus Precaido as the Designated Responsible Producer and that he had signed Mr. Precaido’s name without Mr. Precaido’s knowledge or consent; and (4) that he had collected $5375 in insurance premiums that he failed to remit to the appropriate company. 13. Through the First Consent Order, Mr. Gatsby acknowledged violating provisions of Ariz. Rev. Stat. Title 20. Among other things Citysure’s license was revoked and it was ordered to pay restitution, and Mr. Gatsby was ordered to cease and desist from selling insurance without a license. 14. On or about March 1, 2010, Mr. Gatsby entered into a Second Consent Order with the Arizona Department of Insurance. 15. In the Second Consent Order, Mr. Gatsby acknowledged that after he had entered the First Consent Order, he obtained an Arizona Insurance Producer’s license through misrepresentation or fraud in violation of Ariz. Rev. Stat. section 20-295. 16. Through the Second Consent Order, the Department of Insurance revoked Ms. Gatsby’s producer’s license. 17. On or about June 20, 2011, in the Maricopa County Superior Court, Mr. Gatsby was found guilty of Multiple Violations of the Insurance Code, a Class 5 Felony. Mr. Gatsby was ordered to pay restitution and placed on probation. 18. As of the hearing date, Mr. Gatsby was no longer on probation and it appears that he was released from probation in 2014. 19. Through a Notice of Intent to Deny Application dated October 9, 2018, the Department informed Mr. Gatsby that his application had been denied for reasons including his felony conviction and the revocation of his insurance producer’s license. 20. Mr. Jackson testified to the effect that the Department sees a pattern of serious misdeeds on Mr. Gatsby’s part. He also explained that because real estate salespeople receive funds that must be immediately provided to the escrow company, Mr. Gatsby’s failure to remit insurance premiums to the appropriate entity is of particular concern to the to the Department. Similarly, because real estate salespeople deal with contracts, Mr. Gatsby’s forgery of Mr. Precaido’s name is also of particular concern. 21. Mr. Gatsby asserted that he had never read the First Consent Order and he testified that he could not recall ever having seen the Second Consent Order. 22. Mr. Gatsby acknowledged that he had signed Mr. Precaido’s name to a license application, but asserted that the First Consent Order’s Finding of Fact on that point was inaccurate. 23. Mr. Gatsby testified that he did not pay to the insurance company the premiums he had collected because his bank account had been compromised, which then led to a series of charges against him for insufficient funds. 24. Mr. Gatsby testified that someone at the Department told him to change his answer to question 1 from “yes” to “no.” 25. Mr. Gatsby also testified to the effect that he was young when the issues that led to his insurance producer’s license and criminal conviction occurred. CONCLUSIONS OF LAW 1. Mr. Gatsby bears the burden of persuasion. Ariz. Rev. Stat. § 41- 1092.07(G)(1). 2. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19- 119(A). 3. A preponderance of the evidence is: The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other. Black’s Law Dictionary 1373 (10th ed. 2014).

4. Ariz. Rev. Stat. sections 32-2153(B) provides in pertinent part: The commissioner may suspend or revoke a license, deny the issuance of a license, issue a letter of concern to a licensee, issue a provisional license or deny the renewal or the right of renewal of a license issued under this chapter when it appears that the holder or applicant has:

1. Procured or attempted to procure a license under this chapter for the holder or applicant or another by fraud, misrepresentation or deceit, or by filing an original or renewal application which is false or misleading.

2. Been convicted in a court of competent jurisdiction in this or any other state of a felony or of any crime of forgery, theft, extortion, conspiracy to defraud, a crime of moral turpitude or any other like offense. *** 5. Been guilty of any conduct, whether of the same or a different character than specified in this section, which constitutes fraud or dishonest dealings. *** 7. Not shown that the holder or applicant is a person of honesty, truthfulness and good character. *** 10. Violated any federal or state law, regulation or rule that relates to real estate or securities or that involves forgery, theft, extortion, fraud, substantial misrepresentation, dishonest dealings or violence against another person or failure to deal fairly with any party to a transaction that materially and adversely affected the transaction. This paragraph applies equally to violations of which the licensee was convicted in any lawful federal or state tribunal and to any admissions made in any settlement agreement by the licensee to violations.

5. Mr. Gatsby has been convicted of a felony, which is a violation Ariz. Rev. Stat. sections 32-2153(B)(2). The nature of his underlying crimes and the facts set out in the Consent Orders are such that he has also violated Ariz. Rev. Stat. sections 32- 2153(B)(5), (B)(7), and (B)(10). 6. At the hearing, Mr. Gatsby presented no substantial evidence to show that he is a person of honesty, truthfulness or good character. 7. Mr. Gatsby included with his application a letter explaining that his felony conviction was related to the revocation of his insurance producer’s license, and so he did disclose that revocation with his application. Consequently, although Mr. Gatsby’s application ambiguous, it does not constitute a violation of Ariz. Rev. Stat. section 32-2153(B)(1). 8. Because Mr. Gatsby has violated Ariz. Rev. Stat. section 32- 2153(B)(2), (B)(5), (B)(7), and (B)(10), the Department’s Commissioner has authority to deny Mr. Gatsby’s application. 9. Considering the facts and circumstances of this matter, Mr. Gatsby has not met the burden of proof to show that his application should be granted. RECOMMENDED ORDER IT IS ORDERED that James Grace Gatsby’s application for a real estate salesperson’s license is denied. 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 is five days after the date of that certification.

Done this day, January 29, 2019.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner Arizona Department of Real Estate

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