ALJDEC decisions subject to certification as final

19F-189-REL · Department of Real Estate · 2019-02-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 8, 2019 APPEARANCES: Lindsay Short, Esq. represented Gabrielle Feinholtz (Petitioner). Assistant Attorney General Deian Ousounov represented the Department of Real Estate.

ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn _____________________________________________________________________ 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 Decision to the Commissioner of the Arizona Department of Real Estate. FINDINGS OF FACT

1. On November 8, 2018, Petitioner submitted an application for a real estate salesperson’s license to the Arizona Department of Real Estate (“Department”).[1] 2. On November 16, 2018, the Department issued Petitioner a letter informing her of its intent to deny the application on the basis of A.R.S. §32-2153(B)(2) and (B)(7).[2] 3. When Petitioner appealed,[3] the matter was set for hearing with the Arizona Office of Administrative Hearings, an independent state agency.[4] 4. The Notice of Hearing indicated the Department’s position that grounds existed to deny Petitioner’s original application for a real estate salesperson’s license based on alleged violations of A.R.S. § 32-2153(B)(7) and (B)(10). 5. At hearing, the Department presented the basis for its decision to deny Petitioner’s license application. The reasons include criminal complaints, pleas, judgments, probation periods, and a conviction in April 2009 during a two-year provisional license period (granted in April 2008).

6. In December 2002, Petitioner pleaded guilty to and was convicted of possession of drug paraphernalia, a felony, in Pima County Superior Court, Case CR-20020683.[5] She was sentenced to three years of supervised probation, fines and fees. 7. In January 2003, Petitioner pleaded guilty to and was convicted of possession (in 2001) with intent to distribute a substance containing Marijuana, a felony, in the U.S. District Court, New Mexico, Case CR02-0565 LH.[6] She was sentenced to forty (40) months imprisonment, three years of supervised release, participation in drug and alcohol program, and a penalty. 8. After receiving her April 2008 application, on June 20, 2008, the Department issued Petitioner a two-year provisional real estate salesperson’s license.[7] 9. However, on April 20, 2009, Petitioner pleaded guilty and was convicted of possession of drug paraphernalia, a felony, in Pinal County Superior Court, Case CR-[number redacted].[8] She was given three years of supervised probation and assessed fines and fees. 10. On June 15, 2009, the Department summarily suspended Petitioner’s real estate license.[9] While she appealed, she later requested a voluntary revocation of her license in lieu of an administrative hearing.[10] On August 27, 2009, the Department issued its Consent Order revoking Petitioner’s license. 11. Petitioner does not dispute the pleas or convictions. 12. A court having determined a factual basis for the plea, a voluntary guilty plea to a crime establishes that the person committed the acts that constituted the crime. 13. The Department alleged that Petitioner had violated state law A.R.S. § 32-2153(B)(2) and, through those felony convictions, demonstrated that she was not a person of good character in violation of A.R.S. § 32- 2153(B)(7). 14. At hearing, the Department expressed concern that Petitioner would not follow applicable law and regulatory requirements for real estate agents because she had taken actions violating the conditions of her provisional license. Additionally, the Department noted that the passage of time does not necessarily determine that a person’s judgment has changed and that each case is determined on its own facts. The Department requested that the intent to deny licensure at this time be upheld. 15. At hearing, Petitioner openly acknowledged her past incidents, testifying credibly as to the inception of the issues being the death of her daughter. She argued that she had voluntarily disclosed the 2009 conviction and that, since that time for the last 10 years, she had had no other issues, no arrests and has been clean and sober. She indicated that she now has a deeper understanding of herself and has the tools and skills for awareness of any needs that arise along with the support around her to be able to handle issues. 16. Petitioner is now a field auditor, since 2005, and her job entails verifying assets for financial institutions, taking about 20 to 30 hours a week. Petitioner has also been a consumer sales demonstrator/representative for a “natural” company entailing about 28 hours a week. She obtained a fingerprint card in February of 2018 under a good cause exception and then re-trained for real estate.[11] Petitioner testified that she would accept a provisional license again and argued this would be of paramount importance to her and that it would continue her on her now-productive life path. CONCLUSIONS OF LAW 1. This hearing was conducted in accordance with Arizona Revised Statutes (“A.R.S.”) § 41-1092.01 et seq. Petitioner has the burden of proof and the standard of proof on all issues is by a preponderance of the evidence. See Arizona Administrative Code (“A.A.C.”) R2-19-119. 2. A.R.S. § 32-2153 provides as follows: 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 if it appears that the holder or applicant has:

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.

7. Not shown that the holder or applicant is a person of honesty, truthfulness and good character.

3. The Commissioner is authorized under A.R.S. § 32-2153 to deny licenses for a felony conviction, the conviction of a violent crime or in the circumstances of lack of good character. The Department’s concerns in these areas are legitimate. A person with a criminal record must be given close scrutiny and careful consideration when he or she applies for a professional license because the Department relies on the person, once licensed, to follow any and all applicable laws and rules. Generally, in the event of past criminal convictions or the lack of good character, good character is not automatically regained by passage of time or self-serving testimony. However, the conviction of a crime is not a permanent bar to being licensed. 4. Petitioner has the burden of proving by the preponderance of the evidence that she has resolved the conduct issues that led to the actions that resulted in the convictions, that the public would be protected from any such actions, and that she has sufficient good character and reputation to satisfy the statutory requirements for licensure as a real estate salesperson. 5. The Department alleged that Petitioner violated A.R.S. § 32- 2153(B)(2) through the felony convictions in 2002, 2003, and 2009 and, thus, violation of A.R.S. § 32-2153(B)(7) allegedly demonstrating that she was not a person of good character. 6. There are no allegations of, or convictions of, felonies involving forgery, theft, extortion, or conspiracy to defraud. Such actions are other possible bases for license denial, as set forth in A.R.S. § 32-2153(B)(2). 7. There are no allegations of, or any violations relating to, any of the following: real estate or securities; forgery, theft, extortion, fraud, substantial misrepresentation or dishonest dealings; or, a failure to deal fairly with any party to a transaction that materially and adversely affected the transaction. Such actions are possible bases for license denial as set forth in A.R.S. § 32-2153(B)(10). 8. Based on the evidence presented, the Administrative Law Judge concludes that the incidents regarding the drug possessions may have been due to lack of good character at that time due to the circumstances and her, then, lack of a skill set combined with the death of her daughter, to more appropriately deal with those circumstances. The evidence does not demonstrate a “pattern” of behavior as to drug possession with criminal intent and was not demonstrated to be anything other than the lack at that time in 2008 of the skill set needed to move beyond her circumstances. Further, the hearing record shows no felonious activity, such as those specifically set forth in A.R.S. § 32-2153(B)(10) or those similar felonies that are set forth in A.R.S. § 32-2153(B)(2), the recent nature of which would clearly call for a licensure to be denied in the absence of any redeeming changes. 9. Based on the foregoing, the Administrative Law Judge concludes that Petitioner has met her burden to demonstrate, by a preponderance of the evidence, that she has resolved in the last 10 years the issues that led to the actions that resulted in the aforementioned convictions, that she has sufficient good character and reputation to satisfy the statutory requirements for licensure, and that the public would now be protected from any such actions in the event that Petitioner is given another opportunity for provisional licensure as a real estate salesperson. 10. Such a conclusion should not be read to be condoning the possession of drugs with criminal intent or the downplaying the pleas and convictions in considering whether or not a license denial was appropriate. However, the totality of the evidence, including the credible testimony regarding changes in Petitioner’s life, attitude, and circumstances, leads the Administrative Law Judge to conclude that Petitioner could be granted a provisional license with extensive conditions set forth, emphasizing the violations of which could result in termination and revocation of any provisional licensure.[12] RECOMMENDED ORDER Based on the foregoing, it is recommended that the Department’s denial be reversed and that the Department grant Petitioner’s appeal only in so far as the issuance of a provisional licensure, with strenuous conditions and requirements determined by the Commissioner to be necessary for protection of the public, in the event that Petitioner obtains a practice monitor. 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 shall be five days from the date of the certification. Done this day, February 28, 2019.

/s/ Kay A. Abramsohn Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner Arizona Department of Real Estate

----------------------- [1] See Exhibit 1. The pending application was given the license number of SA626840000. [2] See Exhibit 11. [3] See Exhibit 12. [4] See Administrative Record. [5] See Exhibit 6. At hearing, Petitioner indicated that this was possession of “meth.” [6] See Exhibit 4. [7] See Exhibit 7. A provisional license contains multiple conditions and requirements. [8] See Exhibit 8. [9] See Exhibit 9. [10] See Exhibit 10. [11] Petitioner provided copies of her examination information, scores, and resume; she also provided multiple letters of support. See Exhibits C, D, E, and F. Petitioner’s exhibits are redesignated with letters A through G. A fingerprint clearance card is required for the application. [12] Petitioner did not present any evidence with regard to any person offering to be a practice monitor for Petitioner for a provisional licensure. Petitioner is required to have a practice monitor in order to obtain a provisional licensure.

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

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