ALJDEC decisions subject to certification as final

19F-357-REL · Department of Real Estate · 2020-01-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of the Application for Original Real Estate Salesperson License of:

ANDERSON LINDA, holder of license number SA680832000 (Candidate),

Petitioner.

No. 19F-357-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 19, 2019 at 1:30 PM.

APPEARANCES: Linda Anderson (“Petitioner”) appeared on her own behalf with Kodi Riddle and William Riddle as witnesses. Assistant Attorney General Deian Ousounov, Esq. appeared on behalf of the Arizona Department of Real Estate (“Department”) with Bret Biesenthal as a witness.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

_____________________________________________________________________

After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Recommended Order to the Commissioner of the Department.

FINDINGS OF FACT

Petitioner’s Application

On or about March 08, 2019, Petitioner filled out an application to be licensed as a real estate salesperson with the Department. It was received by the Department on March 19, 2019.

Petitioner answered “yes” to the following questions on the application:

(12) “Has the Applicant . . . [b]een convicted and/or entered into a plea agreement and/or a plea of NOLO CONTENDERE (no contest) to ANY felony in Arizona and/or any other state, whether or not the plea or verdict was set aside, judgment or sentencing was deferred, conviction was dismissed or expunged, or has been pardoned?”

(13) “Has the Applicant . . . [b]een convicted and/or entered into a plea agreement and/or a plea of NOLO CONTENDERE (no contest) to ANY misdemeanor in Arizona and/or any other state, whether or not the plea or verdict was set aside, judgment or sentencing was deferred, conviction was dismissed or expunged, or has been pardoned?” CONVICTIONS – DUI AND/OR RECKLESS DRIVING, EITHER MISDEMEANOR OR FELONY, MUST BE DISCLOSED. Minor traffic citations do not constitute a misdemeanor or felony offense.

* * *

(15) “Is the Applicant . . . CURRENTLY incarcerated, paroled, and/or on probation because of ANY conviction?”

Petitioner attached two written explanations of her “yes” answers to her application where she detailed the following:

On November 18, 2002, Petitioner plead guilty to Endangerment, a Class 6 undesignated Felony, and Driving While Under the Influence of Intoxicating Liquor, a Class 1 Misdemeanor, in Maricopa County Superior Court. Petitioner was sentenced to one (1) day in jail and three (3) years of probation, fined $2,500.00, and ordered to attend a MADD/Victim Impact Panel. On February 04, 2005, Maricopa County Superior Court reduced Petitioner’s Endangerment conviction to a misdemeanor.

On July 30, 2015, Petitioner plead guilty to False Claim to the Internal Revenue Service, a Class D Felony, in United States District Court, for the District of Arizona. On January 26, 2016, Petitioner was sentenced to eight (8) months in prison, three (3) years of supervised probation, assessed $100.00, and ordered to pay $692,206.47 in restitution.

On April 01, 2019, the Department issued an Intent to Deny Application letter to Petitioner.

On April 24, 2018, the Department received a timely appeal letter from Petitioner.

On April 24 2019, the Department referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. On May 15, 2019, a Notice of Hearing was issued citing the issue for hearing as whether grounds existed to affirm the Department’s intent to deny Petitioner’s application for a real estate salesperson’s license pursuant to Ariz. Rev. Stat. §§ 32-2124(M), 32-2153(B)(2), 32-2153 (B)(5) and (10).

Hearing Evidence

Petitioner testified on her own behalf, called Kodi Riddle and William Riddle as witnesses, and submitted four exhibits. The Department called Bret Biesenthal (“Investigator Biesenthal”) as a witness and submitted fourteen exhibits.

Bret Biesenthal’s testimony

At the hearing, the Department contended that Petitioner’s 2015 felony conviction constituted a violation of Ariz. Rev. Stat. § 32-2153(B)(2). The Department further contended that Petitioner’s conduct, for which she had been convicted, also amounted to violations of Ariz. Rev. Stat. §§ 32-2153(B)(5) and 32-2153(B)(10). Because Petitioner was on probation from her 2015 conviction at the time she submitted her application, the Department also found her in violation of Ariz. Rev. Stat. § 32-2124(M). As such, the Department argued that multiple grounds existed to deny Petitioner’s application for a real estate salesperson license.

Investigator Biesenthal testified that he is a Senior Investigator with the Department. His primary job duty is to determine licensure applicant eligibility. Investigator Biesenthal testified that he did not originally review Petitioner’s application, but did review Petitioner’s entire file after her real estate salesperson’s license application was marked for denial. Investigator Biesenthal could not say whether the Department informed Petitioner that it felt her statements were insufficient and/or whether the Department afforded Petitioner an opportunity to provide a more detailed statement for each conviction prior to issuing its Intent to Deny Application letter.

Per Investigator Biesenthal, in order for an applicant for a real estate salesperson’s license to be approved for licensure, the applicant must be professionally and morally qualified. Investigator Biesenthal testified that because licensees engage in public dealings, earnest money, and contracts, they have to possess good moral character and be truthful.

The Department’s primary concern, when determining whether to grant Petitioner’s request for a real estate salespersons license, was her felony conviction for being dishonest with the Internal Revenue Service (”IRS”), a federal agency. Investigator Biesenthal testified that, despite the denials of intentional wrongdoing Petitioner had written in her statements to the Department, Petitioner’s admissions in her 2015 plea agreement denoted that she accepted responsibility for her fraudulent conduct. Investigator Biesenthal opined that Petitioner had offered inconsistent statements to the Department regarding her prior conduct and had also misrepresented facts to the Department. Per Investigator Biesenthal, Petitioner’s crime was severe in nature and exacerbated by the amount of money she was guilty of defrauding the IRS. Investigator Biesenthal also argued that Petitioner’s underlying conduct lasted over a year, which the Department believed illustrated insidiousness. Due, in part, to her perceived unwillingness to be forthcoming in her involvement in the conduct for which she was convicted, Investigator Biesenthal opined that it would be difficult, if not impossible, for the Department to regulate Petitioner and her actions.

Although the Department did consider letters of recommendation as factors in mitigating of Petitioner’s application, it did not find them sufficient to overcome the factors in aggravation it found present to deny the application.

Petitioner’s testimony

At the hearing, Petitioner opined that her guilty pleas evinced her intent to take responsibility and accept the legal consequences for her actions. Petitioner implored the tribunal to consider personal and economic circumstances surrounding each of her convictions. Petitioner also beseeched the tribunal to consider the remoteness of her first conviction. Petitioner contended that while she was embarrassed of her unlawful conduct, that she was ultimately grateful because she matured and mindfully set out to make a better life for herself.

Regarding her first conviction, Petitioner admitted that she consumed one too many alcoholic beverages prior to driving, with her minor child in tow. Per Petitioner, she was in the midst of a contentious divorce at the time and used alcohol to self-medicate during the dissolution of her marriage. After her conviction, Petitioner participated in a diversion program and obtained a counselor to learn positive coping skills. Petitioner also opened up to friends and family and joined a local church to create a support system.

Regarding her second conviction, Petitioner testified that in or around 2009 she sustained debilitating injuries to her head and shoulders in an auto accident, for which she was prescribed several medications. Petitioner’s accident left her with limited earning potential. Petitioner testified that she was preyed upon because of her vulnerable state, and that during a particularly low financial period she accepted an offer for an all-expenses paid tax seminar out of state. Upon her return, Petitioner accepted an offer of remote employment whereby she would serve as a third-party tax form preparer for her employer’s clients. Once Petitioner completed a client’s tax forms she would forward them to her employer, who would in turn file the client’s return with the IRS. In October 2010 Petitioner realized that she was involved in a tax scam. Petitioner contacted the taxpayers she had performed work for, but did not contact the IRS. However, Petitioner was cooperative when IRS investigators contacted her shortly thereafter. During the government’s four-year investigation, Petitioner was honest about her role and involvement in the tax scam as she had never knowingly intended to defraud anyone. After her conviction, Petitioner served six months in prison and ordered to pay restitution. Petitioner was initially placed on probation for three years. She was placed on low intensity supervision effective August 13, 2018, and granted early termination on November 03, 2019.

On March 08, 2019, Petitioner was granted a Level I fingerprint clearance card by the Arizona Board of Fingerprinting.

Since 2017, Petitioner has been employed as an unlicensed assistant with Riddle Realty, a real estate brokerage firm established in Cave Creek, Arizona. The owners of the company, spouses William and Kodi Riddle, have agreed to monitor Petitioner should the Department issue Petitioner a provisional license.

Petitioner testified that she wanted a real estate salesperson’s license because she wanted to make a larger difference in her community and provide increased financial security for her family.

Petitioner emphatically denied that she ever lied, either outright or by omission, on her real estate salesperson’s application, and that she did not understand why the Department questioned her honesty, truthfulness, or good character, as she had admitted to her prior convictions and provided the Department with written explanations for both of them. Petitioner testified that if the Department had asked for additional information regarding her convictions, or had requested any other information for that matter, she would have gladly provided it in an expeditious manner.

Kodi Riddle’s testimony

Prior to Petitioner submitting an application for employment, Mrs. Riddle received a telephone call from Petitioner’s probation officer. The officer called to ask if the Riddles would be open to hiring someone on probation for a felony offense. Mrs. Riddle said that she would consider doing so, based on the applicant. After Petitioner applied for the job, Mrs. Riddle contacted Petitioner’s church for character references. Ultimately, the Riddles agreed to hire Petitioner. Per Mrs. Riddle, they have yet to regret their decision.

Mrs. Riddle testified that Petitioner was hired to fill a position that had been held by six prior employees, all of whom had been licensed. Petitioner had unequivocally done a better job, despite her inexperience, than all of her predecessors. Mrs. Riddle testified that her firm possessed a heightened accountability system, and that Petitioner had not been found to be in violation of it.

When asked, Mrs. Riddle testified that she would be amendable to monitoring Petitioner anywhere from one to three years, if necessary, if the Department issued Petitioner a provisional license.

William Riddle’s testimony

Mr. Riddle testified that, based on all of his professional dealings with Petitioner, he believed her character to be one of an honest and forthright person. Per Mr. Riddle, he has no reservations whatsoever in Petitioner’s access to his company’s proprietary information. Mr. Riddle testified that Petitioner had risen to the accountability standards that he and his wife had set at their company. Moreover, because clients are happy with Petitioner’s performance, the Riddles are also happy with her performance.

CONCLUSIONS OF LAW

Because at all times relevant to this matter Petitioner was subject to the provisions of Title 32, Chapter 20, Arizona Revised Statutes (“Ariz. Rev. Stat.”), the Commissioner of the Department has jurisdiction over Petitioner and the subject matter in this case.

The case was properly brought before the Office of Administrative Hearings for adjudication pursuant to Title 2, Chapter 19, Article 1, of the Arizona Administrative Code (“Ariz. Admin. Code”).

Pursuant to Ariz. Rev. Stat. § 41-1092.07(G)(2) and Ariz. Admin. Code R2-19-119(B), Petitioner bears the burden of proof in this matter to establish that she is rehabilitated and meets statutory qualifications for a real estate salesperson’s license. The standard of proof is by a preponderance of the evidence.

A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” It is “[e]vidence which is of greater weight or more convincing than the 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.”

Ariz. Rev. Stat. § 32-2124(M) provides that the commissioner shall not issue a license to a person who has been convicted of a felony offense and who is currently incarcerated for the conviction, paroled, or under community supervision and under the supervision of a parole or community supervision office, or who is on probation as a result of the conviction.

Ariz. Rev. Stat. § 32-2153(B) provides, in pertinent parts, 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.

* * *

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.

* * *

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.

The legislature has charged the Department with protecting the public and consumers who deal with licensed salespersons when it issues licenses.

An applicant with a criminal record must be given close scrutiny and careful consideration. However, the conviction of a crime is not a permanent bar to being licensed. A real estate salesperson’s license is a privilege, not a right.

The Department has discretion to grant or deny a license to an applicant under Ariz. Rev. Stat. § 32-2153(B).

The issue in this case is, in light of Petitioner’s DUI and Endangerment convictions nearly twenty years ago and her False Claim conviction nearly five years ago, whether Petitioner can be trusted at this time to be responsible in her dealings with her clients and members of the public if the Department grants her a real estate salesperson’s license.

The definition of what constitutes good character, or a lack thereof, is not codified by the legislature. United States Supreme Court Justice Frankfurter noted, “No doubt satisfaction of the requirement of moral character involves an exercise of delicate judgment on the part of those who reach a conclusion.”

The time period required for a license applicant to establish rehabilitation is commensurate with the period of misconduct and the severity of the offense(s). Just over seventeen years have passed since Petitioner’s Endangerment/DUI misdemeanor convictions, and about four and a half years have passed since Petitioner’s felony False Claim conviction. Since that time Petitioner has secured gainful employment with licensed real estate agents willing to monitor her, has been granted a fingerprint clearance card, has dutifully made her monthly restitution payments to the court, and has otherwise lived an irreproachable life.

Petitioner’s 2002 Endangerment/DUI misdemeanor convictions are indeed remote, and cannot reasonably be utilized by the Department as a means to question Petitioner’s character – particularly since neither convictions amounted to a crime of moral turpitude.

Notably, Petitioner’s 2015 felony False Claim conviction was the result of conduct that occurred between 2009 and 2010. Though said conviction gives pause for concern, Petitioner’s conduct since that time raises confidence in her ability to maintain appropriate and lawful conduct, as she fully cooperated with federal investigators for four years prior to her conviction which illustrates her ability to be regulated – particularly since Petitioner’s current employer is willing to monitor her. Petitioner credibly testified, as was corroborated by undisputed evidence, that she has learned from her past mistakes and is unlikely to repeat them in the future.

Petitioner did not dispute her convictions, and her explanations regarding her decisions to engage in conduct which resulted in such, including descriptions of her personal circumstances during those times, are credible. It is clear from the evidence that Petitioner truthfully informed the Department of her convictions, and also provided written insights to the best of her ability for each of them.

Petitioner’s criminal history rightly gave the Department cause for concern, but said concern should not prevent the Department from issuing a real estate salesperson’s license upon finer review. The 2002 DUI conviction is too remote and should not be given consideration. Although the 2015 False Claim conviction is concerning, the underlying conduct appears to be isolated and not an indication that Petitioner is prone to insidious behavior. In light of the circumstances, it appears that Petitioner fell victim to a scheme she failed to realize was unlawful until her participation in it was criminally libelous.

After closely scrutinizing the underlying conduct which resulted in Petitioner’s two criminal convictions, as well as the convictions themselves, and after careful consideration of Petitioner’s past and behaviors over the course of the subsequent years, this tribunal holds that Petitioner has established by a preponderance of the evidence that she is fully rehabilitated and that the public does not need any protection from her. The record reflects that Petitioner is an honest and truthful person of good character. Having satisfied all other statutory requisites to licensure, Petitioner shall be granted a real estate salesperson’s license.

RECOMMENDED ORDER

Based upon the foregoing facts and conclusions of law,

IT IS RECOMMENDED that the Commissioner reverse the Department’s April 01, 2019, Intent to Deny Application for Original Salesperson’s License No. SA680832000.

It is FURTHEr recommended that Petitioner Linda Anderson be issued a three-year provisional salesperson’s license upon the effective date of the Final 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 shall be five days from the date of the certification.

Done this day, January 06, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner

Arizona Department of Real Estate