ALJDEC decisions subject to certification as final
2021A-03728-LDA-LS-ROC · Registrar of Contractors · 2021-11-22
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Arizona Registrar of Contractors,
COMPLAINANT,
v.
C&D Restoration And Construction, LLC
RESPONDENT.
No. 2021A-03728-LDA-LS-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: November 2, 2021
APPEARANCES: David Morris Scott appeared on behalf of Respondent C&D Restoration And Construction, LLC. Assistant Attorney General Sarah A. Asta appeared on behalf of the Arizona Registrar of Contractors.
ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson
_____________________________________________________________________
FINDINGS OF FACT
1. Between 1993 and 1997, David Morris Scott, as an officer of M&R Financial, aided his in-laws in purchasing an annuity and to roll over retirement funds. See Exhibit 11. Beginning on June 7, 1995, and continuing for about eight years, withdrawals were made from the account, with checks made out to M&R Financial.
Mr. Scott’s in-laws had no knowledge of the withdrawals and received fraudulent statements from M&R Financial that misrepresented the actual balances. See id.
2. On February 12, 2007, Mr. Scott pleaded guilty to mail fraud, a felony under 18 U.S.C. § 1341, in case number 3:07-cr-00026-AWT, in the United States District Court for the District Court of Connecticut. See Exhibit 6. The plea agreement specified the following elements of mail fraud:
a. There was a scheme and artifice to defraud certain investing clients and to obtain money and property from such clients by false and fraudulent pretenses, representations and promises;
b. The defendant, knowingly, willfully and with the intent to defraud, participated in the scheme with knowledge of its fraudulent nature and with the intent to defraud;
c. Money and property were the objects of the scheme;
d. In the execution of the scheme, the defendant knowingly caused a mail communication to be used to further or assist the scheme.
3. The criminal complaint, in case number 3:07-cr-00026-AWT, included the allegation that Mr. Scott, “devised a scheme to defraud his in-laws of over $300,000 of their retirement savings and used the wires and mail in furtherance of that scheme.” See Exhibit 5.
4. The plea agreement further required the court to order that Mr. Scott make restitution in the amount of $386,087.73 to one victim and $25,511.36 to another.
See Exhibit 6, Bates 033.
5. On August 23, 2007, Mr. Scott was convicted of the felony of mail fraud under 18 U.S.C. § 1341, in Case No. 3:07-CR-00026-AWT, U.S. District Court for the District of Connecticut. See Exhibit 8.
6. On August 23, 2007, Mr. Scott was sentenced to incarceration for 48 months, to be followed by supervised release for a term of three years, with special conditions including: (1) mental health treatment; (2) payment of any restitution ordered; (3) prohibition from incurring new credit card charges or opening additional lines of credit without permission of the U.S. Probation Office until he has paid all of the restitution and special assessment; (4) provide the U.S. Probation Office access to requested financial information; and (5) shall not possess a firearm or other dangerous weapon.
7. On February 8, 2008, Mr. Scott was ordered to pay restitution in the amount of $593,709.57, with interest waived, and with monthly payments of $200 beginning upon his supervised release, with the unpaid balance to be paid in the 35th month of his period of supervised release.
8. Mr. Scott appealed the order of restitution, challenging the district court’s conclusion that the amount of restitution should include lost investment returns calculated as of the date of sentencing, and requesting that the restitution order be set aside because it was issued more than ninety days after sentencing.
9. On April 14, 2009, the Court of Appeals affirmed the judgment of the district court.
10. On or about June 9, 2014, Mr. Scott was discharged from probation.
11. On May 14, 2021, an application for a contractor’s license was filed with the Arizona Registrar of Contractors (ROC) on behalf of C&D Restoration And Construction, LLC (C&D). See Exhibit 2.
12. Mr. Scott was a signatory on the application as the qualifying party, manager, and Trustee of the C&D Scott Revocable Trust, which has 100% ownership of Applicant.
13. Mr. Scott reported that he had approximately eight years of contracting experience on the application. The May 14, 2021 application, provided, in relevant part, as follows:
Park Place Communities Construction, March 5, 2018 to June 5, 2019. Traveled the country remodeling homes for the employer and worked 40 hours per week.
Remodeled 40 homes as a construction supervisor from March 5, 2019 to June 5, 2019
Size of projects qualifying party worked on (Square Foot And/Or Dollar Amount) 14,000
Owner of Overlook Handyman, LLC from January 1, 2015 to March 5, 2018, worked 40 hours per week
Size of projects qualifying party worked on (Square Foot And/Or Dollar Amount) 25000+
Remodeled turn of the century homes. Oversaw all aspects including roofing, plumbing, electrical, HVAC carpentry etc. Also maintained homes once they were rented. Did a total of approximately 180 homes during this time.
Owner of Barns for Less from April 1, 2011 to December 31, 2014 and worked 40 hours per work.
Size of projects qualifying party worked on (Square Foot And/Or Dollar Amount) 35,000
Built pole barns for horses. Ground up construction, level land, built approximately 40 barns throughout New England ranging in size for a 36 by 36 6 stall barn to a 48x72 riding arena and a same size building for equipment. Built in Middlebury, VT, Saratoga NY, Marlborough CT, among others.
14. Mr. Scott also reported on the application that he held a contractor’s license in the State of Connecticut from March 29, 2021 to November 30, 2021.
15. The application included a Felony Disclosure Form, wherein Mr. Scott disclosed that he was convicted of mail fraud on August 23, 2007.
16. As of May 7, 2021, Mr. Scott owed restitution in the amount of $557,672.57.
17. On July 2, 2021, the ROC issued a notice denying the application and listed the following reasons for the denial:
The [ROC] finds that Mr. Scott’s felony conviction establishes a lack of good character and reputation as is required of every person named on a license pursuant to A.R.S. § 32- 1122(C). The [ROC] further finds that licensing Mr. Scott would present an unreasonable risk to the public given the nature of his offense involving fraudulent conduct with an intent to defraud his clients of their money and property, and due to the substantial outstanding amount of restitution owed. Accordingly, the [ROC] determines that Applicant does not qualify for a contractor’s license.
18. Mr. Scott requested a hearing regarding the denial.
19. The matter was referred to the Office of Administrative Hearings for an evidentiary hearing.
20. A hearing was held on November 2, 2021.
21. At hearing, the ROC presented the testimony of its Assistant Chief Counsel, Chance Peterson, and submitted exhibits 1 through 11. Mr. Scott testified on behalf of himself and submitted exhibits A through D.
22. Mr. Peterson reviews license applications and assists the ROC’s licensing department in the preparation of denials of applications. Mr. Peterson reviewed C&D’s application. Mr. Peterson testified regarding his review of the application and the issuance of the denial. Mr. Peterson explained that he believed that Mr. Scott held a contractor’s license or was a registered contractor in Connecticut prior to March 29, 2021, because his experience shows contracting work for several years prior to 2021.
23. Mr. Scott did not dispute that he was convicted of mail fraud under
18 U.S.C. § 1341. However, Mr. Scott asserted that he has turned his life around.
Mr. Scott stated that a complaint was never filed against his license during the seven years that he was a licensed contractor in the State of Connecticut. In support of his testimony, Mr. Scott submitted Exhibit A. However, Exhibit A provides insufficient information regarding the source of the document and Mr. Scott’s complaint history as a licensed or registered contractor in the State of Connecticut.
24. Mr. Scott presented three character letters in support of his case.
25. Bonnie Faircloth, the Executive Director of the Southern Arizona Law Enforcement Foundation (SALEF), wrote a letter dated July 29, 2021 regarding
Mr. Scott. Ms. Faircloth stated that she has known Mr. Scott for four years. Ms. Faircloth described Mr. Scott as an “active and conscientious citizen and business leader.”
See Exhibit C.
26. Mike McKendrick, Chairman of the Greater Tucson Fire Foundation (GTFF), wrote a letter dated May 25, 2021 regarding Mr. Scott. Mr. McKendrick wrote, “He has been a volunteer and contributed to the success of the Greater Tucson Fire Foundation for over three years. David was elected to the Fire Foundation’s Board of Trustees in November of 2020. I recommend David Scott as a committed and reliable business person within the State of Arizona.” See Exhibit B.
27. Margo Susco, Community Engagement Coordinator for the Tucson Police Department, wrote a letter dated Nov. 1, 2021 regarding Mr. Scott. Ms. Susco wrote, “Dave Scott is one of the best people that I know. He has become a very well-known business owner in Tucson. I have witnessed him build Bio-One of Tucson into a successful and thriving business, known for professionalism, pride in work, fairness, high safety standards, and quality performance. Dave’s work and life ethic are un-equaled. He embodies a dogged determination to continue to grow his business, and his working relationships, while maintaining the high level of integrity and standards of cleanliness and safety. And he does all of this while giving back to his community.”
See Exhibit D.
28. On cross-examination, Mr. Scott admitted that he donates money to SALEF and time to GTFF.
CONCLUSIONS OF LAW
The burden of proof at an administrative hearing falls to the party
asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See Arizona Administrative Code (A.A.C.) R2-19-119.
2. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960).
3. Arizona Revised Statutes (A.R.S.) § 32-1122(C) provides in pertinent part that to obtain a contractor’s license, a person shall be of good character and reputation. Lack of good character and reputation may be established by showing that the person has committed any act which is grounds for suspension or revocation of a license.
4. A.R.S. § 32-1154(A)(7) provides in pertinent part that a holder of a license may not be convicted of a felony.
5. It is undisputed that Mr. Scott was convicted of the felony of mail fraud under 18 U.S.C. § 1341.
6. The ROC’s concern in this case is legitimate and well-founded.
A person with a criminal record must be given close scrutiny and careful consideration when he applies for a professional license. Once good character is shown as absent, it is not automatically regained by the mere passage of time. The concern of the ROC is essential and legitimate in light of Mr. Eden’s past conviction for mail fraud.
7. Mr. Eden has the burden of proving by the preponderance of the evidence that he has resolved the issues that led to the commission of the conviction to establish that he has sufficient good character and reputation to satisfy the statutory requirement for licensure as a contractor.
8. The issue of what constitutes good character or a lack thereof is nebulous at best. Former 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, having heard and seen the applicant . . . , a judgment of which it may be said as it was of "many honest and sensible judgments" in a different context that it expresses "an intuition of experience which outruns analysis and sums up many unnamed and tangled impressions; impressions which may lie beneath consciousness without losing their worth." . . .
9. “[T]he ROC is charged with the overall responsibility of protecting the welfare of the public dealing with persons engaged in the building contracting vocations and afford the public protection against incompetent, inexperienced, unlawful and fraudulent acts of building contractors.”
10. Mr. Scott contended that he currently is a person of good character. In
support of that contention, Mr. Scott testified on his own behalf and presented three character letters.
11. Although Mr. Scott offered three character letters, Mr. Scott did not
provide any character witnesses.
12. The above-mentioned letters of character authored by Ms. Faircloth,
Mr. McKendrick, and Ms. Susco are given little weight because Ms. Faircloth,
Mr. McKendrick, and Ms. Susco were not present to be questioned by the Department’s counsel or by the Administrative Law Judge, and could not be observed by the Judge. Further, due to the content of the letters, the extent of information known by
Ms. Faircloth, Mr. McKendrick, and Ms. Susco, and certain relevant details concerning Mr. Scott could not be discerned, nor could such information be explored because
Ms. Faircloth, Mr. McKendrick, and Ms. Susco did not testify at the hearing.
13. The evidence presented at hearing did not establish that Mr. Scott has taken steps toward rehabilitation. At this time, Mr. Scott did not establish that he is sufficiently rehabilitated to be granted a license or that the ROC abused its discretion when it denied C&D’s application.
RECOMMENDED ORDER
Based on the foregoing, it is recommended that on the effective date of the ROC’s order, the ROC affirm the decision to deny C&D Restoration And Construction, LLC’s application for a contractor’s license.
Done this day, November 22, 2021.
/s/ Velva Moses-Thompson
Administrative Law Judge
Transmitted electronically to:
Jeffrey Fleetham, Director
Registrar of Contractors