ALJDEC decisions subject to certification as final

22F-146-REL · Department of Real Estate · 2022-02-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

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

MONA KURPGEWEIT, License No. SA699263000 (Candidate),

Petitioner.

No. 22F-146-REL

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: February 3, 2022

APPEARANCES: Sara Stark, Esq. represented Petitioner Mona Kurpgeweit, who was present. Assistant Attorney General James Rolstead represented the Arizona Department of Real Estate. Bret Biesenthal appeared as a witness for the Arizona Department of Real Estate. Susan Hack and Dan Jones observed the proceeding.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

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 Arizona Department of Real Estate (“Department”).

FINDINGS OF FACT

Petitioner’s Application

On or about October 20, 2021, Petitioner Mona Kurpgeweit (“Petitioner”) submitted to the Department an application to be licensed as a real estate salesperson.

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

. . . .

(4) “Has the Applicant . . . [v]oluntarily surrendered ANY professional or occupational license during the course of an investigation or disciplinary proceeding?

. . . .

(6) “Has the Applicant . . . [h]ad any judgment and/or order against them by ANY court involving fraud, dishonesty, misrepresentation, unfair trade practice, or moral turpitude?

(7) “Has the Applicant . . . [h]ad any judgment and/or order entered against them by ANY court arising out of the conduct of any business in real estate, cemetery property, timeshare intervals, or membership campgrounds?

. . . .

(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, or the conviction is being appealed?”

. . . .

Petitioner attached a written explanation of her “yes” answers to her application where she detailed the circumstances giving rise to the conviction.

Petitioner disclosed to the Department the following:

In 1997, Petitioner voluntarily surrendered her Limited Practice Officer license when she “turned herself in for the crime [she] committed.”

Petitioner details the circumstances leading up to her “single crime,” and other background information regarding her life experiences. Petitioner stated that in 1996 her office building was burglarized during which all of her business’s equipment and records were stolen. Due to an error in the way in which the business’s insurance policy was written, there was a delay in the payment of those proceeds, causing Petitioner to rely on savings while waiting for the insurance proceeds.

By early 1997, all of Petitioner’s savings had been expended on the business, she was the “sole bread winner” for her household consisting of her abusive husband and two children. Petitioner details the abuse she suffered and the impact that abuse had on her. Petitioner and her husband feared their house would be foreclosed upon and when confronted with such, Petitioner’s husband became more abusive.

Petitioner “felt panic and did not see a way out of [her] situation other than to solve the financial problem.”

The following day, Petitioner “took money from [her] business partner’s bank account and began to kite checks between her business account and her business partner’s account to cover costs of the business and her salary.

Petitioner believed she would be able to repay the money when she received the insurance proceeds.

After further delays by the insurance company, Petitioner contacted an attorney, confessed to her business partner and the FBI, closed the business, obtained a job, and moved away from her husband.

In 2000, Petitioner plead guilty to Bank Fraud, subsequently served a five month prison sentence, thereafter, divorced her husband, and participated in counseling.

Petitioner stated that learned from her mistakes, has not committed any other crime, has been self-employed for the past twenty years, and opened a catering company that expanded to frozen food manufacturing, however that business closed in 2019 due to COVID-19.

Petitioner submitted with her license application a January 22, 2021, Pre-License Determination issued by the Department. The Pre-License Determination was based upon information that Petitioner provided to the Department, and specifically states the following: “[b]ased solely on the information provided in [Petitioner’s] petition, the Department has determined that [Petitioner’s] criminal history will not disqualify her from obtaining a Consent Order with a two (2) year Provisional Real Estate License.”

The Pre-License Determination states that Petitioner’s petition disclosed the following:

[Petitioner] was convicted of Bank Fraud, a Felony Offense on or about August 18, 2000. [Petitioner] was sentenced to imprisonment for a period of 5 months, followed by 5 months of home detention with credit for time served and work release privileges; supervised probation for a period of 5 years; Financial/Life skills counseling; restitution in the amount of $229,922.30 to be paid immediately and assessment of $100.00. United States District Court, Case No. 2:00CR00117-001.

In November 2021, the Department obtained additional information regarding Petitioner’s criminal conviction, including the Information, Plea Agreement, an Order filed on December 2, 2004, and a Noncompliance Summary report filed on January 17, 2006.

On November 16, 2021, the Department issued an Intent to Deny Application letter to Petitioner.

The Department received a timely appeal from Petitioner.

Thereafter, the Department referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. On December 29, 2021, a Notice of Hearing was issued citing the issue for hearing as whether grounds exist to affirm the Department’s intent to deny Petitioner’s application for a real estate salesperson’s license pursuant to Ariz. Rev. Stat. §§ 32-2153(B)(2), (B)(5), B)(7), (B)(9) and (B)(10).

Hearing Evidence

Petitioner testified on her own behalf, and submitted nine exhibits. The Department called Bret Biesenthal (“Investigator Biesenthal”) as a witness and submitted nine exhibits.

Bret Biesenthal’s testimony

Investigator Biesenthal testified that he is a Senior Investigator with the Department. One of Investigator Biesenthal’s job duties is to determine licensure applicant eligibility. 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 of Petitioner’s felony conviction and Petitioner’s violations of a court order, the Department has concerns about granting a license to Petitioner. The Department is charged with protecting the public and Petitioner’s violations of court orders demonstrates the inability or refusal to be regulated.

Investigator Biesenthal testified that he reviewed the application and supporting documentation, including court criminal records and Petitioner’s statement. Investigator Biesenthal explained that Petitioner’s Pre-License Determination from the Department, approving a provisional two year license, was based upon Petitioner’s criminal history that was disclosed by Petitioner to the Department. Petitioner failed to disclose to the Department her violations of court orders. Investigator Biesenthal referenced the section entitled, Decision Criteria and Licensing of the Pre-License Determination, which states the following:

Criminal history is only one of the criteria the Department considers when deciding whether an individual qualifies for a real estate license. The above decision is based solely on the information provided by [Petitioner] in her petition. If, at the time of application, it is determined that the petition contained incomplete and/or inaccurate information, the Department may make an adverse decision regarding licensure.

Investigator Biesenthal testified regarding the documentation he reviewed, including the May 31, 2000 Information issued by the United States District Court Eastern District of Washington (“Court”) that charged Petitioner with Bank Fraud that occurred from September 1997 through September 16, 1998, and resulted in a $227,584.70 loss to the victims of the bank fraud scheme.

Investigator Biesenthal also reviewed the May 31, 2000 Plea Agreement pursuant to which Petitioner plead guilty to one count of Bank Fraud, a Class B felony, and stipulated to the amount of money involved in her scheme to defraud of $227,584.70.

Investigator Biesenthal also reviewed the August 17, 2000 Judgment pursuant to which the Court accepted Petitioner’s guilty plea and sentenced her to a five month prison term, followed by five months of home detention, five years of supervised release with 15 standard conditions of supervision, as well as additional conditions 16 through 25, and a restitution order of $229,922.30, to be paid in full immediately.

Investigator Biesenthal further reviewed a December 2, 2004 Court Order that stated in pertinent part as follows:

A supervised release violation hearing was held December 2, 2004. [Petitioner], who is not in custody, was present and represented . . .

Pending before the Court was the October 20, 2004 Violation Report. [Petitioner] admitted Violation Nos. 1, 3 and 4. . . .

IT IS ORDERED that [Petitioner’s] conditions of supervised release are MODIFIED as follows:

The standard condition continues that [Petitioner] shall not associate with any persons engaged in criminal activity and shall not associate with any person convicted of a felony unless granted permission to do so by the Probation Officer. [Petitioner] may have LIMITED CONTACT with known felon Matt Nicolle. . . .

. . .

[Petitioner] may become self-employed but may not have any access to client funds. . . .

Investigator Biesenthal reviewed a January 17, 2006 Noncompliance Summary issued by the Court that found that Petitioner failed to comply with the following:

Special Condition # 15: You shall not incur any new debt, open additional lines of credit, or enter into any financial contracts, without the advance approval of the supervising probation officer.

Supporting Evidence: [Petitioner] is considered in violation of her supervised release by conducting a fund-raising event for the purposes of collecting donations of food and goods without the advance approval of the supervising probation officer.

Investigator Biesenthal testified that after reviewing the additional documentation obtained by the Department concerning Petitioner’s violations of Court Orders, on November 16, 2021, the Department issued an Intent to Deny letter to Petitioner informing Petitioner that after review, the Department determined that Petitioner does not meet the qualifications for licensure and explained that the Department issued a Pre-License Determination without the knowledge of Petitioner’s violations of the Court Orders referenced above.

Investigator Biesenthal testified that the Consent Order that was initially offered by the Department to Petitioner, granting a provisional license, was offered prior to the Department’s knowledge of Petitioner’s violations of Court Orders. The Consent Order specifically states that Petitioner’s “original application for a real estate Salesperson’s license is hereby approved and [Petitioner] is issued a provisional real estate Salesperson’s license effective upon the return of this Consent Order signed by [Petitioner] and final execution of the Consent Order by the Department.” The Consent Order was never executed, as it was not signed by the Commissioner of the Department.

Petitioner’s testimony

At the hearing, Petitioner explained the circumstances and underlying facts surrounding her conviction. Petitioner’s testimony was consistent with her October 13, 2021 Written Statement provided to the Department. Petitioner’s testimony detailed the repercussions of the burglary of her business, that her insurance policy was not written correctly, which prolonged the payout of the insurance proceeds, which resulted in her kiting checks. Petitioner testified emotionally about her abusive marriage, her financial hardships, and the “pressure” she felt, as well as the guilt, as she knew that what she was doing was “wrong.” Petitioner testified that she believed kiting checks would be a temporary solution to her issues, however, because of the delayed insurance payout, the kiting “stretched out.” Petitioner testified that she contacted an attorney, closed her business, ad met with the FBI.

Petitioner testified that she completed all of her counseling requirements within a year, however, elected to continue with counseling throughout her probation period. Petitioner testified regarding her upbringing and that she learned check kiting from her mother. Petitioner testified that her life has changed since she began counseling and is a different person.

Petitioner testified that she divorced her husband, and in 2003, he tried to kill her, he went to prison, and she moved to Seattle.

Petitioner testified regarding the violations of the Court Orders, explaining who Mr. Nicolle is, and that the other violations were caused by her ex-husband trying to “get her in trouble.” Petitioner testified that she did not appear in Court for the probation violation hearing, contrary to what the Court Order indicates, and asserted that she did not remember the violations or Court Order when she submitted her license application. Petitioner further asserted that she believed the Court Order was a “renegotiation of her probation terms” and “did not know it was a violation.”

Regarding the payment of restitution, Petitioner has only paid $35,758.96 toward the $229,922.30 ordered restitution amount, and the last payment made was October 24, 2012. Petitioner testified that the payments she made were based upon Court calculations that were calculated based upon her income and tax refunds. Petitioner testified about her work and income history, and why payments stopped in 2012. Petitioner explained that her new catering business venture suffered electrical issues and lost inventory due to a lack of power. Petitioner testified that she “tried to recover and move into a new building,” and due to her losses, her income decreased significantly, and her payments were calculated to be zero. On July 28, 2019, Petitioner filed for Chapter 13 bankruptcy. Petitioner made no payments between October 24, 2012 and July 28, 2019, when her bankruptcy was filed. Petitioner further testified that she received approximately $200,000.00 from the insurance proceeds and deposited those funds into the business trust account to “make it whole,” and that she “never knew why she had a restitution order” and “just agreed to it” and “didn’t ask a lot of questions, but the account was whole when she turned herself in.”

Closing Arguments

In closing, Petitioner argued that her crime was committed over 20 years ago, during an abusive marriage, that she is rehabilitated, she successfully completed probation, and has an offer of employment. Petitioner requested that the Department exercise its discretion to grant Petitioner a provisional license.

In closing, the Department argued that Petitioner’s singular crime went on for over a year, that it was fraud within the course of her employment, while licensed, with numerous transactions encompassing large sums of money, with multiple victims, that Petitioner benefitted financially from the fraud, that Petitioner’s probation terms were modified after non-compliance, and that Petitioner did not make a restitution payment for approximately seven years and still owes approximately $189,000.00 in restitution. The Department further argued that Petitioner repeatedly blamed others in order to minimize her behaviors, i.e., the robbery, an abusive marriage, an incorrect insurance policy. As such, the Department asked that its denial of Petitioner’s application for licensure be upheld.

CONCLUSIONS OF LAW

Because at all times relevant to this matter Petitioner was subject to the provisions of Title 32, Chapter 20, 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)(1) and Ariz. Admin. Code R2-19-119(B), Petitioner bears the burden of proof in this matter to establish that she meets the 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. § 32-2153(B) provides, in pertinent parts, as follows:

The commissioner may deny the issuance of a license 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.

* * *

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

* * *

(9) Violated the terms of any criminal or administrative order, decree or sentence.

(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. Therefore, the Department has discretion to deny the issuance of a license under Ariz. Rev. Stat. § 32-2153(B).

The issue of what constitutes good character or a lack thereof is nebulous at best. 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.” Once good character is shown to be absent, it is not automatically regained by the mere passage of time.

Petitioner has one criminal conviction for Bank Fraud in 2000. Therefore, violations of Ariz. Rev. Stat. §§ 32-2153(B)(2), (B)(5), (B)(7), and (B)(10) have been established.

In 2004, the Court found that Petitioner violated the terms of her supervised release conditions. Therefore, a violation of Ariz. Rev. Stat. § 32-2153(B)(9) has also been established.

Therefore, the only remaining issue to address is whether Petitioner offered sufficient mitigating evidence to overcome the Board’s evidence and establish her qualifications for a real estate salesperson license. The Administrative Law Judge concludes that Petitioner has failed to establish that she meets the statutory qualifications for a real estate salesperson’s license. While Petitioner testified that she knew her decision to commit her crime was “wrong,” Petitioner placed much of the blame for her actions (that repeatedly occurred over the course of an entire year) on her life circumstances. Petitioner thereafter violated the terms of her supervised release twice, in 2004 and 2006. Petitioner denied being at the 2004 Court hearing, and characterized the modifications to her supervised release as a “renegotiation.” Petitioner failed to disclose those violations to the Department. Petitioner continues to owe a large sum in restitution and did not make payments for approximately seven years prior to filing for bankruptcy. The Administrative Law Judge finds Petitioner’s testimony that she “never knew why she had a restitution order” and “just agreed to it” and “didn’t ask a lot of questions, but the account was whole when she turned herself in” to be disingenuous.

After closely scrutinizing the evidentiary record, the undersigned Administrative Law Judge concludes that Petitioner has not sustained her burden of proof in this matter by a preponderance of the evidence. Grounds exist for the Department to deny issuance of a real estate salesperson license to Petitioner in accordance with Ariz. Rev. Stat. §§ 32-2153(B)(2), (B)(5), (B)(7), (B)(9), and (B)(10).

RECOMMENDED ORDER

Based upon the foregoing,

IT IS RECOMMENDED that the Commissioner affirm the Department’s determination to deny Petitioner’s application for a Real Estate Salesperson License pursuant to Ariz. Rev. Stat. § 32-2153(B).

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 (5) days from the date of that certification.

-54864001

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-137160-45720000Done this day, February 18, 2022.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Louis Dettorre, Commissioner

Arizona Department of Real Estate-54864001

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-137160-45720000