ALJDEC - Licensing

23A-095-INS · Department of Insurance and Financial Institutions - Insurance · 2024-04-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

Michael A. Roman

(National Producer License No. 20865820)

Respondent.

No. 23A-095-INS

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: April 10, 2024 at 9:00 AM.

APPEARANCES: Assistant Attorney General Zachary Howard, Esq. appeared on behalf of the Arizona Department of Insurance and Financial Institutions (“Department”) with Aqueelah Currie as a witness. Michael Roman (“Respondent”) appeared on his own behalf. Susan Hack observed.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing, Department Exhibits 1-8, and Respondent Exhibit A were admitted into the evidentiary record.

_____________________________________________________________________

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 Director of the Department.

FINDINGS OF FACT

Background and Procedure

On November 20, 1991, the Superior Court of California, Santa Barbara County, convicted Respondent of Petty Theft, a misdemeanor.

On September 27, 2023, Respondent submitted an application for a Resident Insurance Producer license through the National Insurance Producer Registry to the Department.

Respondent answered “No” to Questions #1A and #1B of the Background Questions section of the application, which ask:

1A) Have you ever been convicted of a misdemeanor, had a judgement withheld or deferred, or are you currently charged with committing a misdemeanor?

1B) Have you ever been convicted of a felony, had a judgment withheld or deferred, or are you currently charged with committing a felony?

Responded also swore to the following Attestation at the end of the application, in pertinent part:

I hereby certify under penalty of perjury, all of the information submitted in this application and attachments is true and complete. I am aware that submitting false information or omitting pertinent or material information in connection with this application is ground for license revocation or denial of the license and may subject me to civil or criminal penalties.

On or about October 21, 2023, the Department mailed Respondent a notification that he possible failed to disclose his criminal history in his application. The Department asked Respondent to submit a written statement and copies of all documents related to his criminal proceeding(s) within fourteen (14) days.

On October 23, 2023, Respondent provided the Department with the following written explanation, in pertinent part:

In 2010 was going through some tough financial times. A loan modification was unsuccessful due to not enough income/decrease in income. I was unable to make the payments and eventually lost the home. Criminal disclosure: I totally forgot about this action taken until you brought it up to my attention. I was convicted in Dec 1991 for petty theft(misdemeanor) I was in possession of a stolen wallet that I had found and was emptied by whoever had took it. At the time I decided not to fight the offense because it was out of town and it was easier to pay the fine. I was young and immature at the time and have grown up since.

(All errors in original.)

On or about October 30, 2023, the Department notified Respondent that he was free to withdraw his application and resubmit a new application, or proceed with his pending application.

On October 30, 2023, Respondent asked the Department to proceed with the processing of his pending application.

On or about December 01, 2023, the Department mailed Respondent notice that his application for licensure had been denied pursuant to Arizona Revised Statutes (“Ariz. Rev. Stat.”) §§ 20-295(A)(1) and (A)(3).

On December 11, 2023, the Department received an appeal from Respondent regarding the denial of his licensure application.

On February 12, 2024, the Department referred the matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing to determine whether grounds exist for the Department to assess a civil money penalty of two hundred and fifty dollars ($250.00) against Respondent based on the alleged statutory violation(s).

On February 22, 2024, the Department issued a Notice of Hearing, setting a hearing on April 10, 2024, at 9:00 a.m.

Hearing Evidence

At the hearing, the Department called Aqueelah Currie, its Licensing Supervisor, as a witness. Respondent testified on his own behalf. The substantive evidence of record is as follows:

Providing protection to consumers and businesses in the statewide insurance marketplace is paramount to the Department.

Part of the processing for Respondent’s application for a Resident Insurance Producer license included forwarding this fingerprints to the Arizona Department of Public Safety (“DPS”) for a background check, which was returned back to the Department in October 2023.

On December 22, 2023, the Department issued National Producer No. 20865820 to Respondent. The license has been renewed through August 31, 2027.

Respondent testified that he had failed to disclose his 1991 conviction for petty theft because he had “forgotten” about it, as it had occurred “over 30 years ago” when he was 18 years of age.

Additional Evidence

On June 24, 2009, Respondent submitted a Loan Originator Application to the Department through the National Mortgage Licensing System and Registry (“NMLS”).

Respondent answered “No” to Question (F) of the Criminal Disclosure section of the application, which asked:

(1) Have you ever been convicted of or plead guilty or nolo contender (“no contest”) in a domestic, foreign, or military court to a misdemeanor involving: financial services-related business; any fraud, false statements, or omissions; any theft or wrongful taking of property; bribery; perjury; forgery; counterfeiting; extortion; or a conspiracy to commit any of these offenses?

Respondent also swore to the following Oath at the end of the application, in pertinent part:

I ... make oath and say that I executed this application on my own behalf, and agree to and represent (1) that the information and statements continued herein, including exhibits attached hereto, and other information filed herewith, all of which are made a part of this application, are current, true, accurate and complete and are made under the penalty of perjury, or un-sworn falsification authorities, or similar provisions as provided by law.

On April 19, 2010, the Department issued Loan Originator License No. 0912071 to Respondent. The license has been renewed through an unknown date in 2024.

Respondent testified that he had been confused by Criminal Disclosure question (F) in the Loan Originator application, as he had understood the inquiry to be singular and pertaining solely to “financial services-related business.”

On or about September 20, 2012, believing that he may have misinterpreted question (F), Respondent contacted the Superior Court of California, Santa Barbara County, to request a copy of his criminal record(s) in Case No. 411913, which were provided on or about September 28, 2012. Respondent admitted, however, that he nonetheless continued to answer “no” to substantially similar inquiries on new applications, renewals, and related recertifications.

Per Respondent, he had not withdrawn the underlying application because he would have had to retake a requisite examination and pay for related expenses, which he could not afford. Respondent has four (4) additional other jobs, and obtained his National Producer License in the hopes of increasing his income.

Closing Arguments

In closing, Respondent argued that he had be ensnared into a money civil penalty due to his misunderstanding of a complex question and forgetting a conviction that was several decades old. Although Respondent admitted to having been convicted, and further having failed to disclose said conviction, he essentially argued that his omission was di minimis and did not warrant discipline. Respondent opined that because he had not acted intentionally, that the Tribunal hold no violation of Ariz. Rev. Stat. §§ 20-295(A)(1) or 20-295(A)(3) had been committed, and thusly the Department was prohibited from assessing a civil penalty of any kind in this matter.

In closing, the Department argued that it had sustained its burden of proof. Specifically, the Department argued that the record reflected Respondent had a criminal conviction that he failed to disclose, and in doing so had been issued licensure. While the Department conceded that Respondent’s omission(s) were likely unintentional, the Department argued that intent was not a requisite part of the applicable statute(s), and that grounds to take disciplinary action against National Producer License No. 20865820.

CONCLUSIONS OF LAW

This matter lies with the Department’s jurisdiction and was properly brought before OAH for adjudication.

The Department bears the burden of proof to establish cause to discipline Respondent’s National Producer License. Respondent bears the burden of persuasion on all mitigating evidence by the same evidentiary standard. The standard of proof on all issues in this matter is that of a preponderance of the evidence.

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).

Ariz. Rev. Stat. § 20-295(A)(1) provides, in pertinent part, that the director may impose a civil penalty in accordance with subsection F for “[p]roviding incorrect, misleading, incomplete or materially untrue information in the license application.”

Ariz. Rev. Stat. § 20-295(A)(3) provides, in pertinent part, that the director may impose a civil penalty in accordance with subsection F for “[o]btaining or attempting to obtain a license through misrepresentation or fraud.”

Ariz. Rev. Stat. § 20-295(F) provides that the director may “Impose a civil penalty of not more than two hundred fifty dollars for each unintentional failure or violation.”

In the case at bar, Respondent admitted to unintentionally omitting his misdemeanor conviction from 1991 on his 2023 Resident Insurance Producer license application. Thus, the Department has sustained its burden of proof as to whether grounds exist to assess a civil money penalty against Respondent.

The sole remaining issue is whether the Department’s proposed amount of two hundred and fifty dollars ($250.00) is just, based on the credible evidence of record. Here, Respondent credibly testified that he has multiple jobs and little disposable income. Weighing the Department’s legitimate police powers and authority to discipline National Producer License No. 20865820 against Respondent’s statutory violation(s) and mitigating evidence, the Tribunal holds that reduction of the proposed civil money penalty is warranted.

RECOMMENDED DECISION

Based on the foregoing,

IT IS RECOMMENDED that the Department issue a $100.00 civil money penalty against National Producer License No. 20865820 for violation(s) of Ariz. Rev. Stat. §§ 20-295(A)(1) and (A)(3) in accordance with Ariz. Rev. Stat. §§ 35-146 and 35-147.

It is further recommended that if Respondent fails to pay the entire amount of the civil money penalty on or before thirty (30) days following the effective date of the Director’s Order in this matter, the Department may suspend Respondent’s license, effective on such deadline date, until Respondent tenders payment of the outstanding civil money penalty.

NOTICE

Pursuant to Ariz. Rev. Stat. § 41-1092.08(I), the licensee may accept the recommended Administrative Law Judge Decision by advising OAH in writing not more than ten (10) days after receiving the decision. If the licensee accepts the recommended Administrative Law Judge Decision, the decision shall be certified as the Final Decision by OAH.

In the event of certification of the Administrative Law Judge Decision by OAH’s Director, the effective date of the Order will be five (5) days from the date of that certification.

Done this day, April 11, 2024.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Barbara D. Richardson, Director

Deian Ousounov, Chief Financial Deputy Director

Alena Caravetta, Regulatory Legal Affairs Officer

Ana Starcevic, Paralegal Project Specialist

Steven Fromholtz, Licensing Division Manager

Aqueelah Currie, Licensing Supervisor

Department of Insurance and Financial Institutions - Insurance

100 N. 15th Ave., Ste. 261

Phoenix, AZ 85007

[email redacted]

[email redacted]

[email redacted]

Zachary Howard, Esq., Assistant Attorney General

Office of the Attorney General, Counsel for the Department

Public Law Section

2005 N. Central Ave.

Phoenix, AZ 85004

[email redacted]

[email redacted]

Michael A. Roman, Respondent

9619 S. 50th St.

Phoenix, AZ 85044

[email redacted]

By: OAH Staff