ALJDEC - Licensing
24A-004-INS · Department of Insurance and Financial Institutions - Insurance · 2024-05-21
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
In the Matter of:
MICHAEL SCHNEIDER
Petitioner
No. 24A-004-INS
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: March 21, 2024 and May 6, 2024
APPEARANCES: Petitioner Michael Schneider appeared on his own behalf. Assistant Attorney General Zachary Howard appeared on behalf of the Arizona Department of Insurance.
EXHIBITS ADMITTED INTO EVIDENCE: Department Exhibits 1-7 were admitted, and Petitioner’s Exhibit A was admitted into evidence.
_____________________________________________________________________
FINDINGS OF FACT
On December 6, 2023, Michael Schneider (Petitioner), submitted an application to the Arizona Department of Insurance (Department) for an Arizona resident insurance producer license through the National Insurance Producer Registry (Application).
In the Application, under the “Background Questions” section, Petitioner responded “Yes” to Question 5, which asked:
5: Are you currently a party to, or have you ever been found liable in, any lawsuit, arbitrations or mediation proceeding involving allegations of fraud, misappropriation or conversion of funds, misrepresentation or breach of fiduciary duty? If you answer yes, you must attach to this application: a) a written statement summarizing the details of each incident, b) a copy of the Petition, Complaint or other document that commenced the lawsuit, arbitration, or mediation proceedings, and c) a copy of the official documents, which demonstrates the resolution of the charges or any final judgment.
Question 5 also required applicant to attach a written statement summarizing the details of each incident; a copy of the Petition, Complaint of other document that commenced the lawsuit arbitration, or mediation proceedings; and a copy of the official documents, which demonstrated the resolution of the charges or any final judgment. Petitioner complied with this requirement.
On or about December 29, 2023, the Department, through Aqueelah Currie, Licensing Supervisor, sent a License Denial Letter to Petitioner. The letter stated, in pertinent part:
Pursuant to Arizona Revised Statutes §§ 20-295 A 8. without limitation, your application for an insurance license is hereby denied.
20-295A8. Using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere. . .
Petitioner field an appeal regarding the denial, and the matter was referred to the Office of Administrative Hearings for an evidentiary hearing.
The hearing took place on March 21, 2024 and May 6, 2024.
At hearing, the Department presented the testimony of Ms. Currie.
Ms. Currie testified that she reviewed the information provided by Petitioner concerning a Complaint filed by Scott Goldstone against Petitioner. The Complainant was filed with JAMS arbitration services on February 9, 2022.
Ms. Currie testified further that on August 14, 2023, JAMS Arbitration Final Award (Award) was entered.
As to the Award, Ms. Currie testified that the arbitrator made several findings which included:
Petitioner concealed from Mr. Goldstone his plan to terminate Mr. Goldstone and purchase Mr. Goldstone’s share for less than pennies on the dollar.
Petitioner induced Ms. Goldstone to give him all of the passwords to the accounts so Petitioner could set up new accounts in the corporation’s name, and did not include Mr. Goldstone.
Mr. Goldstone “was damaged as a result of Respondent’s concealment. He was terminated from any position in the company which meant that he lost his entire source of income at that time and in addition, his roughly 50% share of the company which he had founded, was purchased for only $45.”
Petitioner breached the fiduciary duty he owed to Mr. Goldstone, as Petitioner conspired with two other people “to fraudulently induce Goldstone to sign the corporate documents so that he could terminate complainant immediately upon the signing and acquire his 4.5 million shares for $45.”
Ms. Currie testified that the Department had a duty to protect the public even though this incident did not include insurance issues, Petitioner was found to have committed fraud during the course of his business dealings.
Finally, Ms. Currie testified that based upon the findings from the arbitrator, the Department chose to deny the Application because Petitioner exhibited poor business practices, despite there being no criminal proceeding from this business dispute.
Petitioner testified on his own behalf. He testified that this dispute was a private judgment and not a criminal action, and that the Department did not show that he would be a risk to the public.
In addition, Petitioner testified that every action he took was upon the advice of the best attorneys, and that while he may have cut some corners, it was not a “money grab.”
CONCLUSIONS OF LAW
Petitioner bears the burden of persuasion. See Arizona Revised Statutes (A.R.S.) § 41-1092.07(G)(1).
The standard of proof on all issues in this matter is that of a preponderance of the evidence. Arizona Administrative Code § R2-19-119.
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).
The preponderance of the evidence shows that Petitioner used fraudulent and dishonest practices in the conduct of business in Arizona and elsewhere, which is a violation of A.R.S. § 20-295(A)(8).
Consequently, the Department’s Director has discretion to deny Petitioner’s application based on A.R.S. § 20-295(A).
Petitioner failed to demonstrate by a preponderance of the evidence that the Department’s decision to deny his application should be overturned.
7. Therefore, Petitioner’s appeal should be dismissed.
ORDER
IT IS ORDERED that Michael Schneider’s appeal is dismissed.
Pursuant to A.R.S. § 41-1092.08(I), the licensee may accept the Administrative Law Judge Decision by advising the Office of Administrative Hearings in writing not more than ten (10) days after receiving the decision. If the licensee accepts the Administrative Law Judge Decision, the decision shall be certified as the final decision by the Office of Administrative Hearings.
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 forty (40) days from the date of that certification.
Done this day, May 21, 2024.
/s/ Adam D. Stone
Administrative Law Judge
Transmitted by either mail, e-mail, or facsimile to:
Barbara D. Richardson,
Department of Insurance and Financial Institutions - Insurance
Michael Schneider
[email redacted]
Zachary Howard
[email redacted]
By: OAH Staff