ALJDEC

97A-018-GAM · Department of Gaming · 1997-12-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 19, 1997, the record remained open until December 5, 1997 to allow parties to file memoranda APPEARANCES: Peter C. Guild, Attorney at Law, on behalf of the Applicant - Appellant Penny Taylor Moore, Assistant Attorney General, on behalf of the Arizona Department of Gaming ADMINISTRATIVE LAW JUDGE: Allen W. Reed _____________________________________________________________________

FINDINGS OF FACT Unique Inc. (Unique) dba Merestone Productions (Merestone) is owned equally by Theodore and Camille Hill, husband and wife. Theodore J. Hill (Hill) is the CEO and Chairman of the corporation. In approximately March, 1997, Hill submitted an Application for State Certification and a Personal History Record to the Arizona Department of Gaming (Department). Hill as a Principal and Applicant as defined by the Yavapai-Apache Nation and State of Arizona Compact of 1993 (Compact), is seeking certification on behalf of Unique and Merestone, (also an Applicant under the Compact), as an outside vendor to provide entertainment, decoration and special event needs at the Cliff Castle Casino of the Yavapai-Apache Nation. In his Application and Personal History Record, Hill answered “no” to the questions asking whether he had ever been arrested, detained, charged, indicted, summoned or questioned for any criminal offense or violation for any reason whatsoever regardless of disposition. He also answered “no” to the question which asked if he ever had a criminal or civil record expunged or sealed by the court.

In 1968, while working in Conejo Valley, California, Hill had a disagreement with the local newspaper for whom he had done free lance work. According to Hill, the paper refused to pay him money which was owed. Subsequently, Hill who apparently still had a key to the paper’s offices, stole a camera under circumstances that were not made exactly clear during the hearing. On April 4, 1968, Hill was arrested and charged with the theft as well as Receiving Stolen Property. On April 25, 1968, Hill pled guilty to the charge of Receiving Stolen property, a felony. The theft charge was dismissed. Hill was represented by a public defender. The case was certified to the Superior Court for the County of Ventura. On May 17, 1968, Hill was placed on probation for a period one year, fined $100.00, with a $25.00 penalty assessment. He completed his probation without incident. On July 2, 1997, Hill had an interview with C.M. McKee (McKee) of the Department. During the interview, Hill answered “no” when he was asked if he had ever been arrested. When he was confronted with the information regarding the 1968 arrest, Hill stated he had not disclosed it because he had been told the arrest would be stricken from the record if he stayed out of trouble for a period of time (presumably the period of probation). On August 25, 1997, the Department sent a Notice of Denial to the Applicant citing the failure of Hill to disclose the information about his arrest and conviction. CONCLUSIONS OF LAW The Compact is controlling for the purposes of this hearing. Section 5, subsection (f) (4), (5), (6) and (12) of the Compact are cited by the Department in the Notice Of Hearing as the grounds for denial of certification. Section 5 of the Compact is entitled “Procedures For Tribal Licensing And State Certification”. Subsection (f) sets forth “Grounds for Revocation, Suspension or Denial of State Certification” and provides:

“The State Gaming Agency may revoke, suspend or deny a State Certification when an Applicant or holder of certification:”

(4) Has been convicted of, or forfeited bond upon a charge of, or pleaded guilty to, forgery, larceny, extortion, conspiracy to defraud , willful failure to make required payment or reports to any tribal, state or United States governmental agency at any level, or filing false reports therewith, or of any similar offense or offenses, or of bribing or otherwise unlawfully influencing a public official or employee of a Community, any state of the United States, or of any crime, whether a felony or misdemeanor, involving any gaming activity or physical harm to individuals or moral turpitude;

(5) Makes a misrepresentation of, or fails to disclose a material fact to the State Gaming Agency or Tribal Gaming Office;

(6) Fails to prove, by clear and convincing evidence, that he, she or it is qualified in accordance with the provisions of this Section;

(12) Is a person whose prior activities, criminal record if any, reputation, habits and associations pose a threat to the public interest of the Community or the State or to the effective regulation and control of Class III Gaming, or creates or enhances the dangers of unsuitable, unfair or illegal practices, methods and activities in the conduct of Class III Gaming, or the carrying on of the business and financial arrangements incidental thereto;”

The Department urges that Section 5(f)(6) of the Compact should preclude certification based on 5(d)(1) which essentially disallows employment by the Gaming Facility Operator of a person (Gaming Employee) who “…has been convicted of any felony offense;”. The record was kept open in order that the parties could submit memoranda on the issue and its application to a vendor. Upon review of the memoranda, Section 5(d)(1), the definitions in Section 2(m), (n), (p), (v) and (ff) and the testimony of Department Deputy Director for Enforcement Edwin Grohe (Grohe), it is concluded that there is no automatic preclusion under the circumstances of this case. The policy considerations of the Department are entitled to consideration but do not establish the requirements of the law under the Compact. The basic facts of the case are not in dispute. The most significant issues concern whether the nature of the conviction precludes certification, whether failure to disclose the arrest and conviction information was material, whether the conviction and failure to disclose the arrest and conviction show the Applicant is not qualified and whether the activity causing the conviction, the conviction itself and the circumstances surrounding the failure to disclose the conviction, taken together or separately, pose a threat to the community or the State. Hill was convicted of Receiving Stolen Property which conviction was a consequence of Hill’s theft of a camera (larceny). The conviction for Receiving Stolen Property is found to be a “…similar offense…” to larceny within the meaning of 5(f)(4). The term “similar offense or offenses” refers to all the previously listed offenses in 5(f)(4). Count II of the First Amended Complaint (criminal), the count to which Hill pled guilty, asserts Hill received the property knowing it was stolen. The nature of this conviction makes it a sufficiently close relative of larceny. Furthermore, the conviction shows knowledge of receiving the stolen property of another and withholding such property from the owner. This is a crime of moral turpitude and is basically no less reprehensible or base than the actual theft. It is a crime which by its definition is knowing, intentional and based on personal greed to the detriment of individuals specifically and society generally. With respect to the reasons for the conviction, Hill was nearly 30 years old at the time and youthful foolishness is not a compelling defense. Furthermore, the circumstances of the theft are sufficiently murky so as to cast some doubt on their veracity. Hill could not explain why he would agree to take another job for the paper and still have a key to the paper’s offices after he had been told he would not be paid for work he had already done. Considering the issue in its entirety, the Department’s denial for the reason stated in 5(f)(4) is sustained. The failure to disclose the arrest and felony conviction is material. It is not for the Applicant to decide what felony conviction is or is not material. Nor is disclosure or non disclosure a coin flip with materiality to be to be determined after the fact to determine if the provisions of 5(f)(5) should apply. This would turn the application into a somewhat uncertain document with no one required to disclose until it was determined by a hearing whether the information which was not disclosed, was material. The presumption within the context of the Compact and its purposes is that the criminal history information requested is material regardless of how old it is or minor it may seem. The unique details of the answer do not determine materiality. It is the answer itself which is material. The materiality is not dependent on whether the arrest or conviction was over years old or whether it was a minor or serious crime. It is for the Department to determine how it will act on the information provided. If the information is not provided, the Department cannot make an informed decision and to this extent it has been mislead regardless of whether the decision would have been altered by the disclosure. Furthermore, Hill’s reasons for not disclosing are highly suspect. He spoke with his public defender approximately for 20 minutes and based on this fleeting conversation 30 years ago has concluded that he does not have to disclose what actually happened even when confronted with language in the Application such as “Include any convictions you believe were expunged.” or question 1 which says “Have you ever been arrested…regardless of the disposition of the event?” . Hill’s reasoning and explanations are unacceptable. A reasonable and prudent business person would not presume or continue to rely on a suspect 30 year old comment from a stranger (even though an attorney), during a plea proceeding. He would at least make some inquiry of what the status of the conviction was before signing a sworn document. A forthright person would disclose what the facts were in reality, regardless of any presumed or hoped for legal fiction. Finally the continued non disclosure of the arrest even during the interview with McKee shows Hill was still not prepared to be forthcoming with the information. Even if he had not been convicted, there is no reasonable basis to believe the arrest never occurred. The Department’s denial for the reasons stated in 5(f)(5) is sustained. Based on the conclusions in paragraphs three and four above, there is no additional discussion required with respect to 5(f)(6) of the Compact. The burden is on the Applicant to prove his qualifications by clear and convincing evidence. The Department’s denial for reasons stated in 5(f)(6) is sustained. The Appellant’s prior activity of stealing the camera nearly 30 years ago or the resulting criminal record would not in and of themselves, necessarily pose a threat to gaming. However when taken in conjunction with other factors and activities set forth in paragraphs 3 and 4 above, the Appellant’s prior activities pose such a threat. This conclusion is not based on independent factual grounds but rather uses the same facts which have led to the conclusions in paragraphs 3 and 4. It is therefore somewhat duplicative, extraneous and unnecessary in this case. RECOMMENDED ORDER It is hereby recommended that the Department’s denial of State Certification of Unique, Inc., Merestone Productions and Theodore J. Hill be affirmed and the Appeal Unique, Inc., Merestone Productions and Theodore J. Hill be denied. Done this day, December 8, 1997.

________________________________ ALLEN W. REED Administrative Law Judge

Original transmitted by mail this ____ day of December, 1997, to:

Mr. Gary A. Husk, Director Department of Gaming ATTN: Linda Lairson 202 East Earl Drive, Suite 200 Phoenix, AZ 85012

By _______________________________ -----------------------

Office of Administrative Hearings 1700 West Washington, Suite 602 Phoenix, Arizona 85007 (602) 542-9826