ALJDEC

97A-238-INS · Department of Insurance · 1998-02-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 9, 1998 APPEARANCES: Nancy Lee Mallgraf on her own behalf; Assistant Michael J. De La Cruz on behalf of the Arizona Department of Insurance ADMINISTRATIVE LAW JUDGE: Lewis D. Kowal _____________________________________________________________________

Based on the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT On October 3, 1997, Nancy Lee Mallgraf (“Ms. Mallgraf”) filed an application for a life and disability agent’s license (the ”Application”) with the Arizona Department of Insurance (the “Department”). Ms. Mallgraf answered “Yes” to Section V, Question B of the Application which asked “Have you EVER been convicted of a felony?” Ms. Mallgraf attached to the Application an explanation relating to her prior criminal conviction which is more fully described below. On November 13, 1997, the Department issued a letter to Ms. Mallgraf denying the Application. On December 10, 1997, Ms. Mallgraf timely filed with the Department a request for hearing on the denial of the Application. On July 30,1992, Ms. Mallgraf pleaded guilty and was convicted in the Los Angeles County Superior Court, People of the State of California v. Nancy Lee Mallgraf, Case No. SA009093-001, of Possession or Purchase for Sale of a Designated Controlled Substance, a felony, in violation of Cal. Health & Safety Code §11351. The Court sentenced Ms. Mallgraf to three years’ probation, 200 hours of community service and drug counseling. Ms. Mallgraf admitted that she had committed a criminal act by picking up a package for a friend knowing that the package contained a half ounce of cocaine. Ms. Mallgraf further admitted that, at that time, Ms. Mallgraf knew that her friend would pass the cocaine onto others thereby obtaining a financial benefit. Ms. Mallgraf testified that she does not now nor did she at the time of that incident use cocaine. Ms. Mallgraf did not receive any compensation for helping her friend. According to Ms. Mallgraf, she became involved in the above illegal transaction because her friend was aware that Ms. Mallgraf knew how to contact the person who was the source for providing the cocaine. Ms. Mallgraf testified that this was a one time occurrence which was an aberration of her lifestyle and a big mistake for which she has already paid her debt to society. The evidence established that Ms. Mallgraf successfully completed the terms of her probation and that her probation terminated in July, 1995. Ms. Mallgraf has had no criminal convictions other than the above-mentioned criminal conviction. Ms. Mallgraf affirmatively acknowledged the above-mentioned conviction but represented that she is single and has custody of her five year old son, that she is active in her church and that she teaches her son by living an exemplary life. Ms. Mallgraf has disassociated herself from her friend and her lifestyle does not involve drugs but involves being involved in church and community activities. In mitigation, Ms. Mallgraf provided information concerning the events leading to the illegal transaction and testified as to her activities since the conviction. Ms. Mallgraf became involved in helping her friend because her friend was in bad financial condition. Ms. Mallgraf did not know the specifics or extent of her friend’s involvement with cocaine. Once arrested, Ms. Mallgraf cooperated with the police and attempted, without success, to contact the person who provided her with the cocaine to arrange a drug transaction. Subsequently, Ms. Mallgraf entered into a plea agreement as set forth above Ms. Mallgraf regretted her actions which led to her arrest, admitted that she used poor judgment and that she is more careful with her life and decisions now, particularly since it also affects her five year old son. Ms. Mallgraf testified that at the time of the illegal transaction, she was employed as a bookkeeper for an automobile body shop. During the time when the criminal charges were pending before the Court, Ms. Mallgraf became an independent contractor performing bookkeeping and accounting functions. Ms. Mallgraf currently works as a bookkeeper on an independent contractor basis. Ms. Mallgraf also works part-time for the National Association of the Self-Employed where she arranges meeting between insurance agents for the association and prospective insureds. Ms. Mallgraf demonstrated that she has paid her debt to society for the above-mentioned criminal conviction, has rehabilitated herself and become an active member of her community. Ms. Mallgraf was a sincere and credible witness and the Department did not present credible evidence to refute Ms. Mallgraf’s testimony as set forth above. CONCLUSIONS OF LAW The Director of the Department (“Director”) has jurisdiction over this matter pursuant to A.R.S. §20-161. Ms. Mallgraf’s criminal conviction as set froth above in the Findings of Fact constitutes a record of conviction by final judgment of a felony involving moral turpitude within the meaning of A.R.S. §20-290(B)(6). Pursuant to A.R.S. §§20-290(B)(2) and 20-290(B)(6), the Director has discretionary authority to grant or deny the Application. Notwithstanding the prior criminal conviction of Ms. Mallgraf, she sustained her burden of proving that she possesses the requisite qualifications to be licensed by the Department as a life and disability insurance agent. RECOMMENDED ORDER Under the particular facts and circumstances of this case and the evidence presented, including but not limited to the duration of time that has elapsed since the criminal act occurred, the duration of time since probation was successfully completed, Ms. Mallgraf’s remorse as to having committed the offense, Ms. Mallgraf’s employment history and involvement in the community since the offense, the Administrative Law Judge recommends that Nancy Lee Mallgraf’s application for a life and disability insurance agent’s license submitted to the Department on October 3, 1997, be granted. Done this day, February 23, 1998.

_________________________________ LEWIS D. KOWAL Administrative Law Judge

Original transmitted by mail this ____ day of February, 1998, to:

Mr. John A. Greene, Director Department of Insurance ATTN: Curvey Burton 2910 North 44th Street, #210 Phoenix, AZ 85018-7256

By _______________________________

-----------------------

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