ALJDEC

98A-H1997-REL · Department of Real Estate · 1999-03-26

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 19, 1999

APPEARANCES: Bruce Bernloehr appeared on his own behalf; the State of Arizona, Department of Real Estate was represented by Assistant Attorney General Moira McCarthy.

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Applicant Bruce E. Bernloehr brings this appealable agency action protesting the Arizona Department of Real Estate’s denial of his application for a real estate salesperson’s license. The Department based the denial on Applicant’s federal felony convictions. The parties presented evidence and testimony at the hearing. Based on the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order affirming the Department’s denial. FINDINGS OF FACT 1. From October 1985 to February 1986, Applicant was licensed with the Department as a salesperson. In February 1986, he became a designated broker. He retained that licensure until February 1988. (Exhibit J.) According to Applicant, he voluntarily turned in the Arizona license. It appears that Applicant may have let the license lapse. The evidence shows that no disciplinary action was taken on the Arizona licenses. 2. Applicant was also licensed in Minnesota. From March 1985 to March 1986, Applicant bought Minnesota residential properties that were subject to loans secured by mortgages. Applicant falsely promised to assume the mortgage payments. Applicant leased the residences to tenants at less than the monthly mortgage payments, and Applicant spent the rent proceeds on personal expenses. Applicant did this on ten properties, all of which went into foreclosure within two months of Applicant’s “assumption” of the payments. The loans were FHA and VA insured. In July 1986, Applicant was indicted on ten counts of federal mail fraud, because the United States mail was used, and one count of equity skimming, in violation of the federal criminal code. (Exhibit C.) 3. After a trial in the case of United States v. Bruce Ernest Bernloehr, No. Cr. 4-86-79-1 (D. Minn. 1986), a jury found Applicant guilty of eight counts of mail fraud and one count of equity skimming. Applicant was sentenced to three years’ imprisonment, to be followed by five years’ probation. (Exhibits D and E.) Applicant appealed the convictions and lost in 1987. (Exhibit G.) 4. On December 25, 1996, Applicant successfully completed his probation and was discharged. Applicant had moved to Arizona by that time. 5. In January 1998, Applicant filed his application for a salesperson’s license. (Exhibit A.) He disclosed the federal convictions and the available documentation. (Exhibit B.) The Department denied the application and Applicant timely appealed. (Exhibits H and I.) 6. At the hearing, Applicant submitted numerous exhibits in an effort to show good character. Many of these exhibits carry very little weight, as they are undated, the author is either unidentified or not known to this tribunal, and they are more personal than professional. (See, for example, Exhibits 1, 6-9, and 11-12.) Exhibits 16-26 are thank-you notes from very appreciative customers of Applicant’s car buying service. These carry a little weight. Exhibit 28, an e-mail note from a personal friend, is given no weight because it relates solely to the process of Applicant’s criminal trial, which was upheld on appeal. Finally, Exhibits 2-5 and 14 are given a small amount of weight. They essentially show that Applicant is a good networker and has done much volunteer work for the American Heart Association. However, the authors are unknown to this tribunal. Applicant did not submit any weighty evidence relating to rehabilitation, a change of character, or his present trustworthiness. CONCLUSIONS OF LAW 1. Applicant must show that he meets the qualifications for licensure. A.R.S. § 32-2125.01. The Commissioner has discretion to deny a license application for any of the reasons listed in A.R.S. § 32-2153(A) and (B). The Department has alleged that grounds for denial of Applicant’s application exist under that statute per subsections (B)(2)--conviction of any “crime of forgery, theft, extortion, conspiracy to defraud, a crime of moral turpitude or any other like offense;” (B)(5)--committing “fraud or dishonest dealings;” (B)(7)--not being a person of honesty, truthfulness, and good character; and (B)(10)--violating federal law that “relates to real estate or securities or that involves forgery, theft, extortion, fraud, substantial misrepresentation, dishonest dealings. . .or failure to deal fairly with any party to a transaction that materially and adversely affected the transaction.” 2. The evidence in this case supports a conclusion that the Commissioner has reasonable grounds to deny Applicant a license. It has been only two years since Applicant completed probation. Applicant’s crime was a serious offense and it will take time for him to rehabilitate himself and establish a good reputation as a professional. The evidence he submitted does not establish that. Applicant has made progress toward rehabilitation, but he needs more time to establish that he can be trusted with a salesperson’s license. RECOMMENDED ORDER Considering the findings and conclusions above, IT IS RECOMMENDED that the Commissioner of the Arizona Department of Real Estate uphold his denial of Bruce E. Bernloehr’s January 1998 application for licensure as a real estate salesperson.

Done this 29th day of March 1999

OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Eric A. Bryant Administrative Law Judge

Original mailed this ___ day of March 1999, to:

Jerry Holt, Commissioner ATTN: Bonnie Hollon Arizona Department of Real Estate 2910 North 44th Street, Suite. 100 Phoenix, AZ 85018

By ___________________________

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826