STATE OF MICHIGAN DEPARTMENT OF LABOR & ECONOMIC GROWTH OFFICE OF FINANCIAL AND INSURANCE SERVICES

Transcription

1 STATE OF MICHIGAN DEPARTMENT OF LABOR & ECONOMIC GROWTH OFFICE OF FINANCIAL AND INSURANCE SERVICES Before the Commissioner of Financial and Insurance Services Raymond E. Cantrell, II, Petitioner, Case No L v Docket No Office of Financial and Insurance Services, Respondent. / For the Petitioner: For the Respondent: Raymond E. Cantrell, II Laurence S. Wood (P34745) Fairport Street Office of Financial and Insurance Services Detroit, MI W. Ottawa, 3rd Floor Lansing, MI (517) FAX (517) lwood@michigan.gov Issued and entered this day of May 2004 by John R. Schoonmaker Special Deputy Commissioner FINAL DECISION

2 The Administrative Law Judge issued a Proposal for Decision dated March 26, She recommended that the license application be denied. Neither party filed exceptions. The factual findings in the PFD are in accordance with the preponderance of the evidence and the conclusions of law are supported by reasoned opinion. The PFD is attached, adopted, and made part of this final decision. II ORDER Therefore, it is ORDERED that the decision to refuse to license the Petitioner is upheld. John R. Schoonmaker Special Deputy Commissioner

3 STATE OF MICHIGAN DEPARTMENT OF LABOR & ECONOMIC GROWTH BUREAU OF HEARINGS In the matter of Docket No Raymond E. Cantrell, II Petitioner v Office of Financial and Insurance Services, Respondent / Agency No. Agency: Case Type: L Office of Financial & Insurance Services Intent to Deny Refusal to License Issued and entered this 26 th day of March, 2004 by Lauren G. Van Steel Administrative Law Judge PROPOSAL FOR DECISION PROCEDURAL HISTORY Appearances: Raymond E. Cantrell, II, Petitioner, appeared on his own behalf; Laurence S. Wood, Attorney at Law, appeared on behalf of the staff of the Office of Financial and Insurance Services, Respondent. The record reflects that on or about July 14, 2003, Petitioner submitted an application for licensure as an insurance producer with the state of Michigan. On October 2,

4 Page , Respondent issued a Notice of Refusal to Grant License. On October 27, 2003, Petitioner filed an appeal of the Notice of Refusal to Grant License and requested a hearing. This matter under the Insurance Code of 1956, as amended, (Code) [MCL et seq.] commenced on December 2, 2003, with the filing in the Bureau of Hearings of an Order Referring Complaint for Hearing and Order to Respond by the Commissioner of Financial and Insurance Services, dated November 28, On December 2, 2003, a Notice of Hearing was issued in accordance with the Michigan Administrative Procedures Act (APA), 1969 PA 306, as amended [MCL et seq.] by the Bureau of Hearings, scheduling hearing for January 16, On January 16, 2004, a hearing was held as scheduled. Petitioner testified on his own behalf. He did not offer any exhibits for admission. Tracey Peck testified as a witness for Respondent. The following exhibits were offered by Respondent and admitted into the record: Respondent s Exhibit A Michigan Application for Individual Resident License, dated July 14, 2003, and Certificate of Prelicensing Course Completion, dated July 24, 2003 Respondent s Exhibit B Statement by Raymond E. Cantrell, dated July 30, 2003 Respondent s Exhibit C Respondent s Exhibit D Letter from the Office of Financial and Insurance Services to Petitioner, dated August 5, 2003 Final Order of Board of Examiners in Mortuary Science (Docket No ), dated July 3, 2002

5 Page 5 Respondent s Exhibit E Respondent s Exhibit F Respondent s Exhibit G Formal Complaint, Bureau of Commercial Services v Raymond E. Cantrell, II (Complaint No ), dated April 26, 2001 Letter from Licensing Administrator, Bureau of Commercial Services to Petitioner, dated September 24, 2002 Notice of Refusal to Grant License issued by the Office of Financial and Insurance Services, dated October 2, 2003 On January 30, 2004, the transcript of the hearing [hereafter Tr ] was filed in the Bureau of Hearings. The record was then closed. ISSUES AND APPLICABLE LAW The specific issue in this case is whether grounds exist, under Sections 1239(1)(h) and 1205(1)(b) of the Code, to justify Respondent s denial of Petitioner s application for an insurance producer s license. The Code sections state in pertinent part: Sec (1) In addition to any other powers under this act, the commissioner may place on probation, suspend, revoke, or refuse to issue an insurance producer's license or may levy a civil fine under section 1244 or any combination of actions for any 1 or more of the following causes: * * * (h) Using fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of business in this state or elsewhere [MCL (1), emphasis supplied]. Sec (1) A person applying for a resident insurance producer license shall file with the commissioner the uniform application required by the commissioner and shall declare under penalty of refusal, suspension, or revocation of the license that the statements

6 Page 6 made in the application are true, correct, and complete to the best of the individual's knowledge and belief. An application for a resident insurer producer license shall not be approved unless the commissioner finds that the individual meets all of the following:

7 Page 7 FINDINGS OF FACT this matter: * * * (b) Has not committed any act that is a ground for denial, suspension, or revocation under section 1239 [MCL ]. The following facts are found by a preponderance of the evidence presented in 1) On April 26, 2001, the Michigan Board of Mortuary Science issued an Administrative Complaint against Petitioner, alleging violations of the Occupational Code, 1980 PA 299, as amended [Resp. Exh. E]. 2) On July 3, 2002, the Michigan Board of Mortuary Science issued a Final Order in the matter (Case No ; Docket No ), which ordered Petitioner to pay a $6, fine within 60 days and pay $41, in restitution to Agatha M. Lewis within 60 days [Resp. Exh. D]. 3) On September 24, 2002, Suzanne U. Jolicoeur, Licensing Administrator for the Bureau of Commercial Services within the Department, notified Petitioner that his mortuary science license had been placed on suspension because he failed to comply with an outstanding Final Order [Resp. Exh. F]. Ms. Lewis had submitted a statement to the Bureau of Commercial Services, dated September 16, 2002, which stated as follows: As of the above date, September 16, 2002, I, Agatha Lewis have

8 Page 8 not received any restitution from Mr. Raymond Cantrell, II. I sincerely thank you for looking into the subject and his practice of ill doings. Perhaps he would think before he does this to others for he is a defiant cuss [Resp. Exh. F]. 4) On or about July 14, 2003, Petitioner submitted an Application for Individual Resident License to obtain licensure as an agent/insurance producer in the state of Michigan, specifically in the lifeline of insurance [Resp. Exh. A]. Petitioner attached a written statement to his application, which stated as follows: Michigan Funeral Director s License: suspended Nominated Personal Representative for estates through Wayne County Probate Court and some of the funds in the estate were personally used; a breach of fiduciary responsibility. State of Michigan and Licensing and Regulation ascribed a fine of $6, and the suspension of the funeral director s license. Currently unemployed and assessment unpaid [Resp. Exh. B; emphasis supplied]. 5) On August 5, 2003, Tracey Peck, Licensing Technician for Respondent, sent correspondence to Petitioner stating that his license application had not been processed for the following reason: You have checked a yes response to the application question #42-2. Submit documentation of final outcome of any action taken by any regulatory agency against you or any business with which you have been directly affiliated [Resp. Exh. C]. 6) On October 2, 2003, Sonya W. Dungey, Director of Licensing for

9 Page 9 Respondent, issued a Notice of Refusal to Grant License on the basis that Petitioner s license for mortuary science was suspended and you have not met the terms of the Final Order issued by the Michigan Board of Examiners [Resp. Exh. G]. 7) Respondent determined that Petitioner s failure to fulfill the terms of the Board s Final Order, resulting in his mortuary science license suspension, showed financial irresponsibility on Petitioner s part [Tr, 13-14]. 8) A requirement for an insurance agent/producer s license is fiduciary responsibility [Tr, 14]. 9) Petitioner has lived in Detroit, Michigan since Since November 2003, he has been employed as a loan officer on a sales commission basis for Mortgage Investors Corporation [Tr, 16-17]. 10) He was married in 1986 and divorced in He is the father of one child under the age of 18 for whom he makes child support payments, but he does not have custody [Tr, 26, 40]. 11) At the time of his divorce, his wife made allegations of domestic violence against him in the 36 th District Court in Detroit, but he denies any criminal record resulting from the allegations [Tr, 40-41]. 12) Petitioner s educational background includes a high school degree in 1965; a Bachelor of Arts degree in psychology from the University of

10 Page 10 Maryland in 1971; a master s degree in education from the American University of Washington, D.C. in 1976; and a certificate of mortuary science from Wayne State University in 1985 [Tr, 17-18]. 13) Petitioner has had a teaching certificate in Maryland and New Mexico. Between 1976 and 1984, Petitioner held teaching positions in Maryland and New Mexico in special education, elementary and middle schools [Tr, 39-40]. 14) Between 1984 and 2003, Petitioner was employed as a manager and funeral director for the Cantrell Funeral Home in Detroit, owned by his father. His annual income was $50, to $60, [Tr, 18-19, 38]. 15) His employment status with the Cantrell Funeral Home was as an independent contractor. He received 1099, rather than W-2 tax statements [Tr, 34]. 16) While Petitioner was working for the Cantrell Funeral Home in 1998 or 1999, he offered to be nominated by the Wayne County Probate Court as the personal representative for the estate of Harold Armstrong [Resp. Exh. B; Tr, 20-21, 32]. 17) He supplied the probate court with a bond that secured his performance as a personal representative [Tr, 32]. 18) Agatha M. Lewis, who is a daughter of a deceased heir to

11 Page 11 Mr. Armstrong s estate, filed a complaint against Petitioner with the Attorney General s office [Tr, 19, 21]. 19) An administrative hearing was held, at which time Petitioner acknowledged that he had used estate funds for his personal use [Tr, 20]. 20) Petitioner took $41, from the estate funds for his own personal use without authorization, in part to pay between $10, and $12, toward his home mortgage to forestall a foreclosure [Tr, 35]. 21) Petitioner testified that the reason he became in arrears on his home mortgage was that his original mortgage company went bankrupt and there was confusion about the correct company to receive payments; he did not escrow his mortgage payments but [j]ust spent it on other things [Tr, 36-37]. 22) He also used part of the $41, that he misappropriated from estate funds as follows: $10, on an investment in Renaissance Airlines; payment for his sons schooling; and the purchase of a car [Tr, 37]. 23) Petitioner testified that of the $41, owed in restitution, he has paid $10, in October or November 2002 to the representative of the bonding institution that he believes covered the discrepancy in the estate funds. Ms. Lewis notified the Department in September 2002 that she had not yet received any part of the ordered restitution amount.

12 Page 12 Petitioner testified that he has no proof of payment to Ms. Lewis, contrary to the Board s order [Tr, 23, 33, 42; Resp. Exh. F]. 24) In February 2003, the Cantrell Funeral Home terminated Petitioner s employment [Tr, 27]. 25) Between February 2003 and November 2003, Petitioner was unemployed. He received unemployment of $ on a weekly basis, out of which $ in weekly child support payments was made. In his current position, he has only received one paycheck to date, based on his sales commissions [Tr, 38, 45]. 26) Petitioner has not paid any portion of the $6, fine ordered by the Board of Mortuary Science (as of the date of the hearing in the instant matter) [Tr, 24, 43]. 27) Petitioner has a current tax liability with the Internal Revenue Service of approximately $20, for federal income tax. Originally, the federal government claimed that Petitioner owed tax in the amount of $197, for the tax years 1988 through 1996; the amount owed has now been recalculated to approximately $20, [Tr, 30]. 28) Petitioner is hoping to work for GLP and Associates in Farmington Hills as an insurance agent/producer selling life insurance [Tr, 24]. 29) He has completed a three-day training course in life insurance. He has not had any other training in financial or insurance matters [Tr, 25].

13 Page 13 30) In August 2003, Petitioner took the life insurance portion of the licensure examination for insurance agent/producer and passed [Tr, 25]. 31) Petitioner has attempted to obtain a teaching position in recent months without success [Tr, 27]. 32) Petitioner believes that he has acknowledged his responsibility for his prior misconduct and been straightforward and honest insofar as that is concerned. He thinks he has learned my lesson not to commingle funds, which is what had happened [Tr, 28]. 33) In the life insurance position that he is seeking with GLP and Associates, Petitioner believes there would be very little handling of funds [Tr, 28]. 34) Petitioner seeks a license in insurance so that he can resolve his financial problems and pay the fine and restitution amounts ordered by the Board of Mortuary Science [Tr, 29]. CONCLUSIONS OF LAW Respondent has the burden of proof in this matter to show by a preponderance of the evidence that grounds exist, under Sections 1239(1)(h) and 1205(1)(b) of the Code, to justify the denial of Petitioner s application for an insurance producer s license. Respondent has met its burden of proof. The record clearly shows that Petitioner misappropriated a large sum of money, $41,456.12, from a fund that he held as a fiduciary for an estate. He used the money for his own personal purposes, part of which was to make mortgage payments to forestall foreclosure after failing to make mortgage (or escrow) payments for two years. He

14 Page 14 has a significant tax lien (approximately $20,000.00) with the Internal Revenue Service. It is apparent that Petitioner currently has significant financial difficulties, a factor in his prior misconduct that led to the suspension of his mortuary science license. Petitioner testified that he has learned his lesson not to commingle funds. Clearly, however, Petitioner previously knew that he could not misappropriate estate funds. It was not a matter of poor accounting, but rather dishonesty. Also, Petitioner has not paid any portion of the fine ordered by the Board of Mortuary Science to date. He has only paid $10, of the $41, amount owed in restitution. While Petitioner states that he has been unemployed, he has received some income since the Board s Final Order. At least some portion of the fine could have been paid. While Petitioner believes that he would not be in the position of handling funds if licensed as an insurance producer/agent, he could at times be called upon to act as a fiduciary for client funds. Given the above, Respondent has shown that Petitioner has engaged in dishonest practice and financial irresponsibility relevant to his insurance producer application, contrary to Section 1239(1)(h) of the Code. It is therefore concluded that Petitioner s application for licensure should be denied under Section 1205(1)(b) of the Code. PROPOSED DECISION Accordingly, it is proposed that the Commissioner accept the above findings of fact and conclusions of law. It is further proposed that the Commissioner affirm the Office of Financial and Insurance Services denial of Petitioner s application for an insurance producer/agent license.

15 Page 15 EXCEPTIONS The parties may file exceptions to this Proposal for Decision within 20 days after the Proposal for Decision is issued and entered [1979 ACS 13, R ]. An opposing party may file a response within 10 days after exceptions are filed. Any such exceptions and responses shall be filed with the Office of Financial and Insurance Services, 611 West Ottawa Street, 2 nd Floor, P.O. Box 30220, Lansing, Michigan, Attention: Dawn Kobus. Lauren G. Van Steel Administrative Law Judge