ORDERS:
ORDER
This matter is before the Administrative Law Court (“ALC” or “Court”) pursuant to the Request for a Contested Case Hearing filed November 15, 2007. Robert T. Cherry (“Cherry” or “Petitioner”) seeks a mortgage originator license pursuant to S.C. Code Ann § 40-58-10, et seq. (Supp. 2007). Respondent South Carolina Department of Consumer Affairs (“Department”) denied Petitioner’s application for a license because of Petitioner’s felony conviction in 2005.
A hearing on this matter was held at 2:00 p.m., Tuesday, January 22, 2007, at the offices of the Administrative Law Court in Columbia, South Carolina. After listening to the testimony and weighing all evidence presented at the hearing, this Court finds that Petitioner’s license shall be granted, but subject to restrictions.
FINDINGS OF FACT
On June 7, 2005, Cherry was convicted of the felony of embezzlement pursuant to 18 U.S.C. § 641. The conviction stemmed from an investigation concerning certain financial irregularities that were discovered while the Petitioner was employed as the Director of Contracting, Acquisitions & Contracting Office, United States Special Operations Command. According to the United States District Court, Eastern District of North Carolina’s Presentence Investigation Report, (“Report”) the investigation “revealed that Cherry submitted fraudulent travel vouchers for non-existent travel in October 1998; November 1999; December 1999; October 2000; and March 2001. As a result of the fraudulent travel vouchers, Cherry received $16,510.82 in reimbursable travel expenses and $1,079 in air fair to which he was not entitled.” Respondent’s Ex. 1 at 9. The Report continued,
Robert Truman Cherry, Jr., was named in a two-count Indictment returned by an Eastern District of North Carolina Grand Jury on May 26, 2004. Count 1 charges that…Cherry embezzled and converted to his own use, money of the United States, in an amount greater that $1,000, in violation of 18 U.S.C § 641....Count 2 charges that…Cherry made false statements in violation of 18 U.S.C §1001(a)….On February 8, 2005, pursuant to the terms of a written Plea Agreement, Robert Truman Cherry, Jr., pled guilty to Count 1 of the Indictment which charges offense behavior that concluded on or about March 30, 2001. The defendant agreed to make restitution in the amount of $17,589.82. The government agreed to dismiss Count 2 at sentencing.
Respondent’s Ex. 1 at 8.
Petitioner was sentenced to 3 year probation as a result of his plea. Prior to this conviction, Cherry had no other known convictions, with the exception of two speeding tickets in 1989 and 1993. Importantly, at the time of his Rule 11 Hearing, “the defendant provided a cashier’s check, payable to the United States Treasury, for $17,589.82.” See Respondent’s Ex. 1 at 9 and 15. On January 29, 2007, after serving just nineteen months of his sentence, United States District Judge P. Michael Duffy issued an Order discharging Cherry from probation and terminating the proceedings of the case. See Respondent’s Ex. 1 at 4.
The Petitioner has a wife and three children. He received a Bachelor of Arts degree in history from the University of North Carolina in May, 1979, and a Masters degree in education from Campbell University.
At the hearing on the merits, Cherry testified that he is seeking a mortgage originator’s license. The Petitioner submitted five letters from various individuals who are familiar with his character and work product. All of these letters maintained a similar theme, namely, that Cherry conducts himself in a professional manner, that he is trustworthy, and that he carries himself with integrity. Cherry also submitted a letter that he had written. In the letter, Cherry expressed his contrition and indicated how embarrassing the experience of the conviction was for his entire family. Specifically, Cherry wrote that his improper conduct was “not something that I will ever allow myself to get involved in again,” and that he “learned from the experience, and do[es] not intend to travel that road again.” Petitioner’s Ex. 7 at 1.
James W. Culler, Jr. (“Culler”) also testified on behalf of the Petitioner in this matter. Mr. Culler operates New South Mortgage (“New South”), and currently employs Cherry as a business development associate. Culler testified that he has run New South for approximately ten years, and has made many hiring and firing decisions within that time. He stated that he is aware of the Petitioner’s past history but believes that Cherry is of good moral character. Culler indicated further that he personally reviews all loan applications and credit reports and that his goal is always to do what is best for his customers.
Lastly, Cherry’s wife, Mrs. Christy Cherry (“Mrs. Cherry”), testified briefly on behalf of her husband. She stated that she has been married to Cherry for twenty five years and described her husband as a good man who simply made a mistake. Furthermore, Mrs. Cherry stated that the Petitioner is a man of integrity who has always accepted responsibility for his actions.
STANDARD OF REVIEW
This Court has jurisdiction over this contested case proceeding pursuant to S.C. Code Ann. § 37-6-414 (Supp. 2007), S.C. Code Ann. § 40-58-55(A) (Supp. 2007), and S.C. Code Ann. § 1-23-600(B) (Supp. 2007).
In presiding over this contested case, this Court serves as the finder of fact and makes a de novo determination regarding the licensing matters at issue. See S.C. Code Ann. § 1-23-600(B) (Supp. 2007); Marlboro Park Hosp. v. S.C. Dep’t of Health & Envtl. Control, 358 S.C. 573, 577-79, 595 S.E.2d 851, 853-854 (Ct. App. 2004); Brown v. S.C. Dep’t of Health & Envtl. Control, 348 S.C. 507, 512, 560 S.E.2d 410, 413 (2002).
DISCUSSION
Petitioner, his wife and Petitioner’s employer all testified on Petitioner’s behalf. I found all of them to be highly credible, an important, if not overriding feature of the balancing equation in this case.
Before issuing a license to a mortgage loan originator, the licensing authority must find that the applicant’s “financial responsibility, experience, character, and general fitness…are such as to command the confidence of the community and to warrant belief that the business may be operated honestly, fairly, and efficiently according to the purposes of this chapter [i.e., Chapter 58 of Title 40, which pertains to the licensing of mortgage loan brokers].” S.C. Code Ann. § 40-58-60(A) (Supp. 2007). In determining whether an applicant has the requisite character and fitness to be licensed as a mortgage loan originator, the licensing authority may consider such factors as whether the applicant has “(1) violated a provision of this chapter or an order of the [D]epartment; (2) withheld material information in connection with an application for a license or its renewal, or made a material misstatement in connection with the application; [or] (3) been convicted of a felony or of an offense involving breach of trust, moral turpitude, fraud, or dishonest dealing within the past ten years.” See S.C. Code Ann. § 40-58-55(A).
Respondent plead guilty and was convicted of the felony of embezzlement in 2005. Importantly, he divulged this on the application for his license. Furthermore, there is no assertion that Respondent (1) violated any provision of chapter 58 or Order of the Department, nor (2) withheld material information in connection with his license application or made any material misstatement in connection therewith.
Despite the forgoing, the Department denied his license pursuant to S.C. Code Ann. § 40-58-55, which provides, in pertinent part:
(A) Upon request for a contested case hearing by a person whose application for a license or renewal of a license has been denied, the Administrative Law Court may review the determination by the department that the applicant or agent has: …(3) been convicted of a felony or of an offense involving breach of trust, moral turpitude, fraud, or dishonest dealing within the past ten years.
S.C. Code Ann. § 40-58-55 (Supp. 2007).
“The cardinal rule of statutory construction is to ascertain and effectuate the legislative intent whenever possible.” Strother v. Lexington County Recreation Comm’n., 332 S.C. 54, 62, 504 S.E.2d 117, 121 (1998). The words of the statute must be given their plain and ordinary meaning without resorting to subtle or forced construction to limit or expand the statute’s operation. Hitachi Data Sys. Corp. v. Leatherman, 309 S.C. 174, 178, 420 S.E.2d 843, 846 (1992). Here, it is evident that the provisions of § 40-58-55 do not require a mandatory refusal to license where applicant is guilty of a felony within 10 years prior to the application. Thus, the determination of whether or not to issue the license shall remain within the discretion of this Court.
Furthermore, under S.C. Code Ann. § 40-1-140 (Rev. 2001), the Petitioner cannot be refused a license solely as a result of a criminal conviction for embezzlement:
Effect of prior criminal convictions. A person may not be refused an authorization to practice, pursue, or engage in a regulated profession or occupation solely because of a prior conviction unless the criminal conviction directly relates to the profession or occupation for which the authorization to practice is sought. However, a board may refuse authorization to practice if, based upon all information available, including the applicant’s record of prior convictions, it finds that the applicant is unfit or unsuited to engage in the profession or occupation.
S.C. Code Ann. § 40-1-140 (Rev. 2001).
The only evidence in the record submitted by the Respondent are the denial letter and the Petitioner’s Presentence Investigation Report, the latter of which is neutral, if not favorable to the Petitioner. Consequently, as there is no other evidence in the record that reflects negatively upon the Petitioner, I find that a denial of licensure in this instance would clearly violate the language of § 40-1-140. Although S.C. Code Ann. § 40-1-110 (Rev. 2001) proscribes refusal solely on the ground of a felony conviction, it does not prevent the court from granting a license subject to reasonable restriction.
Accordingly, I conclude that the following restrictions shall apply to Petitioner’s license and each and every renewal thereof until the expiration of ten (10) years from the date of his conviction:
In the course of his employment as a mortgage originator:
(a) Petitioner shall never receive any cash payment for any reason from any client or third party;
(b) Petitioner shall never receive any payment by check made payable to himself and will require all such checks to be made payable to his employer;
(c) Petitioner shall never sign checks or accounts of his employer, as agent or otherwise and consequently shall never act as disbursing agent for his employer;
(d) Petitioner shall never misrepresent the financial status of a prospective borrower in order to ensure the granting of a loan commitment nor shall he procure any such misrepresentation or aid in any such representation by any third party;
(e) Petitioner shall not accept or use a credit card that has been issued in his employer’s name;
(f) Petitioner shall cooperate with all compliance inspections instituted by the Department.
ORDER
IT IS HEREBY ORDERED that the Department issue Cherry a mortgage originator license subject to the restrictions set forth in (a-f), above.
IT IS FURTHER ORDERED that Respondent shall conduct compliance inspections on Cherry not less frequently than annually.
AND IT IS SO ORDERED.
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JOHN D. MCLEOD
Administrative Law Judge
January 29, 2008
Columbia, South Carolina
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