ORDERS:
FINAL ORDER AND DECISION
STATEMENT
OF THE CASE
This is a contested case brought by Petitioner
John M. English challenging the
decision of the South Carolina Department of Consumer Affairs (“Department”)
which denied Petitioner’s Renewal of Mortgage Loan Broker License based on
Petitioner’s application and the South Carolina Law Enforcement Division’s (“SLED”)
criminal records check. A hearing was held before me on February 7, 2006 at
the offices of the Administrative Law Court (“ALC” or “Court”) in Columbia, South Carolina.
FINDINGS OF FACT
Having
observed the witnesses and exhibits presented at the hearing and closely passed
upon their credibility, taking into consideration the burden of persuasion of
parties, I make the following findings of fact by a preponderance of evidence:
1. Notice
of the time, date, place and subject matter of the hearing was given to
Petitioner and Respondent.
2. Petitioner
English, in completing his application, Supplemental Form A, submitted a sworn
statement that all information contained in the application is true, current
and correct. Petitioner answered “NO” to the question on the form, “Have you
ever been convicted of a felony or an offense involving breach of trust, moral
turpitude or dishonest dealings within the last ten years?”
3. Petitioner’s
arrest record shows two convictions within the last ten years for fraudulent
checks. Petitioner’s arrest record also shows 11 convictions for delivery of
false or fraudulent documents within the last ten years.
4. Petitioner
was unaware of the two fraudulent check convictions. The fraudulent checks
were a result of Petitioner closing a checking account with two checks outstanding.
One check was written to Piggly Wiggly while the other was written to Lowes.
The two checks totaled approximately $145.00. Petitioner paid the checks when
he was made aware of them. Petitioner thought that remitting payment ended the
ordeal, and was not aware that the convictions were entered on his record.
5. Petitioner
did not feel the need to disclose the 11 convictions for delivery of false or
fraudulent documents because these convictions had already been disclosed in a
hearing before Philip S. Porter, the former Administrator of the South Carolina
Department of Consumer Affairs, and Petitioner felt that the Department was fully
aware of these convictions.
The Order issued in that case held that Petitioner’s renewal refusal would be
rescinded upon completion of the conditions therein.
6. Petitioner
has been in the mortgage business for 33 years. In 1991, Petitioner started
his own mortgage company, Carolina Trust Mortgage Services (a/k/a Carofed
Mortgage Corporation). Petitioner has successfully operated in the mortgage
business without any incidents other than those mentioned above.
CONCLUSIONS
OF LAW
Based upon the above
findings of fact, I conclude the following as a matter of law:
1. S.C. Code
Ann. 37-6-414 (2005), S. C. Code Ann. §§ 1-23-600, et seq. (2005)
and S.C. Code Ann. § 1-23-380 (2005) grant jurisdiction to the Administrative Law Court to hear this contested case.
2. S.C.
Code Ann. § 40-58-55 (2005) sets forth:
(A) The department may refuse to license an applicant or refuse to renew a license if it finds, after
notice and a hearing pursuant to the Administrative Procedures Act, that the
applicant or his agent has:
(1) violated a provision of
this chapter or an order of the department;
(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;
(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.
(B) A person who was in
business as a mortgage broker or is an agent of a broker before October 1,
1998, and who has been convicted of a felony or an offense involving breach of
trust, moral turpitude, fraud, or dishonest dealing within the past ten years
may continue in business as a mortgage broker or agent, but if a mortgage
broker or an agent of a broker is convicted of an offense enumerated in item
(3) of subsection (A) on or after October 1, 1998, that person is subject to
the provisions of this chapter.
Id. (Emphasis added.)
3. The record shows Petitioner has two convictions
for fraudulent checks, which is an offense involving fraud under S.C.
Code Ann. § 40-58-55(A)(3) (2005). However,
Petitioner was not aware of the convictions. The amounts of these checks were
minor, and the amounts were paid by Petitioner upon notification.
4. The record also
shows Petitioner did not disclose these two convictions, nor did he disclose
the eleven convictions for delivery of false or fraudulent documents.
This constitutes a withholding of material information
in connection with an application for a license or its renewal under S.C. Code
Ann. § 40-58-55(A)(2) (2005). However, Respondent was, or should
have been, aware of these convictions based on the prior hearing held on these
matters and based on the Order issued by Philip S. Porter on November 5, 1999.
It is clear from his testimony that Petitioner did not intend to mislead the
Department on this matter.
S.C. Code Ann. § 40-58-55 (A) (2005) states, “The
department may refuse to license an applicant or refuse to renew
a license…” Id. (Emphasis added.) This language makes the refusal
discretionary, not mandatory. In fact, The Department chose to exercise its
discretion by opting not to refuse to renew Petitioner’s license in 1999.
S.C. Code Ann. § 40-58-60 (A) (2005) states:
Upon the filing of an application for a
license, if the department finds that the financial responsibility, experience,
character, and general fitness of the applicant, and of the members if the
applicant is a copartnership, association, or limited liability company, and of
the officers and directors if the applicant is a corporation, 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, it shall license the applicant and issue a license…
Id.
Based on Petitioner’s 33 years of experience in the
mortgage industry, along with his approximately 15 years of experience managing
his own company, based on the fact that Petitioner paid the checks not knowing
a conviction had been entered, and based on the fact that Petitioner did not
intend to misrepresent his 11 convictions, I find that Petitioner’s Mortgage
Loan Broker’s License renewal application was improperly denied. Petitioner
has demonstrated financial responsibility, experience, character, and general
fitness sufficient to command the confidence of the community and to warrant
belief that his business may be operated honestly, fairly, and efficiently. Id. Therefore, Petitioner’s Mortgage Loan Broker’s License should be renewed. However,
I do not feel that Petitioner’s actions or omissions were so minor as to be
ignored completely.
S.C. Code Ann. § 40-58-80 (C) (2005) provides that an
administrative law judge “…may impose upon persons violating the provisions of
this chapter administrative fines of not more than five hundred dollars for
each offense or not more than five thousand dollars for the same set of
transactions or occurrences.” Id. “Each violation constitutes a
separate offense.” Id.
Pursuant to section 40-58-80 (C), I find that Petitioner
shall pay to the Department a $500.00 fine for each fraudulent check, and a
$500.00 fine for withholding material information on an application, for a
total fine of $1,500.00.
ORDER
Based
upon the above Findings of Fact and Conclusions of Law,
IT
IS HEREBY ORDERED that the Department’s decision in the above-referenced
case is REVERSED.
IT
IS FURTHER ORDERED that Petitioner pay to the Department a $500.00
fine for each fraudulent check, and a $500.00 fine for withholding material
information on an application, for a total fine of $1,500.00.
IT
IS FURTHER ORDERED that the Department renew Petitioner’s Mortgage
Loan Broker’s License upon Petitioner’s remittance of the $1,500.00 in fines.
AND
IT IS SO ORDERED.
_________________________________
John D. McLeod
Administrative
Law Judge
February 8, 2006
Columbia, South Carolina
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