South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
Clyde L. Hiers vs. LLR, Board of Accountancy

AGENCY:
South Carolina Department of Labor, Licensing, and Regulation

PARTIES:
Appellant:
Clyde L. Hiers

Respondent:
South Carolina Department of Labor, Licensing, and Regulation, Board of Accountancy
 
DOCKET NUMBER:
5675467547

APPEARANCES:
Petitioner & Representative:
Clyde L. Hiers, J. Todd Manley, Esquire

Respondent & Representative:
South Carolina Department of Labor, Licensing, and Regulation, Board of Accountancy, S. Phillip Lenski, Esquire
 

ORDERS:

FINAL ORDER AND DECISION

I. Introduction


Clyde L. Hiers (Hiers), a Certified Public Accountant, seeks a reversal of a decision rendered by the South Carolina Department of Labor, Licensing, and Regulation, Board of Accountancy (Board). The Board’s decision is AFFIRMED.


Procedurally, this matter is Hiers’ second appeal to the ALJD. The initial appeal produced a remand asking the Board to clarify its decision on whether a violation of applicable statutes and regulations occurred due to Hiers' role in issuing a 1099-C to a former client. On remand, the Board reconfirmed the initial order’s finding of two violations for other actions and in addition the second order clarified that a third violation resulted from Hiers’ actions in the issuance of the 1099-C. After the Board’s denial of a request for a reconsideration, Hiers brought this appeal.


II. Analysis


A. Issues


The Board concluded Hiers violated three provisions of the statutes and rules governing the conduct of accountants. First, Hiers violated S.C. Code Ann. §40-2-290(A)(5) by committing a breach of Regs. 1-21(A) by performing acts that were discreditable to the profession. Second, Hiers committed an additional violation of S.C. Code Ann. §40-2-290(A)(5) by committing a breach of Regs. 1-21(B)(5) in that he solicited and advertised in a manner that was false, misleading, deceptive and that tended to promote unsupported claims that would be likely to cause a reasonable person to misunderstand or be deceived. Finally, the Board found Hiers violated S.C. Code Ann. §40-1-110(1)(f) by committing acts that were dishonorable, unethical, or unprofessional with those acts being likely to deceive or harm the public.


B. Appellate Review


1. Introduction


An appeal before an ALJ triggers the review criteria of S.C. Code Ann. § 1- 23-380(A)(6) (Supp. 2002). See S.C. Code Ann. § 1-23-380(B) (Supp. 2002) (where an ALJ is directed to conduct a review "in the same manner prescribed in [§ 1-23-380](A)."). Section 1-23-380(A)(6)(e) establishes the following:

The court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions or decisions are:
(e) clearly erroneous in view of the reliable, probative and substantial evidence on the whole record.

Hiers argues that the decision below is clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record.


An ALJ "will not substitute [the ALJ's] judgment for that of the [Board] as to the weight of the evidence on questions of fact." S.C. Code Ann. § 1-23-380(A)(6) (Supp. 2002). Thus, once a factual determination is made, the ALJ cannot re-weigh the evidence in an attempt to come to an independent conclusion on the factual dispute. Rather, the ALJ will rely upon the Board’s factual determinations unless those determinations are "clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record." S.C. Code Ann. § 1-23- 380(A)(6)(e) (Supp. 2002).

In determining if substantial evidence supports the Board’s factual determinations, the ALJ does not look for "a mere scintilla of evidence nor evidence viewed blindly from one side, but [rather looks for] evidence which, when considering the record as a whole, would allow reasonable minds to reach the conclusion that the agency reached." Palmetto Alliance, Inc. v. South Carolina Pub. Serv. Comm'n, 282 S.C. 430, 432, 319 S.E.2d 695, 696 (1984). Accordingly, if such evidence is present, the factual determinations will not be overturned. However, if such evidence is not present, the factual determinations cannot be supported.




2. Substantial Evidence


a. Acts Discreditable to the Profession


The Board found that Hiers violated S.C. Code Ann. §40-2-290(A)(5) by committing a breach of Regs. 1-21(A) by performing acts that were discreditable to the profession. The record supports the Board’s determination.


In COL 3A the Board concluded Hiers committed an act that is discreditable to the profession when he used the power and knowledge of his profession to inflict harm upon another. Further, in FOF 5 the Board found the party harmed (a former client) was not a member of the accounting profession. Specifically, FOF 5 holds that Hiers issued the 1099-C to punish a former client for non-payment of an alleged debt owed Hiers and that Hiers inflicted that punishment by having the former client incur a tax debt based on the amount shown on a 1099-C issued to the former client.


In making its determination, the Board had evidence that Hiers was forgiving a client a debt of approximately $1,900 but that the client was issued a 1099-C for approximately $6,000. The difference above the amount of the debt allegedly represented interest owed on the debt. In reaching its conclusion that the 1099-C was issued to harm a client, the Board could certainly have believed that the additional amount allegedly due to interest was not supported and thus the interest was not proper to show on the 1099-C.


Further, based on the evidence presented, the Board had evidence the 1099-C was issued to cause harm since expert testimony supports such a position. An expert at the hearing opined that at the time of the issuance of the 1099-C, Hiers was a cash basis taxpayer and that a cash basis taxpayer would not have issued a 1099-C in such circumstances. Rather, according to the testimony, such a document would be issued by an accrual basis taxpayer having previously included such an amount in income.

Thus, given the record made below and the FOF relied upon by the Board to support the violation, substantial evidence on the whole record exists supporting the factual determinations made. S.C. Code Ann. § 1-23- 380(A)(6)(e) (Supp. 2002). Thus, Hiers committed an act that was a breach of Regs. 1-21(A) by performing an act that was discreditable to the profession.


b. False, Misleading, or Deceptive Advertising


An additional violation of S.C. Code Ann. §40-2-290(A)(5) was determined by the Board since Hiers was found to have breached Regs. 1-21(B)(5). That regulation states the following:

A licensee shall not seek to obtain clients by advertising or other forms of solicitation in a manner that is false, misleading, deceptive, or tends to promote unsupported claims. Such activities include those that:

(5) contain any other representations that would be likely to cause a reasonable person to misunderstand or be deceived.


Thus, substantial evidence must exist establishing 1) that Hiers advertised, 2) that he did so in a manner that was false, misleading, deceptive, or tends to promote unsupported claims, and 3) that his acts would be likely to cause a reasonable person to misunderstand or be deceived. Here, the factual findings are supported by the record below.


In this record, the Board found that advertising occurred since the phrase “Master of Federal Tax Laws and Financial Planning” appears on Hiers’ letterhead. See FOF 3. Statements made on a professional’s letterhead constitutes advertising. See Peel v. Attorney Registration and Disciplinary Comm'n, 496 U.S. 91 (1990) (reversing the Illinois Supreme Court's censure of an attorney whose professional letterhead truthfully advertised that he was certified as a civil trial specialist by a national organization). Accordingly, substantial evidence exists that Hiers advertised.


The advertising must be false, misleading, or deceptive. In FOF 3 the Board finds that the use of the phrase “Master of Federal Tax Laws and Financial Planning” is a “misrepresentation of the Respondent’s credentials and education [since such implies] that the Respondent has a master’s degree in Federal tax laws as well as a Master’s degree in financial planning.”


The fact that the letterhead is deceptive is supported by the evidence since the record establishes that Hiers holds only a Master of Federal Tax Laws degree from California State University. The record is clear that Hiers holds no master’s degree in financial planning. Rather, he holds a designation as a Certified Financial Planner granted by the College of Financial Planning in Denver, Colorado. Further, the Board’s conclusion that the statement is misleading is one that reasonable persons could have arrived at from the evidence presented since the correct characterization for Hiers to have made is that he holds a designation as a Certified Financial Planner. See Ibanez v. Florida Dep't of Bus. & Prof'l Regulation, 512 U.S. 136 (1994) (reversing the Florida Board of Accountancy's reprimand of an attorney who truthfully advertised that she was a CPA and a Certified Financial Planner).


Finally, the listing on the letterhead would likely cause a reasonable person to misunderstand or to be deceived. Here, in FOF 3, the Board relied upon the record to hold that the use of “Master of Federal Tax Laws and Financial Planning” means Hiers asserts he has two masters degrees. Concluding that such a statement would cause a reasonable person to misunderstand Hiers’ educational credentials is a matter that the Board could reach within its broad discretion. Thus, again, the findings of the Board are not without substantial evidence. Accordingly, a violation of §40-2-290(A)(5) has been established since Hiers failed to comply with Regs. 1-21(B)(5).


c. S.C. Code Ann. §40-1-110(1)(f)


Finally, the Board found Hiers violated S.C. Code Ann. §40-1-110(1)(f). Substantial evidence must exist supporting findings that Hiers committed an act 1) that was either dishonorable, unethical, or unprofessional and 2) that was likely to deceive or harm the public.


In FOF 3 “the Board finds that the wording on the Respondent’s stationary is a misrepresentation of the Respondent’s credentials and education . . . [since such implies] the Respondent has a master’s degree in Federal tax laws as well as a Master’s degree in financial planning.” The inference drawn by the Board that Hiers’ stationary expresses the position that Hiers holds both a masters in federal tax law and a separate masters in financial planning is an inference well within the fact finding body’s discretion.


Thus, the result is that the Board determined Hiers made a false statement. One making a false statement is involved in unethical conduct. See e.g. Matter of Kramer, 247 A.D.2d 81 (N.Y. 1998) (where “wide range of unethical conduct” included making of false statements). Further, finding that such statements placed on letterhead presented to the public is likely to deceive the public is also a logical inference available to the Board. See Ibanez v. Florida Dep't of Bus. & Prof'l Regulation, supra. (reversing the Florida Board of Accountancy's reprimand of an attorney who truthfully advertised that she was a CPA and a Certified Financial Planner). Accordingly, a violation of S.C. Code Ann. §40-1-110(1)(f) is supported by substantial evidence.


III. Order


The Board’s decision is AFFIRMED in holding that Hiers violated S.C. Code Ann. §40-2-290(A)(5) by committing a breach of Regs. 1-21(A) by performing acts that were discreditable to the profession; that Hiers committed a second violation of S.C. Code Ann. §40-2-290(A)(5) by committing a breach of Regs. 1-21(B)(5) in that he advertised in a manner that was false, misleading, or deceptive and that would be likely to cause a reasonable person to misunderstand or be deceived; and that Hiers violated S.C. Code Ann. §40-1-110(1)(f) by committing acts that were dishonorable, unethical, or unprofessional with those acts being likely to deceive or harm the public.


AND IT IS SO ORDERED


______________________

RAY N. STEVENS

Administrative Law Judge


Dated: July 30, 2003

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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