11-1005-17963-2
STATE OF
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE DEPARTMENT OF COMMERCE
|
In the Matter of Larry
Charles Smith |
FINDINGS
OF FACT, CONCLUSIONS,
AND RECOMMENDATION |
The above-entitled matter came on for hearing before
Administrative Law Judge Barbara L. Neilson on Thursday, September 27, 2007, at
9:30 a.m. at the Office of Administrative Hearings in
Michael J. Tostengard, Assistant Attorney General,
Larry C. Smith, 4217 28th Avenue South,
Apt. 2, Minneapolis, MN 55406, (“Applicant”)
appeared on his own behalf with assistance from Ronald A. Edwards,
STATEMENT OF ISSUES
The
issue in this case is whether the Department’s
denial of the Respondent’s application for a real estate salesperson’s license should
be affirmed because the Respondent has:
(1) demonstrated
that he is untrustworthy and unqualified to hold a real estate salesperson’s
license pursuant to Minn. Stat. §§ 45.027, subd. 7(4) and 82.35, subd. 1(b); and
(2) provided
the Department with false or misleading information on his licensing application
in violation of Minn. Stat. §§ 45.027, subd. 7(a)(3).
The Administrative Law Judge
recommends that the denial of the Respondent’s license application be affirmed.
Based on the proceedings herein, the Administrative
Law Judge makes the following:
FINDINGS OF FACT
1. The Respondent, Larry Charles Smith,
applied to the Department of Commerce for a real estate salesperson license on
October 11, 2006, after completing a real estate licensing course and passing
the examinations required by the State.[1]
2. As part of the license application,
applicants are required to be “affiliated with” a licensed real estate company,
and a broker for that real estate company must certify on the application that
upon issuance of the license, the applicant will be affiliated with and
licensed by that real estate company. Respondent
indicated on his application that he was affiliated with “Realty Executives
Advantage Plus Group” in
3. On the license application, the Respondent
also checked “yes” in response to the question: “Have you ever been charged,
indicted, pleaded to, or convicted of a criminal offense in any State or
Federal Court?”[3] The application instructed applicants to
“include any felony, gross misdemeanors or misdemeanors,” except misdemeanor
traffic violations, and to attach copies of documents regarding the criminal
offenses. The Respondent submitted
copies of documents relating to his 1996 criminal conviction in federal court
with his application.[4]
4. On November 1, 1996, Respondent pled
guilty to one felony count of conspiracy to distribute cocaine in federal district
court in
5. In addition to the documents he submitted
with his application, the Respondent also submitted a letter of explanation to
the Department. In the letter, the
Respondent stated that he had been convicted of conspiracy to distribute
narcotics and that he had spent over a decade of his life in prison for “bad
decisions.” However, he explained that,
while in prison, he made a commitment to change his life and began taking
coursework and studying the real estate business. The Respondent urged the Department to grant
his license and allow him to the opportunity to pursue a career in real estate.[6]
6. Patricia Stock, senior investigator with
the Department, reviewed the Respondent’s application and documentation
relating to his 1996 conviction, and determined that the Respondent’s application
should be denied. Ms. Stock based her
decision on Respondent’s 1996 felony conviction and the fact that he will
remain on supervised release until at least 2012.[7]
7. By letter dated October 18, 2007, Ms.
Stock notified the Respondent of the Department’s recommendation to deny his
license application. Ms. Stock further informed the Respondent of his right to
request a contested case hearing before an Administrative Law Judge. Ms. Stock copied the letter to Halisi Edwards
Staten of Realty Executive Advantage Plus Group.[8]
8. Prior to receiving Ms. Stock’s letter,
the Respondent was notified by an employee of Realty Executive Advantage Plus
Group that his license application had been denied.[9]
9. The Respondent appealed the Department’s
decision to deny his license application and requested a hearing.
10. Sometime in February of 2007, Ms. Stock
contacted the Respondent’s federal probation officer, David Schwab, to obtain more
information about the Respondent’s 1996 conviction. During this conversation, Mr. Schwab informed
Ms. Stock that the Respondent had a 1991 conviction in
11. By letter dated March 6, 2007, Ms. Stock
asked the Respondent to provide her with information regarding his 1991
conviction and any other criminal offenses.[11]
12. On March 15, 2007, the Department received
a letter from the Respondent in which he acknowledged his 1991 conviction for
possession of cocaine with intent to sell.
The Respondent attached to the letter his judgment of conviction, pre-sentence
report, and parole board termination certificate. According to this documentation, the
Respondent pled guilty in New Jersey Superior Court to one felony count of
possession of cocaine with intent to distribute on April 16, 1991. He was sentenced to 10 years with eligibility
for parole after serving three and one-third years.[12] Respondent
served approximately three years in prison, and returned to
13. The Department issued a Notice of and Order
for Hearing, Order for Prehearing Conference, and Statement of Charges on April
16, 2007. By agreement of the parties,
the hearing in this matter ultimately was held on September 27, 2007.
14. Respondent’s current federal probation
officer, Odell Wilson III, submitted a letter on behalf of the Respondent in
this matter. Based on his observations
of the Respondent in his home and current work environments, Mr. Wilson stated
that it appears the Respondent “is focused on becoming a positive role model to
his children and a productive member of society.” Mr. Wilson further noted that the Respondent
is in compliance with all court-ordered conditions of his probation.[15]
15. The Respondent currently owns and operates
a used car dealership under the name Checkmate Auto Incorporated.[16] In order to operate this business, the
Respondent was required to obtain a dealer license from the Minnesota
Department of Public Safety.[17]
16. The Respondent is not currently affiliated
with any licensed real estate company.
At the conclusion of the hearing in this matter, the Administrative Law
Judge held the record open to allow the Respondent time to submit information
showing that a real estate broker had certified that the Respondent was
affiliated with and would be licensed to the broker’s real estate company upon
issuance of a license. The Respondent
did not submit any information prior to the close of the record on November 28,
2007.
Based
on the foregoing Findings of Fact, the Administrative Law Judge makes the
following:
CONCLUSIONS
1. The
Administrative Law Judge and the Commissioner of Commerce are authorized to
consider the charges against Respondent under Minnesota Statutes §§ 14.50
and 45.027, subd. 7.
2. The
Respondent received due, proper and timely notice of the charges against him,
and of the time and place of the hearing.
This matter is, therefore, properly before the Commissioner and the
Administrative Law Judge.
3. The
Department has complied with all relevant procedural legal requirements.
4. The
burden of proof in this proceeding is on the Respondent to show by a preponderance
of the evidence that he should be granted a license.[18]
5. The
Commissioner of Commerce may deny an application for a real estate salesperson
license if the applicant provides false, misleading, or incomplete information
in the licensing application.[19]
6. The
Commissioner of Commerce may deny an application for a real estate
salesperson’s license if the Commissioner finds that it is in the public
interest to do so and the applicant has “engaged in an act or practice, whether
or not the act or practice directly involves the business for which the person
is licensed or authorized, which demonstrates that the applicant or licensee is
untrustworthy, financially irresponsible, or otherwise incompetent or
unqualified to act under the authority or license granted by the commissioner.”[20]
7. The
Respondent failed to disclose on his license application his 1991 conviction
for possession of cocaine with intent to distribute. By failing to make this disclosure, the Respondent
provided the Department with misleading and incomplete information on his
licensing application in violation of Minnesota Statutes § 45.027, subd.
7(a)(3).
8. Minn.
Stat. § 45.027, subd. 10, specifies that “Chapter 364 [relating to
rehabilitation of those convicted of crimes] does not apply to an applicant for
a license . . . where the underlying conduct on which the conviction is based
would be grounds for denial … of the license.”
9. The
underlying conduct on which the Respondent’s convictions are based demonstrate
that the Respondent is untrustworthy or otherwise incompetent or unqualified to
act as a real estate salesperson under Minn. Stat.
§ 45.027, subd. 7(a)(4), and that he has “engaged in a fraudulent, deceptive,
or dishonest practice” in violation of Minn. Stat. § 82.35, subd. 1(b). This conduct directly relates to the
occupation for which the license is sought and warrants the denial of his
license application under Minn. Stat. § 45.027, subd. 10. The occupation of a real estate salesperson requires
trustworthiness, especially in matters involving the handling of client
properties and money.
10. The
Respondent has failed to demonstrate by a preponderance of the evidence that he
is not in violation of the provisions cited above.
11. An
Order denying the Respondent’s real estate salesperson’s license application
would be in the public interest.
12. These
Conclusions are reached for the reasons discussed in the Memorandum below. The Memorandum is incorporated into these
Conclusions.
Based on the foregoing Conclusions,
the Administrative Law Judge makes the following:
RECOMMENDATION
IT IS RECOMMENDED that the
Department’s denial of Larry Charles Smith’s application for a real estate
salesperson’s license be AFFIRMED.
Dated: December 18, 2007 s/Barbara L. Neilson
|
BARBARA
L. NEILSON Administrative
Law Judge |
Reported: Digitally
recorded (no transcript prepared).
NOTICE
This Report is a recommendation, not a final
decision. The Commissioner of Commerce
will make the final decision after a review of the record. The Commissioner may adopt, reject or modify
the Findings of Fact, Conclusions, and Recommendations. Under Minn. Stat. § 14.61, the final decision
of the Commissioner shall not be made until this Report has been made available
to the parties to the proceeding for at least ten days. An opportunity must be afforded to each party
adversely affected by this Report to file exceptions and present argument to
the Commissioner. Parties should contact
the office of the Commissioner of Commerce, 85th
Pursuant to Minn. Stat. § 14.62, subd.
1, the Agency is required to serve its final decision upon each party and the
Administrative Law Judge by first-class mail or as otherwise provided by
law. If the Commissioner fails to issue
a final decision within 90 days of the close of the record, this report will
constitute the final agency decision under Minn. Stat. § 14.62, subd. 2a. The record closes upon the filing of
exceptions to the report and the presentation of argument to the Commissioner,
or upon the expiration of the deadline for doing so. The Commissioner must notify the parties and
the Administrative Law Judge of the date on which the record closes.
MEMORANDUM
Although the Respondent fully disclosed his 1996 federal
conviction for conspiracy to distribute cocaine on his license application, he
failed to disclose his 1991 conviction in
Respondent also maintains that, since his conviction
in 1996, he has changed his life and is focused on becoming a responsible and hard-working
member of society. Respondent points out
that he invested significant time and money in taking the exams and educational
courses required for licensure, and he asserts that this investment reflects
his commitment to changing his life. In
addition, Respondent is adamant that selling real estate is a career he would
enjoy and one that would allow him to better support his family. He asserts that he has taken full
responsibility for his past mistakes and has remained law-abiding since his
release from prison in 2006. Respondent
maintains that he should be found fit to be licensed as a real estate
salesperson.
The question on the license application
asks whether the applicant has ever been charged with or convicted of a
criminal offense in any State or Federal Court, including any felony, gross
misdemeanors or misdemeanors. Applicants
are instructed to include any and all criminal offenses except misdemeanor
traffic violations. If applicants answer
yes to this question, they are directed to attach a written statement
explaining the circumstances of each incident, and copies of the criminal
complaint, sentencing order, and final judgment/parole resolution. The question on the application form and the description
of the materials to be provided by applicants are clear. By failing to disclose his 1991 conviction for
possession of cocaine with intent to distribute, the Respondent provided the
Department with incorrect, misleading and incomplete information on his
application. The Respondent’s assertion
that he believed he did not have to disclose the 1991 conviction because it enhanced
the sentence he received for his more serious 1996 conviction does not provide
a convincing explanation for his failure to disclose the 1991 conviction in
light of the express request on the application form for information concerning
all criminal convictions other than
misdemeanor traffic violations.
The Respondent’s submission of
incomplete and misleading information is grounds for the Commissioner to deny
his application. Moreover, his failure
to disclose his 1991 felony conviction on his license application demonstrates a lack of
honesty and untrustworthiness that make him presently unqualified to perform
the duties of a real estate salesperson pursuant to Minn. Stat. § 45.027, subd.
(a)(4).[21]
To the extent that Minn. Stat. § 364.03 (relating to
rehabilitation of those convicted of crimes) is applicable here, the Department
has demonstrated that the conduct underlying Respondent’s convictions is serious
in nature and sufficiently related to licensure as a real estate salesperson to
justify denial of his application at this time.[22] Licensed real estate salespersons are
required to demonstrate a history of honesty and integrity because they hold a
position of trust with their clients and have access to clients’ homes, money,
and personal belongings. Respondent’s
felony-level drug possession and conspiracy to distribute cocaine reflect
deceptive or dishonest acts in violation of Minn. Stat. § 82.35, subd.
1(b), and demonstrate that the Respondent is untrustworthy or otherwise
unqualified to act as a licensed real estate salesperson under Minn. Stat. §
45.027, subd. 7(a)(4).
The Administrative Law Judge also notes
that, while the misconduct on which Respondent’s convictions are based occurred
more than 10 years ago, Respondent was only released from prison for his second
conviction in 2006, and is still completing his probationary term for that
offense. Respondent will continue to be
supervised by a probation officer until May 21, 2012. Given that less than two years has passed
since the Respondent served his prison time and he has years left on supervised
probation, he cannot demonstrate sufficient evidence of rehabilitation and
present fitness to perform the duties of a licensed real estate salesperson.[23] It is possible, however, that upon completion
of probation, the Department may reach a different conclusion regarding the
Respondent’s fitness for licensure.
Finally, as part of the license application,
applicants are required to be “affiliated with” a licensed real estate
company. A broker for that real estate
company must certify on the application that, upon issuance of the license, the
applicant will be affiliated with and licensed by that real estate
company. Respondent indicated on his
application that he was affiliated with “Realty Executives Advantage Plus Group”
in
For all of the reasons above, the Administrative Law
Judge concludes that it is appropriate to deny the Respondent’s license
application.
B. L. N.
[1] Ex. 1; Testimony of Larry Smith.
[2] Ex. 1; Testimony of Smith.
[3] Ex. 1 at 2.
[4] Exs. 2, 3 and 4.
[5] Exs. 2-6.
[6] Ex. 1.
[7] Ex. 7 (The Respondent’s supervised release date is given as May 21, 2012, in Ex. 6, and January 20, 2013, in Ex. 7.) .
[8] Ex. 7.
[9] Testimony of Smith.
[10] Testimony of Stock.
[11] Testimony of
Stock; Ex. 5.
[12] Ex. 5.
[13] Testimony of Smith.
[14] Ex. 5.
[15] Ex. 6 (Letter
from
[16] Testimony of Smith; Ex. 6.
[17] Testimony of
Smith.
[18] Minn. R. 1400.7300, subp 5.
[19] Minn. Stat. §
45.027, subd. 7(a)(3).
[20] Minn. Stat. §
45.027, subd. 7(a)(4).
[21] Minn. Stat. §
45.027, subd. (a)(4).
[22] Minn. Stat. §
45.027, subd. 10.
[23] See Minn. Stat. § 364.03, subd. 2.
[24] Ex. 1; Testimony of Smith.