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OAH 48-1800-21449-2 |
STATE OF
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE DEPARTMENT OF HUMAN SERVICES
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In the Matter of Revocation of the License of Charles and Patricia Thompson to Provide Family Child Care |
FINDINGS OF FACT, CONCLUSIONS AND RECOMMENDATION |
A hearing in this matter was held before Administrative Law Judge Steve
M. Mihalchick on September 16, 2010, at the Todd County Courthouse in Long
Prairie,
Appearances: Charles G. Rasmussen, Todd County Attorney, appeared on behalf of the Department of Human Services (the Department) and Todd County Social Services (the County). Andrew S. Garvis, Loch & Garvis LLC, appeared on behalf of Charles and Patricia Thompson (Licensees), who were present at the hearing.
Licensees were charged with and in 2010 pleaded guilty in Minnesota Federal District Court with Conspiracy to Traffic in Counterfeit Goods or Services in violation of 18 U.S.C. § 2320(a)(1).
1. Do the Licensees’ acts meet the definition of Theft or Conspiracy to Commit Theft under Minn. Stat. § 609.52?
2. If so, do the Licensees’ acts disqualify them under Minn. Stat. §§ 245C.14 and 245C.15, from direct contact with or access to persons served by programs licensed by the Department?
3. If so, should their disqualifications be set aside under the facts of this case?
4. Did the Licensees allow a substitute caregiver to provide care for daycare children when no background study request form for the substitute had been submitted as required by Minn. Stat. §§ 245C.03 and 245C.04?
5. In light of any such disqualifications and violation of the background study requirements, should the Licensees’ license to provide family child care be revoked?
The Administrative Law Judge concludes that the Licensees’ acts meet the definition of Theft or Conspiracy to Commit Theft, which disqualifies them from direct contact with or access to persons served by programs licensed by the Department. The Administrative Law Judge also concludes that the disqualifications should not be set aside.
The Administrative Law Judge finds that the Licensees allowed a substitute caregiver to provide care for daycare children when no background study request form for the substitute had been submitted as required by Minn. Stat. §§ 245C.03 and 245C.04.
Finally, the Administrative Law Judge concludes that the Licensees’ license to provide family child care should be revoked.
Based on the evidence in the hearing record, the Administrative Law Judge makes the following:
1.
The Licensees are licensed to provide family
child care in their home in Long Prairie,
2. Mrs. Thompson was issued several correction orders on her annual, then biannual inspections from 1997 to 2007. Several involved paperwork requirements. All of them were corrected as required.[2]
3. Most of their daycare parents think very highly of the care provided by the Licensees, report that their children are very happy there, speak of the difficulty of finding quality daycare near Long Prairie and the difficulty of transitioning children to a new provider, and believe that the Licensees’ criminal matter should not result in the Licensees losing their family child care license.[3]
4. In about 2007, Mr. Thompson bought 10 or 12 counterfeit professional team jerseys on EBay. He sold them to people he knew. He then searched around online and found he could buy counterfeit jerseys for about $18 dollars each. He bought some more and sold them for about twice what he paid. His buyers usually resold them, sometimes in stores they owned, and generally for $50 to $75. Generally the ultimate buyers were not informed that the jerseys were counterfeit. Real NFL jerseys can sell for as much as $259. Mr. Thompson reinvested his profits several times and his original $600 purchase amount multiplied many times.[4] Mr. Thompson disguised some of his transactions by having others make some payments for him and by having others receive some deliveries. Mrs. Thompson was aware of her husband’s transactions. She made several wire transfers to his suppliers in amounts under $2,500 to avoid currency reporting requirements and several times signed for deliveries of counterfeit sportswear that was delivered to their home. Most of the counterfeit sportswear was stored in an outbuilding on their property or in Mr. Thompson’s workshop.[5]
5. On November 23, 2009, federal agents conducted a search at the Licensees’ home. About 15 agents were involved in the raid, which also included state and local agents. One agent entered the lower level where Mrs. Thompson was conducting the daycare that day, but took care not to disturb the children. The other agents searched the rest of the home, outbuilding, and grounds. Mr. Thompson was in the process of selling approximately $2,500 worth of counterfeit items to one of his customers who was there. On that day, Mr. Thompson had approximately 3,000 items of counterfeit sportswear on the property and Mrs. Thompson had signed for nine parcels containing 133 counterfeit NFL jerseys.[6]
6. Based upon evidence gathered in the search and elsewhere, the United States District Court Grand Jury issued an indictment that was filed on April 21, 2010, charging the Licensees, Mr. Thompson’s father, and three others with Conspiracy to Traffic in Counterfeit Goods in violation of 18 U.S.C. §§ 371 and 2320(a) (the Indictment). Among other things, it alleged that Mr. Thompson obtained counterfeit sports apparel from sources of supply in China and caused the counterfeit sportswear to be delivered to various properties he owned; that Mr. Thompson’s father accepted deliveries of counterfeit sportswear to be transferred to Mr. Thompson; that Mrs. Thompson accepted delivery of nine parcels containing 133 counterfeit jerseys, that Mr. Thompson had 3,000 items of counterfeit sportswear at his residence; that Mr. Thompson paid for the counterfeit sportswear with Western Union transfers of money and recruited others to send the money using their names to avoid detection and instructed them to keep the amounts below $2,500 in order to avoid currency reporting requirements; that from October, 2007, through January, 2009, Mr. Thompson personally wired money to China approximately 50 times in the total amount of $97,532; that Mrs. Thompson personally wired money to China in the amount of $2,475 approximately 21 times for a total of $51,975; and that three other individuals purchased counterfeit sportswear from Mr. Thompson on several occasions and resold it for a profit to unsuspecting purchasers.[7]
7.
On April 26, 2010, Mrs. Thompson called Marlys
Steidl, the Licensing Social Worker for the County (the Licensor), and informed
her of the Indictment. She also informed
the Licensor that they had made their first appearance in Federal Court in
8.
On April 28, 2010, there was a meeting of the
Licensor, her Supervisor, the County Social Services Director, and the
9. On April 28, 2010, the County issued letters of disqualification to both of the Licensees. The letters stated that each of them was disqualified under Minn. Stat. § 245C.15 from direct contact with, or access to, persons served by the program due to a preponderance of evidence of Theft under Minn. Stat. § 609.52, subd. 2(4). The letters also stated that the Licensees posed a risk of harm to persons served by the program that required them to be under continuous, direct supervision whenever persons served by the program were present and, therefore, ordered that they be within the sight or hearing of another adult caregiver. The Licensor also sent a letter to the Licensees informing them that because of the evidence of theft, the County was required to recommend suspension of their license to the Department.[10]
10. The County recommended suspension to the Department in a letter of May 3, 2010. That letter included a listing of the prior correction orders and a listing of Mr. Thompson’s criminal record. That record included a 1989 guilty plea to gross misdemeanor Theft under Minn. Stat. § 609.52, a 1990 misdemeanor disorderly conduct under Minn. Stat. § 609.72 (unclear as to disposition), and a 1993 incident resulting in a finding of guilty of 5th Degree Assault under Minn. Stat. § 609.224. The disqualification for the Assault was the subject of a variance in 1997 and was set aside in 1999.[11]
11. By letter of May 12, 2010, the Licensor notified the Licensees’ daycare parents that the County had recommended suspension of the license pending investigation. Because of the publicity surrounding the criminal charges, Mrs. Thompson sent a letter to the parents saying that they were in trouble for selling unlicensed jerseys, that charges were pending, that they had not harmed anyone, and that she was not quitting daycare.[12]
12. On May 18, 2010, the Licensor had a discussion with Mrs. Thompson about the supervision requirement. During that discussion she learned that Bethanie Friese, one of the daycare parents, had substituted the previous day at the Licensees’ daycare. Ms. Friese had a completed background study at another facility, but no background study request had been submitted for her for the Licensees’ daycare. On May 24, 2010, the Licensor issued a correction order to the Licensees for the violation.[13]
13. On May 28, 2010, the County received the Licensees’ requests for reconsideration of their disqualifications and their proposed plan for continuous supervision. Their plan was to have their nephew, Ryan Thompson, always present with them during daycare and to have Bethanie Friese and their niece, Amanda Thompson, available to substitute as well.[14] The County sent the requests for reconsideration to the Department with a recommendation that the disqualifications be upheld.[15] On June 2, 2010, the County issued background study clearances for Ryan Thompson and Bethanie Friese.[16]
14. On June 22, 2010, the Department issued identical decisions to the Licensees denying their requests for reconsideration of their disqualifications. The decisions found that the information used to disqualify them was correct and that each of them had committed an act that met the definition of a disqualifying act under Minn. Stat. § 245C.15, specifically:
A preponderance of the evidence indicates that, from approximately 2007 to 2009, you committed an act which meets the definition of felony theft under Minnesota Statutes, section 609.52.
The decisions also concluded that under the factors set out in Minn. Stat. § 245C.22, subds. 3 and 4, the Licensees had failed to demonstrate that they did not pose a risk of harm to persons served in the licensed program and therefore determined that the disqualifications would not be set aside nor would a variance be granted. The decisions found the following factors to be determinative: the serious nature of the disqualifying acts, the recency of the disqualifying acts, the vulnerability of daycare children, the lack of evidence of rehabilitation, and failure of the Licensees to take responsibility for their actions.[17]
15. The Department also issued an Order of Revocation on June 22, 2010. The Order of Revocation cited Minn. Stat. §§ 245A.07, subds. 1 and 3; 245A.04, subd. 6; 245C.03, subd. 1(a); and 245C.14, subds. 1 and 2; and Minn. R. 9502.0335, subp. 6 D. The basis for the revocation was
Because you are were both disqualified from any position allowing direct contact with, or access to, persons served by DHS-licensed programs; and because they used a substitute caregiver without first submitting the required background study; and in order to protect the health, safety, and rights of persons receiving services in DHS-licensed programs, your license to provide family child care is revoked. [18]
16. The Licensees filed a timely appeal of the Order of Revocation. The date of that appeal is not clear in the record, but it appears to have been on or before July 7, 2010.[19]
17. On July 20, 2010, the Licensor visited the Licensees’ home in part to review a report of the improper use of a substitute on April 23, 2010. Mrs. Thompson disclosed that two different women had been providing care that date. Neither had completed background study requests. The Licensor then observed three other violations: the daycare was over-capacity, the revocation order had not been posted as required, and admission and arrangement forms were missing for five children. On July 26, 2010, the Licensor issued a correction order for the four violations. Mrs. Thompson corrected the violations and returned the signed Correction Order on August 2, 2010, as required.[20] Were these relied upon in any way to support the revocation?
18. On July 28, 2010, the Licensees each pleaded guilty to one count of Conspiracy to Traffic in Counterfeit Goods in violation of 18 U.S.C. §§ 371 and 2320(a). In court they each admitted the allegations made in the Indictment about them.[21]
19. On August 3, 2010, the County served the Notice and Order for Hearing setting the hearing for September 16, 2010.
Based on these Findings of Fact, the Administrative Law Judge makes the following:
1. The Commissioner of Human Services and the Office of Administrative Hearings have jurisdiction to consider this matter.[22]
2. The Department and the County gave proper and timely notice of the hearing and complied with all procedural requirements of law and rule.
3. Pursuant to Minn. Stat. § 245A.08, subd. 2a, this is a consolidated contested case hearing regarding disqualifications for criminal offenses and the revocation of a family child care license based upon the disqualifications and a violation of a licensing rule.
4. Regarding the disqualifications, the Department has the burden of proving by a preponderance of the evidence that the Licensees should be disqualified from direct contact with persons receiving licensed services.
5. Under Minn. Stat. § 245C.14, subd. 1, a person must be disqualified if there is information that shows a conviction of, admission to, or Alford plea to any of the crimes listed in Minn. Stat. § 245C.15, or if a preponderance of the evidence indicates that the person has committed acts that meet the definition of any of the crimes listed in Minn. Stat. § 245C.15.
6. Minn. Stat. § 245C.15 lists the disqualifying crimes and provides that aiding and abetting, attempts, and conspiracy to commit a listed crime requires disqualification for the same period as the listed crime. It also provides that commission of an offense in any other state or country with elements substantially the same as a listed crime requires disqualification for the same period as the listed crime.[23]
7. 18 U.S.C.§ 2320(a) defines the federal crime of Trafficking in Counterfeit Goods or Services as follows:
Whoever; intentionally traffics or attempts to traffic in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services, or intentionally traffics or attempts to traffic in labels, patches, stickers, wrappers, badges, emblems, medallions, charms, boxes, containers, cans, cases, hangtags, documentation, or packaging of any type or nature, knowing that a counterfeit mark has been applied thereto, the use of which is likely to cause confusion, to cause mistake, or to deceive, shall, if an individual, be fined not more than $2,000,000 or imprisoned not more than 10 years, or both ….
8. Minn. Stat. § 609.52, subd. 2(4) provides that whoever, “by swindling, whether by artifice, trick, device, or any other means, obtains property or services from another person,” commits Theft. Under Minn. Stat. § 245C.15, Theft under Minn. Stat. § 609.52 is a disqualifying crime.
9. By the Indictment, the Licensees’ admissions in Federal Court, and their testimony at the hearing, there is a preponderance of the evidence that Mr. Thompson committed acts from 2007 to 2009 that meet the definition of Theft under Minn. Stat. § 609.52 and that Mrs. Thompson committed acts from 2007 to 2009 that meet the definition of Conspiracy to Commit Theft under Minn. Stat. §§ 609.175 and 609.52. With the amount of money paid by and to the Licensees, the theft meets the definition of a felony level violation. Therefore, under Minn. Stat. § 245C.15, both Licensees are disqualified for 15 years.
10. In determining whether the disqualifications should be set aside, it is necessary to consider whether the Licensees pose a risk of harm to their daycare children under the factors sent forth in Minn. Stat. § 245C.22. Under Minn. Stat. § 245C.22, subds. 3 and 4, preeminent weight must be given to the safety of each person served by the license holder over the interests of the disqualified license. The following factors must be considered, although any single factor be determinative:
(1) the nature, severity, and consequences of the event or events that led to the disqualification;
(2) whether there is more than one disqualifying event;
(3) the age and vulnerability of the victim at the time of the event;
(4) the harm suffered by the victim;
(5) vulnerability of persons served by the program;
(6) the similarity between the victim and persons served by the program;
(7) the time elapsed without a repeat of the same or similar event;
(8) documentation of successful completion by the individual studied of training or rehabilitation pertinent to the event; and
(9) any other information relevant to reconsideration.
The Department found the following to be determinative: the serious nature of the disqualifying acts, the recency of the disqualifying acts, the vulnerability of daycare children, the lack of evidence of rehabilitation, and failure of the Licensees to take responsibility for their actions.
11. The Licensees’ criminal acts were recent. They engaged in a serious crime that can have serious economic consequences for unsuspecting buyers and for producers, sellers, and trademark holders of the legitimate goods that are copied. Children in daycare are certainly vulnerable and the fact that the Licensees were willing to engage in the fraudulent behavior is a concern because honesty and compliance with laws and rules is required of people providing family child care. The Licensees did not appreciate the seriousness of their crime and thought that nobody was harmed until they were caught. They then pled guilty and cooperated with the federal authorities. In light of these considerations, the Licensee do pose a risk of harm to the children in their daycare. Their disqualifications should not be set aside.
12. Regarding the failure to request a background study prior to using a substitute, there is no factual dispute. The Licensees admitted that Bethany Friese was used a substitute before they submitted a background study request for her. In doing so, they violated Minn. Stat. § 245C.03, subd. 1, which requires background studies of employees or volunteers who have unsupervised direct contact with persons served by the program, and Minn. Stat. § 245C.04, subd. 1(h), which requires that license holders submit completed background study forms before such persons begin positions allow direct contact. In addition, they have now admitted to the Licensor that there were two other violations of the background study request requirement. All of the violations occurred when the Licensees had an unforeseen need for a substitute and hastily called upon a friend or relative to come in and help out for a short time.
13. Under Minn. Stat. § 245A.07, subd. 3, the Commissioner may suspend or revoke a license, or impose a fine if a license holder fails to fully comply with applicable laws or rules or has a disqualification that has not been set aside or if the license holder knowingly gave false information during an investigation. In applying sanctions, the Commissioner must consider the nature, chronicity, or severity of the violation of law or rule and the effect of the violation on the health, safety, or rights of persons served by the program.
14. The disqualifications that have not been set aside are sufficient in themselves to support the revocation. The violation of the background study request requirement provides additional grounds for the revocation. Background studies are necessary to help ensure that care providers will not endanger the children. The Licensees knew of the requirement and chose to ignore it when it was not convenient to comply. They have done so on at least two other occasions. There have been at least two dozen instances of incomplete or missing records for their daycare children since 1997. The Licensees’ disregard of requirements meant to protect the children is chronic and endangers the health and safety of the children. It is similar to their willingness to disregard the law and engage in dealing in counterfeit sportswear. Grounds exist to revoke their license.
15. Based upon these Conclusions, and for the reasons explained in the accompanying Memorandum, the Administrative Law Judge makes the following:
IT IS RESPECTFULLY
RECOMMENDED THAT:
1. The disqualifications of Charles and Patricia Thompson be AFFIRMED and NOT SET ASIDE.
2. The revocation of the license held by Charles and Patricia Thompson be AFFIRMED
Dated: February 3, 2011
s/Steve M. Mihalchick
__________________________
STEVE M. MIHALCHICK
Administrative Law Judge
Reported: Digitally Recorded
This report is a recommendation, not a final
decision. The Commissioner of Human
Services will make the final decision after a review of the record. The Commissioner may adopt, reject or modify
these Findings of Fact, Conclusions, and Recommendations. Under
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. In order to comply with this statute, the Commissioner must then return the record to the Administrative Law Judge within 10 working days to allow the Judge to determine the discipline to be imposed. The record closes upon the fling 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.
Under 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.
Minn. Stat. § 609.52, subd. 2(4) provides that whoever, “by swindling, whether by artifice, trick, device, or any other means, obtains property or services from another person,” commits theft. The Licensees argue that everyone knew that the jerseys were fake, so there was no obtaining of property, no swindle, and no victims.[24]
A swindle existed because Mr. Thompson trafficked in counterfeit goods knowing them to contain counterfeit marks likely to cause confusion. He admitted that the jerseys he sold to retailers were then sold to unsuspecting customers. The retailers obtained “property” from the customers, their money, when they sold the jerseys. The Licensees conspired in that swindle. Mr. Thompson also obtained property, money, directly from the retailers and others that he sold the counterfeit jerseys to. He committed theft and Mrs. Thompson conspired in that theft.
Unsuspecting customers are victims because they pay for inferior products. Other victims exist. They are the producers and sellers of legitimate goods and the holders of the intellectual property rights in such goods. These victims are expressly identified in 18 U.S.C. § 2320(d)(2).
Thus, a preponderance of the evidence indicates that, from approximately 2007 to 2009, the Licensees committed acts which meet the definition of felony theft and conspiracy to commit felony theft under Minn. Stat. § 609.52.
S. M. M.
[1] Testimony of Patricia and Charles Thompson.
[2] Testimony of Marlys Steidl; Exhibit A to Notice and Order for Hearing, 7/28/10 letter of Marlys Steidl.
[3] Testimony of Marlys Steidl, Joanie Miller, Carol Hudalla, Sharon Thom, Bethanie Friese; Exhibits 1 – 6.
[4] Testimony of Charles Thompson.
[5] Testimony of Patricia and Charles Thompson; Exhibit 19.
[6] Testimony of Charles Thompson; Exhibit 19.
[7] Exhibit 19.
[8] Testimony of Marlys Steidl; Exhibit A to Notice of Hearing, 7/28/10 letter of Marlys Steidl.
[9] Testimony of Marlys Steidl.
[10] Testimony of Marlys Steidl; Exhibit A, 4/28/10 letter of Marlys Steidl.
[11] Testimony of Marlys Steidl; Exhibit A, 5/3/10 letter of Marlys Steidl; Exhibit 22.
[12] Exhibit A, 5/12/10 letter of Marlys Steidl and Exhibit 21 (undated letter of Patricia Thompson).
[13] Testimony of Marlys Steidl; Exhibit A, 5/24/10 letter of Marlys Steidl and Correction Order.
[14] Exhibit A, 5/25/10 letters from Patricia and Charles Thompson.
[15] Testimony of Marlys Steidl; Exhibit A, 5/28/10 letter of Marlys Steidl
[16] Exhibit A, 6/1/10 Background Study Clearances.
[17] Exhibit A, 6/22/10 Department letters to the Licensees.
[18] Exhibit A, 6/22/10 Order of Revocation and 6/29/10 Corrected Order of Revocation.
[19] See Notice and Order for Hearing (signed on 7/10/10) and Exhibit A, 7/7/10 letters of Marlys Steidl.
[20] Exhibit A, 7/26/10 letter of Marlys Steidl and Correction Order; Correction Order signed 8/2/10.
[21] Testimony of Patricia and Charles Thompson; Exhibit 20. The Licensees and Exhibit 20 (Press release from US Attorney’s Office), all stated that they each pleaded to one count of Trafficking in Counterfeit Goods. It seems more likely that the pleas were to the conspiracy charges in the Indictment, as counsel has argued.
[22]
[23] Minn. Stat. § 245C.15, subds. 1(b) and (c), 2(b) and (d), 3(b) and (c). and 4(c) and (d).
[24] Licensees’ Memorandum of Law at 3-4