FLORIDA 7 . oe DEPARTMENT OF po fe /\ g . FINANCIAL PEE gen OYT- 18] PL SERVICES FILED ‘s Ep OT-18l ” ALEX SINK MAR 28 2007 CHIEF FINANCIAL OFFICER STATE OF FLORIDA a, EY Docketed py: - IN THE MATTER OF: CASE NO. 88525-07-AG SCOTT E. CRENSHAW ADMINISTRATIVE COMPLAINT TO: SCOTT E. CRENSHAW 8003 St. James Way Mt. Dora, Florida 32757 You, SCOTT E. CRENSHAW, are hereby notified that pursuant to Chapter 626, Florida Statutes, the Chief Financial Officer of the State of Florida, has caused to be made an investigation of your activities while licensed as an insurance agent in this state, as a result of which it is alleged: GENERAL ALLEGATIONS 1. You, SCOTT E. CRENSHAW, are currently licensed in the state as a life including variable annuity and health agent; variable annuity agent; life insurance agent and life and health insurance agent. 2. At all times pertinent to the dates and occurrences referred to in this Administrative Complaint you, SCOTT E. CRENSHAW, were licensed as an insurance agent in this state. 3. Pursuant to Chapter 626, Florida Statutes, the Chief Financial Officer of the State of Florida and the Department of Financial Services has jurisdiction over your insurance licenses and your eligibility for licensure and appointment. COUNT I 4 Paragraphs one through three are realleged and incorporated herein by reference. 5. On or about February 23, 2006, you, SCOTT E. CRENSHAW, or someone under your direct supervision and control, did knowingly and willfully submit a fictitious and false annuity application and a fraudulent counterfeit check in the purported amount of $95,000 to Allianz Life Insurance Company, for the sole purpose of being paid a commission. 6. The above-mentioned counterfeit check was dishonored by the bank upon presentation. 7. As a result of the fraudulent application submitted by you, SCOTT E. CRENSHAW, and prior to the discovery of the fraud, Allianz Insurance paid to you a commission of $8,000, Atno time, pertinent to the dates and occurrences referred to herein, were you, SCOTT E. CRENSHAW, entitled to this commission. 8. The above-mentioned $8000 represented trust funds received by you, SCOTT E. CRENSHAW, from an insurer in a fiduciary capacity. 9. You, SCOTT E. CRENSHAW, secured the $8000 commission payment from Allianz by false statements. You, SCOTT E. CRENSHAW, have converted, misappropriated, or ‘wrongfully withheld fiduciary funds belonging to Allianz Insurance. IT IS THEREFORE CHARGED that you, SCOTT E, CRENSHAW, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Financial Services which constitute grounds for the suspension or revocation of your insurance licenses and eligibility for licensure: (a) All premiums, return premiums, or other funds belonging to insurers or others received by an agent, solicitor, or adjuster in transactions under his license shall be trust funds so received by the licensee in a fiduciary capacity; and the licensee in the applicable regular course of business shall account for and pay the same to the insurer, insured, or other person entitled thereto. [Section 626.561(1), Florida Statutes]; (b) — Willful _misrepresentation of any’ insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising. [Section 626.61 1(5), Florida Statutes] (c) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. [Section 626.61 1(7), Florida Statutes]; (d) Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.611(9), Florida Statutes]; (e) Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license. [Section 626.611(10), Florida Statutes]; (f) Willful failure to comply with, or willful violation of, any proper order or rule of the department or willful violation of any provision of the Insurance Code. [Section 626.611(13), Florida Statutes]; (g) In the conduct of business under the license or appointment, engaging in unfair methods of competition or unfair or deceptive acts or practices, as prohibited by part IX of this chapter. [Section 626.621(6), Florida Statutes]; (h) Knowingly making a false or fraudulent written or oral statement or representation on, or relative to, an application or negotiation for an insurance policy for the purpose of _ obtaining a fee, commission, money, or other benefit from any insurer. [Section 626.9541(1)(k)1, Florida Statutes]; (i) Securing cash advances from an insurer by false statements. [Section 626.9541(1)(u)2, Florida Statutes]. COUNT II 10. The above General Allegations numbered one through three are hereby realleged and fully incorporated herein by reference. 11. Mr. and Mrs. T.M.M. (hereinafter T.M.M) of Fruitland Park, Florida, as of . December 8, 2003, had retirement assets consisting of a $30,000.00 inheritance and $10,000 on deposit in a money market account. Their sole retirement income consisted of social security and a small veteran’s disability pension benefit. 12. On or about December 8, 2003, you, SCOTT E. CRENSHAW, willfully induced T.M.M. to purchase, with their $40,000 in retirement funds, an Investors Insurance equity index annuity (hereinafter “annuity”). 13. In the process of inducing the sale and purchase of the annuity, you, SCOTT E. CRENSHAW, willfully misrepresented and/or omitted material information regarding the nature and sale of the annuity. The misrepresentations include, but are not limited to, the following: (a) that T.M.M. would receive a guaranteed 3% return on all monies invested in the annuity and that they could elect to have it paid to them as a monthly income payment; (b) that if T.M.M. purchased the annuity before the end of 2003 they would be immediately credited with 3% interest for calendar year 2003; 4 (c) that the $40,000 used to purchase the annuity were 100% guaranteed and safe due to the “state guaranty association” and that T.M.M. were specifically guaranteed to never lose any money due to company bankruptcy or insolvency. (d) that after one year T.M.M. could withdraw any and all money from the annuity without payment of any surrender charge or penalties; and (e) that the annuity would be purchased by T.M.M. as joint owners. The omissions made by you, SCOTT E. CRENSHAW, include, but are not limited, to the following: (f) failure to disclose to T.M.M. that the surrender period for the annuity was 12 years, and included surrender penalties as high as 15% for any withdrawals made before the end of the 12 year period. (g) failure to disclose that the annuity contained numerous penalty and forfeiture provisions, including forfeiture of interest, (h) _ failure to disclose that the index annuity performance was and is intricately tied to the performance of the stock market; (i) failure to disclose that T.M.M. would lose all financial liquidity and flexibility due to the lengthy annuity term; Gj) failure to disclose that T.M.M. would not receive a monthly income payment . from the annuity. (k) _ failure to disclose the tax consequences of purchasing the annuity. 14. | The misrepresentations and omissions, made by you, SCOTT E. CRENSHAW, and described herein were false and material misstatements of fact. You, SCOTT E. CRENSHAW, were fully aware of this fact. 15. The conduct and actions describe herein constitute unfair and deceptive acts or practices in violation of Section 626.9541, Florida Statutes. 16. The index annuity was issued by Investors Insurance on December 11, 2003. However, you, SCOTT E, CRENSHAW, failed to deliver the annuity contract to T.M.M. until February 4, 2004. 17, The Investors annuity provides a 10 day “free look” period as required by Florida law. However, you SCOTT E. CRENSHAW, failed to disclose this fact to T.M.M. and failed to instruct T.M.M. that they only had a certain amount of time to cancel the policy without penalty, The ten day period had long expired before the annuity was delivered and T.M.M. discovered the misrepresentations and omissions concerning the annuity. 18. T.M.M. justifiably relied on the representations and information conveyed to them by you, SCOTT E. CRENSHAW conceming the annuity. They would not have purchased the annuity but for these representations. 19, The sale of the of the annuity to T.M.M. was not in their best interest, was neither necessary nor appropriate for couple of their age and financial circumstance, was without demonstrable benefit, and was done for the sole purpose of obtaining a fee, commission, money or other benefit from an insurance company. As a result, T.M.M. have suffered financial harm. IT IS THEREFORE CHARGED that you, SCOTT E. CRENSHAW, have violated or are accountable under the following provisions of the Florida Insurance Code which constitute grounds for the suspension or revocation of your licenses as an insurance agent in the state: Sections 626.611(5); 626.611(7); 626.611(9); 626.61 1(13); 626.61 1(6), Florida Statutes as more particularly alleged in Count I above and: (a) Violation of any provision of this code or of any other law applicable to the business of insurance in the course of dealing under the license or appointment. [Section 626.621(2), Florida Statutes]; (b) In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part X of this chapter, or having otherwise shown himself to be a source of injury or loss to the public. [Section 626.621(6), Florida Statutes}; (c) Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison, which misrepresents the benefits, advantages, conditions, or terms of any insurance policy. [Section 626.9541(1)(a) 1, Florida Statutes]; (d) Knowingly: a. Filing with any supervisory or other public official, b. Making, publishing, disseminating, circulating, c. Delivering to any person, d. Placing before the public, e. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement. [Section 626.9541(1)(e) 1, Florida Statutes]. WHEREFORE, you, SCOTT E. CRENSHAW, are hereby notified that the Chief Financial Officer intends to enter an Order suspending or revoking your licenses, appointments and your eligibility for licensure as an insurance agent in this state or to impose such penalties as may be provided under the provisions of Sections 626.611, 626.621, 626.681, 626.691, 626.692, 4 and 626.9521, Florida Statutes, and under the other referenced sections of the Florida Statutes as set out in this Administrative Complaint. You are further notified that any order entered in this case revoking or suspending any license or eligibility for licensure held by you shall also apply — to all other licenses and eligibility held by you under the Florida Insurance Code. NOTICE OF RIGHTS You have the right to request a proceeding to contest this action by the Department of Financial Services ("Department") pursuant to Sections 120.569 and 120.57, Florida Statutes, and Rule 28-106, Florida Administrative Code. The proceeding request must be in writing, signed by you, and must be filed with the Department within twenty-one (21) days of your receipt of this notice. Completion of the attached Election of Proceeding form and/or a petition for administrative hearing will suffice as a written request. The request must be filed with the General Counsel acting as Agency Clerk, at the Florida Department of Financial Services, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399-0333. Your written response must be received by the Department no later than 5:00 p.m. on the twenty-first day after your receipt of this notice. Mailing the response on the twenty-first day will not preserve your right to a hearing, YOUR FAILURE TO RESPOND IN WRITING WITHIN TWENTY-ONE (21) DAYS OF YOUR RECEIPT OF THIS NOTICE WILL CONSTITUTE A WAIVER OF YOUR RIGHT TO REQUEST A PROCEEDING ON THE MATTERS ALLEGED HEREIN AND AN ORDER OF SUSPENSION OR REVOCATION WILL BE ENTERED AGAINST YOU. If you request a proceeding, you must provide information that complies with the requirements of Rule 28-106.2015, Florida Administrative Code. As noted above, completion of the attached Election of Proceeding form conforms to these requirements. Specifically, your response must contain: (a) The name, address, and telephone number, and facsimile number (if any) of the respondent (for the purpose of requesting a hearing in this matter, you are the "respondent"). (b) The name, address, telephone number, facsimile number of the attorney or qualified representative of the respondent (if any) upon whom service of pleadings and other papers shall be made. (c) A statement requesting an administrative hearing identifying those material facts that are in dispute. If there are none, the petition must so indicate. (d) _ A statement of when the respondent received notice of the administrative complaint. (e) A statement including the file number to the administrative complaint. If a hearing of any type is requested, you have the right to be represented by counsel or other qualified representative at your expense, to present evidence and argument, to call and cross-examine witnesses, and to compel the attendance of witnesses and the production of documents by subpoena. Ifa proceeding is requested and there is no dispute of material fact, the provisions of Section 120.57(2), Florida Statutes, apply. In this regard, you may submit oral or written evidence in opposition to the action taken by the Department or a written statement challenging the grounds upon which the Department has relied. While a hearing is normally not required in the absence of a dispute of fact, if you feel that a hearing is necessary, one will be conducted in Tallahassee, Florida, or by telephonic conference call upon your request. However, if you dispute material facts which are the basis for the Department’s action, you must request an adversarial proceeding pursuant to Sections 120.569 and 120.57(1), Florida Statutes. These proceedings are held before a State Administrative Law Judge of the Division of Administrative Hearings. Unless the majority of witnesses are located elsewhere, the Department will request that the hearing be conducted in Tallahassee, Florida. Failure to follow the procedure outlined with regard to your response to this notice may result in the request being denied. All prior oral communication or correspondence in this matter shall be considered freeform agency action, and no such oral communication or correspondence shall operate as a valid request for an administrative proceeding. Any request for an administrative proceeding received prior to the date of this notice shall be deemed abandoned unless timely renewed in compliance with the guidelines as set out above. Mediation of this matter pursuant to Section 120.573, Florida Statutes, is not available. No Department attorney will discuss this matter with you until the response has been received by the Department. Jh DATED and SIGNED this 28” day ot __ March 2007. KAREN CHANDLER Deputy Chief Financial Officer 10 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing Administrative Complaint was mailed by certified mail to: SCOTT E. CRENSHAW, 8003 St. James Way Mt. Dora, Florida 32757 on this 23" day of _Morch . 2007. Onwnez. MES A. BOSSART, ESQUIRE ivision of Legal Services 612 Larson Building Tallahassee, FL 32399-0333 (850) 413-4124 11

Docket for Case No: 07-001868PL