STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 95-0249

)

GLENN HAMILTON MARTIN, )

)

Respondent. )

)

RECOMMENDED ORDER

Following notice to all parties, Don W. Davis, a Hearing Officer for the Division of Administrative Hearings, held a final hearing in the above-styled case on February 21, 1995, in Tallahassee, Florida.

APPEARANCES

For Petitioner: John R. Dunphy

Attorney at Law Department of Insurance

200 East Gaines Street Tallahassee, Florida 32399-0333

For Respondent: Mark G. Jochem

Attorney at Law

3007 Maples Avenue, #307

Dallas, Texas 75201 STATEMENT OF THE ISSUE

Whether Respondent is an "affiliated party" within the definition of that term as set forth in Section 624.310(1)(a), Florida Statutes; and, if so, whether Respondent's participation in the affairs of a licensee poses a threat to the interests of the licensee's policyholders, or creditors, or threatens to impair public confidence in the licensee.

PRELIMINARY STATEMENT

Petitioner notified Respondent through Emergency Order dated December 12, 1994, that Respondent was deemed an "affiliated party" and was barred from further participation in the affairs of any of Petitioner's licensees.

Respondent requested a formal hearing with regard to the Emergency Order and the matter was subsequently forwarded to the Division of Administrative Hearings for conduct of formal proceedings in accordance with Section 120.57, Florida Statutes.

At the final hearing, Petitioner presented testimony of two (2) witnesses and ten (10) exhibits. Respondent presented testimony of one (1) witness and four (4) exhibits.

A transcript of the final hearing was filed with the Division of Administrative Hearings on March 13, 1995. Proposed findings of fact were submitted by the parties and are addressed in the appendix to this recommended order.

FINDINGS OF FACT

1. Respondent was formerly licensed by Petitioner as a life and health insurance agent. Respondent's licenses were revoked by final order of Petitioner dated April 15, 1994.

   
   

2. November 10, 1994, Petitioner was indicted in the Federal District Court for the Middle District of Florida, Orlando Division, Case No. 94-155-C- ORL. Petitioner was charged with conspiracy, mail fraud and money laundering. These allegations include the misappropriation of approximately $9,600,000 in premium monies.

   
   

3. At all times pertinent to charges in the indictment, Twentieth Century Life Insurance Company (Twentieth Century), was a foreign insurer legally domiciled in North Carolina, commercially domiciled in Florida, and authorized to transact insurance in the State of Florida. Twentieth Century was subject to jurisdiction and regulations of the Florida Department of Insurance pursuant to Chapter 624, Florida Statutes, and further subject to restrictions imposed by orders issued by the North Carolina Department of Insurance, as well as the Florida Department of Insurance.

   
   

4. At all times pertinent to the indictment, Respondent was the Chief Executive Officer, Corporate President and Chairman of the Board of Directors of Twentieth Century.

   
   

5. The charges contained in the indictment relate to activities of Respondent as Chief Executive Officer, Corporate President and Chairman of the Board of Directors of Twentieth Century. Respondent participated in the conduct of the affairs of licensees as an employee and corporate officer of licensee Twentieth Century.

   
   

6. At all times relevant to the charges contained in the indictment, Respondent was a stockholder in Twentieth Century or its parent corporation.

   
   

7. Allegations which led to revocation of Respondent's life and health insurance agent licenses by Petitioner also were premised on the same underlying facts and circumstances which form the basis for charges contained in the indictment.

   
   

8. Although Respondent has not been an affiliated party as defined in Section 624.310, Florida Statutes, since 1991, the seriousness of the multiple count felony indictment against Respondent and Petitioner's prior regulatory experience with Respondent have led Petitioner to the conclusion that Respondent is not trustworthy.

   
   

9. The insolvency of Twentieth Century caused harm to policyholders who have had their policies placed under moratorium; policyholders whose policy values exceeded the guarantee association cap of $300,000 per person; and the

   insurance purchasing public of North Carolina, Florida and other states that absorbed the estimated $40,000,000 cost of the insolvency.

   
   

10. While directing and controlling the affairs of Twentieth Century, subject to consent agreements with the Florida and North Carolina insurance departments, Respondent and persons acting under his supervision and control filed false financial statements and reports in order to circumvent prohibitions of the consent agreements.

    
    

11. Approximately fifty (50) percent of Petitioner's 3,500 annual investigations focus on misappropriation of premium funds, a significant threat to policyholders. Respondent is deemed a threat by Petitioner as a result of his prior actions and the currently pending felony criminal indictment involving charges of money laundering activity and fraud with regard to handling of

    $10,000,000 of Twentieth Century premium funds.

    
    

12. There are areas of involvement in the affairs of licensees that do not in and of themselves require licensure. Respondent's participation in the affairs of licensees, although in a capacity not requiring licensure, could threaten the interests of policyholders or creditors of a licensee, thereby impairing public confidence in the licensee.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over this matter. Section 120.57(1), Florida Statutes.

    
    

14. Section 624.310(1)(a)1.-4., Florida Statutes, in pertinent part defines an affiliated party to include "any person who directs or participates in the conduct of the affairs of a licensee" and includes directors, officers, and employees.

    
    

15. When an affiliated party is charged with a felony in a state or federal court, Petitioner may, in accordance with Section 624.310(4)(f)2., Florida Statutes:

    
    

    [E]nter an emergency order suspending the affiliated party or restricting or prohibiting participation by the affiliated party in the affairs of the particular licensee or any other licensee upon service of the order upon the licensee and the affiliated party charged.

    
    

16. Subsequently, the affiliated party may:

    
    

    [R]equest a postsuspension hearing to show that continued service to or participation in the affairs of the licensee does not pose a threat to the interests of the licensee's policyholders or creditors and does not threaten to impair public confidence in the licensee. . .

    
    

    Section 624.310(4)(f)2., Florida Statutes.

    
    

17. Notably, the resignation or termination of an affiliated party's status does not affect Petitioner's jurisdiction to proceed with such an emergency order. Section 624.310(4)(h), Florida Statutes.

18. The emergency order at issue in this proceeding was promulgated pursuant to the provisions of Section 624.310(4)(f)2., Florida Statutes. The order bars Respondent from directing or participating in the affairs of any licensee. As a basis for the imposition of such a sanction, the order sets forth Petitioner's findings that Respondent is an affiliated party who directed and participated in the affairs of Twentieth Century and who is the subject of a multi-count federal indictment charging felonies involving fraud, theft and moral turpitude.

    
    

19. The language of the order is clear and unambiguous. Respondent may not direct or participate in the business affairs of any licensee under the Florida Insurance Code.

    
    

20. Respondent contends that Petitioner must show affirmatively that Respondent poses a threat to the interest of policyholders or creditors of a licensee, and that Respondent will impair public confidence in the licensee.

    
    

21. Respondent's contention is not persuasive in view of the clear language of Section 624.310(4)(f)2., Florida Statutes, which states Respondent must show that "continued service" and participation with regard to a licensee does not threaten interests of policyholders or creditors or present the danger of impairing public confidence in the licensee.

    
    

22. The prima facie showing required to create a statutory presumption is specifically detailed in Section 624.310(4)(f)2., Florida Statutes, as are the procedural rights of Respondent. Petitioner has met the statutory requirements. Respondent has failed to render an effective rebuttal.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered affirming Petitioner's Emergency Order.

DONE and ENTERED in Tallahassee, Florida, this 4th day of April, 1995.

DON W. DAVIS

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 4th day of April, 1995.

APPENDIX

In accordance with provisions of Section 120.59, Florida Statutes, the following rulings are made on the proposed findings of fact submitted on behalf of the parties.

Petitioner's Proposed Findings

1.-12. Adopted in substance, but not verbatim. Respondent's Proposed Findings

1.-9. Adopted in substance, not verbatim.

1. Rejected, relevance.

2. Rejected, cumulative.

3. Rejected, relevance.

4. Adopted in effect. 14.-19. Rejected, relevance.

1. Rejected, legal conclusion.

2. Rejected, speculative.

3. Rejected, legal conclusion.

COPIES FURNISHED:

Glenn Hamilton Martin

3131 Maple Avenue, Apt. 11E Dallas, TX 75201

John R. Dunphy Attorney at Law

Department of Insurance

200 East Gaines St. Tallahassee, FL 32399-0333

Mark G. Jochem Attorney at Law

3007 Maples Avenue, #307

Dallas, TX 75201

Bill Nelson

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, FL 32399-0300

Dan Sumner

Acting General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, FL 32399-0300

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 95-000249

Orders for Case No: 95-000249