STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ALEX NIZNIK,

Petitioner,

vs.

DEPARTMENT OF FINANCIAL SERVICES,

Respondent.

)

)

)

)

) Case No. 06-3657

)

)

)

)

)

)

RECOMMENDED ORDER

This case came before Administrative Law Judge John G. Van Laningham for final hearing by video teleconference on November 6, 2006, at sites in Tallahassee and Miami, Florida.

APPEARANCES

For Petitioner: Alex Niznik, pro se

9580 Byron Avenue

Surfside, Florida 33154

For Respondent: R. Terry Butler, Esquire

Department of Financial Services

200 East Gaines Street Room 612 Larson Building

Tallahassee, Florida 32399 STATEMENT OF THE ISSUE

The issue in this case is whether Respondent should grant Petitioner's application for licensure as a public adjuster, despite his having pleaded guilty to (and been convicted of) a felony involving moral turpitude (conspiracy to commit mail

fraud), which conviction was not disclosed on Petitioner's application.

PRELIMINARY STATEMENT

By letter dated July 27, 2006, Respondent Department of Financial Services notified Petitioner Alex Niznik that it intended to deny his application for licensure as a public adjuster. Respondent's decision was based on Niznik's criminal record, which he had failed to disclose on his application. Mr. Niznik timely requested a formal hearing, and on September 22, 2006, Respondent referred the matter to the Division of Administrative Hearings, where an Administrative Law Judge was assigned to conduct a formal hearing.

The hearing took place on November 6, 2006, as scheduled, with both parties present. Petitioner testified on his own behalf, called no other witnesses, and presented no exhibits. Respondent called no witnesses. Respondent's Exhibits 1-3 were received in evidence without objection.

The final hearing transcript was filed on December 4, 2006.

Proposed Recommended Orders were due on December 14, 2006, and each party filed one. (Mr. Niznik's was late but accepted nonetheless.) The parties' submissions were considered.

Unless otherwise indicated, citations to the Florida Statutes refer to the 2006 Florida Statutes.

FINDINGS OF FACT

1. On August 29, 2005, Petitioner Alex Niznik ("Niznik") completed an online application for licensure as a Resident Public Property and Casualty Insurance Adjuster and submitted the form electronically to Respondent Department of Financial Services ("Department" or "DFS").

2. The application contained 18 "screening questions" that called for a "yes" or "no" answer. Focusing primarily on matters bearing on character and fitness, these questions sought to elicit personal information about the applicant's background. One question, for example, asked: "Have you held a resident insurance license in another state during the last three years?" Another inquired: "Have you ever had an application for a license declined or denied by this or any other insurance regulatory body?"

3. The instant dispute arose from the eighth screening question, which asked:

   Have you ever been convicted, found guilty, or pled guilty or nolo contendere (no contest) to a felony or crime punishable by imprisonment of one (1) year or more under the laws of any municipality, county, state, territory or country, whether or not adjudication was withheld or a judgment of conviction was entered?

   
   

   Niznik answered, "no."

4. At the end of the application, just above his electronic signature, Niznik checked a box manifesting agreement with the following declaration:

   Under penalties of perjury, I declare that I have read the foregoing application for license and that the facts stated in it are true. I understand that misrepresentation of any fact required to be disclosed through this application is a violation of the Florida Insurance and Administrative Codes and may result in the denial of my application . . . .

   
   

5. Despite having declared that his responses were true, Niznik's answer to the question of whether he had a criminal record was false. In fact, contrary to his denial of past criminal convictions, Niznik had pleaded guilty, about nine years earlier, to the felony charge of conspiracy to commit mail fraud, which is an offense against the United States. Following this guilty plea, the United States District Court, Southern District of New York, on July 25, 1996, had entered a judgment of conviction against Niznik, sentencing him to three years of probation and imposing a $50 fine.

6. DFS discovered Niznik's conviction before granting him a license. Based on Niznik's criminal record and his failure to disclose its existence, DFS denied Niznik's application. DFS's decision was communicated to Niznik though a Notice of Denial dated July 27, 2006. Niznik was informed that he would not be eligible to reapply until after 17 years had elapsed, starting

   from the date of his conviction. Niznik timely requested an administrative hearing to determine his substantial interest in obtaining a license.

   Determinations of Ultimate Fact

   
   

7. Because conspiracy to commit mail fraud is a felony that involves moral turpitude, and because it is undisputed that Niznik pleaded guilty to——and was convicted of——this federal crime, the Department is required by statute to deny Niznik's application for licensure.

8. Pursuant to its rules, the Department must impose a waiting period on Niznik, which he is required to serve before becoming eligible to reapply. The usual waiting period for the type of crime of which Niznik was convicted is 15 years. An additional two years must be added to this, in consequence of Niznik's failure to disclose the conviction.

9. Although Niznik failed to present persuasive evidence on any specific mitigating factors that might have given grounds to shorten the prescribed waiting period, he did persuade the undersigned that, more likely than not, he has been rehabilitated. Rehabilitation is a general mitigating factor that warrants a modest reduction of the waiting period.

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has personal and subject matter jurisdiction in this proceeding pursuant to Sections 120.569, and 120.57(1), Florida Statutes.

11. Section 626.611, Florida Statutes, provides as follows:

    The department shall deny an application

    . . . of any applicant . . . if it finds that as to the applicant, . . . any one or more of the following applicable grounds exist:

    
    

    (14) Having . . . pleaded guilty . . . to a felony . . . under the law of the United States of America . . . which involves moral turpitude, without regard to whether a judgment of conviction has been entered by the court having jurisdiction of such cases.

    
    

    (Emphasis added.)

    
    

12. Niznik pleaded guilty to the federal crime of conspiracy to commit mail fraud, which comprises the following elements:

    If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both.

    
    

    18 U.S.C. § 371.

13. The object (mail fraud) of the criminal conspiracy in which Niznik took part is a federal crime having the following

    elements:

    
    

    Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

    
    

    18 U.S.C. § 1341.

    
    

14. Conspiracy to commit mail fraud is a Class D felony under federal law, because the maximum term of imprisonment

    authorized therefor is "less than ten years but five or more years[.]" 18 U.S.C. § 3559(a)(4).

15. By rule, the Department has enumerated the felonies—— dubbed "Class A Crimes"——which, it has found, always involve moral turpitude. Among these crimes are "postal fraud" and "conspiracy." Fla. Admin. Code R. 69B-211.042(21)(nn), (vv). See also Fla. Admin. Code R. 69B-211.042(7)(f)(For purposes of classifying felonies, "conspiracy to commit a crime . . . is classified the same as the crime itself.").

16. When the unambiguous law is applied to the undisputed facts of this case, the conclusion is inescapable that Niznik has pleaded guilty to (and been convicted of) a felony involving moral turpitude. Therefore, in accordance with Section 626.611(14), Florida Statutes, the Department has no choice but to deny Niznik's license.

17. An applicant whose criminal record precludes licensure must serve a waiting period before reapplying, the term of which is prescribed by rule as follows:

    1. Required Waiting Periods for a Single Felony Crime. The Department finds it necessary for an applicant whose law enforcement record includes a single felony crime to wait the time period specified below (subject to the mitigating factors set forth elsewhere in this rule) before licensure. All waiting periods run from the trigger date.

       1. Class A Crime. The applicant will not be granted licensure until 15 years have passed since the trigger date.

       2. Class B Crime. The applicant will not be granted licensure until 7 years have passed since the trigger date.

       3. Class C Crime. The applicant will not be granted licensure until 5 years have passed since the trigger date.

       4. The Department shall not impose any waiting period pursuant to this rule where the only crime in an applicant's law enforcement record is a single felony crime that results from the applicant’s passing of a worthless check, or obtaining property in return for a worthless check, and the amount of the check or checks involved in the single felony crime is $500 or less. However, this subparagraph shall not apply where a felony crime resulting from the applicant's passing of a worthless check, or obtaining property in return for a worthless check is not the only crime in an applicant's law enforcement record.

          
          

          Fla. Admin. Code. R 69B-211.042(8)(emphasis added).

          
          

18. The term "trigger date" is defined in Florida Administrative Code Rule 69B-211.041(11) as meaning:

    the date on which an applicant was found guilty, or pled guilty, or pled nolo contendere to a crime; or, where that date is not ascertainable, the date of the charges or indictment.

    
    

19. The applicable trigger date in this instance is July 25, 1996. Thus, under the usual, 15-year waiting period imposed on an applicant whose criminal record consists of a single, Class A Crime, Niznik would be ineligible to reapply until July 25, 2011.

20. Niznik, however, has a problem in addition to his felony conviction, namely his failure to disclose that conviction on his application for licensure. Florida Administrative Code Rule 69B-211.042(4) provides as follows:

    1. Effect of Failure to Fully Disclose Law Enforcement Record on Application.

       1. The Department finds that all matters that are part of an applicant's law enforcement record are material elements of the application, and finds that the omission of any part of the law enforcement record required to be disclosed on the application is a material misrepresentation or material misstatement in and of itself. The applicant shall have violated Section 626.611(2) or 626.621(1), Florida Statutes, if the applicant fails to provide the Department with the documentation required by this rule.

       2. 1. If an applicant fails to fully and properly disclose the existence of law enforcement records, as required by the application, the application will be denied and a waiting period will be imposed before the applicant may reapply for any license.

          1. If the Department discovers the applicant's failure to disclose only after a license has been granted, the Department will suspend or revoke each license currently held by the applicant.

          2. The waiting period shall begin on the later of:

             1. The date that the Department issues a letter or notice of denial of the application, or

             2. The date that a previously imposed waiting period expires.

          3. Waiting periods shall be calculated as follows:

             1. Class A or B crime omitted, where the trigger date was more than 10 years before time of application, add 1 year. If the

                trigger date was 10 years prior, or less than 10 years prior, to the time of application, add 2 years.

             2. Class C crime omitted, add 1 year.

             3. Omission of any arrest, pending criminal charges, pre-trial intervention, or other part of the law enforcement record required to be disclosed on the application, add 1 year.

       3. An applicant whose application is denied under this subsection shall resubmit another application and applicable fee as set forth in Section 624.501, Florida Statutes, on the application form respective to the type and class of license sought.

       4. After the waiting period has elapsed, the Department shall consider the application if it is resubmitted in good form with applicable fees, and licensure shall be granted if the licensee then meets all the requirements and criteria for licensure as set out in the then applicable rules and statutes.

       5. Formal Record to be Made. The Department finds that submission of an application that is inaccurate as to law enforcement history is a matter of such weight that a formal record of the application shall be made and preserved by Department order for reference and consideration should the applicant subsequently become licensed and violate any portion of the insurance code. To this end, applicants are required to execute a settlement acknowledging the inaccuracy as a prerequisite to becoming licensed after all waiting periods have elapsed and the applicant is otherwise eligible for licensure.

    
    

    (Emphasis added.)

    
    

21. Pursuant to the plain language of the preceding Rule, two additional years must be added to the usual waiting period applicable to Niznik's crime, postponing until July 25, 2013,

    the earliest date on which Niznik may reapply for licensure as a public adjuster.1

22. The undersigned has not overlooked Niznik's defense, which is that a secretary who was unfamiliar with his background filled out the electronic application, resulting in the unintentional nondisclosure of Niznik's criminal conviction. Even if true, however, this explanation for the omission does not change the undisputed fact that Niznik has a felony conviction for a crime involving moral turpitude. This fact alone compels the denial of Niznik's application, as a matter of law, whether the nondisclosure was innocent or not.

23. At best, then, Niznik's defense might avoid the addition of two extra years to the usual 15-year waiting period, as required under Rule 69B-211.042(4) for failing fully and properly to disclose the existence of a criminal conviction. Yet, while the undersigned is not without sympathy for Niznik, he cannot conclude that Niznik is blameless in connection with the nondisclosure at issue. First, if the secretary were unfamiliar with Niznik's background, then it was his responsibility to inform her of all facts necessary to accurately and truthfully complete the application. Indeed, given the nature of the screening questions, which focus on the applicant's background, Niznik would have had to tell the secretary the relevant facts, or else she could not have

    answered any of the questions, except by guessing. Niznik's failure (by his own admission) to fully and properly disclose the criminal conviction to his secretary is the same, in these circumstances, as having failed to fully disclose the fact on his application.

24. Second, Niznik was required to (and did) declare, under penalties of perjury, that he had (a) read his application and (b) confirmed that the facts stated therein were true. Because, according to his own testimony, someone else (who was unfamiliar with Niznik's background) had completed the application, Niznik needed to be especially careful in checking the form for accuracy, as the circumstances were such that a mistake could easily have been made. If Niznik carelessly overlooked the misrepresentation about his criminal record, as he implicitly claims, then he is culpable of willful indifference in the matter, at the very least, which amounts to an improper failure to disclose the existence of a conviction.

25. Notwithstanding Niznik's defense, therefore, the undersigned has concluded that he is fully responsible for the nondisclosure and subject to the imposition of a longer-than- usual waiting period as a result.

26. Finally, Niznik did not present persuasive evidence in support of any of the specific mitigating factors set forth in Florida Administrative Code Rule 69B-211.042(10). Niznik

testified generally, however, that he has not been in trouble with the law in the decade since the conviction in question, and he stressed that he is anxious to resume working to support his wife and children, with whom he evidently has a stable life.

The undersigned accepts this testimony as evidence of rehabilitation and recommends that one year be deducted from the

waiting period.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order

(a) denying Niznik's application for licensure as a Resident Public Property and Casualty Insurance Adjuster and (b) imposing a waiting period of 16 years, from the date of his criminal conviction, which must be served before Niznik may reapply.

DONE AND ENTERED this 22nd day of January, 2007, in Tallahassee, Leon County, Florida.

S

JOHN G. VAN LANINGHAM

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 22nd day of January, 2007.

ENDNOTE

1/ Actually, the plain language of Rule 69B-211.042(4)(b)3. provides that, where the applicant has failed to disclose his criminal record, as here, the waiting period commences, not on the date of conviction, but on the date that DFS denies the application (or on the date of a previously imposed waiting period, if later). If that provision were applied to Niznik, he would be ineligible to reapply until July 27, 2023, making the waiting period tantamount to a permanent ban. The Department, however, has not suggested that the waiting period be held to start on July 27, 2006, but instead has maintained consistently that the commencement date should be July 25, 1996. The undersigned urges that DFS adhere to its previous position when rendering the final order.

COPIES FURNISHED:

R. Terry Butler, Esquire Department of Financial Services

200 East Gaines Street Room 612 Larson Building Tallahassee, Florida 32399

Alex Niznik

9580 Byron Avenue

Surfside, Florida 33154

Honorable Alex Sink Chief Financial Officer

Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300

Daniel Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of 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: 06-003657

Orders for Case No: 06-003657