Fil ™p ACERS Mee 36 ay CHIEF FINANCIAL OFFICER STATE OF FLORIDA Rechated IN THE MATTER OF: KATHERINE MARTENS Case No. 94951-08-AG FINAL ORDER THIS CAUSE came on for consideration of and final agency action. On or about January 23, 2008, the Department of Financial Services (“Department” or “Respondent”) sent a letter notifying the Petitioner, Katherine Martens, that her application for licensure as a resident customer representative insurance agent was denied, The Petitioner timely filed a request for a formal heating in accordance with Section 120,57(2), Florida Statutes. Pursuant to notice, the matter was heard before Michael H. Davidson, Hearing Officer for the Department on July 30, 2008 via teleconference. After consideration of the evidence and argument presented at the hearing, the Hearing Officer issued a Recommended Order on July 31, 2008. (Attached as Exhibit A). The Hearing Officer found that the Department should enter a Final Order granting the Petitioner’s application for licensure as resident customer representative insurance agent, if otherwise qualified. The Department filed exceptions to the Recommended Order. The Department’s exceptions to the Recommended Order were filed on August 4, 2008. These exceptions have been considered and are herein addressed. RULING ON RESPONDENT’S EXCEPTIONS 1. Respondent excepts to the Hearing Officer’s Conclusions of Law that the concepts of trust and trustworthiness are not inherent in the allegations made by AT&T Services, Inc. in its lawsuit Filed November 4, 2008 1:32 PM Division of Administrative Hearings. against Petitioner, Katherine Martens and her principals, agents, employees and/or representatives as the complaint alleges that the Petitioner (who owned and operated a private investigative agency) and her principals, agents, or employees accessed information through an AT&T website without the customer’s or AT&T's permission through deceit, trickery, and dishonesty in violation of the United States Computer Fraud and Abuse Act. Furthermore, the Respondent contends that the lawsuit was settled by an agreed order by the district court in which the court noted its general satisfaction with AT&T’s allegations and supporting evidence and entered a permanent injunction restraining Petitioner and other defendants from accessing, disclosing or disseminating AT&T information. . It is apparent that such allegations are of a serious nature, and if proven, could demonstrate an applicant’s lack of fitness and trustworthiness, a violation of Section 626.611(7), Florida Statutes, as it would establish that the applicant engaged in dishonest and fraudulent activity. However, the evidence presented at hearing unequivocally demonstrates that Petitioner did not have any personal involvement in the unauthorized access of AT&T’s information and further establishes that one or more of the Petitioner’s employees, without Petitioner’s knowledge, gained unauthorized access to AT&T information. The Department, as mentioned above, further contends that the Petitioner entered an agreed order with AT&T which settled the lawsuit. However, the Petitioner did not admit any personal liability in connection with the lawsuit. Thus, the lawsuit was settled without any admission of guilt by Petitioner and again the settlement did not establish that she was personally involved with the unauthorized access of AT&T’s information. Likewise, the Department did not present any evidence at hearing which demonstrates that the Petitioner knew or should have known of such unauthorized activity committed by her employees. Further, the Department did not present any other evidence showing that the Petitioner lacks fitness or trustworthiness necessary to engage in the business of insurance. . To support the Department’s contentions, the Department argued that this case is aligned with Paisley v. Department of Insurance, 526 So.2d 167 (Fla. 1* DCA 1988). However, the Paisley case is distinguishable from the present case as the Paisley case involves criminal convictions and the court found that criminal convictions demonstrate a lack of fitness or trustworthiness, which is a violation of Section 626.611(7), Florida Statutes. In the instant case, the Petitioner was not convicted of any criminal activity. Accordingly, for the reasons stated above, the Petitioner’s exceptions are denied. Therefore, upon careful consideration of the entire record and being otherwise fully advised in the premises, it is HEREBY ORDERED that: 1, The Findings of Fact of the Hearing Officer are adopted in full and incorporated herein by reference as the Department’s Findings of Fact. 2. The Conclusions of Law of the Hearing Officer are adopted in full and incorporated herein by reference as the Department’s Conclusions of Law. 3. The Hearing Officer's recommendation that the Petitioner’s application for licensure as a resident customer representative insurance agent be APPROVED is ACCEPTED as being the appropriate disposition of this case. ACCORDINGLY, it is ORDERED that the application for licensure of the Petitioner, KATHERINE MARTENS, as a resident customer representative insurance agent, if the Petitioner is otherwise qualified, is hereby APPROVED. DONE and ORDERED this 1 6M day of Seplembors 2008. Deputy Chief Financial Officer NOTICE OF RIGHTS Any party to these proceedings adversely affected by this Order is entitled to seek review of this Order pursuant to Section 120.68, Florida Statutes, and Rule 9.110, Florida Rules of Appellate Procedure, Review proceedings must be instituted by filing a petition or notice of appeal with the General Counsel, acting as the agency clerk, at 200 East Gaines Street, Tallahassee, Florida 32399- 0333, and a copy of the same with the appropriate District Court of Appeal within thirty (30) days of rendition of this Order. STATE OF FLORIDA - DEPARTMENT OF FINANCIAL SERVICES IN THE MATTER OF: KATHERINE MARTENS Case No. 94951-08-AG ne | RECOMMENDED ORDER This cause came on before the undersigned hearing officer of the Department of Financial Services (Department) for an informal hearing pursuant to Section 120.57(2), Fla. Stat., on July 30, 2008. The subject of the hearing was the Department's letter of denial dated January 23, 2008, relative to Ms. Martens application for licensure as a resident customer representative insurance agent. (Department's Exhibit One) The hearing was conducted by telephone. Ms. Martens and her employer, Michael Chernoff, were duly sworn and gave testimony on her behalf. The Department presented no witnesses, but offered three exhibits that were admitted into evidence without objection. The Department's denial letter was predicated on a First Amended Complaint for Damages and Injunctive Relief filed against Ms. Martens and twenty four other individuals by AT&T in the federal district court for the Western District of Texas, in which it was alleged that Ms. Martens and others unlawfully accessed AT&T's computer systems and obtained information from those systems which they disseminated to others without AT&T's authorization. That lawsuit was settled by entry of an agreed order by the district court in which the court noted its general satisfaction with AT&T's allegations and supporting evidence while acknowledging that Ms. Martens did not admit personal liability in connection with the resolution of the lawsuit. Thus, the lawsuit was settled without any admission of guilt by Ms. Martens, and no proof of any of the allegations against her, individually or otherwise. The Department contends that the settlement of the lawsuit shows that Ms. Martens lacks one or more of the qualifications for licensure, demonstrates that Ms. Martens is not fit or trustworthy to engage in the business of insurance, and is not trustworthy, generally. (See, Department's Exhibit Two.) The evidence adduced at hearing does not support the Department's contentions. The uncontroverted evidence adduced at hearing established that at the time alleged in the AT&T lawsuit, Ms. Martens owned and operated a private investigative agency that specialized in locating individual persons for the benefit of finance companies and other entities. At the relevant times, her company, located at her home in Lutz, Florida, employed approximately three or four other persons licensed either as C class or CC class private investigators. The C class investigators operated without her supervision, while the CC class investigators were supervised by her. The investigators were paid on a per finding basis; the more persons they found, the more they were paid. Ms. Martens admitted that from what she could discern from the allegations made in the AT&T complaint and her investigation of the matter, one or more of the company investigators gained unauthorized access to the AT&T computer systems by posing, on line, as the wanted individual. The information thereafter obtained from AT&T was used by the investigator(s) to locate the wanted individual. Consistent with the lawsuit settlement, Ms. Martens denied any personal involvement in such unauthorized accesses, and testified that she had no knowledge of any such activities until presented with the AT&T lawsuit. As the company's owner, Ms. Martens forthrightly accepted responsibility for her employees’ alleged actions. She agreed to the terms and conditions of the lawsuit's settlement because she had already disbanded the company for other reasons, and because she could not afford to litigate against AT&T to establish her individual innocence. The Department presented no evidence showing which specific qualification, if any, Ms. Martens lacks to hold the resident customer . representative insurance agent license for which she applied. The Department presented no evidence showing that Ms. Martens lacks the fitness or trustworthiness necessary to engage in the business of insurance. None of the activities alleged in the AT&T lawsuit even remotely constitute the business of insurance, and Ms. Martens' forthright acknowledgment of accountability for her employees’ alleged actions demonstrates a sense of honesty that shows she can be trusted to accept rather than to evade responsibilities. Moreover, none of the alleged activities on which the Department's denial is based involve the concept of trustworthiness; no one's trust was betrayed or compromised by the alleged activities of her employees. All the evidence shows is that some investigator employed by Ms. Martens came up with the, then undoubtedly thought to be clever, idea to pose, on line, to AT&T as the wanted person in order to obtain information as to his or her whereabouts. There is no issue of "trust" involved in that activity. Finally, the Department presented no evidence showing that Ms. Martens knew or should have known about any of those activities prior to the lawsuit. Michael Chernoff, Ms. Martens’ present employer, testified that she had been in his employ for approximately a year and a half and now served as his office manager, that he knew only a little about the AT&T matter, and that in his opinion Ms. Martens is an honest, talented, and valued employee whom he is eager to keep. RECOMMENDATION The Department should enter a Final Order granting the resident customer representative insurance agent license applied for by Ms. Martens. Respectfully submitted, this 31st day of July, 2008. Michad| H. Davidson 612 Larson Building Tallahassee, Fl. 32399 (850) 413-4178 Fla. Bar No. 191637 Department Hearing Officer Copies to: Katherine Martens Regina Keenan

Docket for Case No: 08-001738