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Wednesday, April 18, 2007

Recent Licensing Actions

A previously seldom-quoted bail bond statute has recently been used in decisions by both the Department of Insurance and the Cole County Circuit Court.

The statute I am referring to is:

RSMO 374.755.1. The department may cause a complaint to be filed with the administrative hearing commission as provided by chapter 621, RSMo, against any holder of any license required by sections 374.695 to 374.775 or any person who has failed to renew or has surrendered his or her license for any one or any combination of the following causes:…(6) Violation of any provision of or any obligation imposed by the laws of this state, department of insurance rules and regulations, or aiding or abetting other persons to violate such laws, orders, rules or regulations, or subpoenas. (Emphasis added)

This statute may also be used to refuse to renew or issue a bail bond license under 374.750 RSMO.

The significance of this statute is the very broad language can be applied to a variety of circumstances. The department used this statute to revoke a license for failure to pay income taxes. The court used this statute in the case of DIFP V. Cummings. The court also ruled that the statute can be applied retrospectively (applied to convictions before the law went into effect in 2005) in order to revoke the license of those who are convicted of crimes. Note that the language does not state the violation must be a felony just that the licensee is in violation of the “laws of this state.” Previously, the Administrative Hearing Commission had ruled that Cummings was not subject to discipline under 375.755.1(6) because his convictions were not committed under the bail bond statutes and the crimes were committed before the revised language was adopted. The court reversed this decision and said that the law could be applied retrospectively.

The language was changed in 2004 in SB1122. The previous language said, “Violation of, or assisting or enabling any other person to violate, any provision of sections 374.700 to 374.775 or of any lawful rule or regulation promulgated pursuant to sections 374.700 to 374.775." The language was expanded from violation of the bail bond statutes to violation of the “laws of this state.”

Most decisions and debate regarding the discipline of bail bond agents has surrounded the 15-year felony clause and how to apply the clause. However, with these recent decisions, the justification appears to be evolving into license holders’ compliance with any laws, obligations, rules, regulations, and orders of the state.

Also of note, whether a license is refused or disciplinary action is taken, the discretion to take action resides with the DIFP. The department is not required to take action against any license holder for violating the provisions of the licensing laws. The disciplinary section and the license refusal section of the bail bond statutes both use the word "may" when referring to DIFP and its authority over licensees.

Monday, April 16, 2007

License Refused for Failing to Pay Taxes

The Department of Insurance has refused to renew the bail bond license of Christian Lentz of Lee’s Summit for failing to pay Missouri income taxes. I spoke with the department spokesperson, who told me that the DIFP had authority for such action under the following statutes:

RSMO 374.750. The department may refuse to issue or renew any license required pursuant to sections 374.700 to 374.775 for any one or any combination of causes stated in section 374.755. The department shall notify the applicant in writing of the reasons for the refusal and shall advise the applicant of his right to file a complaint with the administrative hearing commission as provided by chapter 621, RSMo.

The cause cited by the DIFP is:
RSMO 374.755.1(6) Violation of any provision of or any obligation imposed by the laws of this state, department of insurance rules and regulations, or aiding or abetting other persons to violate such laws, orders, rules or regulations, or subpoenas;

The DIFP’s position is that by not paying his state taxes, Lentz is in “violation of any provision of or any obligation imposed by the laws of this state.”

Friday, April 13, 2007

Outstanding Judgments & Disciplinary List-4/6/2007

The bail bond unsatisfied judgment list is compiled by the DIFP and the Missouri Office of State Courts Administrator. The following companies/general agents appear on the current list distributed 4/6/2007. The list is distributed to local courts via electronic means.

1) Billy Corn Sr., general agent, Cassville, MO-1 judgment, $500
2) L&C Investment Group, president-Douglas Cheatham of Blue Springs, MO-1 judgment, $100,000
3) C&M Bonding, president-Cody Ice of Houston, MO-5 judgments, $114,500

The following agents/companies appear in the section listing pending disciplinary action: A Way Out Investments, Gerald Franks, Ozell Scott, 1A Bail Agency LLC, A Aarons Bonding, A&J Bail Bonding LLC, MCB Investment Corp, and David McKinney

Note: The judgment list does not provide the address of the company or corporate officers. I added the address, corporate presidents, and corporate status using the Missouri Secretary of State business database as well as the DIFP licensing information.

Thursday, April 12, 2007

Tennessee Bill to Allow Felons Defeated

Our neighbor to the east, Tennessee, seems to have a very different view on felons in the bail bond business than our state bail association and some legislators. WKRN reports that a bill was before the Tennessee House Judiciary Committee which would have allowed convicted felons to become licensed as bail bond agents. Unlike the Missouri Professional Bail Bond Association who writes legislation allowing felons, the Tennessee Association of Bail Agents spoke AGAINST the bill. The Tennessee bail association lobbyist told the committee that allowing felons would hurt the credibility of the industry with both the public and law enforcement. Also speaking against the bill was a former sheriff, who said that it would make him uncomfortable to have convicted felons in secure areas of the jail writing bonds. The bill was defeated in committee.

Lincoln County Bondsman Arrested

General agent James Darby was arrested yesterday in Lincoln County, MO, on charges of possession of a controlled substance. Darby was arrested by Troy Police Department and released on $10,000 cash only bond. Darby has been a general agent since 2002 and has eight agents working under his authority. Darby is a member of the bail bond association.

Monday, April 9, 2007

Ruling: Cause to Discipline for Felony Convictions

The Administrative Hearing Commission (AHC) has entered a decision on a case involving the discipline of a bail bond license holder who was convicted of felony offenses. In its order, the commission said that Ozell Scott is subject to discipline for entering an alford plea to resisting arrest and pleading guilty to unlawful use a weapon in March 2006. Scott was sentenced to three years in prison, but execution of the sentence was suspended and he was placed on probation for three years. The commission noted that for the purposes of licensing, an alford plea is considered a guilty plea. Scott has until April 22nd, to appeal the AHC decision. Unless the decision is appealed, the Department of Insurance (DIFP) will convene a disciplinary hearing and determine what form of discipline to give Scott. According to DIFP licensing records, Scott works under the authority of Darrell Tullock.

In other news regarding the AHC:
The hearing DIFP vs. C&M Bonding and Cody Ice has been continued to 6/21/2007.
The hearing DIFP vs Virgil Lee Jackson has been continued to 9/10/2007.

Friday, April 6, 2007

Court Reverses Licensing Decision

The Cole County Circuit Court has reversed a bail bond licensing decision of the Administrative Hearing Commission (AHC). The AHC had ruled that the Department of Insurance (DIFP) had failed to make its case in complaint regarding the discipline of former bondsman Gerald Cummings. Cummings was charged in 2002 (and then convicted in 2005) of possession of a controlled substance and unlawful use of a weapon. He was given a suspended imposition of sentence and given five years probation.

The AHC ruled that final adjudication did not include a suspended imposition of sentence and certified court documents submitted by the DIFP did not state whether Cummings entered “a plea of guilty or nolo contendere” but just said he was “found guilty.” The AHC also ruled that Cummings criminal offenses were committed prior to the 2005 bail bond law and applied the 2002 version of the statute. The AHC said in its decision, “While the January 1, 2005, version of the statute expanded the scope of violations to those against obligations imposed ‘by the laws of this state,' the version effective in 2002 restricted the violations to the provisions of ‘sections 374.700 to 374.775.’ According to the court records, Cummings violated the criminal laws 195.202 and 571.030.1(1), RSMo 2000. Those sections are not within 374.700 to 374.775.”

The DIFP then asked for a judicial review of the AHC decision. The court reversed the AHC decision. In the court’s ruling it stated that applying the law retrospectively is permissible if it is applied procedurally and does not impair any substantive rights vested by the prior statute. The court further said that Missouri courts have held that professional licensing does not confer substantive rights and that licensing is a privilege granted by the state. Finally, the ruling stated that protecting the public health and welfare is the primary purpose of professional licensing statutes and a person who has statutorily been deemed a menace or threat to the public is no less a threat or menace because some, if not all, of his convictions occurred before the effective date of a given statute.

The order gives the DIFP permission to discipline Cummings whose license expired in 2005.

Tuesday, April 3, 2007

Another Bail Bill Introduced in MO House

Will the fourth time be the charm?

The bail association language has been introduced in yet another bill. HB1165 was introduced by Representative Brian Yates last week. The bill has been second read is waiting to assigned to committee. The bill is identical to the bail language in HB586, (also sponsored by Yates) SB153, and similar to SB459.

Here is quick run-down of the provisions of HB1165:

●Restricts the ability of a bail bond agent from switching companies.
●Inconsistencies with the use of ‘shall’ and ‘may’ causing contradictions and confusion.
●Doubles the amount of CD, to $20,000.00, that a general agent deposits, in order for a general agent to receive a license.
●Allows a wide variety of felons to hold a bail bond license.
●Requires a photographic identification without disclosing the cost or the method that will be required to obtain the photo.

For a more detailed discussion on the provisions of this bill, see the prior posts on other bills. All of the bail bond language is the same.

Here’s the current status on other bail bond bills:

HB586-In committee, no hearing scheduled
SB153-On the Senate calendar for a vote before the full Senate
SB459-In committee, no hearing scheduled

Monday, April 2, 2007

SB153 on Senate Calendar

Senate Bill 153 has been reported out of committee and is now on the Senate calendar for perfection. The bill could be taken up for a vote at any time. If you are concerned that these provisions could adversely affect your bail bond business, please contact your senator by letter, fax, or phone call. Here is a link to find your senator. Need help composing a letter to your senator? Download this sample letter in Word format.

Here are some of the provisions of the senate committee substitute which could affect your business and the section number in the bill:

●The Department of Insurance (DIFP) retains discretion over denial of a license even if the Administrative Hearing Commission over-rules the department’s decision. Bill Section 374.051
●A person is forced to give self-incriminating testimony in any action or proceeding of the Director of Insurance. If the person refuses to incriminate himself/herself, the department can compel this testimony by filing an action in the circuit court. The person can then prosecuted for perjury or contempt for failing to give testimony which is self-incriminating.
Bill section 374.210.4
●Gives power to the director to conduct his own hearings for the suspension or revocation of a license. In lieu of filing a complaint with the Administrative Hearing Commission, the director can hold his own hearing, and may order discipline or enter into a consent order. This removes the independent third-party to hear issues related to a person’s right to earn a living. The DIFP will conduct the investigation, file the complaint, and be the hearing body for the complaint.
Bill section 374-755.2
●Bill continues to license felons in the bail business. This has been an ongoing problem with felons in the bail bond business being profiled in the Columbia Missourian, St. Louis Post-Dispatch, Joplin Globe, and the Columbia Tribune. Keeps the controversial 15-year felony clause passed in 2004, but adds that a license MAY be refused, revoked, etc. if an applicant has been convicted of: any dangerous felony defined by section 556.061, RSMo, any felony crime of assault, any felony crime that results in the serious physical injury or death of another person, any felony crime against the administration of justice, or any felony of which deceit or fraud is an element of the offense. Examples of felonies not included in this language would be manufacturing of meth, child pornography, drug sales, felons with firearms, and statutory sodomy of a 13 year-old.
Bill Section 374.755.1(2-3)
●The bill doubles the required certificate of deposit to become a general agent from $10,000 to $20,000 and then the DIFP can require the CD be increased to $40,000 based upon
regulation. This bill is unfair to small, family-owned companies who will be required to make the same cash deposit as a corporation employing 50 agents. Bill section 374.715.2
●The DIFP must notify the general agent of a notice of forfeiture within 48 hours of receiving notice from the courts. The language is ambiguous and does not specify if this notice is a bond forfeiture hearing or an unsatisfied judgment. Most hearings are set aside and do not result in judgment. This would be an onerous task for local courts, if this language were interpreted to include every ‘notice of forfeiture.’ Bill Section 374.707
●The Department shall include a photograph on the bail bond license. The bill does not say how this picture will be obtained or what the additional licensing cost might be.
Bill Section 374.710.1
●An agent cannot write bonds without noticing the department of the name, address and telephone number for each employer he/she works or operates as an independent contractor. The law already requires a signed affidavit stating the agent does not work for a political subdivision of the State of Missouri and the signature of an agent’s general agent. This is more ambiguous language which does not distinguish between all employers or bail bond related employment.
Bill section 374.710.5
●If a bail bond agent goes to work for a new company he/she SHALL file an affidavit with the DIFP and the new general agent, swearing “that to the best of their knowledge, there are no outstanding premiums owed at the time of the appointment.” In order to go to work for a new company, you SHALL file an affidavit saying there are no outstanding premiums owed. I think there is very little possibility an agent could swear under oath that no one owes money to the agent and/or the company. Secondly, the section does not tell to whom the money might be owed. Premium owed the agent? The former company? The new company? All of the above? Additionally, the section does not differentiate between uncollected or uncollectible premium in the form of credit extended to clients and collected premium not turned into the company. The next sentence of this section states that IF premiums are owed (this should never happen because the previous part of this section states that you shall file an affidavit saying no one owes money) and the agent does not satisfy this obligation, the former general agent MAY file notice, under oath, with supporting documentation, stating that the bail bond agent has failed to satisfy his/her obligation. Then upon receipt of this notification, the new general agent MAY cancel the authority of his/her new agent. IF the new general agent cancels the authority of the new agent, the cancellation SHALL remain in effect until all of the alleged premiums due the former general agent are paid in full. That is a lot of confusing language. This section is riddled with confusing language which shifts between the permissive word--may and mandatory word--shall.
Misappropriation of premium is already against the law. There are already remedies for a company who alleges an agent misappropriated funds. A company can file a complaint with the DIFP, file a complaint with the local prosecutor, or sue the agent for the amount due. Bill Section 374.710.6
●The bill codifies violations by levels and refers to a level two violation for violating section 374.761(b). The proplem is there is no section 374.761b. Bill section 374.780.1

Sunday, April 1, 2007

AHC to Hear Bail Bond Licensing Issues

The DIFP has filed an amended complaint against C&M Bonding, Inc., and its president, Cody Ice. The complaint is scheduled to be heard by the Administrative Hearing Commission (AHC) on April 18th. The amended complaint alleges that C&M failed to satisfy $114,000 in bail bond judgments dated July 26, 2006. The judgments were entered in Texas County, Missouri, the home of C&M Bonding, Inc.

In other news, the AHC will hear two complaints tomorrow regarding the bail bond industry.

DIFP vs. Donald Christian-a complaint regarding Christian's felony conviction in 1998.
Greg Billingsley vs. DIFP- Billingsley appealed the DIFP decision to deny his bail bond license. Original post here. DIFP license refusal here.