University of Tennessee, Knoxville Trace: Tennessee Research and Creative Exchange Tennessee Department of State, Opinions from the Administrative Procedures Division Law November 2012 Tennessee Insurance Division, Petitioner, vs. John Porter Franklin, Jr., Respondent Follow this and additional works at: http://trace.tennessee.edu/utk_lawopinions This Initial Order by the Administrative Judges of the Administrative Procedures Division, Tennessee Department of State, is a public document made available by the College of Law Library, and the Tennessee Department of State, Administrative Procedures Division. For more information about this public document, please contact administrative.procedures@tn.gov
BEFORE THE COMMISSIONER OF THE TENNESSEE DEPARTMENT OF COMMERCE AND INSURANCE IN THE MATTER OF: Tennessee Insurance Division, Petitioner, DOCKET NO: 12.01-116917J v. John Porter Franklin, Jr., Respondent. INITIAL ORDER This matter came to be heard on November 6, 2012, in Nashville, Tennessee, before Steve R. Darnell, Administrative Law Judge, assigned by the Secretary of State, Administrative Procedures Division, and sitting for the Commissioner of the Tennessee Department of Commerce and Insurance. Attorney Lauren V. Dantche represented the Department of Commerce and Insurance (Department), and Petitioner was represented by attorney J. Scott McDearman. The parties submitted proposed findings of fact and conclusions of law. The record closed on December 26, 2012, when Respondent filed his post-hearing materials. ISSUES FOR DETERMINATION 1. Did the Department show, by a preponderance of the evidence, that Respondent was convicted of a felony involving dishonesty? 2. Is revocation of Respondent s insurance license and assessment of a civil penalty of $1,000 and cost the proper disposition of this case?
SUMMARY OF DETERMINATION It is DETERMINED that the Department showed, by preponderance of the evidence, that Respondent was convicted of a felony involving dishonesty. Revocation of Respondent s license, assessment of a civil penalty of $1,000 and cost are appropriate under the circumstances. However, Respondent allowed his license to expire on January 12, 2012, rendering the issue of license revocation moot. This determination is made upon the following findings of fact and conclusion of law: FINDINGS OF FACT 1. Respondent is a Tennessee resident residing in Chattanooga, Tennessee. Respondent has been licensed by the Department to sell insurance in Tennessee since 1985. 2. Respondent has been licensed by the State of Tennessee as a funeral director and embalmer since 1984. His insurance business has been limited to the sale of burial policies in connection with his work as a funeral director and embalmer. 3. Respondent is a graduate of Hampton University having a Bachelor of Science degree. He also completed a two-year course of study at Mid-American College s mortuary school. Following graduation, Respondent served a one-year apprenticeship at his family s funeral home and obtained his license as a funeral director and embalmer. 4. Respondent jointly owns the John P. Franklin Funeral Home with his sister and father where he currently serves as vice president. 5. Respondent has been active in civic and governmental affairs in Chattanooga and in the State of Tennessee. He has served as Chairman of the Chattanooga City Council, as President of the State Board of Funeral Directors, as President of the Tennessee Municipal League, as a 2
member of the Board of Directors of the National League of Cities, and as a member of the Tennessee Open Records Commission. 6. Respondent has regularly handled money from clients, both in connection with his funeral home and his insurance business, and has never had a complaint of a monetary discrepancy. 7. Respondent is the sole employee of John P. Franklin Funeral Home to hold an insurance license. 8. Respondent never had any disciplinary action taken against him by any state or federal regulatory agency other than those described below. 9. Respondent was implicated in a conspiracy to claim $69,500 seized by law enforcement as proceeds from drug trafficking. There is no allegation Respondent was involved in the sale of a controlled substances. Allegedly, after the money was seized, Respondent assisted a thirdparty in having a document notarized indicating the seized money was proceeds from a loan. The third-party intended to use this document to claim ownership of the sized money. 10. In May 2008, Respondent was indicted by a federal grand jury on one (1) count of conspiracy to launder money derived from illicit activity, one (1) count of conspiracy to obstruct justice, and one (1) count of making a materially false, fictitious and fraudulent statement in a matter within the jurisdiction of the United States government. 11. In May 2009, Respondent pled guilty in the United States District Court for the Eastern District of Tennessee to one (1) count of conspiracy to obstruct justice, a felony, charged under count four (4) of the indictment. 12. Respondent pled guilty to a felony involving dishonesty. Respondent was convicted of a felony involving dishonesty. 3
13. The remaining counts of the indictment were dismissed. Respondent received a sentence of three (3) years probation and a $100 fine. 14. After his guilty plea, Respondent entered into a Consent Order with the Board of Funeral Directors and Embalmers placing his funeral director s license on three years probation, concurrent with his federal probation, and fining him $750. Respondent paid the civil penalty and completed his probationary term in June of 2012. 15. Respondent allowed his insurance license to lapse on February 12, 2012, believing that it would not be renewed pending the investigation s conclusion. Respondent is not currently licensed by the Department to sell insurance. 16. The Department filed this action in May 2012, seeking revocation of Respondent s license, assessment of a civil penalty of $1,000, and that Respondent be required to pay the Department s cost of prosecuting this case. 17. The Department has shown, by a preponderance of the evidence, that Respondent was convicted of a felony involving dishonesty. Respondent s conviction of a felony involving dishonesty supports the revocation of his insurance license, assessment of a $1,000 civil penalty, and requirement that he pay the Department s cost of prosecuting this case. 18. Respondent allowed his license to expire on February 12, 2012, rendering the revocation of his license moot. CONCLUSIONS OF LAW 1. The Department has the burden to introduce evidence that would, by a preponderance of the evidence, prove the issues should be resolved in its favor. Rule 1360-4-1-.02. 4
2. Tenn. Code Ann. 56-6-112(a) authorizes the Commissioner to place on probation, suspend, revoke or refuse to issue or renew a license where the license holder has been convicted of a felony. 3. Tenn. Code Ann. 56-6-112(g)(2) allows the Commissioner to assess a penalty of $1,000 per violation of Tenn. Code Ann. 56-6-112(a). Tenn. Code Ann. 56-6-112(h) requires the Commissioner to consider the following factors in determining an appropriate penalty: (i) (ii) (iii) (iv) (v) (vi) (vii) whether the person could reasonably have interpreted such person s actions to be in compliance with the obligations required by statute, rule or order; whether the amount imposed will be a substantial economic deterrent to the violator; the circumstance leading to the violation; the severity of the violation and the risk of harm to the public; the economic benefits gains by the violator as a result of non-compliance; the interest of the public; and the person s efforts to cure the violation. 4. Pursuant to 18 U.S.C. 1033(e)(2), Federal law requires that a person convicted of a felony involving dishonesty or breach of trust may engage in the business of insurance or participate in such business only if such person has the written consent of any insurance regulatory official authorized to regulate the insuror. 5. Tenn. Code Ann. 56-53-106(b)(1) prohibits a person convicted of a felony involving dishonesty or breach of trust to participate in the business of insurance unless a waiver is granted by the Commissioner of Insurance. 6. Tenn. Code Ann. 4-5-307 provides as follows: a. In a contested case, all parties shall be afforded an opportunity for hearing after reasonable notice. b. In all proceedings the notice shall include: (1) a statement of the time, place, nature of the hearing, and the right to be represented by counsel; (2) a statement of the legal authority and jurisdiction under which the hearing is to be held, including a reference to the particular sections of the statutes and rules involved; and (3) a short and plain statement of the matters 5
asserted. If the agency or other party is unable to state the matters in detail at the time the notice is served, the initial notice may be limited a statement of the issues involved. Thereafter, upon timely, written application a more definite and detailed statement shall be furnished ten (10) days prior to the time set for the hearing. IT IS CONCLUDED that the Department has shown, by a preponderance of the evidence, that Respondent was convicted of a felony involving dishonesty. Respondent s insurance license should be revoked, a $1,000 civil penalty assessed, and Respondent required to pay the Department s cost of prosecuting this case. Respondent allowed his license to expire on January 12, 2012, rendering his license revocation moot. Pursuant to state and federal law, Respondent must gain the written waiver of the Commission before he can be re-licensed to sell insurance. Respondent can reapply for licensure and request the Commissioner s written waiver pursuant to the administrative process established by the Department. IT IS THEREFORE ORDERED that Petitioner s license to sell insurance is revoked, he is assessed a civil penalty of $1,000, and is to pay the Department s cost of prosecuting this case. This Order entered and effective this 4 day of March, 2013 Steve R. Darnell Administrative Law Judge 6
Filed in the Administrative Procedures Division, Office of the Secretary of State, this 4 day of March, 2013 Thomas G. Stovall, Director Administrative Procedures Division 7