Mr. Surette applied for a Massachusetts individual insurance producer license with the Division of Insurance
J. Edward Surette, III had been an attorney licensed to practice law in Massachusetts until July 2010, when a Supreme Judicial Court Justice entered an order indefinitely suspending Mr. Surette from practicing law in Massachusetts. While this court order was still in effect, Mr. Surette decided to submit an application for an individual insurance producer’s license with the Division of Insurance.
On October 10, 2013 the Division of Insurance issued a decision upholding the denial of J. Edward Surette, III from obtaining a license as an insurance producer. In affirming the Division’s Motion for Summary Decision affirming the Director’s decision, the DOI cited that Mr. Surette’s misconduct as an attorney resulting in his indefinite suspension from the practice of law, disqualified him from obtaining an insurance producers license on an analogous basis pursuant to M.G.L. c. 175 sec. 162R (a)(8).(“… demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in the commonwealth”).
Mr. Surette’s dealings with the Division of Insurance
Mr. Surette submitted a producer license application to the Division of Insurance. Attached to that letter was a statement from Mr. Surette in which he acknowledge that he had been suspended from the practice of law.
In response to that application, on June 7, 2013, the Division of Insurance issued a letter denying his application for a Massachusetts individual insurance producer license. Undeterred, Mr. Surette then requested a hearing on the Director of Producer Licensing decision. On June 27, 2013 the DOI was required to file an answer and an order scheduling a prehearing conference in response to Mr. Surette’s request.
The DOI filed its answer to Mr. Surette’s Notice Claim which included a summary of the facts relating to a Supreme Judicial Court Judge 2010 order indefinitely suspending Mr. Surette’s indefinite suspension from practicing law in Massachusetts. On July 23, 2013, the Division of Insurance held a prehearing conference in which Mr. Surette, representing himself pro se, did not dispute the facts the DOI presented concerning his suspension from the practice of law as the grounds for the Director’s decision to deny Surette’s application. Since it was determined that no dispute of facts existed, the parties both agreed no evidentiary hearing need take place and that the matter could be resolved by a summary decision.
As such, the hearing officer requested that each party submit a memorandum of law on the issues using documents the Division had submitted in its answer. Under the terms outlined at the prehearing conference, Mr. Surette had until August 6, 2013 to file his memorandum and the DOI had until August 23, 2013.
Mr. Surette did not file his memorandum by August 6, 2013 nor did he request a continuance to file it at a later date. The Division moved to have the matter dismissed or summary decision be found in its favor. On the same day as the Decisions request, August 20, 2013, the Division hearing officer gave Surette until September 3rd to file a written response to the Division’s motion. Mr. Surette did not do so nor did he request to continue the response date.
Division rules that Mr. Surette’s suspension from the practice of law disqualifies him from being issued an insurance producer license
Since January 2003, Mr. Surette had been the trustee of a client’s trust. By December 2007, the trust was worth a little over $135,000.00. Between 2008 and 2009, Attorney Surette used $71,500.00 of the trust for his personal and business purposes completely unrelated to the purpose of the trust. By the fall of 2009, the beneficiary of the trust began to question the handling of the trust and eventually retained a lawyer who tried to obtain an accounting from Attorney Surette. Unable to secure an accounting of the trust’s activities, the attorney filed a civil action against Attorney Surette in family court and sought a temporary restraining order against further dissipation of the trust.
From December 2009 until March 31, 2010, Attorney Surette failed to respond to any orders of the court resulting in the court issuing a capias for his arrest. Aware of the outstanding capias, Attorney Surette appeared and admitted to the court that he had spent $71,500.00 of the trust’s money but said that he was working on a plan to make reimbursement.
After another month with no reimbursement made, the court found him in contempt and ordered his incarceration. Four days later, Attorney Surette made restitution of the $71,500.00 and the court purged him of contempt.
This matter and Surette’s actions with respect to the handling of this trust, however, was brought before the Supreme Judicial Court in July 2010 resulting in his indefinite suspension from the practice of law.
On the application he filed with the Division of Insurance, Mr. Surette declared that he had been under indefinite suspension from the practice of law but stated in an addendum to his application that “he never attempted to conceal the amount and that the amounts were paid back in full”.
The Director of Producer Licensing denied his license application on the basis that he was an unsuitable person to be approved as an insurance producer due to his conversion of funds from a client. In its decision, the DOI states that,
“Evidence that a licensed insurance broker or producer has converted funds entrusted to that license has consistently resulted in revocation of the license. Pursuant to Chapter 175 sec. 162R (a), such evidence is an equally sound basis for denying a license application.”
The hearing officer held that the evidence presented by the division in denying the license that Mr. Surette had a history of having converted the money even though restitution had been ultimately made after he was incarcerated was sufficient to deny the application and upheld the division’s decision not to issue a license.