Along with the three revocations described in the Agency Checklists article of June 30, 2020, “Mass. DOI Hearing Officer Revokes Two Producers’ Licenses But Denies The Revocation Of A Third’s,” there were three additional revocations in June. In these three revocation decisions, the Division of Insurance (“Division”) hearing officer, Jean F. Farrington, entered orders and imposed fines on Orders to Show Cause filed by the Division against:
- Nakima K. Johnson, of Philadelphia, Pennsylvania.
- Samantha Jo Owens, of Omaha, Nebraska.
- Saul Suster, of Aventura, Florida.
Fines and Orders on two of the three Orders to Show Cause filed by the Division
In the cases of these three nonresident producer licensees, the hearing officer also entered Orders against them:
- Revoking any licenses, including their nonresident producer licenses issued to the Licensees.
- Ordering the return to the Division any license in their possession, custody, or control.
- Prohibiting the Licensees from directly or indirectly transacting any insurance business or acquiring, in any capacity whatsoever, any insurance business in Massachusetts.
- Ordering the Licensees to comply with the provisions of G. L. c. 175, §166B, and dispose of any interests in Massachusetts as a proprietor, partner, stockholder, officer, or employee of any licensed insurance producer.
The hearing officer also fined Ms. Johnson $500.00, and Ms. Owens $1,250.00. The Orders entered require these fines be paid to the Division within 30 days.
The Division did not request fines against the third producer against whom it filed an Order to Show Cause. As detailed below, any fines levied against Mr. Suster would have been subordinate to a six-million-dollar restitution order entered him against by a federal court in Miami.
All three Licensees defaulted on the Orders to Show Cause filed by the Division against them.
The fact and allegations involved in the Orders to Show Cause that the hearing officer accepted, regarding each of the Licensees, on the Division’s Motions for Summary Decision, were the following:
Nakima K. Johnson
Ms. Johnson became a licensed Massachusetts nonresident insurance producer on October 26, 2011, and her latest renewal of that license was on January 20, 2017. She had her resident insurance producer license issued by the State of Pennsylvania.
Besides her nonresident producer license in Massachusetts, Ms. Johnson had similar licenses in Georgia, South Dakota, and Mississippi.
On January 13, 2017, Ms. Johnson applied to renew her nonresident producer license in Georgia. On her application, she disclosed an arrest in April 2016 and charges for “Simple Assault” and “Harassment-Subject Order to Physical Contact” [violation of a court’s no-contact order] pending against her in the Court of Common Pleas for Delaware County, Pennsylvania
Upon receipt of her renewal application, the Georgia Insurance Division’s licensing unit referred Ms. Johnson’s application to that Division’s legal department.
On February 7, 2017, after a trial before a judge, sitting without a jury, had found her guilty of simple assault, Ms. Johnson was placed on probation for two years with an electronic monitor for the first two months and an order barring direct or indirect contact with the victim of the assault. Also, she was required to perform sixty-four hours of community service and enroll in and complete anger management classes. Her court cost assessment totaled just over $2,000.
Georgia, like Massachusetts, has a law requiring insurance producers to report any criminal proceedings with thirty days to the Insurance Commissioner. On February 28, 2017, legal counsel for the Georgia Division of Insurance requested from Ms. Johnson, “original certified copies of the indictment or accusation, plea, sentence, final disposition, discharge from probation or parole, and order of dismissal (if applicable) for the charges.”
On May 1, 2017, having had no response from Ms. Johnson, the legal officer again requested the documents relating to Ms. Johnson’s criminal charges. Ms. Johnson signed for the letter on May 6, 2017 but did not respond.
On July 20, 2017, Georgia revoked Ms. Johnson’s nonresident producer license based on her failure to comply with the request to provide documentation of her criminal proceedings to the Division of Insurance.
Following the Georgia revocation, the South Dakota and Mississippi Divisions of Insurance revoked Ms. Johnson’s nonresident producer licenses on November 1, 2018, and January 8, 2019, respectively. However, Mississippi based its revocation solely on the fact that Ms. Johnson’s Pennsylvania resident producer license had lapsed in 2018.
On March 28, 2019, the Division of Insurance filed its Order to Show Cause against Ms. Johnson. The Division alleged that her failure to report to the administrative actions by Georgia, South Dakota, and Mississippi violated G.L. c. 175, §162V(a). This statute obligated her to report criminal proceedings and administrative actions in other states to the Commissioner within thirty days.
The Division served the show cause order on Ms. Johnson by certified mail, return receipt requested. The return receipt evidenced that the Order had been received and signed for at Ms. Johnson’s residential address in Philadelphia. Ms. Johnson did not file any response to the Division’s show cause order.
On May 29, 2019, the Division moved for entry of default and filed a Motion for Summary Decision. The hearing officer on June 20, set a hearing on the Motion for a Summary Decision for July 12, 2019.
At the hearing, the hearing officer accepted the documentary evidence from the Division concerning the Georgia, South Dakota, and Mississippi administrative actions as showing violations of G.L. c. 175, § 162V(a)(9)’s requirement for reporting out-of-state administrative actions within thirty days to the Commissioner.
In the first instance, her decision noted that the 2017 Georgia suspension order had resulted from Ms. Johnson’s failure to provide additional information to that state about the criminal matters Ms. Johnson had disclosed on her renewal application.
Ms. Johnson’s Georgia application information disclosing the pending criminal matter had been on a uniform application made contemporaneously with her Massachusetts renewal application, and the hearing officer found that:
“Massachusetts appears to have reviewed that information and determined that it did not prevent renewal of Johnson’s license, while Georgia took a different approach, suspending Johnson’s license until she provided particular records. In these circumstances, I find that the Georgia suspension is not a basis for revoking Johnson’s Massachusetts nonresident license.”
However, in contrast to DOI hearing officer’s decision regarding the Georgia revocation, she found that the orders from South Dakota and Mississippi revoking Ms. Johnson’s insurance producer license in those jurisdictions, supported disciplinary action under§162R (a)(9) for her failure to report them to Massachusetts.
Accordingly, the hearing officer entered the Orders requested by the Division and imposed fines for each failure to report. However, she did not impose the fines requested by the Division.
The Division, consistent with its standard requests in these types of revocation cases, sought for the hearing officer to impose civil penalties of $1,000 per each failure to report. The Division’s argument rested on the terms of G.L. c. 175, § 162R(a)(2) that prohibits “violating any insurance laws.” That statute, § 162R, also lists other violations but generally provides that the commissioner may allow fines for any of the violations equal to those allowed under G.L. c. 176D, §7 (which allows for fines of up to $1,000 for “unfair and deceptive acts committed in the business of insurance”).
The hearing officer denied, as she had done before, the Division’s request. She reasoned that decisions in license revocation proceedings distinguish between affirmative acts of a licensee in Massachusetts, resulting in license revocation and acts by third-parties, e.g., out-of-state insurance commissioners, to revoke or suspend a Massachusetts licensee’s nonresident producer license in that state.
To the hearing officer, in Ms. Johnson’s case, the Division was seeking the higher fines allowed under §162R (a)(9) because other jurisdictions revoked her nonresident licenses. This ground alleged by the Division was entirely based on administrative actions initiated by third parties out-of-state. However, the failure to report within the thirty-days provision that allows for license revocation, G.L. c. 175, §162V(a), does not explicitly designate any fine for non-compliance. Thus, the hearing officer ruled, any fines for violating this reporting statute are limited by the general penalty statute, G.L. c.175, §194, that provides for a maximum $500.00 fine for violations of insurance laws that do not themselves specify any fine or penalty for a violation.
The hearing officer summed up her position on the Division’s request for a higher fine as “I find no reason to expand a specific violation of a reporting statute into a ground for revoking a license and imposing a second fine.”
While denying the Division’s enhanced fines, the hearing officer did impose, in addition to the Orders concerning license revocation, and employment in the Massachusetts insurance industry, fines of $250.00 on Ms. Johnson for failing to report the Mississippi and South Dakota revocations.
Samantha Jo Owens
Ms. Owens was a licensed Massachusetts nonresident insurance producer who Massachusetts first had licensed as a nonresident producer on July 28, 2015.
On or about April 12, 2018, Mutual of Omaha terminated Ms. Owens’s employment as a sales consultant in the sales department of the company for cause. After an investigation, Mutual of Omaha had determined that Ms. Owens’s made false or fraudulent statements on at least eleven insurance applications she taken for the company in the course of her employment.
Mutual of Omaha submitted copies of the false and fraudulent insurance applications along with voice recordings retrieved by the company relating to the sales transactions between Ms. Owens and the insurance applicants to the Nebraska Department of Insurance. The documents and the recordings evidenced that Ms. Owens had entered the fraudulent transactions on Mutual of Omaha’s books to increase her policy production and compensation.
Ms. Owens entered a consent order admitting Mutual of Omaha’s allegations, and revoking her resident Nebraska insurance producer license effective December 17, 2018.
Based on her home state’s revocation of her producer license, three other states revoked her nonresident producer licenses:
- Washington, on February 20, 2019.
- Idaho, on March 4, 2019; and
- Oregon, on April 15, 2019.
On August 16, 2019, the Division of Insurance filed an Order to Show Cause against Ms. Owens seeking revocation of Ms. Owens’s Massachusetts producer license alleging she was subject to discipline under the provisions of M.G.L. c.175, §162R (a)(9) (“failing to report within thirty days administrative proceedings in other states”). The Division’s show cause order alleged that Ms. Owens failed to report to the Division administrative actions revoking the producer licenses issued to her by her home state, Nebraska, and the states of Washington, Oregon, and Idaho.
After Ms. Owens did not respond to the show cause order, the Division moved, on January 17, 2020, for the entry of a default and the allowance of a motion for a summary decision revoking Ms. Owens’s nonresident producer license and entering the Division’ requested Orders. The hearing officer scheduled a hearing on the summary decision motion for February 4, 2020.
After the hearing, based on the Division’s Motion for Summary Decision, the hearing officer found that Ms. Owens’s failure to report the Nebraska, Washington, Oregon, and Idaho proceedings violated the Massachusetts law requiring the report of final administrative actions against a licensee within thirty days. G. L. c. 175, § 162V(a).
The hearing officer found that Ms. Owens’s failure to report the Nebraska revocation effectively enabled her to retain her status as a nonresident Massachusetts licensed producer after she was no longer eligible to hold that license. For that violation, the DOI hearing officer fined her $500.00 for Ms. Owens’s failure to timely report the revocation of her resident producer license in Nebraska. However, the hearing officer found the follow-on Washington, Idaho and Oregon revocations did not have a similar effect on her status as a Massachusetts licensee, and, therefore, a lesser fines of $250.00 was imposed for each of the failures to report the Washington, Idaho and Oregon administrative actions within the thirty-days allowed by Massachusetts law.
The hearing officer’s final Order was that: “Samantha Jo Owens shall pay a fine of One thousand two hundred fifty dollars ($1,250) to the Division within 30 days of the entry of this order.”
Massachusetts licensed Saul Suster as a nonresident insurance producer on July 22, 2008. Mr. Suster had his resident producer license issued by the state of Florida.
On March 19, 2018, Mr. Suster (66) pled guilty to one count of conspiracy to commit wire and mail fraud before the United States District Court for the Southern District of Florida.
In his guilty plea, Mr. Suster admitted that between 2010 and 2017, although not licensed to sell securities, he solicited investors from “phone rooms” to buy “penny stocks” in companies controlled by a co-conspirator. Mr. Suster’s sales pitches would include falsely telling potential investors that the companies were profitable, the investments were safe, and that he had personally invested in these companies’ stock and had made significant profits.
Mr. Suster and his co-conspirators also told the investors that the companies would use their investments as working capital and to pay sales and marketing expenses, Finally, they represented to the investors that the stocks they purchased would not have any commissions or fees paid to Mr. Suster or his co-conspirators. In contrast to their representations, Mr. Suster and his co-conspirators used the funds to start new ventures, to pay investors “dividends, and to pay themselves “commissions and fees.”
By the time a federal investigation ended their phone room operation, Mr. Suster and his co-conspirators had defrauded one-hundred and fifty (150) individuals of some $15,000,000 dollars.
Mr. Suster, for his part in the conspiracy, received a sentence of thirty months to serve in federal prison. Also, the federal judge found Mr. Suster jointly liable with his two co-conspirators to pay S6,857,713.93 to the investors they defrauded.
While Mr. Suster’s charges were pending in the Federal District Court, the Department of Financial Regulation in Florida suspended his resident producer license. As soon as Florida took that action, Mr. Suster became ineligible to hold a Massachusetts nonresident producer license. Under G.L. c. 175, § 162V(a), Mr. Suster had thirty days to report to the Massachusetts Division of Insurance, the suspension of his Florida license. Considering that at just about time he was heading to a federal prison, Mr. Suster unsurprisingly overlooked this administrative detail.
Once his Florida license suspension took effect, five other insurance departments acted to terminate Mr. Suster’s nonresident producer authority in their states:
- The Mississippi Insurance Department revoked Mr. Suster’s Mississippi producer license on May 3, 2018.
- The State of Washington Insurance Commissioner revoked Mr. Suster’s nonresident producer license effective June 15, 2018,
- Vermont revoked Mr. Suster’s producer license effective July 10, 2018.
- California revoked Mr. Suster’s nonresident producer license on July 10, 2018; and,
- The South Dakota Division of Insurance revoked Mr. Suster’s producer license on July 12, 2018,
On March 1, 2019, the Division of Insurance filed its Order to Show Cause against Mr. Suster. As of that date, he was still validly licensed in Massachusetts as a nonresident insurance producer.
The Order to Show Cause alleged that Mr. Suster violated G. L. c. 175, §162V(a)(6) and (a)(9) by failing timely to report the administrative actions against his licenses in Florida, California, Mississippi, South Dakota, Vermont, and Washington. The subsections of § 162V alleged in the show cause order obligated Mr. Suster to report these administrative actions to the Division within 30 days. Based on this violation, the Division sought the revocation of Mr. Suster’s Massachusetts producer license by the commissioner under the provisions of G. L. c. 175, §162R (a)(2) and (a)(9).
While the Division proposed orders that, among other things, require him to dispose of any insurance-related interests in Massachusetts and prohibit him from conducting any insurance business in the Commonwealth, the Division did not seek the imposition of any fines.
The Division served Mr. Suster with a copy of the Order to Show Cause by mailing it certified mail return receipt requested at this home and office addresses listed on the DOI’s records. The Post Office returned all the mailings with the stamp: “Return to sender-unable to forward.”
The hearing officer found that this notice procedure satisfied Massachusetts law. While the more appropriate address based on Mr. Suster’s thirty-month prison sentence in 2018, might have had his name “c/o” the United States Bureau of Prisons, there always was no likelihood Mr. Suster would respond to any notice for any Division of insurance under his circumstances
On June 10, 2019, the Division moved for entry of default and filed a Motion for Summary Decision. The hearing officer set a hearing on the Motion for a Summary Decision for July 12, 2019.
At the hearing, the hearing officer accepted the documentary evidence from the Division concerning Mr. Suster’s federal conviction and the state administrative actions against his resident and nonresident producer licenses by Florida, California, Mississippi, South Dakota, Vermont, and Washington.
Based on the undisputed evidence, the hearing officer found that Mr. Suster Massachusetts license should be revoked “as a result of the suspension of his Florida license and the revocation of his license in Mississippi, the State of Washington, Vermont, California, and South Dakota…pursuant to §162R (a)(9).” (“having an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory”).
Also, the hearing officer found that Mr. Suster’s guilty plea to a felony in the United States District Court for the Southern District of Florida supported the revocation of his license “for the reasons permitted in §162R (a)(6).” (“having been convicted of a felony”).
As mentioned earlier, the Division did not request the imposition of any fines, presumably since the Federal Court’s six-million-dollar restitution order against Mr. Suster made any such fines entirely superfluous.