Last spring a Roseburg, Oregon woman, Brenda Gay Hartman, now known as Brenda Gay Burum, lost her Oregon license as a "resident insurance producer" because she was convicted in 2006 of a bankruptcy crime. Here is the rest of the story.
The Initial Chapter 7 Case
While living in Klamath Falls Hartman filed a voluntary Chapter 7 petition in June of 2000, the trustee filed a no-asset report that August, and about $72,000 of her debts were discharged in October and the case was closed.
The Case Reopened, and Criminal Conviction
But then in 2002, on motion of the U.S. Trustee's office, the case was reopened, two adversary proceedings were initiated by the Chapter 7 trustee against transferees of assets transferred by the debtor, and a turnover order was entered against Hartman. She was charged in federal court in Eugene, Oregon with committing the crime of bankruptcy fraud under 18 U.S.C. §157, and in June 2006 she pled guilty. She had intentionally omitted from her bankruptcy documents information on assets that she owned or controlled, as well as assets that she transferred, she understated her income, falsely stated expenses, and failed to disclose a debt and payments on that debt. She falsely testified under oath at the regular Meeting of Creditors in 2002 that her petition and schedules were accurate, and then after her case was reopened in 2002 she again made false statements under oath and produced false documents about a vehicle transfer.
Oregon Insurance License Statutes and Rules
Under Oregon law a licensed insurance producer must provide the Director of the state's Department of Consumer and Business Services (DCBS) with notice of any criminal prosecution against him or her and with copies of the criminal complaint and other relevant documents, all within 30 days of the criminal pretrail hearing. ORS 744.089(2). Hartman failed to provide this notice and the documents voluntarily, and more than a year later when contacted by the DCBS, she failed to provide all of the required documents.
ORS 731.428(4) requires the DCBS Director to "revoke, suspend, or refuse to renew" the insurance license of a person convicted "of a felony involving dishonesty or a breach of trust." OAR 836-071-0321(1) defines a felony involving dishonesty as “includ[ing] but not limited to any offense constituting or involving theft, burglary, perjury, bribery, forgery, counterfeiting, a false or misleading oral or written statement, deception, fraud, a scheme or artifice to deceive or defraud, a material misrepresentation or the failure to disclose material facts, or any felony the commission of which is determined by the Director to have involved some element of deceit, misrepresentation, untruthfulness or falsification.”
The Administrative Proceeding
When the DCBS gave notice to Hartman of a proposed action about her license last December (2007), she requested an administrative hearing. A hearing was scheduled and Hartman was given notice. One business day before the scheduled hearing the DCBS received a faxed letter from Hartman withdrawing her request for a hearing, so one was not held. Instead the administrative order was promulgated on the basis of the case record for the purpose of making a prima facie determination. Based on the evidence in the record, the Director found "that the record of this proceeding to date . . . proves a prima facie case." Hartman's insurance license was revoked as of the date of the order.
Additional Administrative Options?
ORS 731.428(4) provides the option, as quoted above, to suspend a license, not only to revoke it. But I could not find reference, in either the ORS or the OAR about this suspension option, such as the appropriate lengths or terms of suspensions.
In addition, although the Final Order of the DCBS Director does not make any reference to this, ORS 731.428(4) continues with the sentence: "The person may apply to the director for a written consent as provided in subsection (1) of this section." This subsection in turn refers to applying "for a written consent to engage or participate in the business of insurance." So there is an procedure for getting an exception to the prohibition against these kinds of felony convictions. The procedures for this "written consent" are laid out in detail, including a list of criteria for the Director to use in making these determinations, in OAR 836-071-0323 through 836-071-0346. Query: could Hartman have retained her license had she worked hard to meet the indicated criteria? Note that she did not get her license until 2003, and the criminal conviction in 2006 pertained to her actions back in 2000 and 2002.
Postscript
Google "Brenda Hartman" and, surprise, you'll find a bit of internet leftover, like the space detritus littering low-Earth orbit, her presumably former business website, which ironically states "I'm licensed in the state of: Oregon." Goes to show, don't believe everything you read on the internet. And to kick a dead horse, isn't her failure to terminate this website a continued misrepresentation to the public?
(Please see my last Litigation Report, dated 12/1/08, about a Ninth Circuit opinion from last year, U. S. v. Milwitt, in which the court overturned a criminal conviction based on the same bankruptcy crime statute, 18 U.S.C. §157. Click on its title: 9th Circuit Overturns B'cy Criminal Conviction of Defendant Pretending to Be Attorney, Who Filed Ch. 13 Cases Without the Knowledge of His "Clients".)
by: Andrew Toth-Fejel
Bankruptcy Litigation Support for Attorneys
Andy@BLSforAttorneys.com
Please note that this writer is not licensed to practice law in Oregon. This means that he is not legally permitted to give any legal advice or provide and legal services. This Bulletin and the entire contents of this website is written only for attorneys. and is not intended for the public. If any non-attorney is reading this, you must consult an attorney about ANYTHING you read here. Nothing in this website is intended to be nor should be read as being legal advice to anyone.
© 2008 Bankruptcy Litigation Support for Attorneys
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