7 TAC §25.31
The Texas Department of Banking (the department) proposes
new §25.31, concerning the effect that a criminal conviction of certain
officials of an applicant for or holder of a permit to sell or accept money
for prepaid funeral benefits may have on the application or permit.
As required by Texas Civil Statutes, Article 6252-13d, the section defines
the crimes that are considered to be directly related to the duties and responsibilities
of selling and managing prepaid funeral benefits contracts, the officials
whose conviction of such a crime could adversely affect a proposed or existing
permit, and specifies the administrative and judicial review available upon
the denial of an application for a permit, or the cancellation, suspension,
or refusal to renew an existing permit because of such criminal conviction.
Everette Jobe, General Counsel, Texas Department of Banking, has determined
that for the first five-year period the section as proposed will be in effect,
there will be no fiscal implications for state or local government as a result
of enforcing or administering the section.
Mr. Jobe also has determined that for each year of the first five-year
period the section as proposed will be in effect, the public benefit anticipated
as a result of the proposed section will be that applicants for a permit can
better assess the prospects of obtaining a permit prior to expending the resources
necessary to do so when an official of the applicant has a criminal conviction,
and existing permit holders may avoid adverse action with respect to the permit
because of such a conviction. There will be no effect on small businesses.
There is no anticipated economic cost to persons who are required to comply
with the section as proposed.
Comments on the proposal may be submitted in writing to Loren E. Svor,
Assistant General Counsel, Texas Department of Banking, 2601 North Lamar Boulevard,
Austin, Texas, 78705-4294, or by e-mail to loren.svor@banking.state.tx.us.
The section is proposed under Texas Civil Statutes, Article 6252-13d,
which requires a licensing authority to issue guidelines relating to the suspension,
revocation, or denial of a license because of a conviction of a crime which
directly relates to the licensed occupation, and Finance Code, §154.051(b),
which authorizes the department to adopt rules on any matter relating to the
enforcement and administration of Finance Code, Chapter 154.
Finance Codes, §154.109 and §154.110, are affected by the proposal.
§25.31.Effect of Criminal Convictions on Permits.
(a)
Definitions. The following words and terms, when used in
this section, shall have the following meanings, unless the context clearly
indicates otherwise:
(1)
Commissioner--The banking commissioner of Texas.
(2)
Official--An individual applying for or holding a
permit, or an owner, director, officer, or holder of more than 25 percent
of the outstanding shares of an entity applicant for or holder of a permit.
(3)
Permit--The authorization issued by the commissioner
pursuant to Finance Code, Chapter 154, Subchapter C, to sell or accept money
for prepaid funeral benefits, or solicit an individual's designation of prepaid
funeral benefits to be paid out of a fund, investment, security, or contract.
(b)
Effect of criminal conviction on proposed or existing permit.
The commissioner may deny an application for a permit, or cancel, suspend,
or refuse to renew a permit if an official of the applicant or permit holder
has been convicted of a crime which directly relates to the duties and responsibilities
of a seller or servicer of prepaid funeral benefits contracts.
(c)
Crimes directly related to fitness for permit. The sale
and servicing of prepaid funeral benefits involves or may involve the making
of representations to prospective plan purchasers, the collection and investment
of money paid by purchasers of prepaid funeral benefits, paying premiums on
insurance policies sufficient to fund the benefits, and the provision of funeral
services on matured contracts. Consequently, a crime involving the misrepresentation
of costs or benefits of a product or service, or the improper handling of
money or property entrusted to the person for the future benefit of another
is a crime directly related to the duties and responsibilities of a permit
holder, including a crime involving:
(1)
fraud, misrepresentation, deception, or forgery;
(2)
breach of trust or other fiduciary duty;
(3)
dishonesty or theft;
(4)
violation of a statute of this or another state governing
prepaid funeral benefits plans;
(5)
violation of a statute of this or another state governing
the provision of funeral services;
(6)
failure to file a required report with a governmental
body, or falsification of such a report; or
(7)
attempt, preparation, or conspiracy to commit one
of the preceding crimes.
(d)
Mitigating considerations. In determining whether a conviction
for a directly-related crime renders a person or an entity related to the
person presently unfit to be a permit holder, the commissioner shall consider:
(1)
the extent and nature of the person's past criminal activity;
(2)
the age of the person at the time of the commission
of the crime;
(3)
the time elapsed since the person's last criminal
activity;
(4)
the conduct and work activity of the person prior
to and following the criminal activity;
(5)
the person's rehabilitation or rehabilitative effort
while incarcerated or following release; and
(6)
the person's present fitness for a permit, evidence
of which may include letters of recommendation from prosecution, law enforcement,
and correctional officers who prosecuted, arrested, or had custodial responsibility
for the person, the sheriff and chief of police in the community where the
person resides, and other persons in contact with the convicted person.
(e)
The applicant must, to the extent possible, secure and
provide to the commissioner reliable documents and/or testimony evidencing
required to make a determination under subsection (d) of this section, including
the recommendations of the prosecution, law enforcement, and correctional
authorities. The applicant must also furnish proof in such form as may be
required by the commissioner that he or she has maintained a record of steady
employment and has supported his or her dependents and has otherwise maintained
a record of good conduct and has paid all outstanding court costs, supervision
fees, fines, and restitution as may have been ordered in all criminal cases
in which he or she has been convicted.
(f)
Notification of adverse action. If a permit application
is denied, or if a permit is canceled, suspended or not renewed because of
the criminal conviction of an official, the commissioner will so notify the
applicant or permit holder in writing. The notification must include a statement
of the reasons for the action and a description of the person's right to administrative
or judicial review of the action, including any time frames within which the
person must act to obtain such review.
(g)
Administrative appeal. An applicant whose permit application
is denied, or a permit holder whose permit is suspended, canceled, or not
renewed may request a hearing. A hearing on an order of suspension, cancellation,
or non-renewal must be requested not later than 15 days from the date the
order is mailed. A hearing is subject to the provisions of the Administrative
Procedure Act, Chapter 2001, Government Code and the provisions of Chapter
9, Subchapter B of this title (relating to Contested Case Hearings).
(h)
Judicial review. An applicant whose permit application
has been denied, or a permit holder whose permit has been suspended, canceled
or not renewed because of the criminal conviction of an official, and who
has exhausted all administrative appeals, may file an action for judicial
review as set forth in Texas Civil Statutes, Article 6252-13d.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
May 11, 1999.
TRD-9902714
Everette D. Jobe
General Counsel
Texas Department of Banking
Earliest possible date of adoption: June 27, 1999
For further information, please call: (512) 475-1300