864 DOS 05

STATE OF NEW YORK

DEPARTMENT OF STATE

OFFICE OF ADMINISTRATIVE HEARINGS

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In the Matter of the Complaint of

DEPARTMENT OF STATE

DIVISION OF LICENSING SERVICES,

Complainant, DECISION

-against-

MICHAEL MCLANE, JOHN DALY, and

MCLANE SECURITY,

Respondents.

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The above noted matter came on for hearing before the undersigned, Roger Schneier, on December 19, 2005 at the office of the Department of State located at 123 William Street, New York, New York.

The respondents having been advised of their right to be represented by an attorney chose to represent themselves.

The complainant was represented by License Investigator III Richard Drew.

The complaint alleges that the respondents employed fifty five security guards who were not registered as such, employed nineteen security guards who were not registered as being associated with them, failed to maintain records or other proof of the due diligence required by 19 NYCRR 174.6 for nineteen security guards, failed to obtain, timely obtain and/or maintain the employee statements and/or to obtain, timely obtain, maintain, or file or timely file finger print cards for eleven non-security guard employees and/or registration exempt security guard employees, and used contracts/agreements which fail to contain the statement "This business is licensed by the New York Department of State, Division of Licensing Services."

1) Notice of hearing together with a copy of the complaint was served by registered mail delivered at the respondents' last known business address on June 6, 2005 (State's Ex. 1). The matter was subsequently adjourned at the respondents' request.

2) McLane Security is, and at all times hereinafter mentioned was, duly licensed as a Private Investigator with Michael McLane and John Daly its qualifying officers (State's Ex. 5).

3) On May 28, 2004 Steven Frummerman, employed by Penda Aiken, an employment agency and working on contract with the complainant, conducted an audit of the respondents' employment records. He concluded that there were numerous employees of McLane Security who were working as security guards although not so registered with the Department of State or, if registered, who were not registered as employees of McLane Security and that records or other proof of due diligence regarding the improperly registered guard employees had not been maintained. He also found that employee statements and fingerprint cards for nine non-security guard employees (not eleven as alleged in the complaint) were not on file (State's Ex. 7). All of those non-security guard employees had been hired prior to September 11, 2001, at which time their employment records were housed in the respondents' office on John Street which had to be vacated.

In addition, Mr. Frummerman ascertained that the contracts used by McLane Security did not contain the statement "This business is licensed by the New York Department of State, Division of Licensing Services" as set forth in 19 NYCRR170.12. The contracts did contain the statement "McLane Security shall have a license to operate a security guard agency issued by the State of New York. A copy of the State License shall be submitted prior to the execution of the agreement" (Comp. Ex. 8). The respondents have since amended their contracts to contain the mandated language.

4) The respondents provide various services to their clients. Along with traditional investigative and security guard services they also operate central mail rooms in various office buildings. When packages for building tenants are delivered by other than major carriers they are accepted at those mail rooms by McLane Security employees who then bring the items upstairs to the addressees. Those same employees also collect such items from tenants and bring them down to the mail room to be claimed by the various messenger services. They do not provide security services (Resp. Ex. C) and McLane Security's Workers Compensation (Resp. Ex. B) and sales tax obligations have been set by the appropriate authorities accordingly. Some or all of the employees earmarked by Mr. Frummerman were mail room employees, and the complainant presented insufficient evidence to make it possible to determine exactly who, or how many of the unregistered or improperly registered employees, there were.

I- In addition to being licensed as a Private Investigator as defined by General Business Law §71, pursuant to GBL §89-f[5] McLane Security which, among other things, employs security guards, is a security guard company. Therefore, pursuant to GBL §89-g[1], except for persons subject to registration and training by the Federal government (GBL §89-f[6]), it may not employ as security guards in the State of New York persons not registered as such with the complainant or, if registered, not registered as employed by it, and it is also subject to the applicable due diligence requirements.

General Business Law §89-f[6] defines "security guard." ⁽¹⁾ The functions of the McLane Security employees assigned to the mail rooms do not fall within that definition.

As the party which commenced the proceedings it is the complainant's burden to prove the charges by substantial evidence. State Administrative Procedure Act §306[1]. The complainant has presented evidence showing that perhaps some of McLane Security's employees are improperly registered or documented security guards. However, it has not established by substantial evidence the number or identity of such people. Accordingly, the charges regarding unregistered, improperly registered, and improperly documented security guard employees are dismissed.

II- McLane Security is required, pursuant to General Business Law §81, to maintain employee statements and fingerprints for all non-security guard employees. It apparently lost those documents and failed to replace them for nine such employees. While the tribunal understands the circumstances under which that occurred, the circumstances do not excuse the lack of such records nearly four years later.

III- Pursuant to 19 NYCRR 170.12[b] all contracts and agreements used by McLane Security must contain the following statement: "This business is licensed by the New York Department of State, Division of Licensing Services." At the time of the audit its contracts contained similar language. That language however did not alert its clients as to what agency issued its license and, therefore, to whom to complain should a problem arise.

IV- Pursuant to the statutory scheme established by GBL Article 7, in order for a corporation to be licensed as a Private Investigator at least one officer must meet all of the requirements for individual licensure. GBL §72. GBL §81[1] then sets forth a requirement that the holder of any license be "legally responsible for the good conduct in the business of each and every person...employed." That requirement is further detailed in 19 NYCRR 170.13. Thus, the qualifying officer of a corporate Private Investigator is responsible for the supervision of the activities of that corporation. Department of State v Greenberg, 32 DOS 87, conf'd. Greenberg v Shaffer, 139 AD2d 648, 527 NYS2d 287 (1988). Accordingly, Michael MCLANE and John Daly are liable for the violations committed by McLane Security.

WHEREFORE, IT IS HEREBY DETERMINED THAT MCLANE Security, Michael McLane, and John Daly have violated General Business Law §81 (nine times), and 19 NYCRR 170.12[b] (one time), and accordingly, pursuant to General Business Law §79, they shall pay a fine of $5,000.00 to the Department of State on or before January 31, 2006, and should they fail to pay the fine then their license as a Private Investigator, and any branch office licenses which may have been issued to them, shall be suspended for a period commencing on February 1, 2006 and terminating two months after the receipt by the complainant of their license certificate(s) and pocket card(s). They are directed to send a certified check or

money order for the fine payable to "Secretary of State," or their license certificate(s) and pocket card(s), to Yvette Carter-Kreczko, Customer Service Unit, Department of State, Division of Licensing Services, 84 Holland Avenue, Albany, NY 12208.

Roger Schneier

Administrative Law Judge

Dated: December 20, 2005

1. "Security guard" shall mean a person, other than a police officer, employed by a security guard company to principally perform one or more of the following functions within the state:

a. protection of individuals and/or property from harm, theft or other unlawful activity;

b. deterrence, observation, detection and/or reporting of incidents in order to prevent any unlawful or unauthorized activity including but not limited to unlawful or unauthorized intrusion or entry, larceny, vandalism, abuse, arson or trespass on property;

c. street patrol service;

d. response to but not installation or service of a security system alarm installed and/or used to prevent or detect unauthorized intrusion, robbery, burglary, theft, pilferage and other losses and/or to maintain security of a protected premises.

Provided, however, that a security guard who is otherwise subject to regulation with respect to registration and training by the federal government in the performance of their duties, or a security guard providing such services on a voluntary basis, shall not be subject to the provisions of this article.