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1570 DOS 08

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-

SCOTT BERNSTEIN,

Respondent.

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In the Matter of the Application of

SCOTT BERNSTEIN

For a License as a Private Investigator.

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The hearing in the above matters came before the undersigned, Scott NeJame, on March 25, 2008 at the office of the Department of State located at 123 William Street, New York, New York.

The respondent/applicant (“respondent”) appeared and was represented by Barry D. Haberman, Esq., 254 South Main Street, Suite 401, New City, New York 10956.

The complainant was represented by Senior Attorney Linda D. Cleary, Esq.

COMPLAINT

The complaint alleges that the respondent’s private investigator’s license should be suspended or revoked and the respondent’s application to renew his license as a private investigator should be denied based on the following: 1) the respondent’s extensive history of criminal convictions and Department of State disciplinary proceedings and the facts underlying those actions, 2) the respondent’s failure to disclose a conviction on his license application, 3) the respondent lacks the requisite good character, fitness and competence required for licensure, and 4) with regard to Paul Knoeffler (“Mr. Knoeffler”), a) the respondent attempted to collect an unearned and disputed fee by threatening legal action, b) the respondent billed Mr. Knoeffler for a nonexistent investigation although Mr. Knoeffler did not retain the respondent’s services, c) the respondent billed Mr. Knoeffler for fees although Mr. Knoeffler did not execute a contract or advance statement of services, and d) the respondent billed Mr. Knoeffler for a consultation despite having advertised consultations for free.

FINDINGS OF FACT

1) The respondent has been licensed as a private investigator since in or about 1991 (State’s Ex. 4, p. 2). From at least April 8, 2002 through April 7, 2006, the respondent was licensed as the qualifying officer and president of Falcon Investigations NA Inc. (“Falcon Investigations”) (State’s Ex. 8).

2) Based upon a disciplinary proceeding commenced by the Department of State against the respondent, on June 9, 1998, Supervising Administrative Law Judge Felix Neals (“Judge Neals”) issued a decision finding that the respondent violated 19 NYCRR §170.12[(b)] and ordered him to pay a $500 fine (State’s Ex. 3).

3) By application dated January 19, 200[6] and received by the Department of State on February 15, 2006, the respondent applied to renew his license as the qualifying officer and president of Falcon Investigations, answering “yes” to question #1, “Since your last application, have you...been convicted of a crime or offense (not minor traffic violation), in this state or elsewhere...? (If yes, enclosed details.)” (State’s Ex. 2).

4) Initially, the Department of State neither granted nor denied the respondent’s application to renew his private investigator’s license. However, since the respondent timely applied to renew his private investigator’s license prior to April 7, 2006, and pursuant to State Administrative Procedure Act §401(2), his license did not expire (i.e., the respondent was permitted to continue acting as a private investigator pending the complainant’s decision to deny or grant his application and the tribunal’s decision denying or granting that application).

5) In March 2006, the complainant commenced a disciplinary proceeding against the respondent alleging that he: 1) misrepresented himself to two witnesses in the course of an investigation in California, 2) disclosed information obtained from those misrepresentations on Court TV, 3) pled nolo contendere in Stanislaus County Court to one count of Impersonating an Officer, 4) entered into a contract to provide investigative services using an agreement that failed to contain a statement pursuant to 19 NYCRR §170.12(b), 5) failed to provide a written report to a client, improperly charged a client for time and travel costs in attending an interview with the complainant’s investigator, in which interview the respondent was questioned about both allegations made by the client and other matters, and 6) pled guilty in Rockland County Court to two counts of Criminal Impersonation and one count of Criminal Mischief in the 4^th degree (State’s Ex. 4, p. 2).

6) The complainant’s complaint against respondent was prepared on November 7, 2005, at which time the respondent’s license was still in effect. The hearing was not held until July 5, 2006, by which time the respondent’s license had expired.

7) By decision dated August 15, 2006, Judge Schneier found that on August 1, 2005, the respondent pled nolo contendere in the Superior Court of California to one count of Impersonating an Officer and was sentenced to three years probation. The conduct underlying that conviction involved the practice of deceit and misrepresentation and was a demonstration of untrustworthiness pursuant to General Business Law §§79(1)(b) and 79(1)(d) (State’s Ex. 4).

8) Judge Schneier further found that on September 26, 2005, the respondent pled guilty in Rockland County Court to two counts of Criminal Impersonation, Penal Law §190.25, and one count of Criminal Mischief in the 4^th degree, Penal Law §145.00, both class A misdemeanors. Judge Schneier stated, “In entering the pleas the respondent acknowledged that on January 30 and February 15, 2005 he pretended to be a public servant, and falsely expressed by words or actions that he was a public servant and was acting with approval and authority of a public agency, and department and did so with the intent to induce another to submit to such pretended official authority. Specifically, he admitted to activating the lights and sirens on his vehicle with the result that the car in front of him pulled over. He also acknowledged that he intentionally damaged the car of another person (State’s Ex. 7).” (State’s Ex. 4, p. 3). By committing these crimes, Judge Schneier again found that the respondent engaged in deceit and misrepresentation and were further demonstrations of untrustworthiness (State’s Ex. 4, p. 4).

9) He also found that the respondent engaged in deceit and misrepresentation and demonstrated untrustworthiness by billing Jennifer Burris (“Ms. Burris”) for the total mileage and time associated with his meeting with the Department of State investigator (State’s Ex. 4, p. 4).

10) Finally, Judge Schneier determined that the complainant failed to meet its burden that the respondent identified himself as a New York City police detective to Samel Newman, Carmen Soria and Sarah Taberna and that he disclosed information obtained from them on Court TV, that he used an improper contract in his dealings with Ms. Burris, and that he wrongfully failed to supply Ms. Burris with a written report. Those charges were dismissed.

11) In determining what penalty to impose for the respondent’s misconduct, the Judge found the respondent to be lacking in credibility. However, in light of the lack of other disciplinary action against the respondent (Judge Schneier was not made aware of Judge Neals’ June 9, 1998 decision), and based upon case law, Judge Schneier imposed a penalty of a $5,000 fine (State’s Ex. 4, p. 5).

12) Judge Schneier’s decision was a disciplinary proceeding, and did not in any way involve or resolve the respondent’s application to renew his private investigator’s license. Contrary to Mr. Haberman’s argument at the hearing, Judge Schneier did not order the complainant to issue the respondent a license.

13) The complainant appealed Judge Schneier’s decision and by undated decision rendered in or about January 2007, the First Deputy Secretary of State (“Secretary of State”) affirmed Judge Schneier’s decision. By a reading of that decision, it is clear that the Secretary of State was unaware of the respondent’s license status, thus stating, “According to the Department of State license certification (State Exhibit 3), Respondent’s license expired on April 7, 2006, a date occurring prior to the administrative hearing in this matter. The act of revoking Respondent’s license would have no beneficial effect on public safety because his license has already lapsed by virtue of the running of time.”¹ (State’s Ex. 5, p. 3). In fact, the Secretary of State recognized that the respondent’s misconduct may have warranted a much more severe penalty but he believed that revocation was simply not an appropriate or effective punishment. Hence, since the Secretary of State was not aware of the respondent’s license status, his decision did not and could not grant or deny the respondent’s renewal application.

14) By letter dated March 14, 2007 and sent to the respondent, the complainant denied the respondent’s application to renew his license as a private investigator based on the following: “1) Applicant’s criminal record and history of disciplinary proceedings with the Department of State, together with the facts and circumstances attendant to the applicant’s criminal convictions and disciplinary infractions demonstrate a lack of the requisite good character, fitness and competence for licensure.” (State’s Ex. 1).

15) By letter from Mr. Haberman dated April 11, 2007, the respondent requested an administrative hearing (State’s Ex. 1).

16) On June 22, 2007, the complainant served the respondent, by certified mail addressed to the respondent at his last known business address, with the following: the notices of hearing (one for the application denial and one for the disciplinary proceeding) initially scheduling the hearing for October 23, 2007 before Administrative Law Judge Patrice M. Le Melle (“Judge Le Melle”); the complainant’s March 14, 2007 letter of denial; and Mr. Haberman’s April 11, 2007 letter requesting a hearing. That mailing was returned by the Postal Service marked “unclaimed.” On August 7, 2007, the complainant re-served the above-described documents on the respondent by regular mail. That mailing was not returned by the Postal Service (State’s Ex. 1). On or about October 19, 2007, the hearing was adjourned to January 29, 2008, and because Judge Le Melle left the employ of the Department of State, the hearing was re-assigned to me. Based on a letter from Mr. Haberman dated December 10, 2007, the hearing was adjourned to March 25, 2008 (State’s Ex. 1).

17) At the close of the complainant’s direct case on March 25, 2008, Mr. Haberman submitted a motion to dismiss the proceeding. The tribunal reserved decision on that motion and requested Mr. Haberman proceed with his defense. Mr. Haberman rested without calling any witnesses or introducing any documents into evidence. At that point, the parties agreed that the complainant would submit a response to the respondent’s motion to dismiss within 30 days from the date Ms. Cleary received the hearing transcript, and Mr. Haberman would have fifteen days after his receipt of her response to submit a closing or reply.

18) In addition to the respondent’s motion to dismiss dated March 25, 2008, the tribunal received and considered the complainant’s memorandum of law in opposition to the motion to dismiss dated April 24, 2008, the respondent’s memorandum of law and closing statement dated May 13, 2008, and the complainant’s letter dated May 23, 2008.

Knoeffler Matter

19) Due to problems he was having with his neighbor and town officials, on May 12, 2004, the day of his trial, Paul Knoeffler contacted the respondent to see if the respondent could attend his trial, sit in the audience, and listen to what transpired as an unbiased witness. Mr. Knoeffler was aware of the respondent through a yellow page ad which read, in part, “Free consultation at your home, our office or nearby” (State’s Ex. 10).

20) The respondent told him that if he has to testify at trial, he charged $750. Mr. Knoeffler clarified that he was not seeking the respondent to testify at the trial, particularly because he hadn’t done anything, seen anything or heard anything about which to testify. The respondent then told Mr. Knoeffler that he charged $75 per hour for his time, that he works by contract and that before he does anything, he would fax Mr. Knoeffler a contract which would have to be signed and returned. The respondent faxed his contract to Mr. Knoeffler and upon seeing it, he became concerned about its length and terms, and decided not to sign or agree to it. He called the respondent and left a message on his answering machine that he did not want to retain his services and did not want him to come to the Mamakating Town Court that evening. A couple further telephone calls ensued between the respondent and Mr. Knoeffler in which the respondent stated that he would appear in court that evening and Mr. Knoeffler telling him that he did not want to hire him or have him appear in court. The respondent did not appear in court that evening.

21) The contract that the respondent faxed required Mr. Knoeffler to make an initial payment of $504.50 and set forth a minimum fee of $600 (State’s Ex. 11). Neither the respondent nor Mr. Knoeffler signed the contract.

22) On June 2, 2004, Mr. Knoeffler received a fax from the respondent, billing him for $856.25 for 1.25 hours of “consultations” ($81.25), cancellation fee for May 12 court appearance ($500) and skip trace collection investigation ($275) (State’s Ex. 12). The bill also included a statement, “NOTE: If payment is not received in full within 15 days net, this office will proceed with civil and criminal prosecution” (State’s Ex. 12).

23) On December 24, 2004, Mr. Knoeffler received another bill from the respondent, this time for $1,506.62 (State’s Ex. 13).

MOTION OF DISMISS

The respondent has moved to dismiss paragraphs numbered 10 through 21 of the complaint on the basis of res judicata and collateral estoppel. “Under the doctrine of res judicata, a disposition on the merits bars litigation between the same parties or those in privity with them of a cause of action arising out of the same transaction or series of transactions as a cause of action that either was raised or could have been raised in the prior action (citations omitted).” Barbieri v. Bridge Funding, Inc., 5 AD3d 414, 772 NYS2d 610 (2^nd Dept. 2004). Regarding collateral estoppel, “The general rule is that when a determination finally resolves an action it is not subject to collateral attack if rendered by a court that had jurisdiction of the subject matter and parties.” Ruben v. American and Foreign Insurance Co., 185 AD2d 63, 592 NYS2d 167, 169 (4th Dept. 1992).

Paragraphs numbered 10 through 21 in the complaint must be and are dismissed based on the doctrines of res judicata and collateral estoppel. Those paragraphs have already been litigated by Judge Schneier and the Secretary of State in prior determinations. The complainant can neither attack those judgments here nor can it seek further sanctions against the respondent based on those same facts. Had Judge Schneier or the Secretary of State determined that the renewal of the respondent’s license be affected, their decisions would so have reflected their intentions. Further, the fact that the Secretary of State was not aware of the respondent’s license status at the time his decision was made, or was aware but believed that a more severe sanction was not an appropriate or effective punishment, is not reviewable here. That could be addressed only through a motion to reconsider or reargue. In sum, the respondent’s motion is granted to the extent that it dismisses paragraphs 10 through 21 of the complaint.

Mr. Haberman’s argument that the respondent cannot be punished a second time, i.e., denial of his renewal application, based on the same conduct that underlaid Judge Schneier’s decision, is accurate. However, the Knoeffler matter is a new and different transaction which forms a separate basis for disciplining the respondent. If the respondent is found to have violated the law regarding the Knoeffler matter, the tribunal may revoke or suspend the respondent’s license, as well as deny his renewal application.² Additionally, if the respondent is found to have violated the law with regard to the new matter, the tribunal may consider the prior decisions of Judges Neals and Schneier in determining an appropriate sanction to impose.

In Point II of his motion to dismiss, Mr. Haberman argues that the allegations contained in paragraphs numbered 22 through 25 of the complaint should be dismissed on the basis of laches. That motion is denied.

Mr. Haberman is correct in citing the defense of laches:

Traditionally, the common law rule has been that laches may not be interposed as a defense against the State when acting in a governmental capacity and the public interest. That principal has, however, been abrogated by State Administrative Procedure Act (SAPA) §301[1], which provides that "(i)n an adjudicatory proceeding, all parties shall be afforded an opportunity for a hearing within reasonable time." Cortland Nursing Home v Axelrod, 66 NY2d 169, 495 NYS2d 927 (1985). That requirement is mandatory, not discretionary. Maxwell v Commissioner of Motor Vehicles, 109 Misc.2d 62, 437 NYS2d 554 (Sup. Ct. Erie County, 1981).

In order to show that a hearing has not been held within a reasonable time, the respondents must show substantial prejudice arising out of the delay. Correale v Passidomo, 120 AD2d 525, 501 NYS2d 724 (1986); Geary v Com'r of Motor Vehicles, 92 AD2d 38, 459 NYS2d 494 (1983), aff'd 59 NY2d 950, 466 NYS2d 304 (1983); Cf. Eich v Shaffer, 136 AD2d 701, 523 NYS2d 902 (1988). Such a showing can be made with a demonstration by the respondents that their ability to present defense witnesses with a clear and detailed recollection of the events has been hampered by the delay. Walia v Axelrod, 120 Misc.2d 104, 465 NYS2d 443 (Sup. Ct. Erie County, 1983). However, the respondents must show that the delay significantly and irreparably handicapped them in preparing a defense. Reid v Axelrod, 164 AD2d 973, 559 NYS2d 417 (1990); Gillette v NYS Liquor Authority, 149 AD2d 927, 540 NYS2d 61.

One of the cases that Mr. Haberman cited in support of his argument is DLS v. Frankel, 141 DOS 98 (1998), in which the respondent notary public notarized a deed five years earlier. In that case, the complaint was not dismissed on the basis of laches. The laches argument in that decision was used to support the respondent’s testimony as to his normal procedure and the fact that he could not recall the actual events involved. The judge found that there was a dishonest scheme that was carried out by a person or persons other than the respondent. That case is also distinguishable from the instant one because a notary’s notarization of a document is typically a far less memorable experience than a private investigator being hiring to act as a witness.

The complainant’s alleged three year delay between the close of its investigation and the commencement of the disciplinary proceeding is not unreasonable on its face. See, Rosenstrauss v. Women's Imaging Center of Orange County, 56 AD3d 454, 866 NYS2d 759 (2^nd Dept. 2008) (doctrine of laches applicable because, nearly 11 years after his medical malpractice action was dismissed, plaintiff moved to vacate the dismissal order); Clarke v. Town of Sand Lake Zoning Bd. of Appeals, 52 AD3d 997, 860 NYS2d 646 3^rd Dept. 2008) (proceeding dismissed on basis of laches because substantial prejudice established due to petitioner’s failure to challenge town’s zoning board of appeals issuance of building permit until after subject property excavated, house built, certificate of occupancy issued, and homeowners moved in). More importantly, it is not a question of the delay, it is a question of whether the respondent can show that the delay significantly and irreparably handicapped him in preparing a defense. The respondent has failed to make such a showing.

The respondent was present at the hearing held on March 25, 2008 but chose not to testify. Instead, his attorney offered a written motion to dismiss, which contained an affidavit by the respondent. In addressing the doctrine of laches, the respondent claimed predominantly that the complainant’s three year delay in commencing the disciplinary proceeding was unreasonable. Out of his eight page affidavit, the respondent claimed, in two conclusory sentences, merely that his knowledge of the underlying events is no longer fresh and that he cannot recall specific details of conversations with Mr. Knoeffler. The respondent’s affidavit falls far short from establishing substantial prejudice.

Since the respondent did not testify at the hearing, he could not be cross-examined and the tribunal could not assess his credibility. The respondent’s memory regarding the events in question could not be probed to determine the truthfulness or extent of his alleged “diminished recollection.”³ The respondent’s unsubstantiated, self-serving and conclusory affidavit has no probative value and is not competent evidence from which to conclude that he is substantially prejudiced from presenting his defense.

It is well known that “where a respondent fails to testify at the fact-finding hearing, the court is permitted to draw the strongest possible negative inference against him (citations omitted).” In re Jasmine A., 18 AD3d 546, 795 NYS2d 87 2^nd Dept. 2005); Schwartz v. New York City Dept. of Educ., 22 AD3d 672, 802 NYS2d 726 (2^nd Dept. 2005). While I do not draw a negative inference against the respondent for not testifying, his hearsay affidavit is not sufficient to establish that he has been substantially hampered by the delay. Furthermore, while Mr. Knoeffler was asked to recall and did testify to events that occurred four years ago, the respondent has not explained why he has more of a memory lapse than Mr. Knoeffler. In fact, given that respondent has been a private investigator since 1991, it is very difficult to believe that he, who is retained to conduct investigations and surveillance, prepare and submit reports to clients, and testify at trials years later about his interaction with clients and details of his reports, cannot recall details of his own transaction with a potential client against whom he made repeated demands for a fee.

It is also pointed out that the respondent has not pointed to any document or witness that he needs to assist him in his defense of the complaint that is now unavailable and that would have been available had the disciplinary proceeding been commenced earlier.

In sum, the respondent’s motion to dismiss paragraphs numbered 22 through 25, is denied.

OPINION AND CONCLUSIONS OF LAW

I- As the party which initiated the disciplinary hearing, the burden is on the complainant to prove, by substantial evidence, the truth of the charges set forth in the complaint. State Administrative Procedure Act §306(1). Substantial evidence “means such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact... More than seeming or imaginary, it is less than a preponderance of the evidence, overwhelming evidence or evidence beyond a reasonable doubt (citations omitted).” 300 Gramatan Avenue Associates v. State Div. of Human Rights, 45 NY2d 176, 408 NYS2d 54, 56-57 (1978); Tutuianu v. New York State, 22 AD3d 503, 802 NYS2d 465 (2^nd Dept. 2005). “The question...is whether a ‘conclusion or ultimate fact may be extracted reasonably--probatively and logically’” City of Utica Board of Water Supply v New York State Health Department, 96 AD2d 719, 465 NYS2d 365, 366 (1983), quoting 300 Gramatan Avenue Associates, supra, 408 NYS2d at 57.

II- “19 NYCRR 173.1 states:

‘(a) No licensed private investigator...shall undertake to perform any services on behalf of a client unless such licensee shall have delivered to the client a written statement, signed by the licensee, which shall set forth the specific service or services to be performed and the charge or fee therefore....’

The purpose of the regulation is to establish the legal right of a client to clearly understand the work scope and costs of the employment of the licensee. Division of Licensing Services v Recovery Investigations, Ltd., 44 DOS 89. That understanding should be exact, and without the required statement of services the client may not be aware of and/or able to hold the licensee to the performance of all of the licensee's obligations. Division of Licensing Services v Aranzullo, 54 DOS 87. The failure to provide the statement is a demonstration of untrustworthiness and incompetency. Division of Licensing Services v E.M.H. Investigation Service, Inc., 8 DOS 92; Division of Licensing Services by Greenberg, 32 DOS 87, conf'd. sub nom Greenberg v Shaffer, 139 AD2d 1988, 527 NYS 2d 287 (1988).” DLS v. Hertz, 326 DOS 97 (1997).

With regard to Mr. Knoeffler, the respondent violated 19 NYCRR §173.1 and demonstrated untrustworthiness and incompetence in violation of General Business Law §79(1)(d). The agreement that the respondent sent to Mr. Knoeffler (State’s Ex. 11) did not set forth the specific service(s) that the respondent was to perform and the charge therefore, and the agreement was not signed by either the respondent or Mr. Knoeffler.

III- When Mr. Knoeffler contacted the respondent in May 2004, he did so under the belief that there was no charge for his consultation (State’s Ex. 10) and there was no mention by respondent that he would charge a fee for Mr. Knoeffler’s telephone call(s). The respondent was the one who told Mr. Knoeffler that, before respondent did anything, he needed Mr. Knoeffler to sign a contract. When Mr. Knoeffler received and read the contract, he became concerned about its terms and left a message for the respondent that he did not want to retain his services and did not want him to appear in court that evening. In turn, the respondent did not appear in court that evening, but sent Mr. Knoeffler a bill for $856.25 with the added threat of civil and criminal prosecution if payment was not made within 15 days. He sent Mr. Knoeffler another bill six months later for almost double that amount.

The bills that the respondent sent to Mr. Knoeffler were not set forth in any detail so that it could be understood clearly for what reason(s) Mr. Knoeffler was being charged. Regarding the June 2004 invoice (State’s Ex. 12), the “consultation fee” of $65 per hour is not even mentioned in the respondent’s contract (State’s Ex. 11) and the amount of time spent is more than triple the amount of time Mr. Knoeffler claims he spent on the telephone with the respondent. The “cancellation fee” in the contract is $250, but the respondent attempted to charge a $500 cancellation fee. The $275 charge for the “skip trace - collection investigation” is not explained or described in any detail. With regard to the December 2004 invoice (State’s Ex. 13), if the respondent was charging Mr. Knoeffler $12.26 interest per month on his bill, which he did between November 12, 2004 and December 12, 2004, then it would be impossible for the respondent’s initial invoice of $856.25 to jump to $1,506.62 by December 2004.

The above-described actions by the respondent are demonstrations of extreme untrustworthiness in violation of General Business Law §79(1)(d). The respondent’s actions in this case can only be described as predatory. After becoming angry that Mr. Knoeffler decided not to hire him, the respondent untruthfully told Mr. Knoeffler that he would appear in court that evening and subsequently sent him an exorbitant bill containing fabricated charges with the threat of civil and criminal prosecution if not paid. The respondent further compounded his misconduct by sending Mr. Knoeffler another bill six months later for an unexplained, almost doubled amount of money.

IV- In determining what penalty to assess against the respondent, I have taken into consideration the prior decisions of Judges Neals and Schneier, as well as the seriousness of respondent’s misconduct in this case. It is clear to me that the respondent does not have the competence or trustworthiness to be licensed as a private investigator.

Regarding an appropriate sanction, in contrast to the cases cited by Mr. Haberman, there are other cases which he did not cite in which the revocation or denial of the respondent’s private investigator license was warranted. See, DLS v. Hertz, 326 DOS 97 (1997) (revocation of license); DLS v. Hurley, 265 DOS 98 (1998) (revocation of license); DLS v. Borkan, 822 DOS 07 (2007) (denial of renewal of private investigator license); DLS v. O’Hanlon, 1011 DOS 02 (2002) (revocation of license); DLS v. Neville, 925 DOS 02 (2002) (revocation of license); DLS v. Dunne, 377 DOS 97 (1997) (denial of private investigator license); DLS v. Belluardo, 309 DOS 98 (1998) (revocation of license). Furthermore, none of the cases cited by Mr. Haberman involved a respondent who had a history of disciplinary action against him or her, as is the case here.

V- As an applicant, the respondent has the burden of proving, by substantial evidence, that he is honest and of sufficient good character and integrity to be licensed as a private investigator. General Business Law §72(1); State Administrative Procedure Act §306(1).

The respondent’s actions concerning the Knoeffler matter clearly demonstrate a lack of honesty, good character and integrity. Even though it was his burden, the respondent did not offer any evidence to the tribunal that established these elements required for licensure. Although he was present at the hearing, the respondent chose not to testify, and therefore, I could not assess his credibility. In fact, the only evidence of the respondent’s credibility is that, in a previous disciplinary proceeding, Judge Schneier found him to be not credible. Therefore, I find that the applicant has failed to meet his burden of proving that he is honest or of sufficient good character and integrity to be licensed as a private investigator.

VI- In the last paragraph of his closing statement, Mr. Haberman argues that the respondent was denied due process. The first argument he makes is that the tribunal did not render a decision on the motion to dismiss prior to conducting the hearing. However, motion practice is specifically set forth in 19 NYCRR §400.6: “(a) A motion to dismiss the complaint or statement of charges for failure of proof may be made at the conclusion of the direct case presented by the complaining division of the Department of State. The administrative law judge may make a determination: (1) granting the motion; (2) denying the motion and continuing the hearing; or (3) reserving decision on the motion and continuing the hearing.” In the instant case, the tribunal reserved decision on the motion and continued the hearing.

Mr. Haberman’s second argument is that the tribunal should have barred examination related to the Knoeffler matter because the respondent was seeking its dismissal on the basis of res judicata and collateral estoppel. This argument makes no sense. The tribunal attempted to and did limit the complainant’s presentation of proof on those matters that were previously decided by Judge Schneier. However, the tribunal did not limit the scope of examination in the Knoeffler matter because that new matter had not been previously alleged or charged by the complainant. As Mr. Haberman points out in Point I of his memorandum of law and closing statement, “The Respondent does not allege that the Complainant’s self stylized NEW PROCEEDING: - 2004-2021 is barred under the principle of res judicata and/or collateral estoppel.”

DETERMINATION

WHEREFORE, IT IS HEREBY DETERMINED THAT Scott Bernstein has violated 19 NYCRR §173.1 and demonstrated untrustworthiness and incompetence in violation of General Business Law §79(1)(d). Accordingly, pursuant to General Business Law §79, the respondent’s license as a private investigator is revoked, effective immediately. He is directed to send his license certificate and pocket card to Norma Rosario, Department of State, Division of Licensing Services, Alfred E. Smith Building, 80 South Swan Street, 10th Floor, Albany, NY 12201.

WHEREFORE, IT IS HEREBY FURTHER DETERMINED THAT the application of Scott Bernstein for renewal of his license as a private investigator for the period of April 8, 2006 through April 7, 2008, UID #11000032825, is denied.

Scott NeJame

Administrative Law Judge

Dated: December 23, 2008

¹It should be pointed out that, had the respondent not applied to renew his license, a fine against him would not be effective because there would be no incentive for him to pay the fine. In contrast, had the respondent’s license been revoked, even given that there is no statutory waiting period before the respondent could apply for a new license, the respondent would be required to disclose his revocation on any new application he submitted for a private investigator’s license. The disclosure of that revocation might well have resulted in the respondent being denied a license. Furthermore, in an application case, it is the respondent’s burden to disclose the revocation and to establish that he has the necessary honesty, integrity and good character to be licensed as a private investigator. Had he applied for a private investigator’s license shortly after his revocation, it would be nearly impossible for him to establish that he has become competent and trustworthy shortly after being found that he engaged in behavior warranting the revocation of his license.

²The proceeding to discipline the respondent for misconduct is separate from the proceeding to grant or deny the applicant’s application for a private investigator’s license. Although the proceedings can be held at the same time, since the hearing procedure is that same, the burden of proof in each of the proceedings is different: in a disciplinary proceeding, the complainant has the burden of proving the charges in the complaint, while in an application proceeding, the applicant has the burden of proving that he has the required honesty, integrity and good character for licensure. In a situation where the complainant is seeking to discipline the respondent and, at the same time, deny the renewal of the applicant’s license, General Business Law §79(1) cannot be interpreted to require the tribunal to choose between, for example, revocation of a license and denial of an application. Such an interpretation leads to an illogical result: if the tribunal revokes the licensee’s license, the tribunal would have to allow the applicant to renew his license; or, if the tribunal denies renewal of the license, the licensee would be allowed to continue practicing until his existing license expires, thereby endangering the safety and welfare of the public.

³The respondent testified at the previous disciplinary hearing and Judge Schneier found him to be not credible.