Matter of Deraffele v State of New York Banking Dept.

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Matter of Deraffele v State of New York Banking Dept. 2012 NY Slip Op 31887(U) July 12, 2012 Supreme Court, New York County Docket Number: 111951/2011 Judge: Paul G. Feinman Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. PAUL G. F B N W PART /2 JuslJcr B L DERAFFELE, JOHN vs. NYS BANKING DEPARTMENT SEQUENCE NUMBER : 001 ARTICLE 78 MOTION DATE MOTION 8tR NO. @7 1 The followlng pmpon, n u m k n d 1 to NOUW of MottonlOrder to Show Cmume AMWOrlng AMdrvltn - @xhlbtta ,were h a d on thlr motlon toffor -Affldavtb -Exhibltr RIplylnQ Amdavltr INdd. IN O W IW a ) . Upon the forrgolng papers, It la ordered that thh motlon le FILED s NEW YORK COIJNTY CLERK'S OFFICE J.8.C. D.t.d:1/ILjll O R NE QATD SETTLE ORDER 0DO NOT POST 0NON-FINAL DlSPOSmON 0GRANTED IN PART 0OTHER 0SUBMIT ORDER aFIDUCIARY APPOINTMEW 0REFERENCE [* 2] JOHN DERAFFELE, Index Number: J 11951/2011 Mot. Seq. No.: QQl Petitioner, -against- DECISION, ORDER AND STATE OF NEWYORK BANKMQ DEPT., For the Petltlonsr John DcRaffelc - Dro se 305 North Ave. New Rochelle, NY 1080 1 (9 14) 420-3967 JUDGMENT FILED For thc Rsrpondsnt: Eric T. Schneiderman Attomcy Ocncral of the ,.nta of New York By:Michael J. Sludzinski. Esq. 120 Broadway,24' fl. New York, NY 10271 NEW YORK (212) 416-8552 CCIUT\I 1-Y CLERK'S OFFICE JUL 17 2gp Papers consldsred In rsvlsw of this pstltlon: Notice of petition, DcRaffclc afndavit and m e x c d exhibits I - V Notico of cross motion to dlsmlss, memorandum of law and Nochlln affirmation and annexed exhibits A - E DeRaffale reply afidavit DeRaffelc supplemental reply affidavit and annexed exhibit Paper6 Numbered: 1.2 3-5 6 7 PAUL FEINMAN, G. J.: In this proceeding brought pursuant to CPLR article 78, petitioner, John DeRaffele, seeks to annul respondent Banking Department's determination, dated August 4,201 1, which denied petitioner's application for a mortgage loan origination license. Respondent cross-moves to dismiss. Petitioner opposes the cross motion, For the reasons provided below, the petition is denied. BACKGROUND Petitioner was a licensed mortgage broker f o January 1, 1989 until 2010, when he rm 1 [* 3] surrendered his broker s license after deciding that he would rather work for a mortgage bank (Doc. 2, DeRaffele statement at 7 2). In 1989 petitioner plead guilty in the United States District Court, Eastern District of Pennsylvania, to conspiracy for aiding and abetting the filing of false t x returns. In October of 1990, petitioner received a permanent certificate of relief f o a rm disabilities from the New York State Board of Parole, rcmov[ing] all legal bars and disabilities to employment, license and privilege except those pertaining to firearms ... and except the right to be eligible for public office (Doc. 2,ex. 11, Certificate of Relief). By letter dated March 5 , 1996, petitioner received a Certificate of Good Conduct from the Board of Parole, which also provide[d] relied f o disabilities and bars to employment and licensing automatically imposed rm by New York State law as a result of your conviction, except the right to possess weapons and the right to hold public office (Doc. 2, ex. 111, March 5, 1996,letter). In July of 20 10, petitioner satisfied the educational requirements, passed the written test, paid the applicable fees and provided all of the information necessary in connection with his application to become a licensed Mortgage Loan Originator for 1-4family residential properties in New York (Doc. 2,DeRaffele statement a 7 6). By letter dated August 4,201 1, petitioner s t application was denied based on the Banking Department s analysis of petitioner s criminal history, conducted pursuant to Article 12-E of the Banking Law and Title V of the Federal Housing and Recovery Act of 2008, also known as the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (the SAFE Act ) (Doc. 2, ex. I, Aug. 4,201 1 letter). The letter a advised petitioner that under both Article 12-Eand the SAFE Act, he w s barred from being a licensed Mortgage Loan Originator because he has been convicted of, or pled guilty or nolo conlendere to, a felony in a domestic, foreign, or military court: (i) during the seven-year period 2 [* 4] preceding the date of your application for an M,O license; or (ii) at any time preceding such date, if such felony involved an act of fraud, dishonesty, or breach of trust, or money laundering (id.). After receiving notice of the denial of his license application, petitioner timely filed the instant petition within the four-month statute of limitations period. ANALYSIS Judicial review of an administrative determination pursuant to CPLR article 78 is limited to inquiry into whether the agency acted arbitrarily or capriciously (Mqtter ofCip Svcs.. Inc. v Neiman, 77 AD3d 505, 507 [l Dept 20101 [infernal cftationomittedJ). The court is not permitted to substitute its own judgment for that of the agency, particularly with respect to matters within its expertise ( f d ; citing Flacke v Onondaga LandJlI Sys., 69 NY2d 355,363 [ 19871). Petitioner seeks to annul the determination of the Banking Department based on the Certificate of Relief from Disabilities and Certificate of Good Conduct, which he claims allows him to hold licenses in New York State and the right to work in New York State (Doc. 2, DeRaffele statement at 7 9). Correction Law 8 752 prohibits a state agency f o unfairly rm discriminating against a person applying for a license based on his or her conviction for one or more criminal offenses. The statute applies to any application by any person for a license except where a mandatory forfeiture, disability or bar to employment is,imposed by law, and has not been removed by an executive pardon, certificate of relief from disabilities or certificate of good conduct (Correction Law 5 75 1). Correction Law 3 753 sets forth eight factors that are to be considered by an agency in making a determination on an application for a license pursuant to 3 [* 5] Correction Law 8 752). While a certificate of good conduct creates a statutory presumption of rehabilitation, it does not establish prima facie petitioner s entitlement to a license (Mutter o f Greenberg v Wrynn, 86 AD3d 437,437 [la Dept 201 13; citing Correction Law 8 753). However, Banking Law 0 599-e provides, [nlotwithstanding any other law, tho superintendent shall not issue a mortgage loan origination license unless he or she makes, at a minimum ... certain findings including that We applicant has not been convicted of, or pled guilty or nolo contendere to, a felony either (i) During the seven-year period preceding the date of the application for licensing; or (ii) At any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering ... (Banking Law 9 599-e [ 1J [b] [i], [ii]). However, for purposes of that subdivision, the superintendent may, in his or her discretion, disregard a conviction where the felon has been pardoned (Banking Law 0 599-e [l] [b] [i]). Correction Law 5 753, a prior general statute, must yieldn to [BankingLaw 5 599-e,] a later specific or special statute ( M a w of Rampolla v Banking Dept. o the State ofh! Y , 93 AD3d 526, 527 [lntDept 20121; quoting Matter ofNiagara f County v Power Auth. ofsfate o f N K , 82 AD3d 1597, 1601 [41hDept 201 11). - In 1989, petitioner pled guilty to Conspiracy Aiding & Abetting Filing False Tax - Returns a felony involving an act o f fraud, dishonesty, or a breach of trust .,. within the meaning Banking Law 3 599-e [b] [ii]). While petitioner was granted a Certificate of Relief from Disabilities automatically imposed by law by reason of his felony conviction, pursuant to Correction Law 4 701, he has not been pardoned (Matter ofRumpoZZu, 93 AD3d at 527). Similarly, his Certificate of Good Conduct also is not a pardon. Therefore, the superintendent had no discretion to disregard Petitioner s conviction and was required to deny his application 4 [* 6] (id.). It follows that the determination of the Banking Department was not arbitrary or capricious. While there is no dispute that petitioner is rehabilitated and may be able to perfom the functions required of a Mortgage Loan Originator without any risk to the public, the clear terms of the Banking Law and the relevant case law are binding on this court. Accordingly, it is: ORDERED and ADJUDGED that the petitioner s application pursuant to CPLR article 78 seeking an annulment of respondent s August 4,201 1 determination is denied and the petition is hereby dismissed. This constitutes the decision, order and judgment of the court. Dated: July L + O 12 New York, New York 5

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