Opinion ID: 1969705
Heading Depth: 1
Heading Rank: 1

Heading: a. Engelman

Text: Steven E. Engelman [4] began operating a bail bonding company known as Professional Bail bonds on October 22, 1992. Engelman subsequently incorporated the entity as Professional Bail Bonds, Inc. (Professional), which began issuing bonds in its own name in January of 1993. In March of that same year, Sandra Castagna, Senior Market Conduct Examiner for the MIA, and William McGarvey, a Market Conduct Examiner for that same organization, performed an examination of Professional's business activities as well as those of Engelman, for the period November 1, 1992 through February 28, 1993. By a letter dated April 19, 1993, [5] Castagna informed Engelman of the March examination results, questioning a $12,766.25 discrepancy between insurance premiums charged and premiums actually collected. Castagna also informed Engelman that Professional was not a registered trade name and that the corporation was not on record as having a Certificate of Qualification as required by § 168(e)(2) of the Code. On April 22, 1993, Engelman responded to Castagna's letter, averring that he had registered Professional as a trade name and completed the corporation's Certificate of Qualification and was filing it that same day. Unsure of the alleged discrepancy period, however, Engelman requested further information so that he could adequately respond. Within six days, Engelman's father, who also was his accountant, informed Castagna by letter that, with respect to the discrepancy between premiums charged and premiums collected, there are numerous situations where premiums are not paid in full because of broken promises, bad checks and the bad credit of essentially indigent persons who make up the bulk of his clientelle. [sic] At the time of these shortfalls, Steven [Engelman] provides his client with a written receipt and obtains a promissory note for the balance due. Steve keeps a record of these balances due but in time, many of these receivables go on to becoming write offs ... Following its investigation, the MIA alleged, inter alia, that by failing to collect bond premiums in full at the time the bonds were written, Engelman violated §§ 226(a), 230(b), and 242(e) of the Code, discussed further beginning in Part III, infra. The MIA also charged Engelman with violations of § 168(e)-(f), [6] for failing to timely acquire a Certificate of Qualification and for failing to timely register Professional's trade name with the agency. At a hearing held before an Administrative Law Judge (ALJ) of the Office of Administrative Hearings, [7] Engelman stipulated that from November 1, 1992 to February 28, 1993, he and his employees had accepted less than the full premium for thirty-five issued bonds, although the balance of the premiums due had been secured by promissory notes. The sureties underwriting the bonds did not have a rate filing permitting installment payments. Engelman also conceded that he did not register Professional's trade name until April 20, 1993almost five months beyond the date it began issuing bonds and collecting premiums in its own name. The ALJ recommended granting Engelman's Motion for Summary Decision on the installment payment issue, concluding that none of the cited statutes prohibited the practice. The ALJ did, however, conclude that Engelman's failure to comply with § 168(e)-(f) warranted a three-day suspension under § 175(12). [8] On March 8, 1995, the Insurance Commissioner (Commissioner) rejected the ALJ's conclusions of law with respect to installment payments, concluding that [they] ... plainly constitute[ ] a `special favor ... benefit ... or valuable consideration' as those terms are used in § 226(a) of Article 48A, and that § 230(b) prohibited the collection of partial premiums. The Commissioner imposed a thirty-day suspension for the totality of Engelman's alleged violations. Engelman then sought judicial review in the Circuit Court for Baltimore City.