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CFO Alex Sink licensed ex-felons to sell insurance after bashing other agency for similar moves

TALLAHASSEE — At the same time Alex Sink tried to ban felons from selling mortgages in Florida, her own state office was licensing ex-cons in the insurance business.

As Florida's chief financial officer, Sink oversees about 527,000 insurance licenses in the state. Her office could not identify how many of those belonged to agents with criminal backgrounds.

But the Times/Herald has identified at least 11 agents convicted of felonies such as grand larceny, fraudulent use of credit cards and writing bad checks who received their license from Sink, the Democratic nominee for governor.

A twelfth applicant was licensed nine years after a shoplifting conviction, despite rules that appear to require a 15-year waiting period for that crime. Sink's office did not respond to a question about that case.

State law prohibits Sink from using a criminal history as the sole reason to deny an insurance license application as long as the applicant has met a list of other requirements.

But Sink can use that criminal history against an applicant if the crime is "directly related" to the insurance business. She also has broad discretion to withhold a license if the crime shows the applicant has a "lack of fitness or trustworthiness" commensurate with the insurance industry.

Sink could not name one case in which she used that authority. And her CFO office could not find any examples after three days of searching.

"We're following the letter of the law," Sink said.

Questions about giving ex-felons insurance licenses were first raised during a debate last Friday by Sink's Republican rival in the governor's race, Rick Scott.

"You don't know what you're talking about," Sink said to Scott's prodding.

Scott replied that Sink "takes no responsibility for anything."

Sink's campaign shoots back that Scott has dodged his fair share of accountability.

Scott promises voters that he'll apply business principles to government but refuses to release a sworn deposition given earlier this year as part of a lawsuit against his latest business venture, a chain of health care clinics in Florida known as Solantic.

Scott also says he takes responsibility for "mistakes'' made by Columbia/HCA, his chain of hospitals, that led to the company paying $1.7 billion in fines for Medicare fraud and pleading guilty to 14 felony charges for a variety of violations.

He was not charged with a crime, denies he was warned that the company was violating the law, and said he should have hired more auditors.

Meanwhile, piling up are Scott's criticisms that Sink distances herself from controversies the happen on her watch:

• In the late 1990s, Sink was on the audit board of Sykes Enterprises, a Tampa-based call center, when it was sued by investors for improper accounting procedures. Sink said she was unaware of the problems.

• As a member of the board that oversees state investments, Sink didn't object to some questionable transactions, notably the $266 million Peter Cooper Village real estate debacle, until the investments went south.

• While she was president of NationsBank Florida, the bank's parent company paid a $6.7 million fine for hoodwinking customers into buying high-risk securities. Sink said she had nothing to do it, because the suspect activity was ordered by her superiors.

The attorney for the plaintiffs in a suit against NationsSecurities, a division of the Charlotte-based NationsBank, said Sink should not be blamed for her company getting in trouble for the security sales.

"The state presidents were being told what to do, that they had to help the securities people," said Jonathan Alpert, a Tampa lawyer and Sink supporter.

Albert's comments echoed a NationsSecurities whistle-blower, David Cray, who said, "I would tend not to point the finger at Alex Sink for this."

Sink said she "had no authority or control" over the securities sales. "There were very, very strict firewalls between any kind of securities and brokerage operations and operations of commercial banking," she said.

Those "firewalls," Sink said, were the result of the Depression-era Glass-Steagall law. But Yale University finance expert Jonathan Macey said Sink wasn't prohibited from finding out what was going on in her bank.

"She's the state bank president," he said. "She has the authority and perhaps the responsibility to know what's going on in her lobby."

When asked Tuesday about giving felons insurance licenses, Sink pointed to a rigid process created by the Legislature that lets people with criminal records get insurance licenses. "It's pretty clear in the law what the guidelines are, and our office is following the guidelines," she said.

State law requires lengthy waiting periods, restoration of civil rights, fingerprinting and background checks for applicants with criminal histories. Sink's office has received 383,000 applications for insurance licenses since 2007. About 12,000 of those involved people with arrest records, but the CFO's office could not say how many were convicted or how many received licenses.

At the end of that rigorous process there is one last hurdle: Sink's authority to deny a license if she has concerns about the person's character or the safety of customers.

In 2008, an "outraged" Sink used her clout as one of three state Cabinet members to force the resignation of Florida's top mortgage regulator, Don Saxon, after news reports showed Saxon declined to use his discretionary power to stop felons from receiving mortgage broker licenses.

A Miami Herald investigation found more than 10,000 people with criminal records had been licensed to work in the mortgage industry, and many had gone on to commit mortgage fraud.

Of the 11 ex-felons Sink granted insurance licenses, only one has been arrested since, according to the Florida Department of Law Enforcement, and that was over driving while intoxicated. And none has been the subject of a consumer complaint or disciplinary action from Sink's office.

But in 2008, Sink said, "Floridians depend on the state to protect them from criminals." She urged Gov. Charlie Crist to issue an order banning all felons from getting a mortgage license.

Crist accepted Saxon's resignation from Office of Financial Regulation but didn't issue the executive order, saying the office already had the power to deny licenses to ex-cons.

Sink has that same power regarding insurance licenses.

"The facts are always considered, whether its insurance licensing or any other type of licensing," she said in an interview. "And it's pretty clear in the law what the guidelines are and our office is following the guidelines."

Sink's discretionary power to reject a license comes at the end of one of the most rigorous application processes in the country, according to several national insurance groups.

Florida requires 200 hours of training to sell property and casualty policies. All agents must be fingerprinted, including those who live out-of-state.

Would-be agents with a criminal history must wait five, 10 or 15 years after the crime before receiving a license. Lesser crimes, such as public drunkenness or disorderly conduct, require the shortest waiting period, while the 15-year punishment is reserved for insurance-related violations, like falsifying insurance claims, or the most heinous crimes such as murder or rape.

"Florida is one of the toughest places to get an insurance license in the country, if not the toughest," Florida Association of Insurance Agents vice president Scott Johnson said.

Times/Herald reporter Marc Caputo and Times researcher John Martin contributed to this report. Michael C. Bender can be reached at mbender@sptimes.com or (850) 224-7263. This article has been revised to reflect the following correction: The office of Florida's chief financial officer, Alex Sink, has received 383,000 applications for insurance licenses since 2007. About 12,000 of those involved people with arrest records, but the CFO's office could not say how many were convicted or how many received licenses. Due to incorrect information from the office, a story Thursday had erroneous figures.

CFO Alex Sink licensed ex-felons to sell insurance after bashing other agency for similar moves 10/13/10 [Last modified: Monday, October 18, 2010 1:26pm]
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