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Ruling for insurance producer in licensing case affirmed

January 2, 2019

A trial court order lifting a regulator’s nonrenewal of an insurance producer’s license stemming from his unauthorized use of funds from his homeowner’s association was affirmed by the Indiana Court of Appeals on Monday. The appellate panel agreed that the man’s actions in this case did not warrant such a severe sanction.

Jeffrey A. Schumaker’s insurance producer license was not renewed by the Indiana Department of Insurance after he admitted during his license renewal process that he had taken about $8,300 from his homeowners association’s bank account. Schumaker took the money to pay a medical bill with the intent to repay it from an expected commission check. Schumaker ultimately did repay the money, and resigned as HOA treasurer, also disclosing his actions to the association, according to the record. The HOA declined to press charges.

Schumaker also disclosed the incident to parties including the Financial Industry Regulatory Authority and the Indiana DOI when he sought to renew his license. The Department of Insurance rejected his application for renewal, even after an administrative law judge ruled that “the evidence in this case demonstrates that Schumaker took $8300 from the homeowners’ association bank account with the intent to repay it” and “[w]hile dishonest, all evidence presented at the hearing was that this was a singular issue, out of character for Schumaker, and not part of a pattern of deceit or a series of ‘practices’ in either his personal or professional life.”

After his license renewal was rejected, Schumaker filed for judicial review, and the Marion Superior Court vacated the DOI’s decision against renewal. The Indiana Court of Appeals agreed Monday in The Commissioner of the Indiana Department of Insurance v. Jeffrey A. Schumaker, 18A-MI-864.

“The evidence supports the conclusion that Schumaker’s action of taking money from his homeowners association, under the specific circumstances of this case as set forth in the administrative record, did not constitute ‘practices’ in Schumaker’s professional or personal life which warrant the severe sanction of refusal to renew his insurance producer license,” Judge Elaine Brown wrote for the panel.

“To the extent that he did not timely report the FINRA action to the Department and was required to do so, Schumaker testified that, because he was going through everything with FINRA, he assumed FINRA shared all of that information with the Commissioner, that he did not realize that was something he needed to do as well, and that as soon as he went online to complete his renewal he provided an explanation for what had happened,” Brown wrote. “We agree that any delay does not merit the strict sanction of nonrenewal of Schumaker’s license. We do not disturb the trial court’s ruling.”

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