BEFORE THE CALIFORNIA BOARD OF ACCOUNTANCY DEPARTMENT OF CONSUMER AFFAIRS STATE OF CALIFORNIA
In the Matter of the Interim Suspension Order Against:
DENNIS DUANE DIVER Case No. AC-2015-97 Oroville, California 95966
Certified Public Accountant OAH No. 2015100893 Certificate No. CPA 21362
Respondent.
AMENDED ORDER ON PETITION FOR INTERIM SUSPENSION ON NOTICE
The Petition for Interim Suspension on Notice was heard before Stephen J. Smith, Administrative Law Judge (ALJ), Office of Administrative Hearings (OAH), State of California, on November 17, 2015, in Sacramento, California. The ALJ was duly delegated to hear this matter by the California Board of Accountancy, pursuant to Business and Professions Code section 494, subdivision (h).
Stephanie Alamo-Latif, Deputy Attorney General, Department of Justice, State of California, represented the California Board of Accountancy (Board), Department of Consumer Affairs, State of California
Respondent Dennis Duane Diver, C.P.A., appeared and was represented by Eric Ortner, Attorney at Law.
Evidence was presented pursuant to Business and Professions Code section 494, subdivision (d), the matter was argued and submitted on November 17, 2015.
FACTUAL FINDINGS
1. The Board has the authority to regulate the practice of public accounting and to impose rules and standards governing the practice of accountancy in the State of California, pursuant to Business and Professions Code sections 5018 and 5019. The Board has the authority to impose disciplinary action upon any holder of a license to practice as a certified public accountant in the State of California for violation of those rules and standards, pursuant to Business and Professions Code section 5050.2. The Board has the
1 authority to seek interim suspension, pending a full evidentiary hearing, of any holder of a California certificate to practice as a public accountant (CPA).
2. The standard of proof to be applied is a preponderance of the evidence.1
3. Respondent, through counsel, timely sought an evidentiary hearing on the Petition. This hearing followed.
4. Evidence was presented via the Petition for Interim Suspension (Petition), a supporting report and supplements written by an investigator employed by the Butte County District Attorney’s White Collar Crime Investigations Unit (DA Investigator), a statement from respondent to the DA investigator, and court records from the Butte County Superior Court. Respondent presented the Butte County Probation Department Presentence Investigation and Report (Probation Report).
5. The Petition attached respondent’s conviction of two felony offenses by no contest pleas in the Butte County Superior Court on September 30, 2015. The convictions were for grand theft by embezzlement, and respondent additionally admitted an enhancing allegation for a great taking/white-collar theft, as part of his plea. The Superior Court imposed Judgment and Sentence on the pleas on October 25, 2015.
6. Respondent’s plea agreement reserves the matter of the status and discipline of his CPA certificate to the Board. The court imposed no sentencing restrictions on respondent practice as a CPA, based on that reservation.
7. The Superior Court concluded that, pursuant to Penal Code section 1203.045 and California Rule of Court 4.413, that respondent’s case involved “unusual circumstances where the interests of justice would best be served by granting probation,” rather than sentencing him to state prison. Respondent was credited for acknowledging guilt at an early stage of the proceedings, fully and candidly cooperating with law enforcement investigators from the outset, including comprehensive responses to the DA Investigator’s repeated requests for additional information and documentation, and making considerable effort to begin the process of repaying all funds misappropriated. The court noted respondent is 68 years old, has no significant record of criminal conduct, and had almost 40 years of unblemished practice as an accounting professional until the almost two year period beginning in 2013, when he began to misappropriate client funds. The court found that his misconduct, although not excused, was in part precipitated by a combination of health crisis, a very expensive divorce, depression and PTSD, and a tendency toward excessive drinking. The court found that by the time of sentencing, respondent had taken responsible steps to deal with all of these problems. The mitigating factors were articulated by the Superior Court in deciding upon imposition of a probationary sentence that involved no prison time, little jail time, community service, and latitude for respondent to continue to work in order to
1 Business and Professions Code section 494, subdivision (c).
2 be able to make restitution. The sentencing court reserved jurisdiction to determine the total amount of restitution due, due to at least one outstanding claim yet to be resolved.
8. The Probation Report noted that respondent had repaid slightly more than half of the money wrongfully taken from client accounts entrusted to him as of the date of his sentencing hearing. He intends to repay the remainder of the misappropriated funds before his three-year court-imposed formal probation expires. He has a substantial incentive to do so, in that his plea agreement in the Butte County Superior Court permits him to petition for reduction of his felony convictions to misdemeanors upon proof of full repayment of all misappropriated funds.
9. The evidence presented met the Board’s burden of proving that respondent has engaged in acts or omissions constituting violations of the California Accountancy law.
10. Respondent seeks a limited permission in the issuance of any Order following these proceedings to be able to close out four matters in progress, including two audits and one offer in compromise. At least two of these matters involve trusts. Respondent contends that it is in the best interests of the clients in these four matters to permit him to finish the work he has begun. The Probation Report makes reference to respondent’s statement to the Probation Officer that he was in the process of transferring many matters for which a CPA license is required to other professionals. These four matters were not mentioned.
11. Respondent is on formal probation, and a new breach of fiduciary duty or client trust would almost certainly result in a revocation of probation and a prison term. Some of the matters for which respondent seeks leave to continue to practice after an Order is issued in this matter involve trusts, which were the primary targets of respondent’s misappropriations leading to this action.
12. This is a proper case to grant the Petition and issue the Interim Suspension Order sought. The record reflects that absent the issuance of the Order, a significant potential exists for harm to the public.
13. There is insufficient evidence of oversight and control to permit granting the limited exception to the Interim Suspension sought by respondent. Criminal probation provides incentive to conform to all requirements for lawful practice. That same criminal probation also offers incentive to accelerate repayment of misappropriated funds, and thus a temptation to again risk conviction and imprisonment to use trust funds under his control to more quickly satisfy the restitution obligation. The risk of conviction and possible prison failed to deter respondent earlier, and this record does not contain sufficient assurances that the risk is insignificant at this time. In the interim, the Board’s mandate to protect the public is best served by issuance of the sought Interim Suspension, until such time as those additional matters can be fully explored through a full evidentiary hearing.
LEGAL CONCLUSIONS
1. Business and Professions Code section 494 provides:
3 (a) A board or an administrative law judge sitting alone, as provided in subdivision (h), may, upon petition, issue an interim order suspending any licentiate or imposing license restrictions, including, but not limited to, mandatory biological fluid testing, supervision, or remedial training. The petition shall include affidavits that demonstrate to the satisfaction of the board both of the following:
(1) The licentiate has engaged in acts or omissions constituting a violation of this code or has been convicted of a crime substantially related to the licensed activity. (2) Permitting the licentiate to continue to engage in the licensed activity, or permitting the licentiate to continue in the licensed activity without restrictions, would endanger the public health, safety, or welfare.
[¶] … [¶]
(e) The board or an administrative law judge sitting alone as provided in subdivision (h), shall issue a decision on the petition for interim order within five business days following submission of the matter. The standard of proof required to obtain an interim order pursuant to this section shall be a preponderance of the evidence standard. If the interim order was previously issued without notice, the board shall determine whether the order shall remain in effect, be dissolved, or modified.
(f) The board shall file an accusation within 15 days of the issuance of an interim order. In the case of an interim order issued without notice, the time shall run from the date of the order issued after the noticed hearing. If the licentiate files a Notice of Defense, the hearing shall be held within 30 days of the agency's receipt of the Notice of Defense. A decision shall be rendered on the accusation no later than 30 days after submission of the matter. Failure to comply with any of the requirements in this subdivision shall dissolve the interim order by operation of law.
[¶] … [¶]
(j) A plea or verdict of guilty or a conviction after a plea of nolo contendere is deemed to be a conviction within the meaning of this section. A certified record of the conviction shall be conclusive evidence of the fact that the conviction occurred. A
4 board may take action under this section notwithstanding the fact that an appeal of the conviction may be taken.
[¶] … [¶]
2. Petitioner has met its burden of proving by a preponderance of the evidence both standards required to be proved in order to grant the Petition, as set forth in the Factual Findings. The Petition shall be granted, and the Order of Interim Suspension imposed.
3. Respondent’s request to complete the four matters pending cannot be granted. At this stage of the proceedings, before a full evidentiary hearing, there is insufficient evidence of oversight and control of respondent’s practice satisfactory to address concerns regarding the potential for further harm to the public. Carving out an exception to this Order imposing Interim Suspension that permits respondent to continue to practice as a CPA on matters similar to those that resulted in the bringing of this Petition and the criminal convictions is not supported here, as set forth in the Factual Findings.
ORDER
The Petition for Interim Suspension of California Certified Public Accountant Certificate number CPA 21362, issued by the California Board of Accountancy to Dennis Duane Diver is GRANTED.
CPA Certificate number CPA 21362, issued by the Board to Dennis Duane Diver is SUSPENDED.
The suspension remains in effect until such time as modified or lifted by the Board, in its discretion, or the conclusion of proceedings as provided in Business and Professions Code section 494, subdivision (f). The Deputy Attorney General shall file and serve an Accusation in accordance with the requirements of Business and Professions Code section 494, subdivision (f).
Respondent is reminded the provisions of Business and Professions Code section 494, subdivision (i), as follows:
Failure to comply with an interim order issued pursuant to subdivision (a) or (b) shall constitute a separate cause for disciplinary action against any licentiate, and may be heard at, and as a part of, the noticed hearing provided for in subdivision (f). Allegations of noncompliance with the interim order may be filed at any time prior to the rendering of a decision on the accusation. Violation of the interim order is established upon proof that the licentiate was on notice of the interim order and its terms, and that the order was in effect at the time of the violation. The finding of a violation of an interim order made at
5 the hearing on the accusation shall be reviewed as a part of any review of a final decision of the agency.
DATED: November 19, 2015
______STEPHEN J. SMITH Administrative Law Judge Office of Administrative Hearings
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