Violent Crime Control and Law Enforcement Act of 1994 (18 U.S.C. §§ 1033, 1034 )

BUREAU OF INSURANCE

April 25, 2000

Administrative Letter 2000 - 5

TO:

All domestic companies licensed in accordance with Chapter 10, 40, 41, 42, 43,

44 or 45 of Title 38.2 of the Code of Virginia or otherwise authorized to write

insurance or reinsurance risks pursuant to Chapter 26, 27, 28, 29 or 51 of Title

38.2 of the Code of Virginia or § 65.2-802 of the Code of Virginia, and all

reinsurance intermediaries that are residents of Virginia and licensed in

accordance with Article 5 of Chapter 18 of Title 38.2 of the Code of Virginia.

RE:

18 U.S.C. §§ 1033, 1034 -- Violent Crime Control and Law Enforcement Act of

1994

The purpose of this administrative letter is to remind domestic insurers and others domiciled

or residing in Virginia of the requirement and means of complying with 18 U.S.C. § 1033

(attached) pertaining to the federal Violent Crime Control and Law Enforcement Act of 1994

(Act). This Act prohibits any individual, who is engaged in the "business of insurance" as

defined in 18 U.S.C. § 1033(f)(1) and whose activities affect "interstate commerce" as

defined in 18 U.S.C. § 1033 (f)(3), from willfully permitting any individual who has been

convicted of a criminal felony involving dishonesty or breach of trust, or who has been

convicted of an offense under 18 U.S.C. § 1033, to be engaged in the business of insurance

unless written consent is given pursuant to 18 U.S.C. § 1033(e)(2) by an insurance

regulatory official authorized to regulate the insurer.

The Act requires a written consent from an insurance regulatory official authorized to

regulate the insurer before an insurer may permit an individual, who has been convicted of a

criminal felony involving breach of trust or dishonesty or any offense referenced in 18 U.S.C.

§ 1033 (prohibited individual), to engage in the business of insurance as the insurer's

director, officer, agent or employee.

The attached Notice and Request for Waiver Evidencing Written Consent to Engage in the

Business of Insurance Pursuant to 18 U.S.C

permit an individual, who has been convicted of a

criminal felony involving breach of trust or dishonesty or any offense referenced in 18 U.S.C.

§ 1033 (prohibited individual), to engage in the business of insurance as the insurer's

director, officer, agent or employee.

The attached Notice and Request for Waiver Evidencing Written Consent to Engage in the

Business of Insurance Pursuant to 18 U.S.C. § 1033 (e)(2) (application) should be

reproduced, completed and filed with the State Corporation Commission Bureau of

Insurance (Commission), by licensed companies domiciled in Virginia, before any prohibited

individual is permitted to engage in the business of insurance as a director, officer or

employee of such company. THIS REQUIREMENT APPLIES TO CURRENT, AS WELL

AS FUTURE, EMPLOYEES, DIRECTORS AND OFFICERS. A letter from the company

Administrative Letter 2000-5

April 25, 2000

Page 2

expressly stating that the company wants to employ or otherwise retain the services of the

individual in question must be filed with the application.

The filing of the application does not constitute written consent to engage in the business of

insurance within Virginia. Any consent or waiver given by the Commission will be in writing

and expressly given. Criminal sanctions are authorized for those who willfully permit a

prohibited individual to engage in the business of insurance without written consent.

A company licensed in Virginia but domiciled in another state should contact the

Commissioner, Director or Superintendent of Insurance of its domiciliary state for

information regarding procedures for complying with the Act. Similarly, non-resident agents

and intermediaries should contact the Commissioner, Director or Superintendent of

Insurance in its domiciliary state for information regarding procedures for complying with the

Act.

Questions concerning persons licensed as agents, insurance consultants, managing general

agents, surplus lines brokers or viatical settlement brokers should be directed to:

Warren E

Act. Similarly, non-resident agents

and intermediaries should contact the Commissioner, Director or Superintendent of

Insurance in its domiciliary state for information regarding procedures for complying with the

Act.

Questions concerning persons licensed as agents, insurance consultants, managing general

agents, surplus lines brokers or viatical settlement brokers should be directed to:

Warren E. Spruill

Supervisor, Agents Licensing

Life and Health Division

SCC, Bureau of Insurance

P.O. Box 1157

Richmond, Virginia 23218

(804) 786-9522

Completed applications and questions concerning this administrative letter should be

directed to:

Victoria I. Savoy, CPA

Chief Financial Auditor, Financial Regulation Division

SCC, Bureau of Insurance

P.O. Box 1157

Richmond, Virginia 23218

(804) 371-9869

Sincerely,

Alfred W. Gross

Commissioner of Insurance

Attachments

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NOTICE AND REQUEST FOR WAIVER EVIDENCING WRITTEN CONSENT

TO ENGAGE IN THE BUSINESS OF INSURANCE PURSUANT TO

18 U.S.C. § 1033(e)(2)

TO BE FILED WITH THE STATE CORPORATION COMMISSION BUREAU OF INSURANCE

(COMMISSION)

Please fill in the blanks below; also number and attach requested descriptions, comments, and attachments.

SECTION I – APPLICANT INFORMATION

This Application is filed by

(the Licensee), a company now or in the future to be domiciled in Virginia and licensed

under Title 38.2 of the Code of Virginia and ,

(the § 1033 (e)(1)(A) Individual).

1.

Licensee name:

NAIC #:

2.

Contact person:

Title:

3

,

(the § 1033 (e)(1)(A) Individual).

1.

Licensee name:

NAIC #:

2.

Contact person:

Title:

3.

Telephone #: FAX #:

4.

§ 1033 (e)(1)(A) Individual (director, officer or employee):

5.

Social Security Number:

6.

Home Address:

7.

Telephone #:

8.

Alias or other names used, if any:

SECTION II – PRESENT/PROPOSED INSURANCE EMPLOYMENT

9.

The § 1033(e)(1)(A) Individual currently holds a position with the Licensee: Yes _____ No _____

• Describe the current position.

10.

The § 1033(e)(1)(A) Individual is contemplating a new position with the Licensee: Yes _____ No _____

• Describe the new position

10.

The § 1033(e)(1)(A) Individual is contemplating a new position with the Licensee: Yes _____ No _____

• Describe the new position.

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11. The position involves activities of a director ______, officer ______, employee _____ (check all that apply).

• Describe the nature, duties and activities of the office, position, occupation, trade, vocation or

profession for which the issuance of written consent is sought. Attach all written agreements or

contracts to be entered into between the Licensee and the § 1033(e)(1)(A) Individual.

12.

Actual or prospective dates of employment or association with the Licensee:

SECTION III – CRIMINAL HISTORY

13.

Type and date(s) of conviction(s):

• Provide the details regarding each felony conviction that appears to prohibit the § 1033(e)(1)(A)

Individual from engaging in the business of insurance as defined in 18 U.S.C. § 1033. Include (i) the

type, (ii) date of the offense, (iii) the court (with city/county and state), (iv) docket number, (v) age of

the § 1033(e)(1)(A) Individual on such date, (vi) time that has since elapsed, (vii) whether the §

1033(e) (1)(A) Individual has made full payment of outstanding court costs, supervision, fees/fines and

restitution concerning the offense, and (viii) whether the § 1033(e)(1)(A) Individual has received a full

pardon or other type of pardon for the offense. Attach additional pages if needed.

14. Was the offense insurance related? Yes _____ No _____

• Comment on the bearing, if any, the criminal offense will have on the § 1033(e)(1)(A) Individual’s

fitness or ability to perform the duties, activities, or responsibilities presented in this Application.

Attach additional pages if needed

received a full

pardon or other type of pardon for the offense. Attach additional pages if needed.

14. Was the offense insurance related? Yes _____ No _____

• Comment on the bearing, if any, the criminal offense will have on the § 1033(e)(1)(A) Individual’s

fitness or ability to perform the duties, activities, or responsibilities presented in this Application.

Attach additional pages if needed.

15.

Are there special circumstances or additional information which should be considered with this

Application? Yes_____ No_____

• Describe any mitigating circumstances and attach evidence of rehabilitation (such as a letter from the

state parole or probation office outlining performance or satisfactory completion of parole) or evidence

of current qualifications, including current employment history and records of professional

certifications presently held. Attached additional pages if needed.

16

16.

Has disclosure of the conviction(s) been made to any regulators? Yes ____ No ____

• Attach copies of any such notice or disclosure.

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17. Has regulatory consent been requested or received by or on behalf of the § 1033(e)(1)(A)

Individual from any insurance regulatory official or agency? Yes ____ No ____

• Attach a copy of the request and the regulatory response(s).

SECTION IV - ATTACHMENTS

Attach the following documents to this Application. Applications without attachments, or Applications with

incomplete attachments, will be returned to the Licensee.

1.

A current copy (no more than 90 days old) of the § 1033(e)(1)(A) Individual’s criminal history record

report (CCRE). The § 1033(e)(1)(A) Individual can obtain a CCRE by contacting the state law

enforcement agency in each state or other jurisdiction in which he or she has resided, and requesting the

information. In Virginia that would be the Virginia State Police.

2.

Certified copy of the indictment, criminal complaint, or docket sheet or other initiating documents for

the charge(s) which is the subject of this Application.

3.

A certified copy of the order of judgement and sentence of the court for the conviction that is the subject

of this Application, including certification of completion and performance of all conditions imposed by

the court.

4.

A letter from the Licensee expressly stating that the Licensee wants to employ or otherwise retain the

services of the § 1033(e)(1)(A) Individual

ct of this Application.

3.

A certified copy of the order of judgement and sentence of the court for the conviction that is the subject

of this Application, including certification of completion and performance of all conditions imposed by

the court.

4.

A letter from the Licensee expressly stating that the Licensee wants to employ or otherwise retain the

services of the § 1033(e)(1)(A) Individual.

For the § 1033(e)(1)(A) Individual:

I, _________________________________________ (name of the § 1033(e)(1)(A) Individual), swear under

penalty of law that the statements in the attached Application, including the documents appended thereto, are

true and correct and complete. I understand that the statements in the Application and the attachments to this

Application are being filed with the Virginia State Corporation Commission Bureau of Insurance (Commission);

and that they will be relied upon by the Commission in the execution of its duties under Title 38.2 of the Code

of Virginia, and 18 U.S.C. § 1033, in making a decision on this Application. I understand that if there are any

false statements in this Application, or if there are any false statements included in the attachments to this

Application, I may be criminally prosecuted under any state criminal or administrative remedies available and

that any insurance license(s) that I currently hold, or for which I have applied, will be subject to suspension or

revocation. I further understand that a false statement would also constitute a violation of 18 U.S.C. § 1033.

For the purposes of this Application, I do not contest the validity of any felony conviction upon which this

request would be granted

r administrative remedies available and

that any insurance license(s) that I currently hold, or for which I have applied, will be subject to suspension or

revocation. I further understand that a false statement would also constitute a violation of 18 U.S.C. § 1033.

For the purposes of this Application, I do not contest the validity of any felony conviction upon which this

request would be granted. By signing this Application, I acknowledge that the Commission may make or direct

to be made an independent investigation to confirm the information in this Application and I expressly consent

and authorize any person, business or agency to release any information the Commission may request as part

of the investigation, including but not limited to, records of my former employment, state and federal tax

returns, business records, and banking records.

§ 1033(e)(1)(A) Individual (signature)

Print Name

Sworn before me this __________ day of __________________________, ________.

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Notary Public

City/County of _______________________________ in the State of

My commission expires:

For the Licensee: Under penalty of perjury, I do hereby swear and/or affirm that I have reviewed the

information contained in this Application, including all attachments, and to the best of my knowledge

and belief, the information contained herein and all attachments is true, correct, and complete; and I

further swear and/or affirm that the named § 1033(e)(1)(A) Individual will not be placed into a position

by which the § 1033 (e)(1)(A) Individual’s activities will constitute a risk or threat to this

mation contained in this Application, including all attachments, and to the best of my knowledge

and belief, the information contained herein and all attachments is true, correct, and complete; and I

further swear and/or affirm that the named § 1033(e)(1)(A) Individual will not be placed into a position

by which the § 1033 (e)(1)(A) Individual’s activities will constitute a risk or threat to this company or its

insureds and policyholders.

Licensee

By:

Name and Title of Officer

Sworn before me this __________ day of __________________________, ________.

Notary Public

City/County of _______________________________ in the State of

My commission expires:

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ATTACHMENT A:

18 UNITED STATES CODE, SECTIONS 1033 AND 1034

Sec. 1033. Crimes by or affecting persons engaged in the business of insurance whose activities affect interstate commerce.

(a)(1) Whoever is engaged in the business of insurance whose activities affect interstate commerce and knowingly,

with the intent to deceive, makes any false material statement or report or willfully and materially overvalues any land,

property or security—

(A) in connection with any financial reports or documents presented to any insurance regulatory official or agency

or an agent or examiner appointed by such official or agency to examine the affairs of such person, and

(B) for the purpose of influencing the actions of such official or agency or such an appointed agent or examiner,

shall be punished as provided in paragraph (2).

operty or security—

(A) in connection with any financial reports or documents presented to any insurance regulatory official or agency

or an agent or examiner appointed by such official or agency to examine the affairs of such person, and

(B) for the purpose of influencing the actions of such official or agency or such an appointed agent or examiner,

shall be punished as provided in paragraph (2).

(2) The punishment for an offense under paragraph (1) is a fine as established under this title or imprisonment for not

more than 10 years, or both, except that the term of imprisonment shall be not more than 15 years if the statement or

report or overvaluing of land, property, or security jeopardized the safety and soundness of an insurer and was a

significant cause of such insurer being placed in conservation, rehabilitation, or liquidation by an appropriate court.

(b)(1) Whoever —

(A) acting as, or being an officer, director, agent, or employee of, any person engaged in the business of insurance

whose activities affect interstate commerce, or

(B) is engaged in the business of insurance whose activities affect interstate commerce or is involved (other than as

an insured or beneficiary under a policy of insurance) in a transaction relating to the conduct of affairs of such a

business, willfully embezzles, abstracts, purloins, or misappropriates any of the moneys, funds, premiums, credits,

or other property of such person so engaged shall be punished as provided in paragraph (2).

e whose activities affect interstate commerce or is involved (other than as

an insured or beneficiary under a policy of insurance) in a transaction relating to the conduct of affairs of such a

business, willfully embezzles, abstracts, purloins, or misappropriates any of the moneys, funds, premiums, credits,

or other property of such person so engaged shall be punished as provided in paragraph (2).

(2) The punishment for an offense under paragraph (1) is a fine as provided under this title or imprisonment for not

more than 10 years, or both, except that if such embezzlement, abstraction, purloining, or misappropriation described in

paragraph (1) jeopardized the safety and soundness of an insurer and was a significant cause of such insurer being placed

in conservation, rehabilitation, or liquidation by an appropriate court, such imprisonment shall be not more than 15 years.

If the amount or value so embezzled, abstracted, purloined, or misappropriated does not exceed $5,000, whoever violates

paragraph (1) shall be fined as provided in this title or imprisoned not more than one year, or both.

(c)(1) Whoever is engaged in the business of insurance and whose activities affect interstate commerce or is involved

(other than as an insured or beneficiary under a policy of insurance) in a transaction relating to the conduct of affairs of

such a business, knowingly makes any false entry of material fact in any book, report, or statement of such person

engaged in the business of insurance with intent to deceive any person, including any officer, employee, or agent of such

person engaged in the business of insurance , any insurance regulatory official or agency, or any agent or examiner

appointed by such official or agency to examine the affairs of such person, about the financial condition or solvency of

such business shall be punished as provided in paragraph (2).

© 1998 National Association of

Insurance Commissioners

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ployee, or agent of such

person engaged in the business of insurance , any insurance regulatory official or agency, or any agent or examiner

appointed by such official or agency to examine the affairs of such person, about the financial condition or solvency of

such business shall be punished as provided in paragraph (2).

© 1998 National Association of

Insurance Commissioners

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(2) The punishment for an offense under paragraph (1) is a fine as provided under this title or imprisonment for not

more than 10 years, or both, except that if the false entry in any book, report, or statement of such person jeopardized the

safety and soundness of an insurer and was a significant cause of such insurer being placed in conservation,

rehabilitation, or liquidation by an appropriate court, such imprisonment shall be not more than 15 years.

(d) Whoever, by threats or force or by any threatening letter or communication, corruptly influences, obstructs, or

impedes or endeavors corruptly to influence, obstruct, or impede the due and proper administration of the law under

which any proceeding involving the business of insurance whose activities affect interstate commerce is pending before

any insurance regulatory official or agency or any agent or examiner appointed by such official or agency to examine the

affairs of a person engaged in the business of insurance whose activities affect interstate commerce, shall be fined as

provided in this title or imprisoned not more than 10 years, or both.

g the business of insurance whose activities affect interstate commerce is pending before

any insurance regulatory official or agency or any agent or examiner appointed by such official or agency to examine the

affairs of a person engaged in the business of insurance whose activities affect interstate commerce, shall be fined as

provided in this title or imprisoned not more than 10 years, or both.

(e)(1)(A) Any individual who has been convicted of any criminal felony involving dishonesty or a breach of trust, or

who has been convicted of an offense under this section, and who willfully engages in the business of insurance whose

activities affect interstate commerce or participates in such business shall be fined as provided in this title or imprisoned

not more than 5 years, or both.

(B) Any individual who is engaged in the business of insurance whose activities affect interstate commerce and who

willfully permits the participation described in subparagraph (A) shall be fined as provided in this title or imprisoned not

more than 5 years, or both.

(2) A person described in paragraph (1)(A) may engage in the business of insurance or participate in such business if

such person has the written consent of any insurance regulatory official authorized to regulate the insurer , which consent

specifically refers to this subsection.

(f)

As used in this section-

(1)

the term "business of insurance" means-

(A)

the writing of insurance, or

(B)

the reinsuring of risks,

by an insurer , including all acts necessary or incidental to such writing or reinsuring and the activities of

persons who act as, or are, officers, directors, agents, or employees of insurers or who are other persons

authorized to act on behalf of such persons;

(2) the term "insurer" means any entity the business activity of which is the writing of insurance or the

reinsuring of risks, and includes any person who acts as, or is, an officer, director, agent, or employee of that

business

ctivities of

persons who act as, or are, officers, directors, agents, or employees of insurers or who are other persons

authorized to act on behalf of such persons;

(2) the term "insurer" means any entity the business activity of which is the writing of insurance or the

reinsuring of risks, and includes any person who acts as, or is, an officer, director, agent, or employee of that

business

(3)

the term "interstate commerce" means-

© 1998 National Association of

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(A)

commerce within the District of Columbia, or any territory or possession of

the United States;

(B)

all commerce between any point in the State, territory, possession, or the

District of Columbia and any point outside thereof;

(C)

all commerce between points within the same State through any place

outside such State; or

(D)

all other commerce over which the United States has jurisdiction; and

(4) the term "State" includes any State, the District of Columbia, the Commonwealth of Puerto Rico, the

Northern Mariana Islands, the Virgin Islands, American Samoa, and the Trust Territory of the Pacific Islands.

Sec. 1034. Civil penalties and injunctions for violations of section 1033.

(a) The Attorney General may bring a civil action in the appropriate United States district court against any person

who engages in conduct constituting an offense under section 1033 and, upon proof of such conduct by a preponderance

of the evidence, such person shall be subject to a civil penalty of not more than $50,000 for each violation or the amount

of compensation which the person received or offered for the prohibited conduct, whichever amount is greater. If the

offense has contributed to the decision of a court of appropriate jurisdiction to issue an order directing the conservation,

rehabilitation, or liquidation of an insurer, such penalty shall be remitted to the appropriate regulatory official for the

benefit of the policyholders, claimants, and creditors of such insurer

eived or offered for the prohibited conduct, whichever amount is greater. If the

offense has contributed to the decision of a court of appropriate jurisdiction to issue an order directing the conservation,

rehabilitation, or liquidation of an insurer, such penalty shall be remitted to the appropriate regulatory official for the

benefit of the policyholders, claimants, and creditors of such insurer. The imposition of a civil penalty under this

subsection does not preclude any other criminal or civil statutory, common law, or administrative remedy, which is

available by law to the United States or any other person.

(b) If the Attorney General has reason to believe that a person is engaged in conduct constituting an offense under

section 1033, the Attorney General may petition an appropriate United States district court for an order prohibiting that

person from engaging in such conduct. The court may issue an order prohibiting that person from engaging in such

conduct if the court finds that the conduct constitutes such an offense. The filing of a petition under this section does not

preclude any other remedy which is available by law to the United States or any other person.

© 1998 National Association of

Insurance Commissioners