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Difficulty: MediumFraud and False Statements (18 U.S.C. 1033 and 1034)

Marcus, an experienced commercial property underwriter, is applying for a senior position at a regional brokerage firm that transacts business across multiple state lines. Ten years ago, Marcus was convicted of a felony involving a breach of trust. Under the provisions of 18 U.S.C. 1033, what is legally required before the brokerage firm can employ him in the insurance business?

  1. A
    The state insurance commissioner must pass a special administrative rule permanently expunging the felony from federal records.
  2. B
    The brokerage firm must pay a federal penalty fee into the state Guaranty Association fund to protect against insolvency.
  3. Marcus must obtain written consent from an authorized state insurance regulatory official permitting him to engage in the business of insurance.Answer
  4. D
    Marcus may accept the position immediately under a temporary broker license since his conviction occurred more than seven years ago.

Answer

Marcus must obtain written consent from an authorized state insurance regulatory official permitting him to engage in the business of insurance.
The correct answer accurately reflects the statutory exception found in 18 U.S.C. 1033. The law permanently bars individuals convicted of felonies involving dishonesty or a breach of trust from participating in the insurance industry unless they secure specific written consent from a state insurance commissioner or equivalent regulator. There are no automatic time expirations for this restriction.

Step-by-Step Solution

1
Identify the relevant federal statute applying to the individual's criminal history.
Marcus has a prior felony conviction involving a breach of trust, which directly triggers the restrictions of 18 U.S.C. 1033.
The statute specifically targets individuals with criminal felonies involving dishonesty or breach of trust working in interstate insurance.
2
Determine the statutory limitations placed on such an individual.
The law strictly prohibits this individual from engaging in or participating in the business of insurance.
Federal regulations seek to protect consumers and the financial soundness of insurers from individuals with a history of financial dishonesty.
3
Identify the legal exception that allows employment.
The individual must obtain the written consent of an authorized state insurance regulatory official.
Section 1033(e)(2) explicitly grants state insurance regulators (such as a Commissioner or Superintendent) the authority to issue this specific written consent, often referred to as a 1033 waiver.

Key Concept

18 U.S.C. 1033 Written Consent Requirement (1033 Waiver)
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Topics

Fraud and False Statements (18 U.S.C. 1033 and 1034)

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