US Court of Appeals Second Circuit Case 21-1575, Doc 6, Pre-Argument Statement on Appeal 07-12-2021

ong>Caseong> ong>Caseong> 2:20-cv-06291-NGG-SJB 1:ong>21ong>-cv-014ong>21ong>-NGG ong>Caseong> MDL ong>21ong>-ong>1575ong>, No. 3011 ong>Docong>ument ong>Docong>ument 6, 19 07/12/20ong>21ong>, 56 25-33 Filed Filed 05/27/ong>21ong> Filed 06/25/ong>21ong> 3136178, 06/24/ong>21ong> Page Page106 14 15 ong>ofong> ong>ofong> 27 14 ong>ofong> 28 119 ong>ofong> PageID 27 #: #: 2285 4422 insurance policies in New York and (2) issue workers’ compensation policies outside ong>ofong> New York, when, in fact, it was not authorized to do either ong>ofong> those things. Id. at *6. On March 20, 2009, Kernan pleaded guilty to one count ong>ofong> knowingly permitting a convicted felon to be involved in the business ong>ofong> insurance, a felony in violation ong>ofong> 18 U.S.C. § 1033(e)(1)(B). (See United States v. Kernan, N.D.N.Y. 08-cr-61 (“U.S. v. Kernan”), Mar. 20, 2009 Minute Entry); U.S. v. Kernan, Plea Agreement (Dkt. 82); U.S. v. Kernan, Change-ong>ofong>-Plea Hr’g Tr. (Dkt. 84).) He was sentenced to five years ong>ofong> probation and the court imposed a 0,000 fine, a 0 special assessment, and 400 hours ong>ofong> community service. (U.S. v. Kernan, Judgment (Dkt. 103).) After his conviction, Kernan asked the New York State Department ong>ofong> Financial Services (“NYSDFS”) for permission to engage in the business ong>ofong> insurance in New York again. See Oriska Ins. Co. v. Avalon Gardens Rehab. & Health Care Ctr., LLC, No. 18-cv- 1030 (DNH/DEP), 2018 WL 6074693, at *3 (N.D.N.Y. Nov. ong>21ong>, 2018). On May 26, 2011, the NYSDFS issued a preliminary denial. Id. It then held a hearing in late 2011 to consider “(1) whether Attorney Kernan ‘demonstrated untrustworthiness’ within the meaning ong>ofong> section 1506(c)(1)(A) ong>ofong> the New York Insurance Law, such that he should be prohibited from acting ‘as a controlling person’ ong>ofong> Oriska; and (2) whether the preliminary denial ong>ofong> Attorney Kernan’s application for consent pursuant to 18 U.S.C. § 1033(e)(2) should be made final on the grounds that he demonstrated untrustworthiness or incompetency.” Id. at *4. 4 Based on that hearing, the NYSDFS Hearing Officer submitted a recommendation that the Superintendent ong>ofong> the NYSDFS deny Kernan’s request to engage in the business ong>ofong> insurance and “issue an order pursuant to Insurance Law § 1506(c)(1)(A) finding 4 When quoting cases, and unless otherwise noted, all citations and quotation marks are omitted, and all alterations are adopted. 14

ong>Caseong> ong>Caseong> 2:20-cv-06291-NGG-SJB 1:ong>21ong>-cv-014ong>21ong>-NGG ong>Caseong> MDL ong>21ong>-ong>1575ong>, No. 3011 ong>Docong>ument ong>Docong>ument 6, 19 07/12/20ong>21ong>, 56 25-33 Filed Filed 05/27/ong>21ong> Filed 06/25/ong>21ong> 3136178, 06/24/ong>21ong> Page Page107 15 16 ong>ofong> ong>ofong> 27 15 ong>ofong> 28 119 ong>ofong> PageID 27 #: #: 2286 4423 that [] Kernan, as a controlling person ong>ofong> Oriska Insurance Company, has demonstrated his untrustworthiness” and “directing [] Kernan to terminate his ownership capacity at Oriska Insurance Company, including but not limited to providing legal or engineering services, or insurance agency services, by himself or by any member ong>ofong> his family or relative, directly or indirectly, to Oriska.” Id. The Superintendent issued a final determination and order adopting the hearing ong>ofong>ficer’s recommendation. Id. (citing N.D.N.Y. 18-cv-1030, Dkt. No. 47-4 at 3-4). Despite these restrictions, Kernan went on to represent Oriska in a subsequent insurance action in the Northern District ong>ofong> New York. Id. The court terminated his representation in that action on the grounds that he had violated both provisions ong>ofong> the NYSDFS’s order. Id. at *7-9. The Appellate Division ong>ofong> the New York Supreme ong>Courtong>, Fourth Department, suspended Kernan from the practice ong>ofong> law in New York for a period ong>ofong> five years following his felony conviction or until the termination ong>ofong> his federal term ong>ofong> probation, whichever was longer. In re Kernan, 66 A.D.3d 1497, 1497 (4th Dep’t 2009) (initial order ong>ofong> suspension); In re Kernan, 73 A.D.3d ong>21ong>9, 220 (4th Dep’t 2010) (final order ong>ofong> suspension). In reaching its conclusion, the Fourth Department considered the fact that Kernan’s “misconduct was willful and appears to have been committed for personal gain, and that respondent has failed to express remorse for his misconduct.” 73 A.D.3d at 220. The Fourth Department reinstated Kernan on June 12, 2015. See In re Kernan, 129 A.D.3d 1556, 1556 (4th Dep’t 2015). Kernan was reinstated to practice law in the Eastern District ong>ofong> New York around the same time. (In re Kernan, 10-mc-351, Order Reinstating Kernan (Dkt. 3).) The Eastern District ong>ofong> New York then disbarred him again, after he was directed by ECF order on two separate occasions to provide the court with proong>ofong> ong>ofong> his admission to practice law and failed to do so. (In re Kernan, 15