Petitioner established that respondents provided deceptive and untruthful information on a license application; made false statements under oath to the Department; failed to fully comply with a document demand; failed to comply with notice of cancellation requirements; and are untrustworthy and not of good character. ALJ recommends revocation of license and civil penalties. REPORT AND RECOMMENDATION Petitioner, the Department of Consumer and Worker Protection (“DCWP” or “Department”), commenced this proceeding against respondents Diplomat Home Remodeling, LLC (“Diplomat II”) and Donavan Marrow (“Respondent”), pursuant to title 20 of the Administrative Code of the City of New York and title 6 of the Rules of the City of New York (“RCNY”). Petitioner charged that respondent provided deceptive and untruthful information in its license application; made false representations under oath to the Department; failed to fully comply with the Department’s demand for production of records; failed to comply with the notice of cancellation requirements in the consumer contract; and are untrustworthy and not of good character. Petitioner seeks revocation of Diplomat II’s license to do business as a home improvement company (“HIC”) and civil penalties in the amount of $2,375 (ALJ Ex. 1). A trial was held by videoconference. Petitioner presented documentary evidence and called respondent as a witness. Respondent elected to represent himself after being advised of his right to legal representation. He testified on his behalf and presented documentary evidence. For the following reasons, I recommend revocation of Diplomat II’s license and civil penalties in the amount of $1,850. BACKGROUND Diplomat I Diplomat Home Improvement LLC (“Diplomat I”) was a HIC licensed by DCWP under license number 2016220-DCA from December 6, 2014, through March 15, 2023 (ALJ Ex. 1 at 10). Christopher Marrow, respondent’s father, was the owner and president of Diplomat I. Respondent worked remotely for Diplomat I, and Kelly McCarthy was employed as the office manager (Tr. 19, 21). Diplomat I’s application to renew its license was denied on March 14, 2023, for violation of the laws and rules applicable to HICs (Pet. Exs. 3, 4). Diplomat I filed an Article 78 petition seeking a temporary restraining order which was denied on March 21, 2023. Order to Show Cause, Diplomat Home Improvement LLC v. NYC Dep’t of Consumer & Worker Protection, Index No. 152482/2023 (Sup. Ct. NY Co. June 21, 2023) (NYSCEF Doc. No. 12). The Article 78 petition was denied on June 21, 2023 (Pet. Ex. 5). Diplomat II On March 22, 2023, Diplomat II filed its Articles of Organization with the Department of State (Pet. Ex. 16). On April 4, 2023, respondent applied for a HIC license for Diplomat II (Tr. 41-42; Pet. Ex. 1). Diplomat II became a licensed HIC under license number 2112567-DCA on April 18, 2023 (ALJ Ex. 1 at
9, 24). Respondent is listed as the sole owner and president of Diplomat II on the license application (Tr. 17, 42; Pet. Ex. 1). As part of an investigation launched into Diplomat II by petitioner, respondent provided sworn deposition testimony on June 28, 2023 (Pet. Ex. 2). On August 11, 2023, petitioner made a demand for the production of documents relating to Diplomat II’s business operations (Pet. Ex. 6). On August 25, 2023, Diplomat II, through its attorney, submitted documents in response to petitioner’s request (Pet. Ex. 15 at 107). Donavan Marrow Respondent resides in Virginia with his son and travels back and forth regularly between New York and Virginia (Tr. 19, 22, 39). In addition to being the president of Diplomat II, respondent has a full-time job working in the Pentagon, managing Army and Air Force bases located in various states around the country for which he travels approximately ten days a quarter, e.g. ten days in San Antonio or ten days in Hawaii (Tr. 19, 40). He testified that the majority of his work is conducted remotely. Prior to becoming President of Diplomat II, he worked for his father at Diplomat I for seven to eight years doing “lead generation by searching diameters of a certain area within New York [and] cold calling homeowners to see if they were interested in home improvement and renovation” (Tr. 17, 19-20). He received a commission if a job resulted from his canvassing efforts (Tr. 20). Respondent claimed that he became aware in February 2023 that Diplomat I was closing but was not aware of the Article 78 proceedings. He testified that he wanted to “keep the family business alive” and claimed that his father wanted to quit home improvement and venture into the bar and restaurant industry (Tr. 20-21). He explained that Diplomat I was a community-minded family business based in Queens and owned by his father Christopher Marrow (Tr. 17-18). Respondent testified that he “decided to take over and create a family business of Diplomat Home Remodeling” with a “new twist” (Tr. 21). ANALYSIS Count One: Providing deceptive and untruthful information in the Application in violation of 6 RCNY 1-01.1(a) and (b) Petitioner alleges that respondent was deceptive and untruthful by claiming to be the true owner of a new company, Diplomat II (ALJ Ex. 1 at 77; Pet. Ex. 1 at 1, 3-4). The Department’s rules on license enforcement provide that: “[a]ll applicants for a license or a license renewal must provide complete and truthful responses to all the information requested on an application for such license or license renewal and any related documents…. No applicant for a license or a license renewal shall conceal any information, make a false statement or falsify or allow to be falsified any certificate, form, signed statement, application or report required to be filed with an application for a license or license renewal to be issued by the department.” 6 RCNY §1-01.1(a), (b) (Lexis 2024). Petitioner claims that Diplomat II is not a newly formed company owned solely by respondent. Instead, petitioner alleges that it is a straw company created to continue the business of Diplomat I after its HIC license was not renewed by DCWP due to multiple violations relating to its “regular and ongoing deceptive trade practices” (ALJ Ex. 1 at 79; Pet. Ex. 4). Petitioner further argues that Christopher Marrow and Kelly McCarthy are the real owners and operators of Diplomat II and not respondent, who lives in Virginia with a full-time job at the Pentagon and has limited knowledge about the business operations of Diplomat II. Respondent disputes petitioner’s claim that he is not the true owner of Diplomat II by attributing his incomplete answers at the deposition to his inexperience as a new business owner transitioning from “analyst to an owner” (Tr. 23, 25-26). He admits to similarities in business practices between the two companies but states that as a new owner, he is “allowed to change the direction of my company” (Tr. 25-26). At trial, respondent admitted that he is not physically at job sites checking on contractors or doing the work of salespeople answering questions regarding job estimates, but claimed instead that his job is to “accrue and get the necessary pieces to complete a home improvement project” and “manage to make sure it’s financial for the company in the macro aspect rather than just this one transaction” (Tr. 23). Respondent’s defense is not supported by the record. Respondent also argues that there is no legal prohibition to employing the same individuals and that he readily passed the home improvement contractor exam and was issued a license by the Department. He further testifies that Diplomat II had no intention to “deceive or mislead” and is instead under new leadership merely carrying on his family name and legacy (Tr. 27-28). Rather, he believes that the Department is holding Diplomat II responsible for the consumer complaints made against Diplomat I by bringing forth this petition even though Diplomat II is not the same company (Tr. 32-33, 37; Resp. Ex. A). The evidence in this case is not in dispute. The record is comprised primarily of documents submitted by respondent to the Department, respondent’s sworn deposition testimony, and his testimony at trial. Based on my review of the evidence, I find little to support respondent’s contention that he is the true owner and that Diplomat II is a new company as represented in the license application. Instead, there is ample evidence to support the finding that Diplomat II was created to continue the business operations of Diplomat I and is run and operated by Christopher Marrow and Kelly McCarthy in the same exact manner as Diplomat I, in an attempt to evade the licensing enforcement powers of DCWP. Diplomat II has the same business address as Diplomat I (Tr. 41, 93, 103; Pet. Ex. 2). Christopher Marrow’s home phone number is listed as one of the contacts numbers for Diplomat II (Tr. 44; Pet. Ex. 2). Diplomat II employs the same people in the same roles they occupied at Diplomat I (Tr. 21). Respondent admits that due to his remote status and inexperience, Kelly McCarthy was the contact person for Diplomat II and performed similar tasks as she did while working for Diplomat I, such as communicating with banks, handling finances, issuing payments, processing credit applications, and distributing leads to salespeople (Tr. 21-22, 24-25, 104-05). While respondent purports to claim that his father is only a salesperson, the evidence lends support to petitioner’s allegation that Christopher Marrow plays a more significant role at Diplomat II. Documents show that Christopher Marrow was the salesperson for the bulk of Diplomat II’s contracts, soliciting and interacting with the majority of the company’s customers (Tr. 116-18; Pet. Exs. 9, 15). However, unlike the other employees, salespeople, or subcontractors who were issued checks or given salaries through payroll for their services, there is no proof of payment for Christopher Marrow because he was not merely a salesperson as respondent claims. Diplomat II’s business practices were also identical to Diplomat I. Diplomat II engaged with the same banks used by Diplomat I for consumer financing (Tr. 56-57). Notably, in the credit application submitted to Foundation Financing Company, Diplomat II wrote “Already do business together” in response to the query “How did you hear about FCC?” (Pet. Ex. 7; Tr. 58). Diplomat II also used the same advertising, contract templates, and consumer credit applications as Diplomat I, only substituting the name of the company, Diplomat Home Remodeling LLC for Diplomat Home Improvement LLC and the HIC license numbers (Tr. 44-46, 55-56; Pet. Exs. 11, 13, 14). Even more persuasive are respondent’s admissions made during his deposition in June 2023. His deposition testimony unequivocally demonstrated respondent’s lack of knowledge about Diplomat II’s business practices and the home improvement business in general. Respondent was unable to provide answers to many questions relating to the operation of Diplomat II. For example, he was unable to answer questions about insurance typically associated with businesses, namely unemployment, disability, and general liability. He was also not able to recall the names of any paid contractors or the names or the number of salespeople employed by Diplomat II, except for his cousin who had also worked for Diplomat I. Respondent was also unfamiliar with the banks that his company engaged with except for one (Tr. 109-12; Pet. Ex. 2 at 76, 96). When asked about the open jobs that Diplomat II had at the time of his deposition, respondent could not offer any details except for one job in Brooklyn that he personally visited (Tr. 113). Although he claimed that Diplomat II did not work in the Bronx, the document production revealed that there was a job in the Bronx for which Christopher Marrow was the salesperson (Tr. 115; Pet. Ex. 8). Even at the trial held approximately eight months after the deposition, I did not find that respondent exhibited greater knowledge about Diplomat II’s business practices or any changes in operating practices despite his self-serving expressed intention to leave his job at the Pentagon and “be in New York full-time to run the company, you know, in person” (Tr. 22). Petitioner has proven by a preponderance of the evidence, respondent’s sworn deposition testimony, and Diplomat II’s business documents, that respondent provided deceptive and untruthful information in the license application. This charge is sustained. Count Two: Making false representations to the Department under oath, in violation of 6 RCNY 1-04 The Department’s rules provide that: “No licensee or employee or agent of such licensee shall make a false representation to the Department….” 6 RCNY §1-04(a). Petitioner alleges that respondent made false representations under oath during his deposition by claiming that: (1) Christopher Marrow was not involved with Diplomat II; (2) Diplomat II’s consumer contract was created based on DCWP’s online template; (3) Diplomat II did not use Diplomat I’s advertisements; and (4) Diplomat II was engaged in a job for which no signed contract existed (ALJ Ex. 1 at
