EZ AZ Traffic School Supreme Court Investigation

Supreme Court

STATE OF ARIZONA ADMINISTRATIVE OFFICE OF THE COURTS

Scott Bales Chief Justice

David K. Byers Administrative Director of the Courts

June 13, 2019

 

RE: Complaint Number 18-D006

 

Dear Mr. Martin:

 

This letter is to inform you of the Defensive Driving (“Board”) action regarding the above-referenced complaint you submitted to the certification and Licensing Division on March 27, 2018 involving EZ AZ Traffic School

On June 13, 2019, the board reviewed the enclosed Investigation Summary, Probable Cause Evaluation Report, and Recommendation and entered the enclosed Order to formally dismiss the complaint. This information and documentation is being provided for your records. Pursuant to Arizona Code of Judicial Administration 7201, the matter is public record and available for public inspection

 

Sincerely,

Michelle Martinez, Manager Certification and Licensing Division

1501 WEST WASHINGTON STREET . PHOENIX, ARIZONA 85007-3231

602-452-3300 | 602-452-3545

ARIZONA SUPREME COURT ADMINISTRATIVE OFFICE OF THE COURTS INVESTIGATION SUMMARY and PROBABLE CAUSE ANALYSIS

and DETERMINATION REPORT

CERTIFICATE HOLDER LICENSEE INFORMATION COMPLAINANT INVESTIGATION INFORMATION

Business Name: Certification Number: Type of Certificate/License: Name: Complaint Number: Investigator:

EZ AZ Traffic School #048 Defensive Driving School Waylon Martin 18-D006 Pasquale Fontana

Complaint Received: Complaint Forwarded to the Certificate Holder: Certificate Holder/Licensee Received Complaint: Response From Certificate Holder: Period of Active Certification/Licensure: Status of Certification/License: Availability of Certificate Holder/Licensee: Availability of Complainant: Report Date:

March 27, 2018 March 30, 2018 April 3, 2018 August 16, 2018 October 21, 2009 Active Available Available April 29, 2019

ALLEGATIONS:

  1. EZ AZ Traffic School failed to report the theft of up to $250,000.00 of

student school fees. 2. EZ AZ Traffic School failed to report a change in school owners.

ADDITIONAL ALLEGATIONS:

None. List of sources for obtaining information: (Investigative, records, outside resources, etc.):

  • Written complaint and documentation submitted by complainant, Waylon Martin

(“Martin”) • Written response and documentation submitted by certificate holder, Paul Hallums

(“Hallums”) owner/principle of EZ AZ Traffic School (“EZ AZ”) • Review of applicable Certification and Licensing Division (“Division”) records

Review of applicable sections of Arizona Revised Statutes (“ARS”), Arizona Codes of Judicial Administration (“ACJA”) § 7-201 and 7-205, and Arizona Supreme Court Rules Interview with Martin Interview with Christopher De Witt (“De Witt”), Division Compliance Unit – Defensive Driving Program Interview with Afton Foutz (“Foutz”), Division Compliance Unit – Defensive Driving Program Interview with Richia Hipolito (“Hipolito”) Interview with Hallums

PERSONS INTERVIEWED:

  1. Waylon Martin 2. Christopher De Witt 3. Afton Foutz 4. Richia Hipolito 5. Paul Hallums

SUMMARY OF INVESTIGATION:

Martin’s allegations are based on information he said Hipolito gave him when they were in a relationship. Martin asserted that an individual named Carlos, who was a border patrol agent, employee of EZ AZ and friend of Hallums and Hipolito, over a period of four (4) or five (5) years, stole cashier’s checks and money orders from EZ AZ’s three (3) southern Arizona defensive driving classes. Martin stated that Carlos took one cashier’s check and/or money order per week from one of the three (3) classes to avoid detection over the years and Carlos ultimately stole approximately $250,000.00. Martin alleged Hallums was aware of the thefts and failed to report the missing money to the Division.

Martin further alleged Hallums made Hipolito an owner of EZ AZ and Hallums failed to report the change in ownership to the Division.

Hallums, for EZ AZ, disputed the allegations. He denied that any money was missing and dismissed Martin’s assertions that $250,000.00 was missing or stolen from EZ AZ. Hallums said that the only theft of checks from his company was discovered when he conducted an audit of his records and learned that one of his defensive driving instructors embezzled money from the company. Hallums said he reported the matter to the Division and, ultimately, the Board revoked the defensive driving certification of the said instructor.

Hallums acknowledged one instance when one of his defensive driving instructors put the class paperwork and checks/money orders in an envelope but inadvertently mailed the envelope to EZ AZ without first putting the mailing address on the envelope. Hallums said that those checks were returned to EZ AZ by the United States Postal Service (“USPS”)

On another occasion, Hallums said United Parcel Service (“UPS”) misplaced an envelope of checks/money orders and those checks/money orders were found in the wheel well of the UPS vehicle. Those checks/money orders were returned to EZ AZ but were damaged. Hallums said EZ AZ took a financial loss. Hallums said in all cases the Court’s fees and State’s fees were paid.

Hallums, on behalf of EZ AZ, denied that Hipolito was ever an owner of EZ AZ or that he offered her an ownership interest in his company.

Hallums said that Hipolito was in a relationship with Martin but she had to obtain a restraining order against him.

Hipolito denied telling Martin that she discovered $250,000.00 in missing checks or that she found that weekly checks/money orders were missing.

Hipolito further denied that she was ever offered an ownership interest in the company and said she remained an employee of the company until she left EZ AZ.

SUMMARY OF FACTUAL FINDINGS OF INVESTIGATION:

  1. On March 27, 2018, the Division received a written complaint against EZ AZ.

Martin wrote that in late 2016 he was living with EZ AZ’s accountant/owner, Hipolito. He said that he did not know if Hipolito had been “listed as an owner of the school. Martin said that he and Hipolito realized that a man named, Carlos (last name unknown), was working for EZ AZ and had been stealing money on the routes he drove for the defensive driving school. Martin said that Carlos had been doing this for years and that within approximately five (5) years, Carlos “may have taken” as much as $250,000.00 (two hundred and fifty thousand). Martin wrote that Carlos was a border patrol agent and friend of Hallums and Hipolito. Martin said Carlos was fired at the time the theft was discovered but Martin did not believe that the theft was disclosed to the Division adding that EZ AZ was required to report “ASAP.” Martin stated that this was “easy to figure out and he wondered whether Hallums “knew what was going on.”

  1. On August 18, 2018, Hallums, for EZ AZ, provided a written response to the complaint. Hallums wrote that Martin’s allegations that Hipolito or anyone associated with the business or Hallums himself, had in any manner, diverted any money from their accounts including checking, savings, court fees, state fees or money in the process, including up to $250,000.00 (two hundred and fifty thousand), was “unrealistic.” Hallums stated, “No court money, diversion fees, state fees or school fees were missing.”

Hallums said that EZ AZ deposits all receipts into a court’s holding account at Bank of Tucson and that EZ AZ then pays the business, the state, and local courts from that account. He said the deposit preparation and class reconciliations would identify any discrepancy. He said no discrepancies were found and no monetary receipts were missing. Hallums said the school fees are deposited into an Operations Account where all business financial transactions are funded, and that no money is missing.

Hallums said they assisted in reporting Martin’s “false complaints and his threats and intimidation” to the Tucson Police Department.

  1. On April 1, 2019, this Investigator interviewed Division Compliance Unit staff,

Dewitt. He stated that if diversion fees are not paid, the courts contact the Division to inform that diversion fees were not paid. In addition, students will file complaints because if the defensive driving school does not pay the diversion fees, students’ driver’s licenses are negatively affected. DeWitt said he was not aware of any court complaining about EZ AZ not paying the diversion fees.

De Witt said that checks to the state are paid on the seventh (7th) and twenty-second (22nd) of each month. He said that Division staff, Foutz, does the reconciliations and she would be aware of any defensive driving school that failed to pay the state fees.

  1. On April 10, 2019, this Investigator interviewed Foutz. She said that defensive driving schools submit a Remittance Form, showing all monies collected, twice monthly by the seventh (7th) and twenty-second (22nd) of each month. She said she regularly monitors and reviews these and if any defensive driving school has not paid, Foutz said she will follow up with an email to the school. She recalled “a few times” when she emailed Hallums over years. She said the defensive driving school paid the state fees after each reminder email.

Foutz checked CLD defensive driving school remittance records covering the period from 2012 when she was hired into the position through 2018. Foutz identified the number of times she sent a follow up email to Hallums regarding a late Remittance Form:

  • 2018: Three (3) • 2017: None • 2016: Four (4) • 2015: Six (6) • 2014: One (1) • 2013: None • 2012: None

Foutz stated that the number of times she has emailed Hallums, as noted above, did not raise any concern for her and that it is common in the defensive driving industry.

  1. On April 15, 2019, this Investigator conducted a telephonic interview with Martin.

He verified that he has provided emails and screen captures of text messages between him and Hipolito and that this constituted the full record. Martin clarified that the screen captures of the text messages were “spread over six months of my life” and said there may be “other references because it’s literally thousands of text messages.” He said that he searched text messages using key words including “schools, Carlos, Paul” etc. He said that the text messages represent “sporadic” conversations he had with Hipolito over time.

Regarding his allegation that an individual named Carlos (unknown last name), an employee of EZ AZ, stole up to $250,000.00 in defensive driving checks from EZ AZ and that Hallums did not report the theft to the Division, Martin said “my core complaint is that money going missing and that’s the basis of everything.”

Martin said that Hipolito was brought on as an owner of the schools “which makes things super complicated.” He said he went through EZ AZ’s limited liability company listings and noted that Hallums now has his son named as an owner therefore Hallums knows the proper procedure.” Martin said Hallums made Hipolito and his six (6) children or something like that” owners of the schools and they were splitting the money “six (6) or seven (7) directions between all of them.” Martin stated that Hipolito was performing in somewhat of a managerial role, but she was also an owner but was never listed as such. Martin said he knows that it is a requirement that all the owners of a defensive driving school are reported.

Martin was asked about his knowledge regarding Hipolito’s alleged ownership interest. He replied that she worked as EZ AZ’s accountant and in early 2016 she called Hallums to tell him know that she was going to quit her position as accountant and was no longer going to continue to work for him. At that time, Martin said Hallums offered to make Hipolito a part owner. Martin could not recall whether he was present when Hipolito made the call to Hallums, but Martin said he remembered that she had reiterated that conversation to him. He said that Hipolito would get her salary and her ownership shares along with the Hallums, his wife, and the children. Martin said he knew that because Hipolito complained that the children were getting her money and not doing anything to earn the money. Martin said that because Hipolito was doing all the work she got a larger percentage of schools that Hallums opened.

Martin stated that the information Hallums provided to the Division that they never had a guy named Carlos and the guy named Carlos only worked in the call room or whatever” was not correct. Martin said he knew the defensive driving school had a person named Carlos “who was very specifically a driver for the cashed checks from all the southern region of Arizona.” Questioned how he knew this, Martin stated that prior to his involvement with Hipolito, her boyfriend was getting prescription medication from Mexico apparently from a border patrol agent named Carlos. Martin said Carlos also worked for the defensive driving schools on the weekends. According to Martin, every weekend Carlos’ job was to go to three (3) schools in the southern region of Arizona because he was already in the area and he was the one who would transfer the cashier’s checks or whatever form of payment from the school to EZ AZ.”

Martin said one of the schools was in Nogales, Arizona, but he did not know about the other two schools. He said that Carlos had access to EZ AZ’s safe and Martin remembered that EZ AZ had to change the safe information when they found out about this.” Martin said that Carlos was to take the cashier’s checks and take the monies from the classes to the main traffic school office. Martin said Carlos would go to all the schools every week and “what he was doing was he was rotating every week what school he would take a check from…but every week he’d only steal one check from a different school every weekend.” Martin said that Carlos did this so that it would look like one check was missing from one of the three schools. Martin said EZ AZ used Carlos because he was a border patrol agent and was already in the region and arca of the three (3) schools.

Martin stated that Carlos was fired by EZ AZ once it was discovered that he was taking money and that Hipolito was “genuinely shocked” when she found out the money was missing. Martin said that in 2015, Hipolito was working part time as an accountant for EZ AZ for approximately six (6) to eight (8) months before she was brought on as an owner. He said, at some point, EZ AZ brought in another accountant. In 2016, one month after Hipolito was brought on as an owner, Martin said that she came to his house and was very distraught” and told him that one of the checks from the schools was missing. Martin said he thought it was “weird” that she was very upset and “overly concerned about one missing check.

Given Martin’s statements that Hipolito was working as EZ AZ’s accountant for approximately eight (8) months, he was asked if Hipolito previously mentioned any missing checks/money to which he replied, “She never said anything before that.” Martin did not know which school was missing a check but said that it was one of the three (3) schools that Carlos “was a transporter for.” Martin said he asked Hipolito if any other checks were missing and she told him that she had to inquire further because she was limited to information she could access from her home computer and could only see one month of records. Martin was asked if Hipolito regularly monitored accounts while she was the accountant to which Martin said she had access to all school records and was accessing those records. He said, “I don’t know how this stuff slid past her before this and remarked that once Hipolito became an owner she started paying more attention to detail. Martin said Hipolito worked one day per week for EZ AZ and would typically go in on Saturday because she worked as an accountant for another business. He said when Hipolito became an owner she typically went to the EZ AZ office one day per week and maintained her regular job which was not affiliated with the traffic schools.

Martin said that after Hipolito checked EZ AZ’s system she discovered that two (2) additional checks were missing in the same month from the same three (3) schools. Martin said his understanding was that these checks “never showed up at the main offices.” Martin said that Hipolito called Hallums, while Martin was present, and she told Hallums that she believed Carlos had stolen the checks. Martin said that Hallums was quiet and Martin did not hear him respond to her statements about Carlos prompting Martin to assume that to assume Hallums was not surprised.

Martin said Hipolito discovered that checks had been going missing over the last five (5) years or so and she told Martin that approximately three (3) cashier’s check were taken every month in that period. He said Hipolito estimated that the theft amounted to upward of $250,000.00 (two hundred and fifty thousand). Based on his interpretation that Hallums was quiet and did not respond when Hipolito called him to report her suspicions about Carlos, Martin said he assumed that Hallums was aware of the thefts and that he “somehow had to be cooking the books to cover this for five years.”

Martin said once Hipolito found out that the money was being stolen, Carlos was terminated from EZ AZ and the company changed the code to the safes. Martin said the pattern was that Carlos was taking a check almost every week from the three (3) schools for the last five (5) years so “it wasn’t a very complicated scam that he was trying to pull.” Martin said that an entire class of checks went missing four (4) or (5) years ago and those checks were never recovered. In addition, Martin said that the week prior to Carlos’ termination from EZ AZ, a week of checks went missing from an entire defensive driving class and were not reported for that weekend.

Martin said he assumed that because Hallums is friends with Carlos, Hallums told him to make the missing checks “show up and that a week a later the missing checks mysteriously appeared in the mailbox. Martin said that Hipolito told him that the staples were wrong” because EZ AZ has a standard procedure of how they staple things and keep them ordered. Apparently, the checks that appeared in the mailbox were “literally the opposite direction the staples go.” Martin said he thinks that the checks may have been dropped off and not sent via the postal system.

Martin said that after Carlos was terminated from EZ AZ, Hipolito told Martin that no further checks went missing.

On April 18, 2019, this investigator conducted a telephonic interview with Hipolito.

She said she worked for EZ AZ on a full-time basis from 2014 to 2017. She worked out of the main office Monday to Friday from 7:30am-4:30pm and was paid an hourly rate. Hipolito said she was an accountant/bookkeeper and became a partial office manager in 2016. When she was first hired by Hallums, Hipolito said she was in college, so she worked part-time which was sixteen (16) hours per week for about four (4) or five (5) months. When she became office manager she worked alongside the other office manager when that office manager returned from a maternity leave.

As the accountant Hipolito said she worked on defensive driving class reconciliations, accessed records, handled money and kept track of monies. She said “Oh yes” when asked if she would have noticed any discrepancies. Regarding internal systems, Hipolito said EZ AZ keeps a list of classes coming in on certain days and if class money does not get mailed in to EZ AZ “it’s a problem” adding that they would see any missing money within days. For example, she said if a class was held on Saturday the money would need to be in by Tuesday. She said EZ AZ looks at that regularly because they could not process the end of the week tasks without all the classes coming through. Hipolito said that other than online payments, EZ AZ only accepted cashier’s checks or money orders.

Hipolito was asked if she or anyone at EZ AZ discovered that checks/money orders were missing, as alleged by Martin. She said she recalled an incident involving EZ AZ defensive driving instructor, Ana Durazo (“Durazo”) and her defensive driving classes. Hipolito could not clearly remember but thought that Durazo took students’ checks, kept the money and rescheduled students to a different class.

Hipolito stated that in 2014 or 2015, there was one instance where a class had gone missing for a while, but it was due to the post office or I believe it was either USPS or FedEx. The checks had got stuck under a piece in the back of the truck and it was pretty much burnt. Everything was burnt…it was black and burnt.” She said that class comprised of eleven (11) or twelve (12) students. She said the checks were returned to EZ AZ months later. She said they had noticed the missing checks “right away” and that EZ AZ contacted all the students. Hipolito said the defensive driving instructors send a list of students registered and after each class is completed so EZ AZ knew which students were there and who had paid and what form of payment. She said that EZ AZ paid out of the school’s operating expenses while EZ AZ was trying to recoup the money.” She said all the students were reported to the courts as attended and money taken out of the school’s operating expenses until the school was reimbursed by FedEx or UPS. She said the checks “mysteriously showed up burnt and black.”

Asked about EZ AZ’s regular process or protocol for collecting monies from students taking defensive driving classes. Hipolito said students pay the instructor at the time of the class and after the class the instructor sends a list of students who paid, with signatures, how much they paid, and what form of payment. The instructor then faxes the list to EZ AZ before the instructor sends the money over to EZ AZ with USPS and it takes about two (2) days to get to EZ AZ. She said the instructors drop the cashier’s checks and money orders into a USPS blue mailbox. She said that EZ AZ was using couriers but after the incident involving the lost and burnt checks she said the school starting using USPS. She stated that it has “always” been the practice that the instructor would collect the money, be the custodian of that money and drop them off either to the courier or USPS. She said could only think of two occasions, if it fell on a holiday, where the instructor handed the money over to a third party, the courier services.

Asked if there was anyone with EZ AZ responsible for going out and collecting those monies, Hipolito replied, “No. We had no one ever do that. It’s too much of a liability for someone to pick up money orders somewhere.” Hipolito denied that, outside of the one week of classes missing she mentioned, there was any other time where checks were missing including once per week or several per month.

Regarding Carlos, Hipolito said there was a Carlos Gamez (“Gamez”) who worked for EZ AZ as a telephone operator. She said he was there for about six (6) months and worked part time. She said all he would do is scheduled someone for a class and “he never touched money” and had no access to money. She denied that Gamez worked as a border patrol agent and she said he was not terminated and left voluntarily. Hipolito said she was not aware of any other person at EZ AZ named Carlos.

Hipolito initially told Division staff that she has never had a conversation with Martin regarding missing checks/money orders and could not think of any reason he thought so unless he was “hacking my email about the Ana Durazo file.” Hipolito then recalled that she may have mentioned to Martin the time when the missing class of checks mysteriously appeared at EZ AZ.

Regarding Martin’s statement that EZ AZ changed the safe’s information out of concern, Hipolito said she did not recall any changes to the safe’s information. She said that only three people including herself had access to the safe and the other two employees are still with EZ AZ and have been for 15 (fifteen) years.

Hipolito denied that she was ever brought on as a owner of EZ AZ stating, “No…it wasn’t ever even discussed…I was just an employee for the company.” Division staff referenced screen capture of text messages apparently between her and Martin where she used references to ownership, Hipolito denied having any ownership interest.

Division staff referenced various screen shots of text messages apparently between Hipolito and Martin. Regarding a screen capture whereby Hipolito writes that “Carlos texted me. First time since I was in Tucson… And xa” and to which Martin questions whether this was that border patrol guy and thief of 1.4 million dollars” and to which Hipolito appears to have responded with “Exactly,” Hipolito stated that she did not know a border patrol agent named Carlos and denied that she had contact with any border patrol agent named Carlos. Asked about the Carlos she mentioned in her text message, Hipolito did not know the reference to a Carlos and she denied that Gamez sent her text messages. She then stated that she knew a Carlos in San Francisco where she said she moved for some time to get away from Martin. She said that Martin “got jealous of for him hitting on me but that’s literally the only Carlos I can think of.” Hipolito denied that the Carlos referenced in the text messages as those appear in the screen captures provided by Martin, was a border patrol agent.

  1. On April 19, 2019, this Investigator conducted a telephonic interview with Hallums. He confirmed that EZ AZ had a part time employee named Carlos.

Hallums was unable to provide Carlos’ last name at the time of interview but said that EZ AZ’s office manager could provide Carlos’ last name if needed. Hallums said Carlos worked in the office as a telephone phone operator for EZ AZ and that his duties were to answer the phone and register people.” Hallums said that Carlos did not handle transactions in cash nor did he handle checks or money orders. Hallums said Carlos electronically processed credit card charges when he was registering students over the phone. Asked if there was any other individual named Carlos or went by the name Carlos, Hallums said there was not and could not recall any other person working for EZ AZ with the name.

Asked if Carlos was a border patrol agent, Hallums stated that Carlos went to work in Nogales, AZ where he lives, and Carlos would drive to Tucson to work for EZ AZ. He said Carlos got a job working for a security company that provides security at certain facilities and said that that some of those facilities may relate to the federal government. Hallums added that Carlos had gone through an extensive background check for that job. Hallums said Carlos left EZ AZ when he got the security job and there may have been minimal crossover working both jobs.

Regarding Hipolito, Hallums said he hired her as a part time accountant and assistant to the book keeper and that Hipolito later became a full-time employee. He said that shortly after Hipolito started working for EZ AZ, the primary bookkeeper went off on an early maternity leave so Hipolito picked up the work with the help of other employees.

With respect to Hipolito’s tasks and responsibilities, Hallums said that Hipolito had “full access to our accounting system and she prepared deposits for the bank.” He said that he normally took the deposits to the bank. Hallums stated that Hipolito did all the book keeping for ninety (90) says while EZ AZ’s primary book keeper was off on leave and once the book keeper returned, Hipolito went back to her role as accountant and assistant to the book keeper. her assistant.

Hallums denied that Hipolito was ever brought on an owner of EZ AZ schools. He denied ever offering her an ownership interest.

Hallums denied that, at any time, Hipolito informed him that she discovered missing cashier’s checks or money orders. He said that EZ AZ has a strict accounting. He said the only times EZ AZ had problems was approximately “four years ago” when instructor, Juan Valdez (“Valdez”) in Yuma, AZ, put the “class completion paperwork and the money in the mail and forgot to address the outside envelope but that was eventually recovered.” Hallums said that Valdez taught defensive driving class on Saturdays and after class, he put everything in the United States mailbox and EZ AZ would receive everything by Tuesday. Hallums said this one occasion, Valdez forgot to include EZ AZ’s address on the envelope before mailing the envelope. Hallums said that the money was missing for several weeks until the envelope ended up in the missing mail depository in Kansas City, KS. He said once that was discovered, the United States Post office eventually forwarded the missing mail to EZ AZ.

Division staff asked Hallums about any checks or money orders that may have been returned to EZ AZ damaged or burnt. Hallums said he recalled that on one occasion “maybe five years ago”, UPS lost a small class of checks/money orders. Hallums could not remember which class but said he did not think it was any in southern Arizona because those were “hand carried.” Hallums said the checks/money orders were missing for several weeks and apparently had slipped down into the UPS vehicle’s wheel well to the point where “most of the money orders and the paper was absolutely shredded…” He said that EZ AZ filed a claim with UPS but said UPS would not reimburse EZ AZ apparently because there was not “extra insurance on it to cover it so I had to eat it.” Hallums said that EZ AZ had already paid the local courts’ and state’s respective fees “and basically it was a loss to our company.” Hallums added that after incident EZ AZ switched to using the USPS.

Hallums stated that another problem concerned one of his instructors (Durazo), who was teaching in Douglas, AZ, and embezzled money. He said the incident was reported to the Division and the matter was handled by the Board who revoked her defensive driving instructor certification. Hallums Durazo returned the money so he elected not to have her prosecuted.

Hallums said that EZ AZ deals primarily with money orders. He said that instructors hand carried the money for classes in Tucson, Douglas, Nogales and Green Valley and brought the money orders to EZ AZ. He said having instructors handling the monies and having to only worry about one person handling the money gives EZ AZ better span of control. Hallums denied that EZ AZ used any employee to drive a route to pick up money.

  1. Division staff reviewed closed Complaint Number 16-D029 involving defensive

driving instructor, Durazo. In that complaint, Hallums, after conducting an audit of his schools completion records and discovering discrepancies, contacted the Division to report that Durazo falsified student rosters in several classes to embezzle student payments for personal use. The Board adopted the Division’s recommendations including the revocation of Durazo’s certification as a defensive driving instructor.

ANALYSIS OF ALLEGATIONS:

Allegation 1: EZ AZ Traffic School failed to report the theft of up to $250,000.00 of student school fees.

Martin’s allegation is based on statements Hipolito made while they were in a relationship. He said it was Hipolito who discovered $250,000.00 (two hundred and fifty thousand) in cashier’s checks and money orders were stolen from EZ AZ over a period of four (4) or five (5) years. Martin said Hipolito told him that Carlos, a border patrol agent and friend of Hallums and Hipolito, who had taken the money. Martin alleged Carlos stole a cashier’s check or money order almost weekly from three (3) classes in the southern region of Arizona and that Carlos was able to carry out the thefts over years because he was responsible for transporting the checks from those classes to EZ AZ’s main office. To support his allegation, Martin provided copies of various emails and copies of screen captures of what appear to be text messages between himself and Hipolito covering a span of six (6) months, according to Martin’s statements.

The Division reviewed the screen captures of text messages that Martin provided to the Division. It was not possible to fully determine the context of the conversations because the screen captures were specifically selected by Martin, contained limited information as was visible on the screen captures, and the text message conversations spanned six (6) months approximately, according to Martin.

In one of the text messages, Hipolito wrote that “Carlos texted me. First time since I was in Tucson” and added, “And xa” to which Martin replied, “that border patrol guy?” and, “and thief of 4 million dollars.” Hipolito appeared to respond with “Exactly.”

Regarding Carlos, Hipolito told Division staff that she knew of one person named Carlos Gamez who was employed part-time with EZ AZ and worked as a telephone operator for about six (6) months. She said that he was not a border patrol agent and that he left EZ AZ voluntarily and he was not terminated. She was not aware of Carlos handling any money.

Regarding the referenced screen capture text messages to Martin indicating that Carlos had texted her, Hipolito stated that she did not know any Carlos who was a border patrol agent. She said that the “xa” referenced in the text was likely a typographical error and said that she did not know the context of those conversations.

Hipolito told Division staff that she was aware of one incident where cashier’s checks/money orders went missing from EZ AZ because former defensive driving instructor, Durazo, embezzled money from EZ AZ. Hipolito recalled another incident when FedEx or UPS got an envelope containing checks stuck in a company truck. She said those monies returned to EZ AZ but were burnt and damaged. Hipolito denied that she told Martin about checks/money orders going missing weekly. She denied that she told Martin that checks were missing weekly or that missing checks or money orders amounted to upward $250,000.00 (two hundred and fifty thousand).

Hipolito denied that anyone other than defensive driving instructors for EZ AZ collected the cashier’s checks and money orders. She said the instructors were the custodians of those monies until the instructors dropped those monies off at the USPS blue mailboxes. Hipolito described the normal process/protocol utilized by EZ AZ and said that students pay for defensive driving class at the time of class and after class has completed, instructors send EZ AZ a list of those students who paid, with signatures, and include the amount paid and form of payments. She said instructors then drop the cashier’s checks or money orders into postal mailboxes.

Hallums told Division staff that EZ AZ employed an individual named Carlos who was a part-time employee and worked as a telephone operator tasked with answering the telephone and register students for defensive driving classes. Hallums said that Carlos did not handle financial transactions in cash, cashier’s checks or money orders, but he would process credit card charges when students called to register for classes. Hallums said that Carlos left EZ AZ after he found a job with a security company.

Hallums recalled three (3) instances where cashier’s checks were missing from EZ AZ. He said that after completion of a defensive driving class, his defensive driving instructor, Valdez, mailed the class paperwork and checks/money orders to EZ AZ but he inadvertently forgot to include EZ AZ’s mailing address on the envelope. Hallums said those checks were recovered after several weeks because the enveloped ended up in missing mail depository in Kansas. Postal workers opened the envelope, saw the contents and forwarded the mail to EZ AZ.

Hallums recounted another incident whereby, while using UPS, checks/money orders envelopes ended up in the wheel well of the UPS vehicle and eventually arrived at EZ AZ damaged and shredded.

Hallums stated that the third instance occurred when a former employee, Durazo, embezzled money. Hallums reported the incident to the Division and said the Board revoked Durazo’s certification as a defensive driving instructor.

Hallums denied that up to three checks were missing monthly or that upward of $250,000.00 (two hundred and fifty thousand) was missing from EZ AZ.

Division records demonstrate that Hallums, paid the division fees and the state fees. Other than his assertion, Martin did not provide evidence that supported his allegation that $250,000.00 (two hundred and fifty thousand) was stolen from EZ AZ. If that amount of money was stolen from EZ AZ, based on $250.00 (two hundred and fifty) as a cost for each defensive driving class, the extent of this alleged theft would involve approximately 1,000 (one thousand) students whose driver’s licenses would likely have been adversely affected if EZ AZ did not report class completions or failed to pay the diversion fees.

Despite the absence of evidence of money stolen, as described by the complainant, even if money was stolen from EZ AZ, as it was in the Durazo matter, mentioned previously in this Investigation Summary, a violation of code would exist if EZ AZ failed to pay the diversion fees or state fees. The Division did not find evidence that EZ AZ failed to pay diversion fees or state fees.

Allegation 1 is not substantiated

Allegation 2: EZ AZ Traffic School failed to report a change in school owners.

Martin said that Hipolito called Hallums to inform him that she was no longer going to work for EZ AZ at which time Hallums offered her an ownership interest in the school.

Martin said that Hipolito accepted the offer and became a part owner, along with Hallums, his wife, and approximately six (6) of Hallums’ children.

Martin said he checked the Arizona Corporation Commission records and said those records did not reflect Hipolito as an owner but showed that Hallums knew the proper procedure.

Hipolito denied that Hallums ever offered to make her an owner or that she was given an ownership interest. She maintained that she was always just an employee of the company.

Hallums denied that Hipolito was ever brought on as an owner of EZ AZ and denied ever offering her an ownership interest.

Arizona Corporation Commission records showed on August 6, 2015, Hallums filed Articles of Organization regarding EZ AZ Properties, L.L.C., File No. L-2024280-7, naming himself and Johanna Hallums as members.

Division records showed that Hallums and his wife, Johanna, own EZ AZ and that Hallums added his son, Jeff Hallums, as a member/owner.

The Division’s School Renewal Applications contain the following language:

By checking this box I agree to the following:

I certify under penalty of perjury that all information contained in this application, including all supporting documents, is true and correct to the best of my knowledge and belief. I understand that any false statements, misrepresentations or failures to disclose (omissions made in this application may be grounds for denial of certification may be grounds for denial of certification, subsequent suspension or revocation of certification or other disciplinary action deemed appropriate by the Board

Pursuant to a renewal application dated October 19, 2018, Hallums responded to an email from Foutz regarding membership to which Hallums replied “there are no other owners other than Jeff Hallums, Paul Hallums and Johanna Hallums.

In submitting an executed School Renewal Applications, Hallums, for EZ AZ, under penalty of perjury, accepted that any false statements, misrepresentations or failures to disclose or omit information, may be grounds for denial of certification, suspension or revocation of certification. Therefore, Paul Hallums and EZ AZ, would be risking significant consequential disciplinary action if he failed to report any changes in ownership or membership of EZ AZ.

Allegation 2 is not substantiated.

PASQUALE FONTANA, Investigator Certification and Licensing Division

 

ARIZONA SUPREME COURT ADMINISTRATIVE OFFICE OF THE COURTS

ORDER OF THE BOARD

CERTIFICATE HOLDER INFORMATION

Certificate Holder: Certification Number:

EZ AZ Traffic School #48 

RECOMMENDATION:

It is recommended the Board accept the finding of the Probable Cause Evaluator and enter a finding EZ AZ Traffic School #48 has not committed the alleged act(s) of misconduct as detailed in the Investigation Summary and Allegation Analysis Report in complaint number 18-D006.

It is further recommended that the Board dismiss complaint number 18-D006.

SUBMITTED BY:Mark Wilson, Division Director Date Certification and Licensing Division

FINAL DECISION AND ORDER:

The Board having reviewed the above Investigation Summary, Allegation Analysis Report, finding of the Probable Cause Evaluator, and Recommendation regarding complaint number 18-D006 and EZ AZ Traffic School #48, makes a finding of facts and this decision, based on the facts, evidence, and analysis as presented and enters the following order: Dismiss

 

Honorable Maria Brewer, Chair Defensive Driving Board