The Judicial Officer (JO) on April 24, 2003, the JO denied Petitioner's petition for reconsideration. The JO held Petitioner's contention that she was only nominally a partner was irrelevant because there was no finding that she was a partner in the violating PACA licensee. Instead, the evidence established that Petitioner was a holder of more than 10 per centum of the outstanding stock of the violating PACA licensee. The JO also held Petitioner's contention that she was only nominally a manager was irrelevant because the second prong of the two-pronged statutory test to show she was not responsibly connected does not require that she show she was only nominally a manager of the violating PACA licensee. The JO rejected Petitioner's contention that the finding that Petitioner knew or should have known that the violating PACA licensee was not paying its bills, was error. The JO also rejected Petitioner's contention that she was not actively involved in the activities resulting in the PACA violations.

Ruben D. Rudolph, Jr., for Respondent.

Paul T. Gentile, for Petitioner.

Initial decision issued by Jill S. Clifton, Administrative Law Judge.

Order issued by William G. Jenson, Judicial Officer.

PROCEDURAL HISTORY

On February 21, 2001, James R. Frazier, Chief, PACA Branch, Fruit and Vegetable Programs, Agricultural Marketing Service, United States Department of Agriculture [hereinafter Respondent], issued a determination that Merna K. Jacobson' [hereinafter Petitioner] was responsibly connected with Jacobson Produce, Inc., during June 1999 through January 2000, when Jacobson Produce, Inc. violated the Perishable Agricultural Commodities Act, 1930, as amended (7 U.S.C. §§ 499a-499s) [hereinafter the PACA].2 On March 5, 2001, Petitioner filed a Petition for Review pursuant to the PACA and the Rules of Practice Governing Formal Adjudicatory Proceedings Instituted by the Secretary Under Various Statutes (7 C.F.R. §§ 1.130-.151) [hereinafter the Rules of Practice] seeking reversal of Respondent's determination that she was responsibly connected with Jacobson Produce, Inc. during the period Jacobson Produce, Inc.

'Respondent's February 21, 2001, determination letter (CARX 14) and a number of other exhibits and filings in this proceeding refer to Petitioner as "Myrna K. Jacobson." Petitioner's name is "Merna K. Jacobson" (Amendment of Case Caption, Deadlines for Filing Outstanding Evidence, Request for Settlement Documents, and Briefing Schedule).

During June 1999 through January 2000, Jacobson Produce, Inc. failed to make full payment promptly to 28 sellers of the agreed purchase prices in the total amount of $584,326.83 for 153 lots of perishable agricultural commodities, which Jacobson Produce, Inc. purchased, received, and accepted in interstate and foreign commerce. Jacobson Produce, Inc.'s failures to make full payment promptly constitute willful, repeated, and flagrant violations of section 2(4) of the PACA (7 U.S.C. § 499b(4)). In re Jacobson Produce, Inc., 60 Agric. Dec. 381 (2001) (Consent Decision and Order) (CARX 15).

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violated the PACA.

On July 12, 2001, Administrative Law Judge Jill S. Clifton [hereinafter the ALJ] conducted a hearing in New York, New York. Paul T. Gentile, Gentile & Dickler, New York, New York, represented Petitioner. Ruben D. Rudolph, Jr., Office of the General Counsel, United States Department of Agriculture, Washington, DC, represented Respondent.

Petitioner and Respondent filed post-hearing briefs. The ALJ then issued a "Decision" [hereinafter Initial Decision and Order] in which the ALJ affirmed Respondent's determination that Petitioner was responsibly connected with Jacobson Produce, Inc. during June 1999 through January 2000, when Jacobson Produce, Inc. violated the PACA (Initial Decision and Order at 12).

On October 16, 2002, Petitioner appealed to the Judicial Officer. On November 15, 2002, Respondent filed a response to Petitioner's appeal petition. On January 7, 2003, I issued a "Decision and Order as to Merna K. Jacobson" in which I adopted the ALJ's Initial Decision and Order with minor modifications. In re Janet S. Orloff (Decision as to Merna K. Jacobson), 62 Agric. Dec. (Jan. 7, 2003).

On February 7, 2003, Petitioner filed "Petitioner's Petition for Reconsideration." On April 17, 2003, Respondent filed "Respondent's Response to Petitioner's Petition for Reconsideration." On April 18, 2003, the Hearing Clerk transferred the record to the Judicial Officer for reconsideration of the January 7, 2003, Decision and Order as to Merna K. Jacobson.

(9) The term "responsibly connected" means affiliated or connected with a commission merchant, dealer, or broker as (A) partner in a partnership, or (B) officer, director, or holder of more than 10 per

centum of the outstanding stock of a corporation or association. A person shall not be deemed to be responsibly connected if the person demonstrates by a preponderance of the evidence that the person was not actively involved in the activities resulting in a violation of this chapter and that the person either was only nominally a partner, officer, director, or shareholder of a violating licensee or entity subject to license or was not an owner of a violating licensee or entity subject to license which was the alter ego of its owners.

§ 499b. Unfair conduct

It shall be unlawful in or in connection with any transaction in interstate or foreign commerce:

(4) For any commission merchant, dealer, or broker to make, for a fraudulent purpose, any false or misleading statement in connection with any transaction involving any perishable agricultural commodity which is received in interstate or foreign commerce by such commission merchant, or bought or sold, or contracted to be bought, sold, or consigned, in such commerce by such dealer, or the purchase or sale of which in such commerce is negotiated by such broker; or to fail or refuse truly and correctly to account and make full payment promptly in respect of any transaction in any such commodity to the person with whom such transaction is had; or to fail, without reasonable cause, to perform any specification or duty, express or implied, arising out of any undertaking in connection with any such transaction; or to fail to maintain the trust as required under section 499e(c) of this title. However, this paragraph shall not be considered to make the good faith offer, solicitation, payment, or receipt of collateral fees and expenses, in and of itself, unlawful under this chapter.

§ 499d. Issuance of license

(b) Refusal of license; grounds

The Secretary shall refuse to issue a license to an applicant if he finds that the applicant, or any person responsibly connected with the applicant, is prohibited from employment with a licensee under section 499h(b) of this title or is a person who, or is or was responsibly connected with a person who

62 Agric. Dec. 281

(A) has had his license revoked under the provisions of section 499h of this title within two years prior to the date of the application or whose license is currently under suspension; [or]

(B) within two years prior to the date of application has been found after notice and opportunity for hearing to have committed any flagrant or repeated violation of section 499b of this title, but this provision shall not apply to any case in which the license of the person found to have committed such violation was suspended and the suspension period has expired or is not in effect[.]

(c) Issuance of license upon furnishing bond; issuance after three years without bond; effect of termination of bond; increase or decrease in amount; payment of increase

Any applicant ineligible for a license by reason of the provisions of subsection (b) of this section may, upon the expiration of the two-year period applicable to him, be issued a license by the Secretary if such applicant furnishes a surety bond in the form and amount satisfactory to the Secretary as assurance that his business will be conducted in accordance with this chapter and that he will pay all reparation orders which may be issued against him in connection with transactions occurring within four years following the issuance of the license, subject to his right of appeal under section 499g(c) of this title. In the event such applicant does not furnish such a surety bond, the Secretary shall not issue a license to him until three years have elapsed after the date of the applicable order of the Secretary or decision of the court on appeal. If the surety bond so furnished is terminated for any reason without the approval of the Secretary the license shall be automatically canceled as of the date of such termination and no new license shall be issued to such person during the four-year period without a new surety bond covering the remainder of such period. The Secretary, based on changes in the nature and volume of business conducted by a bonded licensee, may require an increase or authorize a reduction in the amount of the bond. A bonded licensee who is notified by the Secretary to provide a bond in an increased amount shall do so within a reasonable time to be specified by the Secretary, and upon failure of the licensee to provide such bond his license shall be automatically suspended until such bond is provided. The Secretary may not issue a license to an applicant under this subsection if the applicant or any person responsibly connected with the applicant is prohibited from employment with a licensee under

section 499h(b) of this title.

§ 499h. Grounds for suspension or revocation of license

(b) Unlawful employment of certain persons; restrictions; bond

assuring compliance; approval of employment without bond; change in amount of bond; payment of increased amount; penalties

Except with the approval of the Secretary, no licensee shall employ any person, or any person who is or has been responsibly connected with any person

(1) whose license has been revoked or is currently suspended by order of the Secretary;

(2) who has been found after notice and opportunity for hearing to have committed any flagrant or repeated violation of section 499b of this title, but this provision shall not apply to any case in which the license of the person found to have committed such violation was suspended and the suspension period has expired or is not in effect; or

(3) against whom there is an unpaid reparation award issued within two years, subject to his right of appeal under section 499g(c) of this title.

The Secretary may approve such employment at any time following nonpayment of a reparation award, or after one year following the revocation or finding of flagrant or repeated violation of section 499b of this title, if the licensee furnishes and maintains a surety bond in form and amount satisfactory to the Secretary as assurance that such licensee's business will be conducted in accordance with this chapter and that the licensee will pay all reparation awards, subject to its right of appeal under section 499g(c) of this title, which may be issued against it in connection with transactions occurring within four years following the approval. The Secretary may approve employment without a surety bond after the expiration of two years from the effective date of the applicable disciplinary order. The Secretary, based on changes in the nature and volume of business conducted by the licensee, may require an increase or authorize a reduction in the amount of the bond. A licensee who is notified by the Secretary to provide a bond in an