Under 18 USC Section 1033, a person convicted of a felony involving dishonesty or a breach of trust:
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Why D is correct
18 USC Section 1033 prohibits any person convicted of a crime involving dishonesty or a breach of trust from engaging in the business of insurance affecting interstate commerce without the written consent of the appropriate insurance regulatory official. Section 1034 imposes criminal penalties for knowingly violating Section 1033. The prohibition is federal and applies to insurance business affecting interstate commerce, so a state license alone does not authorize the activity. Written regulatory consent is the only pathway back into the business, and the consequences include criminal penalties rather than mere civil liability.
Why the other options are wrong
- A) A state license does not overcome the federal bar. The convicted person must obtain the written consent of the appropriate regulator before engaging in the insurance business. This statement does not survive the statutory analysis presented above and is therefore wrong.
- B) The statute is a federal law that applies to insurance affecting interstate commerce. It is not a restriction limited to a single state. The correct answer follows from the controlling authority, which this option does not follow.
- C) Criminal penalties apply under 18 USC Section 1034 for knowingly violating the prohibition, so the exposure is not limited to civil liability. This common misconception is exactly what the governing rule rejects, so the option is incorrect.
Memory hook
A dishonesty felony closes the insurance door; only a regulator's written consent reopens it.