Collateral consequences after conviction (part 1): One man's struggle for employment

By Alexandria Staubach

An employer wants him, he has the skills to do the job, and he passed the required courses and test required for a mortgage-lending-originator license. Yet he is barred from obtaining that license—and related employment and career—because of felony convictions for conduct unrelated to the financial industry or matters of trust.

“Collateral consequences” are the various restrictions that affect people convicted of crime even after they have served their sentences. Such restrictions can impact access to employment, licensing, and housing, and myriad other things. They may not directly relate to the crime of conviction, and they can apply without consideration of the person’s rehabilitation or risk.

The struggle to find employment after a felony conviction is well documented and studied. A September 2023 report conducted by the Internal Revenue Service states “that (criminal) records may be preventing about one third of working-age males from contributing to the formal economy.” The same study found negative effects on employment prospects “even in cases where charges did not lead to convictions.”

WJI recently sat down with a formerly incarcerated person who is putting in serious work to obtain gainful employment, to discuss the roadblocks he has faced in a system that just won’t get out of his way.

Stuart Parker Arthur

Stuart Parker Arthur, 26, grew up in south central Wisconsin. When he was in his late teens, he relocated to Missouri to work for his biological father in his business.

Shortly after Arthur arrived, he threw a large party. Arthur was young.

The police came. The police found drugs. The police found a gun.

According to Arthur, the drugs were trace quantities of cocaine and the gun was disassembled.

Missouri court records indicate that on Jan. 26, 2019, Arthur was charged with possession of a controlled substance other than marijuana, a Class D felony, and unlawful use of a weapon, a Class E felony. Missouri felonies are graded on an A-E scale, with Class E felonies carrying the least significant penalties.

Arthur told WJI he felt his best option was to take a plea deal that avoided a prison sentence because his then-fiancée was pregnant with their first child.

Court records indicate that Arthur pleaded guilty to the two charges on July 25, 2019, and received a suspended sentence, meaning the charges would ultimately be dismissed if he successfully completed five years of supervised probation.

Arthur told WJI that his fiancée suffered from a drug addiction and in the winter of 2020, after the birth of their child, she overdosed in a hotel room on a combination of drugs including fentanyl and heroin. “It happens a lot more than people think,” said Arthur.

Arthur said he went to the hotel room with his infant child and met with police.

The overdose was fatal.

Initially, Arthur was not charged with any crime. Court records do not reflect any probation violations, either.

Six months later, on June 27, 2020, Arthur was charged with endangering the welfare of a child involving drugs, as a result of bringing his child to the scene of his fiancée’s drug overdose.

“I had completed drug rehabilitation” pursuant to his supervised probation, said Arthur. “I voluntarily went to inpatient treatment to deal with potential relapse from the grief,” he told WJI.

Consistent with the new charges, court records of July 15, 2020, reflect the first violation of probation filed in his original case.

Nearly two years later, on May 2, 2022, Arthur pleaded guilty to the child endangerment charge, again feeling the pressure of having a child on the way and hoping to avoid a lengthy prison sentence.

On the new charges, Arthur was sentenced to 120 days of inpatient treatment while incarcerated and two years of supervised probation that included random blood, breath, and urine testing, despite any indication that ongoing drug use was an issue. Court records reflect no subsequent probation violations, and he was discharged from probation on the child endangerment charge as of May 28, 2024.

However, as a result of the second offense, his earlier drug and gun possession suspended sentence was revoked and a new sentence was imposed. He served 120 days of additional incarceration and was sentenced to another five years of supervised probation. Supervision on the drug and firearm case will terminate in August 2027, though they could terminate as early as winter of 2025 with time credits for good behavior, said Arthur.

Arthur told WJI he has otherwise met the obligations of his sentence.

Following release, Arthur relocated to Wisconsin, where his mother lives. Among other stipulations, Arthur was required to obtain housing and employment.

He initially found work as a car salesman. But he was unable to find housing (look for part 2 on the housing issue).

Because he could not find housing, Arthur reached out to a mortgage lender with the hope of eventually purchasing a home. In the process, he discovered he was good at deciphering what he needed to qualify and what rates and programs would be available to him. “I had done my homework,” Arthur said.

Sue Foley, Arthur’s mortgage lender, also thought he had a knack for the work. She remains “impressed by his efforts to turn his life around.” “His credit score is in the 700’s, he owns a home” Foley told WJI.

Foley encouraged Arthur to come work for her at Nations Lending, even though they had never hired anyone with a felony conviction. She believed he could be licensed in Wisconsin if they could get him through her company and its attorneys.

In Wisconsin, the license for a mortgage loan originator is obtained through the Department of Financial Institutions (DFI). According to the Nationwide Multistate Licensing System (NMLS), the license is required of anyone who takes or negotiates the terms of a residential mortgage loan.

According to NMLS, the license requires completion of 20 hours of precertification training and passage of a test. Wisconsin law further requires that "(a)n applicant shall not have been convicted of, or pled guilty or no contest to, a felony in a domestic, foreign, or military court during the 7-year period preceding the date of the application or, for a felony involving an act of fraud, dishonesty, breach of trust, or money laundering, at any time preceding the date of the application. This paragraph does not apply with respect to any conviction for which the applicant has received a pardon."

However, the Wisconsin Fair Employment Act (WFEA) prohibits discrimination against individuals and “certain licensed activities” on 14 protected traits, including records of arrest or conviction.

Storm Larson, a Madison based employment attorney, wrote in an article in Wisconsin Lawyer that employers and licensors have “leeway to consider an employee’s record of conviction” and “the general rule is that conviction records cannot be considered in making an employment decision unless ‘the circumstances of the [the conviction] substantially relate to the circumstances of the particular job or licensed activity’” (emphasis in original).

The Wisconsin Supreme Court in a 2022 decision muddied the waters and caused employer and licensors to deploy a “fact-intensive inquiry into the circumstances of the job and conviction itself,” wrote Larson. Now, “the supreme court specifically notes that the length of time between the conviction and the application for employment can be relevant to determining the likelihood of recidivism,” he wrote. Previously that was not a factor.

Despite the law and the costs, Arthur completed the necessary course work and testing to obtain his license. He applied at Nations Lending and was hired by the firm.

When Arthur submitted his license application to DFI, Nations Landing backed him. Arthur supplied additional letters of support from his employers at two car dealerships. Foley told WJI that Arthur even obtained a letter of support from the warden of the Missouri prison where he had been incarcerated.

Nevertheless, DFI rejected Arthur’s license application because of his felony convictions. DFI wrote that its legal staff had reviewed case law about the WFEA and that the law governing licensure for mortgage loan originators “does not give the Division discretion to consider those facts and circumstances, unless the crimes have been expunged or pardoned or are older than seven years.”

“(E)ven if the Division could consider those facts and circumstances for these offenses, it would not find licensure appropriate at this point given the recency of the offenses. Your subsequent life changes are more consistent with holding a position of financial trust, but establishing a longer post-offense track record is required to provide adequate assurance that the applicant meets the requirements for licensure,” DFI wrote.

Arthur attempted to dispute DFI’s decision, but there is no formal appeal process under Wisconsin law. Ultimately, on May 29, 2024, Arthur withdrew his application so it would not later show up as a denial.

“They’re making me give up a job that that I am good at, a job that could give me a better life,” Arthur told WJI.

“There are people who want something better when they get out of prison,” said Foley. “We shouldn’t throw away the baby with the bath water.”

WJI reached out to DFI and spoke with the agency’s Chief Legal Counsel, Matthew Lynch. Lynch said DFI has no official position and that the agency cannot comment on specific cases.

Lynch acknowledged the tension between state licensing requirements and WFEA. Lynch told WJI that in his analysis, federal law drove Wisconsin’s adoption of the statue governing mortgage lending and sets minimum requirements, including the provision requiring seven years between conviction and licensure. According to Lynch, states that run afoul of the federal standards would be subject to federal intervention and control over licensing in the area.

Lynch said the “agency would be happy to take another direction but it would likely run afoul of federal law.”
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Lynch further told WJI that his analysis of the legislative intent behind the mortgage lender licensing statue also drives their decision making. In 2013 the Legislature added language to the mortgage licensing statue that permits them to use the discretion described in WFEA for convictions that have been expunged or pardoned, Lynch said. The 2013 addition “can’t make sense” if the agency had the ability to use the mitigation factors under WFEA in every case, he said.

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