hearing on the Department's proposed denial of his license application. On January 4, 1980, the Department forwarded the Applicant's request to the Division of Administrative Hearings and asked for assignment of a Hearing Officer to conduct the hearing.
By Notice of Hearing, dated February 1, 1980, final hearing was set for March 11, 1980. Upon the Applicant's request for a continuance and without objection by the Department, final hearing was rescheduled for March 27, 1980.
At final hearing, the Department, without objection by Respondent, withdrew paragraph 31 of the Department's Order of Denial to the extent that it alleged Applicant was guilty of, or had been convicted of a crime of moral turpitude, or subject to a civil judgment concerning allegation of fraud. The Applicant, then, called Albert R. Ruiz as his witness, and testified on his own behalf. He offered Petitioner's Exhibits Nos. 1 through 3, inclusive, each of which was received into evidence. The Department called no witnesses on its behalf, and offered Respondent's Exhibit No. 1, which was received.
At the close of hearing, the parties requested, and were granted, the opportunity to submit proposed findings of fact and conclusions of law no later than April 11, 1980. On April 8, 1980, counsel for the Applicant, citing irreconcilable differences, withdrew as counsel and asked that the proceedings be held in abeyance for thirty (30) days in order to allow the Applicant to obtain new counsel. The proceedings were, therefore, stayed until April 29, 1980. On that date, new counsel for the Applicant moved for an extension of the stay until two weeks after a transcript of the hearing was obtained, which motion was granted.
The Department and Applicant filed their respective proposed findings of fact, conclusions of law, and recommended orders on April 11, 1980, and May 22, 1980.
On May 16, 1980, the Department filed a Motion to Correct and Amend Transcript of the Final Hearing, and Memorandum in Support Thereof, which Motion, without objection or response by Applicant, is granted, post.
Upon consideration of the testimony and documentary evidence presented at hearing, the following facts are determined:
On February 4, 1980, the Department served Requests for Admissions upon the Applicant. The Requests asked the Applicant to admit or deny the truth of each alleged finding of fact contained in the Department's Order of Denial dated December 7, 1979. Those findings of fact form the basis of the Department's proposed denial of Applicant's license. By his Answers to Request for Admissions (Respondent's Exhibit 3), the Applicant admitted the truth of each and every Finding of Fact contained in the Department's Order of Denial. The relevant Findings of Fact, which are now admitted and undisputed, are set out below:
The Applicant, James B. Payne, was previously licensed as a mortgage broker in the State of Florida under license number 2387 and registration number 90-1. His license expired on or about August 31, 1977.
On or about July 18, 1979, the Department received Applicant's application requesting registration as a mortgage solicitor.
The application was not completed until Applicant passed his mortgage brokerage license exam. On August 29, 1979, the Applicant took, but failed to pass, the mortgage brokerage examination in Miami, Florida. However, on October 9, 1979, the Applicant retook, and successfully passed, the examination. Thereafter, the Department, pursuant to Chapter 494, supra, conducted an investigation into the Applicant's background and qualifications for registration as a mortgage solicitor.
On or about May 15, 1978, [prior to filing the application at issue here] the Applicant had applied to the Department for a mortgage solicitor's license, pursuant to Chapter 494, supra. After receiving his application, the Department conducted an investigation into the background and qualifications of the Applicant. That investigation resulted in an Order of Denial which was issued on August 4, 1978, in administrative proceeding number 78-9 DOF (ME). An Affidavit of Default was entered in that action on September 1, 1978. That earlier Order of Denial [which became final and is not at issue here] contained the following allegations, now admitted by the Applicant:
"(i) That at all times material hereto [subparagraphs (i)-(iv), post] the Applicant was employed by Metropolitan Mortgage Company as its Chief Financial Officer at 2244 Biscayne Boulevard, Miami, Florida.
"(ii) On or about August, 1976, the Applicant did knowingly and with intent to defraud Metropolitan Mortgage Company, approve payment of a purported $5,000 mortgage fee to one Robert Day by check number 8309 issued by Metropolitan Mortgage Company and dated September 2, 1976. Said check was cashed on or about September 3, 1976, at the Capital Bank of Miami. On or about September 2, 1976, a cashier's check in the amount of
$4,500.00 was issued by the Capital Bank of Miami and made payable to the Applicant. The Applicant represented that said payment to Robert Day constituted a share of a brokerage commission for commitments entered into between Metropolitan Mortgage Company and Tremont Savings and Loan Association. The primary fee for said transaction was paid to Mortgage Brokerage Services, East Orange, New Jersey. No such brokerage commission sharing agreement between mortgage brokerage services and Robert Day ever existed.
"(iii) On or about June 3, 1977, the
Applicant did knowingly and with intent to defraud Metropolitan Mortgage Company, make a false requisition upon said Metropolitan Mortgage Company for a check disbursement in the amount of $3,150.00 payable to State Savings and Loan Association by check number 11797 dated June 3, 1977, and drawn on Flagship National Bank. The Applicant did knowingly and with intent to defraud Metropolitan Mortgage Company, misrepresent that said requisition was for a verbal commitment issued by State Savings and Loan Association to buy conventional mortgages valued at $315,000.00 at a net of 8.75 percent. The Applicant did misrepresent to State Savings and Loan Association that said check constituted rentals collected by Metropolitan Mortgage Company on two foreclosed units at Tallwood Condominiums.
At no time did State Savings and Loan Association issue the above described commitments either verbally or in writing. In fact, said requisition was made for the purpose of payment to State Savings and Loan Association for the Applicant's personal misadministration of loans regarding the Tallwood Condominiums and the Segars account in the respective sums of $6,340.00 and
$4,210.00.
"(iv) On or about June, 1977, the Applicant did knowingly and with intent to defraud Metropolitan Mortgage Company, approve payment of a purported brokerage fee to David
G. Witherspoon, in the sum of $6,500.00 by check number 11796 dated June 3, 1977, issued by Metropolitan Mortgage Company and drawn on the Flagship National Bank of Miami. The Applicant represented that said payment to Donald G. Witherspoon constituted a share of a brokerage commission for commitments entered into between Metropolitan Mortgage Company and Tremont Savings and Loan Association. On or about June 6, 1977, said check was converted to cashier's check number 070087 drawn on the Flagship National Bank of Miami and made payable to one Donald G. Witherspoon. The primary fee for said transaction was paid to Mortgage Brokerage Services, East Orange, New Jersey. No such
brokerage commission sharing agreement between Mortgage Brokerage Services and Donald G. Witherspoon ever existed. Donald G. Witherspoon was never a party to such transaction nor did he ever see, receive or sign said check."
Misconduct by the Applicant Subsequent to the August 4, 1978,
Order of Denial
The Applicant represented himself to Mr. Alan N. Schneider of Kings Way Mortgage Company of Coral Gables, Florida, as being a licensed mortgage broker/solicitor in the State of Florida. From December 22, 1978, until February 23, 1979, the Applicant was employed by Kings Way Mortgage Company as a mortgage solicitor, and did act in the capacity of a mortgage solicitor and negotiated several loans and collected fees. At all times above, the Applicant was not licensed as a mortgage broker and/or solicitor in the State of Florida.
That on or about February 1, 1979, the Applicant represented himself as, and acted in the capacity of a mortgage broker and/or solicitor in the State of Florida without being licensed as required by Chapter 494, supra, and in violation of Section 494.04, supra.
When the Applicant filed his application at issue here, he failed to indicate, in response to Question No. 7, the existence of a Final Judgment against him in the amount of $1,482.35. Such Judgment was entered against the Applicant in Dade County, Florida, on August 15, 1978, in Case No. 78-7543 SPO5.
Competence, Character, and Reputation of the Applicant
Applicant has had considerable experience in the field of mortgage banking. The president and vice-president of two mortgage brokerage companies established, without contradiction by the Department, that the Applicant is extremely knowledgeable in the area of mortgage banking. (Testimony of Ruiz, Petitioner's Exhibit No. 1)
Should the Applicant qualify for and receive a license, Allan Zalesky, President of First Capital Mortgage Company, and Albert Ruiz, Vice-President of Conley and Jones, a mortgage banking firm, would be willing to consider employing him as a mortgage solicitor. While no evidence was presented to indicate Zalesky was aware of the Applicant's past misconduct, or the basis for the Department's proposed denial of the Applicant's license, Ruiz was generally familiar with the Department's charges against the Applicant. Ruiz, nevertheless, affirmed that, should the Applicant be licensed, he would employ him as a competent mortgage solicitor, not just as a friend. (Testimony of Ruiz, Petitioner's Exhibit 1)
The Applicant's reputation in the community, to the extent that it is known by his friend, Luiz, is one of "truthfulness, honesty, and integrity." (Testimony of Ruiz)
Extenuating and Mitigating Circumstances Surrounding the Applicant's Misconduct
Although the Applicant failed, in response to Question 7, to disclose on his application for licensure the existence of a Final Judgment against him, dated August 16, 1978, the Applicant had previously satisfied the Judgment, on or about November, 1978. Although the Judgment creditor had been paid by the Applicant, a Satisfaction of Judgment was not executed until March 18, 1980. (Testimony of the Applicant, Petitioner's exhibit 2)
The Applicant intends to repay Metropolitan Mortgage Company for the losses it suffered due to the Applicant's prior misconduct. While the Applicant has made tentative arrangements to that end, no such payments have yet been made. (Testimony of Applicant)
The Applicant admits his past misconduct as a mortgage solicitor as alleged by the Department, and sincerely regrets his actions. His fraudulent conduct, which forms the basis of the Department's previous 1978 Order of Denial, occurred, in part, because he was suffering financial difficulties, and faced mounting medical bills of his wife. He was aware that his continued functioning as a mortgage solicitor, subsequent to that Order denying a license, was unlawful but he felt compelled to do so because of mental and financial difficulties and his physical condition at that time. Further, he was encouraged by his friends at the mortgage company to engage in such activities. (Testimony of Applicant)
The Applicant has never before engaged in misconduct in connection with mortgage brokerage transactions. His misconduct caused him embarrassment and great humiliation resulted in mounting family debts, and left him unemployed since February, 1979. His primary knowledge, and skills are limited to the mortgage banking field, and, unless he is able to act as a mortgage solicitor, it will be difficult to pay his debts and support his family. He freely acknowledges, and sincerely regrets his wrongful actions, and genuinely regrets the hardships which his actions have imposed on his family and friends. He professes to understand the value of and need for honesty and integrity in mortgage banking. Insisting that he has learned his lesson, he promises that, if licensed, he will never again engage in misconduct. (Testimony of Applicant)
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the parties thereto. Section 120.57, Florida Statutes, (1979)
Section 494.04, supra, provides in pertinent part: "(1) No person shall act as a mortgage
broker or mortgage solicitor in this
state, or in, out of, or from offices in this state, without a license therefore as provided in this act.
* * *
"(4) The Department shall require such information with regard to the application as it may deem desirable, with due
regard to the paramount interest of the public as to the experience, background, honesty, truthfulness, integrity, and competency of the applicant as to financial transactions involving primary or subordinate mortgage financing. "
The grounds authorizing the Department to deny a license application are prescribed by Section 494.05(4), supra:
"The Department may refuse a license if it determines that an applicant does not
meet all requirements of Section 494.04 or has violated any provision of this chapter. " (Emphasis supplied)
Pursuant to Section 494.05(1), supra, a mortgage broker or solicitor's license may be suspended for up to two years upon a showing that the licensee has been guilty of, inter alia, one of the following:
"(a) making any false promises likely to influence, persuade or induce; or pursuing a course of misrepresentation or false promises through agents or
solicitors, or advertising or otherwise.
"(b) misrepresentation, circumvention, or concealment by a licensee through whatever subterfuge or device of any of the material particulars or the nature thereof, regarding a transaction to which he is a party, and of injury to another party thereto.
* * *
"(e) failure to account or deliver to any person any personal property such as money, fund, deposit, check, draft, mortgage, or other document, or thing of value, which has come into his hands, and which is not his property, or which he is not in law or in equity entitled to retain, under the circumstances, and at the time which has been agreed upon,
or is required by law, or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery.
* * *
"(g) failure to comply with any of the provisions of this act, or with any lawful order, rule or regulation made or
issued under the provisions of this act."
Section 494.05(2), supra, provides:
"The license of a licensee may be revoked, if the application for the license is found to contain a material misstatement, where the licensee demonstrates by a
course of conduct negligence or incompetence in performing any act for which
he is required to hold a license under this act, or if the licensee for a second time shall be found guilty of any misconduct which warrants his suspension under subsection (1)."
Section 494.093, supra, entitled "Prohibited Practices," provides:
"It is unlawful, and a violation of the provisions of this chapter, for any person:
In any practice or transaction or course of business relating to, sale, purchase, negotiation, promotion, advertisement, or hypothecation of mortgage transactions, including any transaction consummated by parties under the provisions of section 494.03, directly or indirectly:
to knowingly or willingly employ any device, scheme or artifice to defraud.
to engage in any transaction, practice, or course of business which operates as a fraud upon any person in connection with the purchase or sale of any mortgage loan.
In any matter within the jurisdiction of the department, to knowingly and willfully falsify, conceal, or cover up, by any trick, scheme, or device, a material fact, or make any false or fraudulent statement or representation, or make or use any false writing or document, knowing the same to contain
any false or fraudulent statement or entry."
Based upon the foregoing Findings of Fact, it is concluded that the Department has established that the Applicant is guilty of violating Sections 494.05(1)(a), (b), (e), and (g), and 494.093(1)(a), (b), and (2), supra. Furthermore, the Department has established that the Applicant is guilty of violating Section 494.04(1), supra, by his acting as a mortgage solicitor without the required license.
However, the Applicant's violations of Chapter 494, infra, do not mandate, or require that his license application be denied. Section 494.05(4), supra. His violations simply provide the Department with a factual and legal basis for denial.
The Department contends that once the violations are established, and a basis thereby provided for denial, the final decision is within the sole discretion of the Department and Hearing Officer "cannot substitute his judgment for that of the agency." Page 10, Respondent's Proposed Findings of Fact, Conclusions of Law, Memorandum of Law, and Recommended Order. As authority for this contention, the Department cites Section 120.68(12), supra, which prohibits an appellate court from substituting its judgment for that of an agency on an issue of discretion.
The Department's contention is erroneous and overlooks the purpose of Section 120.57(1) proceedings. Such proceedings are not "appeals" from agency actions; they are, instead, "intended to formulate final agency action, not to review action taken earlier and preliminarily" (Emphasis supplied). McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA 1977). As established in the landmark case construing Florida's Administrative Procedure
Act, State ex rel. Dept. of Gen. Serv. v. Willis, 344 So.2d 580, 591 (Fla. 1st DCA 1977), a Hearing Officer "independently serves the public interest by providing a forum to expose, inform, and challenge agency policy and discretion" (Emphasis supplied). Id. His or her function, in appropriate cases, `subjects agency policy makers to the sobering realization their policies lack convincing wisdom, and requires them to cope with the Hearing Officer's adverse commentary." McDonald, supra, at 583.
The Department is required to obtain information concerning, inter alia, a license applicant's honesty, truthfulness, integrity, and competency as to financial transactions. Section 494.04(4), supra. In the case at hand, the prior conduct of the Applicant raises serious questions concerning his integrity, and his ability to carry out the functions of a mortgage solicitor with honesty and truthfulness. His fraudulent conduct justifying the previous denial of his license, followed by his acting as a mortgage solicitor without the required license, reflects flagrant and repeated disregard of Chapter 494, supra, and a fundamental misconception of the duties and responsibilities of a mortgage solicitor. The extenuating and mitigating circumstances surrounding his misconduct do not justify or adequately explain such repeated violations over a three-year period. It is concluded, therefore, that, based on his pattern of misconduct beginning in 1977, and continuing through 1979, the Applicant has demonstrated that he lacks the requisite honesty, truthfulness, and integrity to be licensed as a mortgage solicitor in Florida.
Conversely, the Applicant has failed to show, by a preponderance of evidence, that he is entitled to the requested mortgage solicitor's license. It may be that, upon reapplication in future years, the Applicant may show new and substantially different evidence of rehabilitation which would justify the Department's issuance of the requested license. This proceeding, and the Department's final action should not foreclose such a possibility in the future.
The Department's Posthearing Motion to Correct and Amend Transcript of the Final Hearing, without objection by the Applicant, is hereby GRANTED.
To the extent that the proposed Findings of Fact filed by the parties are not incorporated in this Recommended Order, they are rejected as either irrelevant or immaterial to the issues for determination, not supported by competent substantial evidence, or as constituting conclusions of law as opposed to findings of fact.
