STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MELVIN J. HABER, )

)

Petitioner, )

)

vs. ) CASE NO. 81-1775

)

DEPARTMENT OF BANKING AND ) FINANCE, DIVISION OF FINANCE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, R. L. Caleen, Jr., held a formal hearing in this case on September 30, 1981, in Miami, Florida.

APPEARANCES

For Petitioner: Julian R. Benjamin, Esquire

7300 North Kendall Drive, Suite 500

Miami, Florida 33156

For Respondent: Albert T. Gimbel, Esquire

Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301

ISSUE PRESENTED

Whether petitioner's application for a mortgage broker's license should be granted or denied.

BACKGROUND

By application dated March 18, 1981, petitioner Melvin J. Haber ("Applicant") applied to the respondent Department of Banking and Finance, Division of Finance ("Department") for a mortgage broker's license. By order dated June 22, 1981, the Department denied the application.

On July 3, 1981, the Applicant timely requested a formal hearing on the Department's denial. Thereafter, this case was referred to the Division of Administrative Hearings for the purpose of conducting the requested hearing.

At final hearing on September 30, 1981, the Applicant testified in his own behalf and called Stephen Kollin and Arthur Sheppard as his witnesses. He offered Petitioner's Exhibit 1/ Nos. 1 through 4 into evidence, each of which was received. The Department called Michael S. Lipsitt and Joseph M. Ehrlich as its witnesses and offered Respondent's Exhibit 1/ Nos. 1 through 8 into evidence, each of which was received.

The parties were allowed to file proposed findings of fact and conclusions of law within 30 days from the filing of the transcript of hearing. In November 1981, Applicant requested and, without objection, was granted an extension of time, until November 25, 1981, within which to file proposed findings. The Department was allowed until December 9, 1981, to file a reply memorandum.

However, neither party filed proposed findings of fact or post-hearing memoranda.

Based on the evidence presented at hearing, the following facts are determined:

FINDINGS OF FACT I.

Application and Reasons for Denial

1. Applicant is a 52-year-old former mortgage broker who resides in Dade County, Florida. He was first licensed as a mortgage broker in Florida in 1959. His license remained in effect until it expired in 1976. He reapplied for registration as a mortgage broker in December, 1976. In June, 1977, the Department denied his application despite Applicant's attempt to withdraw his application in January, 1977. (P-1, R-6, R-7.)

   
   

2. On March 18, 1981, Applicant filed another application with the Department for a license to act as a mortgage broker. That application is the subject of this proceeding. The Department seeks to deny it on grounds that the Applicant is insolvent; that he had a final judgment entered against him in a civil action on grounds of fraud, misrepresentation, or deceit; and that he lacks the requisite competence, honesty, truthfulness, and integrity to act as a mortgage broker in Florida.

   
   

   II.

   
   

   Insolvency

   
   

3. Applicant is insolvent and deeply in debt. His insolvency arises out of his association with a company known as Guardian Mortgage and Investment Corporation ("Guardian Mortgage"), a mortgage brokerage firm operating in Dade County. He was secretary/treasurer and one of several mortgage brokers who worked for that company. Prior to its going out of business in 1976, it and its several brokers were accused of numerous financial misdealings. Between 1974 and 1980, over 31 civil lawsuits were filed against Applicant concerning financial transactions in which he was involved; most of the transactions occurred in connection with his employment at Guardian Mortgage. As a result of these lawsuits, and his failure to defend against them (on advice of counsel) , final judgments in excess of $500,000 have been entered against him and remain unpaid. Applicant has not attempted to pay off any of these judgments, although his codefendant, Archie Struhl, has made efforts to satisfy some of them. (Testimony of Lipsitt, Haber; R-4, R-5, R-6.)

   
   

4. After Guardian Mortgage ceased operations, Applicant ran a hotel and orange grove operation in Central America. His wife was a preschool teacher. He has not earned any money beyond that necessary to meet his basic needs. (Testimony of Haber.)

5. In the past, the Department has ordinarily refused to issue mortgage broker licenses to applicants who are insolvent. The reason for this policy is that the public "could be injured if a man [mortgage broker] did not have sufficient monies to back him up . . ." Tr. 144.) The only exception to this policy of denying applications on grounds of insolvency is when an applicant has shown that he is making an honest effort to satisfy and pay off the outstanding judgments. (Testimony of Ehrlich.)

   
   

   III.

   
   

   Civil Judgment of Fraud Entered Against Applicant

   
   

6. In April, 1977, a civil action was filed by Murray Ritter against three codefendants: Applicant, Archie Struhl, and Guardian Mortgage. (Circuit Court of Dade County, Case No. 77-10849, Division II.) Count II of the complaint alleged that the defendants committed fraud by failing to invest $10,000 in a first mortgage and, instead, converted the money to their own use. On July 20, 1977, the circuit court, upon plaintiff's motion, entered a Final Summary Judgment in favor of plaintiff and against the three defendants. The judgment awarded plaintiff $10,000 in compensatory damages, $5,000 in punitive damages, and court costs of $63, for a total of $15,063. (R-5, R-6.)

   
   

   IV.

   
   

   Experience, Honesty, Truthfulness, Integrity, Competency, and Background of Applicant

   
   

7. Applicant was a licensed mortgage broker for many years. The Department acknowledges that his experience in mortgage financing is adequate. (Testimony of Ehrlich.)

   
   

8. Applicant denies that he ever engaged in wrongdoing as a mortgage broker, that he knew of improprieties occurring at Guardian Mortgage, or participated in a cover-up. He denies that he ever misrepresented facts or acted dishonestly as a mortgage broker. The evidence is insufficient to establish that Applicant lacks honesty, truthfulness, or integrity. (Testimony of Haber.)

   
   

9. However, Applicant has not demonstrated that he has the requisite background and competence to engage in financial transactions involving mortgage financing. Civil judgments were entered (by the Circuit Court of Dade County) against Applicant in the following cases, each of which involved mortgage financing, unsecured loan transactions, or real estate investments negotiated by Applicant:

   
   

   1. Irvings S. Philipson, et al. v. Venus Development Corporation, et al., Case No. 74-1320.

   2. Dr. Seymour Z. Beiser, et al. v. Guardian Mortgage

      and Investment Corporation, et al., Case No. 76-24374.

   3. Dade Federal Savings and Loan Association of Miami

      v. Brenda Alexander, et al., Case No. 75-16230.

   4. City National Bank of Miami v. Guardian Mortgage

      and Investment Corporation, et al., Case No. 75-39444.

   5. Leon Earler, et al. v. Venus Development Corporation, et al., Case No. 76-22138.

   6. Jesus Suarez v. Leonard Gordon, et al., Case No. 76-26381.

   7. John J. Nussman, et al. v. Melvin J. Haber, et al., Case No. 76-30569 (12).

   8. County National Bank of North Miami Beach v. Sid Shane, et al., Case No. 77-27909 (14).

   9. Herman Mintzer, et al. v. Guardian Mortgage and Investment Corporation, Case No. 76-16842.

   10. Melvin Waldorf, et al. v. Guardian Mortgage and Investment Corporation, Case No. 76-16344.

   11. Florence Margen v. Guardian Mortgage and Investment Corporation, et al., Case No 76-39412.

   12. Biscayne Bank v. Guardian Mortgage and Investment Corporation, et el., Case No. 76-39857 (8).

   13. Harry Jolkower, et al. v. Archie Struhl, et al., Case No. 77-19172.

   14. Hilliard Avrutis v. Archie Struhl, et al., Case No. 32494.

   15. Julius Wladawsky, et al. v. Melvin J. Haber, et al., Case No. 76-22554 (14).

   
   

   Taken as a whole, these judgments support an inference that Applicant lacks the competence and background necessary to act as a responsible mortgage broker in Florida. 2/ (Testimony of Ehrlich; R-4, R-5.)

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Section 120.57(1), Fla. Stat. (1981).

    
    

11. Before granting a license, the Department must determine whether an applicant has the requisite "experience, background, honesty, truthfulness, integrity and competency" to act as a mortgage broker in Florida. Section 494.04(4), Fla. Stat. (1979).

    
    

12. The Department is authorized to deny a license if the applicant is deficient in these respects or if he has committed actions which would justify suspension or revocation of a mortgage broker's license. See, Section 494.05(4), Fla. Stat. (1979). A license may be revoked on grounds of insolvency, Section 494.05(1)(i), or the existence of a final judgment against the applicant for fraud, misrepresentation, or deceit, Section 494.05(1)(d), Florida Statutes (1979).

    
    

    In hearings on the denial of a license, the applicant has the burden of establishing entitlement to the requested license. Section 28-6.08(3), F.A.C.

    
    

13. In the instant case, Applicant has failed to sustain his burden. The evidence affirmatively establishes that Applicant is insolvent, that a final judgment for fraud has been entered against him, and that he lacks the requisite competence and background necessary to function responsibly as a mortgage broker in Florida. Sections 494.04(4), 494.05(1)(d) and (i), Fla. Stat. (1979).

By statute, denial is permissive, not mandatory. However, the Department has an established practice of denying licenses when one of the statutory grounds for denial is satisfied. Exceptions to this practice are narrowly defined. In this case, Applicant does not fall within an exception; neither has he presented evidence justifying a deviation from the Department's established practice and construction of its statutory responsibilities. See, Outdoor

Advertising Art, Inc. v. Florida Department of Transportation, 366 So.2d 114 (Fla. 1st DCA 1979); Section 120.68(12)(b), Fla. Stat. (1981). The application must, therefore, be denied.

RECOMMENDATION

Based on the foregoing, it is RECOMMENDED:

That the application for a mortgage broker's license be DENIED.

DONE AND RECOMMENDED this 15th day of January, 1982, in Tallahassee, Florida.

R. L. CALEEN, JR. Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

FILED with the clerk of the Division of Administrative Hearings this 15th day of January, 1982.

ENDNOTES

1/ Petitioner's and Respondent's Exhibits will be referred to as "P- ," and "R- ," respectively. Pages of the transcript will be referred to as

"Tr ."

2/ Applicant did not present sufficient evidence to negate such an inference.

COPIES FURNISHED:

Julian R. Benjamin, Esquire Suite 500

7300 North Kendall Drive Miami, Florida 33156

Albert T. Gimbel, Esquire Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301

The Honorable Gerald Lewis State of Florida Comptroller The Capitol

Tallahassee, Florida 32301

Docket for Case No: 81-001775

Orders for Case No: 81-001775