STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OFFICE OF THE COMPTROLLER, )

)

Petitioner, )

)

vs. ) CASE NO. 87-2471

)

CHARLES LEON WINKLEMAN, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William J. Kendrick, held a public hearing in the above-styled case on September 3, 1987, in Miami, Florida.

APPEARANCES

For Petitioner: Thomas E. Glick, Esquire

Office of the Comptroller

401 N.W. 2nd Avenue Suite 440

Miami, Florida 33128

For Respondent: Guy K. Stewart, Jr., Esquire

1110 Brickell Avenue

Suite 710

Miami, Florida 33131 PRELIMINARY STATEMENT

By administrative complaint dated April 23, 1987, Petitioner sought to revoke Respondent's registration as an associated person under the Florida Securities and Investor Protection Act. The essence of the charges are that Respondent, subsequent to registration, was convicted of a crime involving moral turpitude or fraudulent or dishonest dealing, that Respondent's registration in Alaska was revoked because of such conviction, and that Respondent failed to notify Petitioner of the criminal proceeding or revocation proceeding as required by law.

At hearing, Petitioner called no witnesses, but its exhibits 1-3 were received into evidence. Respondent testified on his own behalf, and his exhibits 1-5 were received into evidence.

The transcript of hearing was filed September 17, 1987, and the parties were granted leave until September 29, 1987, to file proposed findings of fact. The parties' proposed findings have been addressed in the appendix to this recommended order.

FINDINGS OF FACT

1. On or about August 18, 1977, Respondent, Charles Leon Winkleman (Winkleman), filed an application with Petitioner, Office of the Comptroller, Department of Banking and Finance (Department) for registration as an associated person with Tax Favored Securities, Inc., now known as Global Investors Securities, Inc. Winkleman's application was granted November 1, 1977.

   
   

2. On April 11, 1984, Winkleman pled guilty to an information filed in the United States District Court, Southern District of Florida (District Court) , Case No. 84-6043-Cr-JLK, which charged that he:

   
   

   did wilfully and knowingly aid

   assist in, and counsel, procure, and advise the preparation and presentation to the Internal Revenue Service of a United States Individual Income Tax Return (Form 1040) of William I. and Amy Steele Donner for the calendar year 1978 which was false and fraudulent as to a material matter, in that it represented that said William I. Donner was entitled under the provisions of the Internal Revenue laws to claim deductions in the sum of $83,313.00 representing an ordinary loss of income, as a result of being owner of a sole proprietorship managed by Charles L. Winkleman, whereas, as .

   Winkleman . . . then and there well knew and believed William I. Donner was not entitled to said deductions all in violation of Title

   26 United States Code, Section 7206(2). 1/

   
   

3. On April 18, 1984, Winkleman filed an amended Form U-4 with the Central Registration Depository, and thereby advised interested parties that he had pled guilty to the information filed in the District Court. A copy of the amended Form U-4 was, contemporaneously, filed with the Department. 2/

   
   

4. On June 6, 1984, the District Court entered a judgment of guilt on Winkleman's plea. Winkleman was sentenced to six months imprisonment and fined

   $3,000.00. Winkleman failed, however, to notify the Department of such conviction until April 10, 1987, and offered no explanation at hearing for such failure.

   
   

5. Following Winkleman's plea of guilty in the District Court, the Department of Commerce and Economic Development, Division of Banking, Securities and Corporations (Department of Commerce) in Juneau, Alaska, issued a notice of intent to revoke Winkleman's registration. This notice, dated June 4, 1984, sought revocation based primarily on Winkleman's plea of guilty to the charges filed in the District Court. Winkleman failed to notify the Department of the pendency of the Alaska proceeding until April 10, 1987, and offered no explanation at hearing for such failure.

   
   

6. On March 10, 1987, the Department of Commerce entered an order revoking Winkleman's registration in Alaska based on his conviction in the District Court. By amended Form U-4, filed April 10, 1987, Winkleman advised the Department of his conviction in the District Court and the revocation of his registration by the State of Alaska. 3/

7. The order of the Department of Commerce, revoking Winkleman's registration, is currently on appeal. Winkleman seeks reversal of such order predicated on his assertion that the Department of Commerce breached an agreement to allow him to withdraw his registration in lieu of revocation. On July 20, 1987, the court, which is reviewing the Department of Commerce proceedings, entered an order staying the order of revocation pending the disposition of Winkleman's appeal.

   
   

8. On April 1, 1987, a hearing was held before the National Association of Securities Dealers, Inc. (NASD), to consider whether Winkleman, because of his conviction, should be disqualified as a registered representative with Global Investors Securities, Inc. On August 13, 1986, NASD entered a "Notice Pursuant to Rule 19h-1 of the Securities and Exchange Act of 1934" whereby it proposed that Winkleman not be disqualified. On January 8, 1987, the Securities and Exchange Commission (SEC) rendered its decision that it would not invoke Section 15A(g)(2) of the Securities and Exchange Act of 1934 to direct NASD to disqualify Winkleman.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

   
   

10. Pertinent to this case, Section 517.161, Florida Statutes, provides:

    
    

    1. Registration under s. 517.12 may be denied or any registration granted may be revoked or suspended by the department if the department determines that such applicant or registrant:

       1. Has violated any provision of this chapter or any rule or order made under this chapter.

          * * *

          (h) Has demonstrated his unworthiness to transact the business of dealer, investment adviser, or associated person.

          * * *

          (j) Has been convicted of, or entered a plea of nolo contendere to, a crime against the laws of this state or any other state or of the United States involving moral

          turpitude or fraudulent or dishonest dealing.

          
          

11. Also pertinent to this case are Rules 3E-600.010 and 3E-600.011, Florida Administrative Code. Rule 3E-600.010 provides:

    
    

    1. An applicant or registrant shall notify the Department:

       1. within thirty (30) calendar days of

          the date a complaint is served, of any civil, criminal or administrative charges filed against him which directly or indirectly relate to the registration or sale of securities, or which directly or indirectly relate to his activities as a dealer,

          investment advisor, principal or agency, or any other activity in which he was involved where a breach of a fiduciary trust is alleged. This shall not include minor traffic violations; but shall include any notification of investigation by any recognized regulatory agency;

       2. within thirty (30) calendar days of the date filed, any answer or reply to any

          complaint filed as outlined in paragraph (a) above

       3. within thirty (30) calendar days of the date of decision, order, or sanction

       rendered, or any appeal filed with respect to such decision with regard to any complaint outlined in paragraph (a) above.

    2. One (1) copy of such complaint, answer or reply, decision, order, or sanction shall be filed with the Department at the time of notification in accordance with paragraphs (1)(a) ,(b), and (c) of this rule.

       
       

       Rule 3E-600.011 provides:

       
       

       Prima Facie evidence of unworthiness to transact the business of a dealer, investment adviser, principal, or agent in the State of Florida shall include, but shall not be limited to:

       1. A conviction of any felony or first degree misdemeanor which relates to the registration being sought; or

       2. Any injunction, suspension, prohibi- tion, revocation, denial or administrative order by any state or federal agency, national securities exchange, or national securities association, involving a violation of any federal or state securities law or any rule or regulation promulgated

       thereunder . . . .

       
       

12. The proof established that Winkleman's registration is subject to revocation under the provisions of Section 517.161(1)(h) and (j), Florida Statutes, since he was convicted of a crime against the laws of the United States involving moral turpitude or fraudulent or dishonest dealing. The proof further established that Winkleman's registration is subject to revocation under the provisions of Section 517.161(1)(a), Florida Statutes, for his failure to comply with the notice requirements of Rule 3E-600.010, Florida Administrative Code. The proof does not, however, support the conclusion that Winkleman's registration is subject to revocation for violation of Rule 3E-600.011(2), Florida Administrative Code, since the revocation order entered in the State of Alaska has been stayed.

    
    

13. In concluding that Winkleman violated the provisions of 517.161, Florida Statutes, and in reaching the recommendation which follows, I am not unmindful of the decision of the NASD and SEC that Winkleman not be disqualified. I conclude, however, that the opinions of those agencies are not

    persuasive in this case since I was not made privy to the proof presented to them, nor was I made aware of whether such proof was taken under oath. As importantly, the notice of the NASD of August 13, 1986, was apparently amended on two occasions, October 23, 1986, and December 15, 1986, and such amendments were not offered in evidence. Accordingly, I decline in this de novo proceeding to attach any significance to the action taken by the NASD and the SEC.

    
    

14. The crime for which Winkleman was convicted evidences moral turpitude or fraudulent or dishonest dealing. Consequently, Winkleman has been demonstrated to lack an essential requirement for registration: good repute and character. Section 517.12(11), Florida Statutes. There being no competent proof of rehabilitation, Winkleman's registration should be revoked. 4/ Winkleman's assertion that the Department's action is barred by the Statute of Limitations, Section 95.011, Florida Statutes, is ill founded. Donaldson v. Department of Health and Rehabilitative Services, 425 So.2d 145 (Fla. 1st DCA 1983), and Farzad v. Department of Professional Regulation, 443 So.2d 373 (Fla. 1st DCA 1983).

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the registration of Respondent, Charles Leon Winkleman, as

an associated person under the Florida Securities and Investor Protection Act be

REVOKED.

DONE AND ENTERED this 6th day of October, 1987, in Tallahassee, Leon County, Florida.

WILLIAM J. KENDRICK

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550 904/488-9675

Filed with the Clerk of the Division of Administrative Hearings this 6th day of October, 1987.

ENDNOTES

1/ Title 26, United States Code, Section 7206(2) provides that it is a felony if any person:

Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under or in connection with any matter arising under, the internal revenue laws of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or

consent of the person authorized or required to present such return, affidavit, claim, or document. . . .

2/ At hearing, Winkleman testified that a copy of his amended Form U-4 was mailed to the Department on April 18, 1984. The Department did not controvert such assertion at hearing, and offered no proof that such amended Form U-4 was not received by it. Accordingly, it is concluded that such form was duly filed with the Department.

3/ At hearing, Winkleman testified that a copy of his amended Form U-4 was mailed to the Department on April 10, 1987. The Department did not controvert such assertion at hearing, and offered no proof that such amended Form U-4 was not received by it. Accordingly, it is concluded that such form was duly filed with the Department.

4/ The only proof offered , other than the actions of the NASD and SEC, that might arguably bear on Winkleman's rehabilitation was contained in a letter written by his counsel dated January 17, 1986. Petitioner's exhibits 2 and 3. For the reasons set forth in the response to Respondent's proposed findings of fact 2 and 9, such proof has been rejected.

APPENDIX

Petitioner's proposed findings of fact are addressed as follows:

1. Addressed in paragraph 1.

2. Addressed in paragraph 3 and 4.

3. Addressed in paragraphs 5-7. 4-5. Addressed in paragraphs 3-6.

6-7. Rejected as not supported by competent proof. See findings of fact 3 and 6, and footnotes 2 and 3.

8. Rejected as not a finding of fact.

Respondent's proposed findings of fact are addressed as follows:

1. Addressed in paragraph 1.

2. Addressed in paragraphs 2 and 4. Last sentence rejected as not supported by competent proof. This sentence is extracted from a letter written by Respondent's counsel and filed with the Department of Commerce in Alaska. (Petitioner's exhibits 2 and 3) Such letter does not purport to have been made on firsthand knowledge, was not sworn to, and was not otherwise shown to be reliable. Accordingly, it is unpersuasive and no finding of fact will be based upon such letter. See: Harris v. Game and Fresh Water Fish Commission, 496 So.2d 806 (Fla. 1st DCA 1986).

3-4. Addressed in paragraph 5.

1. Addressed in paragraphs 6 and 7.

2. Addressed in paragraphs 3 and 4.

3. Addressed in paragraphs 5 and 6.

4. Addressed in findings of fact 3, 6 and footnotes 2 and 3.

5. First paragraph addressed in finding of fact 8 and conclusions of law 5 and 6. Second paragraph rejected as not supported by competent or persuasive proof. See response to Respondent's proposed finding of fact number 2.

COPIES FURNISHED:

Thomas E. Glick, Esquire Office of the Comptroller

401 N.W. 2nd Avenue Suite 440

Miami, Florida 33128

Guy K. Stewart, Jr., Esquire 1110 Brickell Avenue

Suite 710

Miami, Florida 33131

Honorable Gerald Lewis Comptroller

The Capitol

Tallahassee, Florida 32399-0350

Charles L. Stutts, Esquire General Counsel Department of Banking

and Finance

Plaza Level, The Capitol Tallahassee, Florida 32399-0350

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE

DIVISION OF SECURITIES

IN RE:

CHARLES LEON WINKELMAN,

Respondent.

/

CASE NO. 87-2471

FINAL ORDER

WHEREAS, the Department of Banking and Finance, Division of Securities, State of Florida, ("the Department"), pursuant to the authority granted the Department in Chapter 517, Florida Statutes, by Administrative Complaint dated April 23, 1987, sought to revoke Charles Leon Winkelman's ("Respondent") registration as an associated person with tax favored securities, Inc., now known as Global Investors Securities, Inc., under the Florida Securities and Investor Protection Act; and

WHEREAS, Respondent requested a formal hearing under the Florida Administrative Procedures Act pursuant to Section 120.57, Florida Statutes; and

WHEREAS, said hearing was assigned case number 87-2471, to be heard before William J. Kendrick, Hearing Officer, Division of Administrative Hearings; and

WHEREAS, said hearing was held before Hearing Officer, William J. Kendrick, on September 3, 1987, in Miami, Florida; and

WHEREAS, Hearing Officer Kendrick, issued his Recommended Order dated October 6, 1987, recommending that Respondent's registration as an associated person under the Florida Securities and Investor Protection Act be revoked; and

WHEREAS, said Recommended Order was in all respects proper however, exceptions thereto have been filed by Respondent which will be addressed herein;

NOW THEREFORE, it is hereby ordered as follows:

1. The Findings of Fact and Conclusions of Law as set forth in the Recommended Order of the Hearing Officer are hereby adopted, in toto, as the Findings of Fact and Conclusions of Law of this Final Order as though set forth herein at length.

   
   

2. With regards to the written exceptions filed by Respondent (inadvertently directed to the Hearing officer but addressed herein) it is concluded that said exceptions are given no merit for the reasons that follow:

   
   

   a) Respondent filed written exception to conclusion of Law number 5 in the recommended Order claiming that the Hearing Officer "declined to attach any significance to the decision of the National Association of Securities Dealers, Inc., ("NASD") and the United States Securities and Exchange Commission ("SEC") to not bar the Respondent from the securities business by virtue of his conviction."

   In the recommended order, on the above-styled, it was concluded that: "In concluding that Winkelman violated

   the provisions of 517.161, Florida Statutes, and in reaching the recommendation which follows, I am not unmindful of the decision of the NASD and SEC that Winkelman not be disqualified.

   I conclude, however, that the opinions of those agencies are not persuasive in this case since I was not made privy to the proof presented to them, nor was I made aware of whether such proof was taken under oath. As importantly, the notice of the NASD of August 13, 1986, was apparently amended on two occasions, October 23, 1986 and December 15, 1986, and such amendments were not offered in

   evidence. Accordingly, I declined in this

   de novo proceeding to attach any significance to the action taken by the NASD and the SEC."

   
   

   The Respondent, in his written exceptions to the recommended order in trying to introduce that evidence submitted was taken under oath. However, even in a light most favorable to the Respondent, that was just one of three reasons cited

   by the hearing officer in declining to attach any significance to the actions taken by the NASD and the SEC. As quoted herein above, the hearing officer concluded that the opinions of those agencies were not persuasive in this case because along with the issue of it being under oath, he was not made privy to the proof presented them and as importantly, the notice of the NASD was amended on two occasions and such amendments were not offered into evidence.

   
   

3. Based on said Findings of Fact and Conclusions of Law, the registration of Charles Leon Winkelman as an associated person under the Florida Securities and Investor Act, Chapter 517, Florida Statutes, is hereby revoked.

DONE AND ORDERED this 9th day of November, 1987, in Tallahassee, Florida.

GERALD LEWIS, Comptroller of the State of Florida and Head of the Department of Banking and Finance

COPIES FURNISHED:

William Kendrick Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

Guy Stewart, Esquire Attorney for Respondent

1110 Brickell Avenue, Suite 710

Miami, Florida 33131

Don Saxon, Director Division of Securities The Capitol, Plaza Level

Tallahassee, Florida 32399-0350

Thomas E. Glick

Assistant General Counsel Office of the Comptroller State of Florida

401 N. W. 2nd Avenue, Suite 440 Miami, Florida 33128

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled to Judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing one (1) copy of a Notice of Appeal with the agency clerk of the Division of Administration Hearings and a second copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the appellate district where the party resides. The Notice of Appeal must be filed within thirty (30) days of rendition of the order to be reviewed.

Docket for Case No: 87-002471

Orders for Case No: 87-002471