STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF REAL ) ESTATE, FLORIDA REAL ESTATE ) COMMISSION )

)

Petitioner, )

)

vs. ) CASE NO. 87-3084

) THOMAS C. PLUTO, KATHLEEN M. ) PLUTO, and PLUTO REALTY, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

Consistent with the Order Granting Continuance entered by the undersigned in this case on September 23, 1987, a hearing was held in this case before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings, in Sarasota, Florida, on December 22, 1987. The issue for consideration was whether Respondents' licenses as real estate brokers and a brokerage corporation, as appropriate, should be disciplined because of the alleged misconduct outlined in the Administrative Complaint filed herein.

APPEARANCES

For Petitioner: James R. Mitchell, Esquire

DPR, Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

For Respondent: Robert P. Rosin, Esquire

1900 Main Street, Suite 210

Sarasota, Florida 34236

Kathleen M. Pluto, pro se 8415 Midnight Pass Road Sarasota, Florida 34242

BACKGROUND INFORMATION

On June 24, 1987, Van B. Poole, then Secretary of the Department of Professional Regulation, filed an Administrative Complaint in this case against the Respondents alleging in three Counts, respectively, that they were guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, and breach of trust in a business transaction in violation of Subsection 475.25(1)(b), Florida Statutes.

Thereafter, the three Respondents individually submitted Election of Rights forms on which they disputed the allegations contained in the Administrative Complaint and requested formal hearing. On July 21, 1987, the file was forwarded to the Division of Administrative Hearings for assignment of a Hearing Officer and on September 10, 1987, after all Respondents had responded to an initial Order of the Hearing Officer requesting suggested hearing dates, the undersigned set the case for hearing on November 19 and 20, 1987. However, on September 15, 1987, counsel for Petitioner moved to continue the hearing, concurred in by the Respondents, and on September 23, 1987, the undersigned entered an Order of Continuance rescheduling the hearing for December 22, 1987 at which time it was held as scheduled.

At the hearing, the parties entered into a Stipulation of Fact signed by counsel for Petitioner and counsel for Respondents Thomas Pluto and Pluto Realty, and by Respondent Kathleen Pluto in which the majority of the disputed issues of fact were resolved. The Petitioner presented no witnesses and introduced Petitioner's Exhibits 1 through 4. Respondent, Thomas C. Pluto and Kathleen M. Pluto testified in their own behalf. No documentation was submitted on behalf of Respondents.

No transcript of testimony was filed. Subsequent to the hearing, both parties filed submissions which, have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times pertinent to the allegations contained here, the Respondents, Thomas C. Pluto, Kathleen M. Pluto, and Pluto Realty, Inc., were licensed as real estate brokers and a brokerage corporation respectively.

   
   

2. On October 23, 1985, Karen S. Hicks, listed certain property owned by her, located at 1537 Oak Park Avenue, Sarasota, Florida, for sale with Allstar Realty of Sarasota, Inc., (Allstar), utilizing Annette Schmidt as broker.

   
   

3. On or about November 25, 1985, Respondent Thomas C. Pluto entered into a contract for sale between himself/or assigns as buyer and Karen Hicks as seller. The contract was for the sale of the property mentioned above. Respondent, Thomas Pluto was representing an investor who was to be the actual buyer and Mr. Pluto neither intended nor desired to purchase the property for himself.

   
   

4. Because of the unfavorable interest rate then existing on the mortgage in effect on the property, which resulted in a negative amortization and a less favorable purchase opportunity, the warranty deed, mortgage deed, and closing statement to be executed in closing of the contract of sale herein were to be back dated to September 12, 1985 in order to take advantage of certain peculiarities of the federal income tax law pertinent thereto. By Respondent's own admission, had this sale been consummated in this fashion, it would have constituted at least a conspiracy to defraud the U.S.

   
   

5. Closing was held on December 27, 1985. Prior to the closing, the intended buyer of the property, Mr. Pluto's investor, backed out of the deal and Mr. Pluto so informed Ms. Hicks through her agent, Ms. Schmidt. Because Ms. Hicks was anxious to close, because of the Christmas season, and because Mr. Pluto felt that he still might be able to find an investor to take over the property, Mr. Pluto agreed to go through with the purchase and as a part of the closing, paid Ms. Schmidt a $1,000.00 split commission.

6. When the documentation was prepared for the December 27, 1985 closing, Thomas C. Pluto was shown as the buyer, but the mortgage deed, the warranty deed, and the closing statements all reflected a date of September 12, 1985. These documents were drafted and prepared by Respondent, Kathleen Pluto, who received her instructions as to what date to utilize thereon from Respondent, Thomas C. Pluto. The date of September 12, 1985, was initially dictated by the accountant for the original proposed investor who stipulated that date be used in order to take advantage of certain tax advantages possibly involved. According to Mr. Pluto and Mrs. Pluto, independent of each other, Mr. Pluto never thought to change it, and she merely assumed the back date was still to be used. This back dating of documents was, however, even by admission by the Respondent, Thomas Pluto, an improper act. Since the closing did not go through, however, the significance of the back dating relates only to the issue of the intent of Mr. Pluto at the time he took title to the property.

   
   

7. By the middle of February, 1986, Mr. Pluto was still unable to secure another buyer for the property and on February 21, 1986, he submitted a written request for an assumption package to the mortgagee, Cameron-Brown, Incorporated. This written request was followed up by a verbal request on February 24 and again on March 18 and April 8, 1986. The mortgage assumption package was ultimately received by Mr. Pluto on April 11, 1986 and was completed and returned to the mortgagee on April 15, 1986. It was, however, either never received or was misplaced by Cameron-Brown. On June 27, and again on July 8 - 21, 1986, another assumption package was requested which was received on July 23, 1986, and returned completed to the mortgage company on July 25, 1986. The assumption was ultimately finalized on August 12, 1986, with credit being given back to September 12, 1985, at the reguest of Ms. Hicks. In the interim, all mortgage payments were timely made by Mr. Pluto.

   
   

8. The Respondents did not claim a tax deduction or any tax advantage on the basis of this transaction nor was it ever their intent that they gain a personal tax advantage from it.

   
   

9. Petitioner alleges that Mr. Pluto left the original back date on the deed when he took title to the property to make the property more attractive to another buyer to whom the property could have been transferred and who could have taken advantage of the earlier date for tax purposes. Mr. Pluto, on the other hand, contends that was not his intention and that if that had been his intention, he would not have taken title to the property when he did in his own name because that would require another complete closing and the resultant additional fees and charges inherent therein. This would have made the property less desirable because of the already high interest rate, the negative amortization and other financial problems.

   
   

10. In light of the above, it appears that Mr. Pluto was quite willing to participate in a potentially illegal scheme and at the time he executed the documents for the final closing, notwithstanding he claims he did not realize the date had not been changed, he was guilty of at the very least, culpable negligence and dishonest dealing by scheme. The fact that he paid the selling broker a commission after alleging he went through with the purchase as a favor to her, tends to weaken the credibility of his story.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this case. Section 120.57(1), Florida Statutes.

12. In the Administrative Complaint filed herein, Petitioner alleges Respondents are guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida Statutes, which permits the Commission to discipline a licensee for such misconduct.

    
    

13. In disciplinary cases such as this, the burden of proof to establish the guilt of the offender by clear and convincing evidence rests upon the Petitioner, here the Florida Real Estate Commission. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

14. The evidence presented here clearly shows that Respondent, Thomas C. Pluto, participated in a proposed scheme intended to give a client an illegal tax benefit which constitutes dishonest dealing as outlined by the statute even though the transaction did not finalize. Steps were taken by Respondent to put the transaction into motion and that is sufficient to support the conclusion of Respondent's guilt of misrepresentation. Even accepting his motivation therefore, at best he must be considered guilty of culpable negligence for going through with the closing utilizing back dated documents after the intended scheme fell through.

    
    

15. As to Respondent, Kathleen M. Pluto, notwithstanding she followed the instructions of Thomas C. Pluto in utilizing a back date on the instruments she prepared, she clearly knew the dates were improper yet she used them, regardless. This willingness to participate in an obviously improper act cannot be ignored and constitutes misrepresentation.

    
    

16. The Florida Real Estate Commission was established, among other reason, to insure that practitioners of the profession of real estate maintain the highest standards of integrity and honesty in their dealing with the public. It was for this reason that the Commission was given disciplinary authority.

    
    

17. Though no one was damaged by Respondents' misconduct herein, some corrective action is necessary as to both Respondents. Action may be mitigated by the fact that neither Respondent has been disciplined previously.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:

RECOMMENDED that Respondent, Thomas C. Pluto's, license be suspended for 90 days and that he be reprimanded but that the execution of the suspension be stayed for one year with provision for automatic remission at the end thereof; that Respondent, Kathleen M. Pluto, be reprimanded; and that the charges relating to Pluto Realty, Inc., be dismissed.

RECOMMENDED this 4th day of February, 1988, at Tallahassee, Florida.

ARNOLD H. POLLOCK, 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 4th day of February, 1988.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-3084

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case.

BY THE PETITIONER

1 Accepted and incorporated herein. 2&3 Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. Accepted and incorporated herein. 6&7 Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. Accepted and incorporated herein. 10&11 Accepted.

12 Accepted and incorporated herein.

BY THE RESPONDENTS

1-3 Accepted and incorporated herein. 4&5 Accepted.

6-10 Accepted.

1. Accepted and incorporated herein.

2. Accepted and incorporated herein.

3. Accepted and incorporated herein.

4. Accepted and incorporated herein.

5. Accepted except for the words, "through inadvertence, oversight, or mistake"

6. Rejected as contra to the evidence.

7. Accepted except for the words, "by oversight and error"

8. Accepted.

19&20 Accepted and incorporated herein.

21 Accepted.

COPIES FURNISHED:

James R. Mitchell, Esquire DPR, Division of Real Estate Post Office Box 1900 Orlando, Florida 32801

Robert P. Rosin, Esquire 1900 Main Street, Suite 210

Sarasota, Florida 34236

Kathleen M. Pluto, pro se 8415 Midnight Pass Road Sarasota, Florida 34242

Darlene F. Keller

Acting Executive Director DPR, Division of Real Estate Post Office Box 1900 Orlando, Florida 32801

Docket for Case No: 87-003084

Orders for Case No: 87-003084