STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SAM ANTHONY CIOTTI, )

)

Petitioner, )

)

vs. ) CASE NO. 90-1023

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case at Fort Lauderdale, Florida, on September 28, 1990, before Michael M. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings.

Appearances for the parties at the hearing were as follows:

APPEARANCES

For Petitioner: Allen S. Kaufman, Esquire

2801 East Oakland Park Boulevard Suite 420

Fort Lauderdale, Florida 33306

For Respondent: Mark T. Aliff, Esquire

Assistant Attorney General Department of Legal Affairs Tax Section, The Capitol

Tallahassee, Florida 32399-1050 STATEMENT OF THE ISSUES

The basic issue is whether the Petitioner engaged in conduct that constitutes a taxable event under Section 212.0505, Florida Statutes (1987), and, if so, the amount of tax, interest, and penalties assessable against Petitioner.

PRELIMINARY STATEMENT

At the formal hearing the Petitioner, Mr. Sam Anthony Ciotti, elected not to offer any evidence. The Respondent, Department of Revenue, offered two exhibits, both of which were received in evidence, and presented the testimony of two witnesses. At the conclusion of the hearing the parties requested, and were granted, thirty days from the filing of the transcript within which to file their proposed recommended orders.

The transcript of the hearing was filed with the Hearing Officer on October 24, 1990. Thereafter, by agreement of the parties, the deadline for filing proposed recommended orders were extended until December 7, 1990. The Petitioner elected not to file a proposed recommended order, but did file a

letter summarizing the Petitioner's legal arguments. The Respondent filed a timely proposed recommended order containing proposed findings of fact and conclusions of law. The substance of all proposed findings of fact submitted by the Respondent has been incorporated into the findings of fact which follow:

FINDINGS OF FACT

1. During the month of April in 1988, and perhaps also in March of that year, the Petitioner, Sam Anthony Ciotti, conspired with others to purchase 200 pounds of marijuana in Broward County, Florida, for $110,000.00 The conspirators intended to transport the 200 pounds of marijuana to Ohio, where they expected to sell the marijuana to others.

   
   

2. Unbeknownst to the conspirators, the persons from whom they arranged to purchase the marijuana were detectives of the City of Fort Lauderdale Police Department. The negotiations for the sale were primarily between the detectives and a conspirator named Klenner. The basic terms of the agreement were that the detectives would deliver 200 pounds of marijuana to Klenner or to someone designated by Klenner, Klenner would then transport the marijuana to Ohio and sell it, and once he received the money for selling the marijuana, Klenner would pay $110,000.00 to one of the detectives. To secure the deal, Klenner agreed that he and the Petitioner, Ciotti, would sign a promissory note for $110,000.00 secured by a boat co-owned by Klenner and Ciotti.

   
   

3. On April 14, 1988, one of the detectives met with the Petitioner, Ciotti, at the boat yard where the boat was. docked. During that meeting the detective confirmed with Ciotti that a promissory note would be signed for 200 pounds of marijuana and that the boat would be collateral for the promissory note.

   
   

4. On April 15, 1988, the two detectives met with Klenner and Ciotti, at which time Klenner delivered to one of the detectives a promissory note in the amount of $110,000.00 signed by both Klenner and Ciotti.

   
   

5. On April 19, 1988, one of the detectives spoke to Klenner and arrangements were made for the marijuana to be delivered to a third conspirator named Bradford. Later that day the two detectives met Bradford at a prearranged location. One of the detectives took possession of Bradford's motor vehicle, loaded it with 200 pounds of marijuana, and returned the motor vehicle and its cargo of marijuana to Bradford. The trunk was opened and Bradford examined the marijuana cargo. Bradford then took possession of his motor vehicle and attempted to drive away with the 200 pounds of marijuana. At that point, he was arrested. Later that same day, the detectives went to the boat yard where the boat owned by Klenner and Ciotti was docked, where they arrested Ciotti and seized the boat owned by Klenner and Ciotti.

   
   

6. On June 8, 1989, the Department of Revenue issued a document titled Notice Of Assessment And Jeopardy Findings which assessed tax, penalties, and interest in the amount of $52,534.42 against the Petitioner, Ciotti, pursuant to Section 212.0505, Florida Statutes (1987). The factual basis for the assessment was the Petitioner's involvement in the marijuana transaction described in the foregoing findings of fact. Following other unsuccessful efforts to resolve the matter, the Petitioner ultimately filed a timely petition seeking a formal hearing.

7. At the formal hearing in this case on September 28, 1990, the Department of Revenue delivered to the Petitioner a document dated September 27, 1990, titled Revised Notice Of Assessment And Jeopardy Findings. The significant difference between the original assessment and the "revised" assessment is that in the latter document the Department seeks to recover less than in the original assessment. Specifically, the "revised" assessment contains a lower estimated retail price than on the original assessment and eliminates a fifty percent penalty that was included on the original assessment. These changes are consistent with the Department's current policies regarding the assessment of taxes, penalties, and interest. The net difference between the two assessment documents is a reduction of $18,809.39 in the amount sought by the Department. The specific amounts assessed in the "revised" assessment are as follows: Tax, $22,000.00; Penalty, $5,500,00; and Interest, $6,225.03; for a total of $33,725.03. Interest continues to accrue at the rate of $7.23 per day. The factual predicate for the "revised" assessment is the same as that of the original assessment.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. See Sections 72.011 and 120.57, Florida Statutes.

   
   

9. At the time of the events described in paragraphs 1 through 5 of the foregoing findings of fact, Section 212.0505, Florida Statutes (1987), read as follows, in pertinent part:

   
   

   1. Every person is exercising a taxable privilege who engages in this state in the unlawful sale, use, consumption, distribution, manufacture, derivation, production, transportation, or storage of any medicinal drug, as defined in chapter 465, cannabis, as defined in S. 893.02, or controlled substance enumerated in S. 893.03. For the exercise of such privilege, a tax is levied on each taxable transaction or incident, including each occasional or isolated unlawful sale, use, consumption, distribution, manufacture, derivation, production, transportation, or storage, at the rate of 20 percent of the estimated retail price of the medicinal drug, cannabis, or controlled substance involved in the transaction or incident.

      (5) Any assessment made pursuant to this section shall be deemed prima facie correct in any judicial or administrative proceeding in this state. The suppression of evidence on any ground by a court in a criminal case involving a transaction or incident taxable under this section or the dismissal of criminal charges in such a case shall not affect any assessment made under this section.

10. At that same time, the term "use" was defined at Section 212.02(27), Florida Statutes (1987), as:

    
    

    (27) "Use" means and includes the exercise of any right or power over tangible personal property incident to the ownership thereof, or interest therein, except that it does not include the sale at retail of that property in the regular course of business. "Use" also means the consumption or enjoyment of the benefit of services.

    
    

11. At that same time, Section 893.02, Florida Statutes (1987), included the following pertinent definitions of terms used in Chapter 893, the Florida Comprehensive Drug Abuse Prevention and Control Act:

    
    

    (5) "Deliver" or delivery" means the actual, constructive, or attempted transfer from one person to another of a controlled

    substance, whether or not there is an agency relationship.

    (7) "Distribute" means to deliver, other than by administering or dispensing, a controlled substance.

    
    

12. At this point it is helpful to consider some of the basic legal principles applicable to criminal conspiracies, especially conspiracies involving illegal drug transactions. In United States v. Oropeza, 564 F.2d 316 (9th Cir. 1977), the court noted, at page 321:

    
    

    Conspiracy is established when there is an agreement to accomplish an illegal objective, coupled with one or more overt acts in furtherance of the illegal purpose and the requisite intent necessary to commit the underlying substantive offense. United States v. Monroe 552 F.2d 860 (9th Cir.) cert. denied, 481 U.S. 972, 97 S.Ct. 2936, 53

    L.Ed.2d 1069 (1977).

    The government need not show an explicit agreement. Iannelli v. United States, 420 U.S. 770, 777 n.10, 95 S.Ct. 1284, 43 L.Ed.2d

    616 (1975); United States v. Monroe, supra. The criminal scheme may be inferred from circumstantial evidence, which is as probative as direct evidence. Iannelli v. United States, supra; United States v.

    Peterson, 549 F.2d 654, 657 (9th Cir. 1977). Once a conspiracy is shown, there need be only slight evidence to link the defendant with it. United States v. Turner, 528 F.2d

    143 (9th Cir.), cert. denied sub nom. Grimes, et al. v. United States, 423 U.S. 996, 96 S.Ct. 426, 46 L.Ed.2d 371 (1975). The slight evidence

    . . . must be of the quality which will reasonably support a conclusion that

    the particular defendant in question willfully participated in the unlawful plan with the intent to further some object or purpose of the conspiracy.

    United States v. Freie, 545 F.2d 1217, 1222 (9th Cir.), cert. denied sub nom. Ganqadean

    v. United States, 430 U.S. 966, 97 S.Ct. 1645, 52 L.Ed.2d 356 (1976).

    
    

    And at page 322, the Oropeza court continued:

    
    

    One conspirator is liable for the acts of his coconspirators in furtherance of the conspiracy, United States v. Testa, 548 F.2d 847 (9th Cir. 1977), even when he may be unaware of some of the acts or actors.

    United States v. Roselli, 432 F.2d 879 (9th Cir. 1970), cert. denied, sub nom. Jacobs v. United States, 401 U.S. 924, 91 S.Ct. 883, 27

    L.Ed.2d 828 (1971); United States v. Knight, 416 F.2d 1181 (9th Cir. 1969).

    
    

13. Similar to the language quoted immediately above is the recognition in Boyd v. State, 389 So.2d 642 (Fla. 2d DCA 1980), of

    
    

    the basic principal that when a conspiracy is established, everything said, written, or done by any of the conspirators in execution or furtherance of the common purpose is deemed to have been said, done, or written by every one of them and may be proved against each. Brown v. State, 128 Fla. 762, 175 So.

    515 (1937), clarified, 130 Fla. 479, 178 So.

    153 (1938).

    
    

14. In United States v. Tamargo, 672 F.2d 887 (11th Cir. 1982), the court said, at page 890:

    
    

    As for appellant Tamargo, the evidence is also sufficient to support his conviction for possession with intent to distribute methaqualone. Possession of a controlled substance may be actual or constructive.

    United States v. Moreno, 649 F.2d 309 (5th Cir. 1981). Moreover, as with actual possession, constructive possession of a controlled substance may be exclusive or joint and may be proved by circumstantial as well as direct evidence. Id. Appellant Tamargo was a participant in a conspiracy to possess methaqualone with intent to distribute, and the evidence shows beyond any doubt that some participants in this conspiracy possessed methaqualone with the intent to distribute. Therefore, Tamargo, as a co-conspirator, is considered also to have

    possessed methaqualone with the intent to distribute. United States v. Garcia, 655 F.2d 59, 63 (5th Cir. 1981).

    
    

15. The Tamargo court also included the following comments regarding definitions identical to those quoted in paragraph 4 of these conclusions of law:

    
    

    Appellants' final contention is that the evidence was insufficient to support their convictions for distribution of methaqualone. "The term `distribute' means to deliver ... a controlled substance." 21 U.S.C. Sec.

    802. (11). "The terms `deliver' or `delivery' mean the actual constructive, or attempted transfer of a controlled substance. .

    21 U.S.C. Sec. 802(8) (emphasis added). The statutory scheme clearly defines "distribution" as a delivery, and "delivery" can be merely an attempted transfer.

    
    

16. The meaning of the defined term "distribute" is also discussed in United States v. Pool, 660 F.2d 547 (5th Cir. 1981), at page 561:

    
    

    We note that the term "distribute," 21 U.S.C. Sec. 802(11), is not restricted to distribution of a drug to the ultimate consumer. It also may, in appropriate circumstances, refer to the distribution of a controlled substance from one conspirator to another. See United States v. Bass, 535 F.2d

    110 (D.C. Cir. 1976). Here, for example, the transfer of marijuana from the mother ship

    to the off-load boats constitutes distribution as contemplated by 21 U.S.C. Sec. 802(11).

    
    

17. Applying all of the foregoing to the facts in this case, it is first noted that the Petitioner agreed with others to accomplish an illegal objective and he engaged in overt acts to advance the purposes of the illegal objective, including signing a promissory note and agreeing for his interest in a boat to be collateral for the note. Therefore, the Petitioner was clearly a conspirator in the illegal objective. See United States v. Oropeza, supra. And as a conspirator, he is deemed to have done everything done by any of the other conspirators in the furtherance of the conspiracy. See Boyd v. State, supra.

    
    

18. The activities that invoke the tax consequences of Section 212.0505, Florida Statutes (1987), include "use," "distribution," or "transportation." On April 19, 1988, when Bradford, one of the other conspirators, took possession of his mother vehicle and its cargo of 200 pounds of marijuana, Bradford was exercising a "right or power over tangible personal property incident to the ownership thereof, or interest therein" by attempting to drive away with the marijuana. This constitutes a taxable "use" within the meaning of Section 212.0505, Florida Statutes (1987). Bradford's attempt to drive away with the load of marijuana also constitutes an attempt to transfer the marijuana. Such an attempt comes within the statutory definition of "deliver" or "delivery" and thus constitutes a taxable "distribution" within the meaning of Section

    212.0505, Florida Statutes (1987). See Tamargo, supra; Pool, supra; and the definitions quoted above at paragraph 4 of these conclusions of law. Finally, Bradford's act of setting the motor vehicle and its load of marijuana in motion, albeit for a very short distance and very short period of time, constitutes transportation of the marijuana. Such transportation is a taxable act under Section 212.0505, Florida Statutes (1987).

    
    

19. As a result of his status as a conspirator, the Petitioner is deemed to have done everything done by any of the other conspirators in the furtherance of the conspiracy, and is liable for all of those acts. Therefore, the Petitioner is deemed to have engaged in the taxable use, distribution, and transportation engaged in by Bradford and is liable for the tax consequences of those acts.

    
    

20. What remains to be determined is the amount of tax, penalties, and interest to be assessed against the Petitioner. The original assessment was, as admitted by Respondent at hearing, incorrect. The amounts set forth in the "revised" assessment are correct.

    
    

21. The petitioner has argued that the Department's action of delivering a "revised" assessment on the morning of the hearing violates fundamental notions of due process that impair the Petitioner's ability to prepare and present a defense to the assessment. The Petitioner has not, however, demonstrated any harm or prejudice as a result of the "revised" assessment. The "revised" assessment is, at best, surplusage or a redundancy. Without the "revised" assessment the Department could have properly presented all of the evidence that it did present. With or without the "revised" assessment, that evidence shows that the Petitioner is liable for tax under Section 212.0505, Florida Statutes (1987). With or without the "revised" assessment, the correct amount of that tax liability is $33,725.03, plus interest at the rate of $7.23 per day since September 28, 1990. The "revised" assessment document is irrelevant to the disposition of this case other than for the fact that it happens to be a convenient summary of the amount of the Petitioner's tax liability. 1/

RECOMMENDATION

Based on all of the foregoing, it is RECOMMENDED that the Department of Revenue issue a final order in this case concluding that the Petitioner, Sam Anthony Ciotti, is liable for taxes, penalties, and interest pursuant to Section 212.0505, Florida Statutes (1987), and assessing the amount of such liability at

$33,725.03, plus interest at the rate of $7.23 per day since September 28, 1990.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 1st day of February 1991.

MICHAEL M. PARRISH

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 1st day of February 1991.

ENDNOTE

1/ This case is unlike Brumley v. Department of Revenue, Case No. 89-6841 (Recommended Order 5/21/90, Final Order 8/27/90), in which the Department, shortly before hearing, issued a "corrected" tax warrant which asserted tax liability based on events alleged to have occurred on dates different from the dates alleged in the original assessment. Nevertheless, the Department's practice of issuing "corrected" or "revised" assessments or warrants while the case is pending before the Division of Administrative Hearings, even innocuous ones like the one in this case, provides fertile ground for unnecessary litigation; litigation that could be avoided by, when necessary (as in Brumley), withdrawing the assessment and starting over, or, when appropriate (as would have been better practice here), filing a motion seeking leave to amend the original assessment. In this regard the Department's attention is once again commended to the penultimate sentence of Section 120.57(1)(b)3., Florida Statutes (1990 Supp.).

COPIES FURNISHED:

Allen S. Kaufman, Esquire

2801 East Oakland Park Boulevard Suite 420

Fort Lauderdale, Florida 33306

Mark T. Aliff, Esquire Assistant Attorney General Department of Legal Affairs Tax Section, The Capitol

Tallahassee, Florida 32399-1050

Thomas Herndon Executive Director Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

William D. Moore General Counsel Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA DEPARTMENT OF REVENUE

SAM ANTHONY CIOTTI,

Petitioner,

vs. 90-1023

DEPARTMENT OF REVENUE,

Respondent.

/

FINAL ORDER

This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above case submitted a Recommended Order to the Department of Revenue recommending the issuance of a final order concluding that the Petitioner, Sam Anthony Ciotti, is liable for taxes, penalties, and interest pursuant to Section 212.0505, Florida Statutes (1987). A copy of that Recommended Order is attached hereto. The Department, through counsel, filed an exception to a footnote in the Recommended Order, which is attached hereto. On review of the Recommended Order and the exception cert. the Department makes the following findings and conclusions.

RULINGS ON EXCEPTION FILED BY THE DEPARTMENT

Counsel excepts to a footnote in the Hearing Officer's Conclusions of Law relating to the Department's practice of correcting or revising assessments.

The challenged footnote is unnecessary to the disposition of the case and is rejected for the reasons set forth in the exception.

FINDINGS OF FACT

The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order.

CONCLUSIONS OF LAW

The Department hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except where inconsistent with the ruling on the exception.

Based upon the foregoing, it is ordered that the Petitioner, Sam Anthony Ciotti, is liable for taxes, penalties, and interest pursuant to section 212.0505, Florida Statutes (1987) and the assessment in the amount of

$33,725.03, plus interest at the rate of $7.23 per day since September 28, 1990, is sustained.

Any Party to this Order has the right to seek judicial review of the Order pursuant to Section 120.68, F.S., by the filing of a Notice of Appeal pursuant to Rule 9.110, Florida Rules of Appellate Procedure, with the clerk of the Department in the Office of General Counsel, Post Office Box 6668, Tallahassee, Florida 32314-6668 and by filing a copy of the Notice of Appeal accompanied by the applicable filing fees with the appropriate District Court of Appeal. The Notice of Appeal must be filed within 30 days from the date this Order is filed with the clerk of the Department.

DONE AND ORDERED in Tallahassee, Leon County, Florida this 8th day of April, 1991.

STATE OF FLORIDA DEPARTMENT OF REVENUE

J. Thomas Herndon Executive Director

Filed with the Agency Clerk this 8th day of April, 1991. COPIES FURNISHED:

Mark T. Aliff, Esquire Assistant Attorney General Department of Legal Affairs Tax Section, The Capitol

Tallahassee, Florida 32399-1050

Michael M. Parrish Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Allen S. Kaufman, Esquire

2801 East Oakland Park Boulevard Suite 420

Fort Lauderdale, Florida 33306

Linda Lettera, Esquire Deputy General Counsel

Florida Department of Revenue Room 204, Carlton Building Tallahassee, Florida 32399-0100

Victoria L. Weber, Esquire General Counsel

Department of Revenue

Room 201, Carlton Building Tallahassee, Florida 32399-0100

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA, DEPARTMENT OF REVENUE TALLAHASSEE, FLORIDA

SAM ANTHONY CIOTTI

Petitioner,

vs. CASE NO. 90-1023

DEPARTMENT OF REVENUE,

Respondent

/

FINAL ORDER

This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above case submitted a Recommended Order to the Department of Revenue recommending the issuance of a final order concluding that the Petitioner, Sam Anthony Ciotti, is liable for taxes, penalties, and interest pursuant to Section 212.0505, Florida Statutes (1987). A copy of that Recommended Order is attached hereto. The Department, through counsel, filed an exception to a footnote in the Recommended Order, which is attached hereto.

Upon review of the Recommended Order and the exception filed, the Department makes the following findings and conclusions.

RULING ON EXCEPTION FILED BY THE DEPARTMENT

Counsel excepts to a footnote in the Hearing Officer's Conclusions of Law relating to the Department's practice of correcting or revising assessments.

The challenged footnote is unnecessary to the disposition of the case and is rejected for the reasons set forth in the exception.

FINDINGS OF FACT

The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order.

CONCLUSIONS OF LAW

The Department hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except where inconsistent with the ruling on the exception.

Based upon the foregoing, it is ordered that the Petitioner, Sam Anthony Ciotti, is liable for taxes, penalties, and interest pursuant to section 212.0505, Florida Statutes (1987) and the assessment in the amount of

$33,725.03, plus interest at the rate of $7.23 per day since September 28, 1990, is sustained.

Any Party to this Order has the right to seek judicial review of the Order pursuant to Section 120.68, F.S., by the filing of a Notice of Appeal pursuant to Rule 9.110, Florida Rules of Appellate Procedure, with the clerk of the Department in the Office of General Counsel, Post Office Box 6668, Tallahassee, Florida 32314-6668 and by filing a copy of the Notice of Appeal accompanied by the applicable filing fees with the appropriate District Court of Appeal. The Notice of Appeal must be filed within 30 days from the date this Order is filed with the clerk of the Department.

DONE AND ORDERED in Tallahassee, Leon County, Florida this 8th day of April, 1991.

STATE OF FLORIDA DEPARTMENT OF REVENUE

J. Thomas Herndon Executive Director

Filed with the Agency Clerk this 8th day of April, 1991.

Judy Langston, Agency Clerk

Copies: Mark T. Aliff, Esquire Assistant Attorney General Department of Legal Affairs Tax Section, The Capitol

Tallahassee, Florida 32399-1050

Michael M. Parrish Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Allen S. Kaufman, Esquire

2801 East Oakland Park Boulevard Suite 420

Fort Lauderdale, Florida 33306 Linda Lettera, Esquire

Deputy General Counsel Florida Department of Revenue Room 204, Carlton Building

Tallahassee, Florida 32399-0100

Victoria L. Weber, Esquire General Counsel

Department of Revenue

Room 201, Carlton Building Tallahassee, Florida 32399-0100

Docket for Case No: 90-001023

Orders for Case No: 90-001023