STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
STATE OF FLORIDA DEPARTMENT OF ) BANKING AND FINANCE, )
)
Petitioner, )
)
vs. ) CASE NO. 90-1570
) WEST FLORIDA FINANCIAL SERVICES )
and BONNIE LEE HALL, a/k/a ) LAMAR BONNE' HALL, SR., )
)
Respondents. )
)
RECOMMENDED ORDER
Upon due notice, this cause came on for formal hearing on October 19, 1990 in Tallahassee, Florida, before Ella Jane P. Davis, a duly assigned Hearing Officer of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: Margaret S. Karniewicz
Assistant General Counsel Department of Banking and Finance Legal Section, The Capitol Tallahassee, Florida 32399-0350
For Respondent: Mark H. Zilberberg, Esquire
313 Williams Street, Suite 2 Tallahassee, Florida 32303
STATEMENT OF THE ISSUE
Petitioner seeks to discipline Respondents by cease and desist order, complaint, and administrative fine pursuant to Chapter 817, Part III, and Subsections 516.07(1)(g) [incorporating Part III of Chapter 817 F.S.] and (i) and 516.23(2)(b) and (c) F.S. for their refusal to permit the inspection of books and records in an agency investigation or examination or by refusal to comply with an agency subpoena; by failure to obtain a required bond and establish a trust account; by failure to obtain a signed contract with specific customers, and, more specifically, failing to obtain a signed contract with those customers which complied with certain named statutory requirements.
PRELIMINARY STATEMENT
Petitioner served a Cease and Desist Order and Complaint for Imposition of Administrative Fine with Notice of Rights on December 14, 1989 on the Respondents and Chester Murray, advising them of the agency's intent to issue a Final Order requiring Respondents to cease and desist their violations of Part III, Chapter 817, F.S. and imposing fines as authorized by Subsections 516.07(2)(b) and 516.23(2)(c) F.S.
On January 5, 1990, counsel for Respondents filed an Answer to the Department's initial pleading and requested an informal hearing. On February 23, 1990, the matter was transmitted to the Division of Administrative Hearings for the assignment of a hearing officer to conduct a formal administrative hearing.
By order of April 18, 1990, the undersigned determined that the Respondents' Answer disputed several issues of material fact and that since substance should prevail over form, a formal hearing before the Division of Administrative Hearings (DOAH) with regard to those issues was jurisdictionally correct and further determined that since Chester Murray had filed no petition for administrative hearing, Chester Murray had never been before DOAH and Chester Murray would henceforth be omitted from the style of this cause.
This matter was originally scheduled for formal hearing on June 28, 1990 but was cancelled when Respondents' original counsel filed a Motion to Withdraw. A Second Notice of Hearing set the hearing for September 24, 1990, at which time counsel for each party appeared and entered into several oral stipulations so that the matter was rescheduled for formal hearing on October 19, 1990.
At formal hearing on October 19, 1990, Petitioner presented the oral testimony of Lynn Chang, a Department of Insurance financial administrator; Rebecca Brown and Sylvia Gilbert, former clients of the Respondents; and Bernice Newton. Petitioner's Exhibits 1 through 10 were admitted into evidence.
Respondents presented the oral testimony of Joyce Garmon Horne, also a client of the Respondents, and testimony of Respondent Bonnie Lee Hall. Respondents' Exhibits 1 through 6 were admitted into evidence.
No transcript of the proceeding was provided, but Petitioner's proposed findings of fact have been ruled upon in the Appendix to this Recommended Order, pursuant to Subsection 120.59(2) F.S. Respondents filed no proposals.
FINDINGS OF FACT
Respondent, Bonnie Lee Hall a/k/a Lamar Bonne Hall, Sr., established West Florida Financial Services in March 1989, as a "credit repair" service incidental to his insurance business. Mr. Hall is a Florida-licensed Life and Health Agent. Respondent's Exhibit R-6 is Respondent's "218" professional insurance license effective 04-01-90, at a time subsequent to the times material to this complaint. However, the undersigned accepts Respondent's unrefuted testimony that he was similarly licensed as an insurance agent and broker at the time of the incidents giving rise to the charges in this cause.
At all times material, Mr. Hall operated West Florida Financial Services out of the same office as his insurance agency. West Florida Financial Services never has been incorporated.
Respondent asserted that West Florida Financial Services has been registered under Florida's fictitious name statute, but the undersigned finds Respondent not credible on this point.
On or about March 23, 1989, Rebecca Brown saw an advertisement in the Tallahassee Democrat which read "ERASE BAD CREDIT!" and which provided a telephone number for free details. She called the telephone number, and the telephone was answered "West Florida Financial Services" by a Chester Murray, who made an appointment to meet Ms. Brown at her residence that night. Murray offered to improve the credit reports of Ms. Brown and her daughter, Glenda Brown, for a total fee of $400. Rebecca Brown gave Murray a check for $200 postdated to March 30, 1989 (P-6) and agreed to pay the balance of $200 by the end of April. The check was made out to "West Florida Financial Services." That check was endorsed by Chester Murray, and although Rebecca Brown related a complex transaction as to how the cash therefrom was generated through another cashier's check, all that is relevant to these proceedings is that Chester Murray retained Rebecca Brown's $200 fee intended for West Florida Financial Services.
On April 14, 1989, Rebecca and Glenda Brown went in person to the offices of West Florida Financial Services where Respondent Hall was operating the credit repair service out of his insurance office. At that time, Mr. Hall admitted that Mr. Murray had previously worked for him in West Florida Financial Services, that Murray had taken money from another client of that business, and that Murray was therefore no longer associated with the business.
At that time, Mr. Hall also represented that he, personally, could still help Mesdames Brown improve their credit reports. Mr. Hall quoted much higher fees of $1,160 to improve Rebecca Brown's report and $825 to improve her daughter's report. He also offered to try to get back Rebecca Brown's $200 from Chester Murray. Both women signed a Service Contract Agreement with Respondent Hall, who signed on behalf of West Florida Financial Services. Rebecca Brown did not keep a copy of her contract, but a copy of Glenda Brown's signed contract with Hall and West Florida Financial Services was admitted as Exhibit
P-7. This exhibit was identified by Rebecca Brown as a contract identical to the one she herself had signed except as to the client name. Rebecca Brown also was able to identify her daughter's and Mr. Hall's signatures on Exhibit P-7 because she was present when they signed Exhibit P-7 and because she was long familiar with her daughter's signature. The Service Contract Agreement of Glenda Brown which was admitted as Exhibit P-7 did not contain a cancellation clause, an information statement, or any other information required by Sections 817.702, 817.703, and 817.704 F.S. By inference, the undersigned finds that the identical agreement entered into by Rebecca Brown was similarly lacking.
Rebecca Brown paid $100 in cash to Mr. Hall to continue to work on the credit problems of herself and her daughter. She recognized this amount was merely a down payment.
Respondent Hall had not effectuated any improvement of Rebecca Brown's or her daughter's credit reports as of the date of formal hearing, nor had Rebecca Brown seen any effort he put forth toward that end. Mr. Hall admitted putting her $100 down payment into his business checking account and not into a trust or escrow account as required by law. Mrs. Brown's and Mr. Hall's testimony concurs that after April 14, 1989, she never asked for the return of her $100 or actively pursued having Mr. Hall work at credit repair for herself or her daughter because he had quoted such high fees. However, he also never returned her $100.
On April 17, 1989, an advertisement appeared in the Tallahassee Democrat which read "ERASE BAD CREDIT!" and provided a telephone number for free details. The telephone number was that of West Florida Financial Services.
This advertisement ran in the newspaper for several weeks before and after that date and was probably the same advertisement to which Rebecca Brown had replied the preceding month. Although Mr. Hall asserted that it was Chester Murray's advertisement which had appeared in the Tallahassee Democrat, he admitted that he had run virtually the same advertisement in The Thrifty Nickel, and there is no dispute that when Ms. Lynn Chang, a financial administrator with the Department of Banking and Finance, called the same number as appeared in the April 17, 1989 Tallahassee Democrat advertisement, the telephone was answered "West Florida Financial Services" on April 19, 1989 by Respondent Hall. There is also no dispute that during their conversation, Mr. Hall stated that he could help with credit problems and that he had a 97% success rate.
In order to determine Respondents' compliance with Chapter 817, Part III, F.S., Ms. Chang caused a subpoena duces tecum to be served May 11, 1989 upon Respondents. The subpoena specified, among other things, the production of their surety bond, proof of trust account, and copy of an information statement and customer contract, and was returnable May 25, 1989. It did not specify copies of all signed contracts that Respondents had on file.
Respondent Hall appeared at Mrs. Chang's on May 25, 1989. As of that date, West Florida Financial Services and its principal, Mr. Hall, had no surety bond, no trust account, and no information statement as required by Florida law. Mr. Hall did, however, provide copies of a blank contract (P-4) and a promotional flyer (P-5). Neither item fully met the applicable statutory standards for a contract and disclosure statement. Ms. Chang cautioned Mr. Hall that he must have a trust account and surety bond and that he must conform his contract or he would be violating Florida law, but apparently no further request for signed contracts or files was made. There is evidence that Mr. Hall and Ms. Chang had some miscommunication over what he would or would not do at this point, but it is insufficient to constitute refusal to permit inspection by the agency.
On or about May 10, 1989, Ms. Sylvia Gilbert had contacted Mr. Hall at West Florida Financial Services upon advice from a friend. Mr. Hall told her that for a fee of $600, he could improve her credit reports, so Ms. Gilbert signed a Service Contract Agreement with West Florida Financial Services. She was not given a copy of the agreement by Mr. Hall, but knew she could request one and pick it up at his office at any time. At formal hearing, she was able to identify Exhibit P-4 (a blank form provided Ms. Chang by Mr. Hall) as the type of contract she had signed. Upon that identification, and Mr. Hall's evidence of which type of agreement he was using at various times, it is found that the agreement entered into by Ms. Gilbert and Mr. Hall on behalf of West Florida Financial Services did not contain a cancellation clause, an information statement, or any other information required by Sections 817.702, 817.703, and 817.704 F.S.
Ms. Gilbert paid Mr. Hall $550 in fees in three installments. On May 10, 1989, she paid $200 (P-8); on July 6, 1989, she paid $100 (P-9); and on September 29, 1989, she paid $250 (P-10). On several occasions thereafter, she spoke with Mr. Hall, who made himself readily available to her and assured her work was being done. In his testimony, Mr. Hall explained that his work for Ms. Gilbert involved letters he prepared that she did not sign and payments she did not make on his advice to clear up her credit rating. Ms. Gilbert conceded that
Mr. Hall had done some work for her, but as of the date of formal hearing, she had received no refund from Respondents and was unaware of any improvement in her credit report.
Ms. Joyce Garmon Horne paid Respondents $400 to clear up credit problems she had and was satisfied with Mr. Hall's services. She could not identify what type of Service Contract Agreement she signed or whether the agreement or services had been rendered in 1989 or 1990.
Sometime in December 1989, Respondents obtained a $10,000 surety bond from Western Surety Company. This bond, dated November 22, 1989, had become effective November 17, 1989 and was purchased for Respondents by Bernice Newton.
On December 15, 1989, a trust checking account at Industrial National Bank (INB) in Tallahassee was opened for West Florida Financial Services with an initial deposit of $100 cash contributed by Bernice Newton. The record is not clear whose social security number or what entity's tax identification number was used, but the INB account clearly required both Ms. Newton's and Mr. Hall's signatures to draw funds. She was listed as "bookkeeper," and he was listed as "manager."
Although Mr. Hall testified that as of August 1989, he had established, with money from one Ralph Hadley, another type of account "to protect clients" at another bank, it is not clear from the record whether the clients he sought to protect were insurance or credit repair clients, whether the account was a business or escrow account, or in what institution (federally insured or not) the account was located. Upon such vagueness and upon Mr. Hall's testimony that whatever and wherever this prior account was, it was not labelled "trust account," it is found that existence of such an account is immaterial to these proceedings.
Bernice Newton paid for Respondents' occupational license.
Bernice Newton also paid Respondents' $160 telephone bill one month.
Bernice Newton is what is called in the financial world "an opportunity seeker," that is, she is always on the lookout for legitimate business ventures but with a penchant for "start your own business" and other "get rich quick" schemes. She met Messrs. Hall and Murray at an educational/promotional meeting organized by a Californian known as "Mr. Gold" for persons interested in starting credit repair service businesses. Throughout her testimony, Ms. Newton referred to her association with Mr. Hall as trying to establish a "credit bureau" in which she would hold an investment interest, which interest she could later resell for profit. The record is not clear whether "credit bureau" was merely a misnomer on Ms. Newton's part or whether she thought a "credit bureau" and a "credit repair service" are one in the same thing. In any case, her testimony was clear that she was helping Mr. Hall in his credit repair business and that she had no further association with Mr. Murray after their initial meeting.
In June or July 1989, Ms. Newton became part of "West Florida Financial Services" without ever holding a corporate office or definable business interest in the credit repair services. As previously related, she eventually paid for the trust account and surety bond and occasionally loaned Mr. Hall money. Beyond this, her entire involvement was apparently only to answer the phones a few hours each day, and on one occasion, she took a credit repair fee of $15 from a client on behalf of Respondents. In exchange for these
services, she got free use of Respondents' office equipment for her other investment projects. Substantially all she observed from June or July 1989 until December 1989 in the West Florida Financial Services office was credit repair work, although she was also aware that Mr. Hall discussed insurance with clients. She has never been paid a salary as Respondents' employee or been reimbursed for her direct payments on their behalf.
Mr. Hall maintained Ms. Newton was never intended to be part of West Florida Financial Services regardless of listing her as "bookkeeper" on the escrow account in December 1989. Apparently, Ms. Newton also did not regard herself as part of the credit repair business.
It may be inferred that Respondents did not amend their Service Contract Agreement to include the required cancellation notice and a handwritten information statement to clients until after they obtained the surety bond in December 1989, because their revised Service Contract Agreement specifies they are a bonded service, identifying the Western Surety Company as the bonding agent. (R-1)
The form Service Contract Agreement which was utilized by Respondents at least until December 1989 (P-4) provided that the clients authorized West Florida Financial Services to prepare all the necessary correspondence (and negotiation) in settlement or clarification of derogatory information which might be contained in the clients' credit report.
The information flyer (P-5) put out by Respondents states that persons can, with Respondents' help, "improve their credit bureau reports and practically erase bad credit." This literature also states that as a result of years of research, Respondents have "the experience and background that can offer consumers assistance in removing inaccurate, erroneous, outdated, obsolete, incomplete and misleading information from their credit bureau reports."
Respondents were operating a "credit service organization," as defined by statute, regardless of whether or not it was incidental to Mr. Hall's insurance business. From March 1989 to November 1989, they did so without having a $10,000 surety bond. For the period of time from March 1989 to December 1989, they did so without having a trust account for customer monies in an appropriate institution. For the period of time from March 1989 to December 1989, they did so without a customer contract which contained all of the information required by Sections 817.702, 817.703, and 817.704, F.S. The overwhelming weight of the evidence, particularly the receipts retained by Ms. Gilbert and the testimony of Ms. Newton, render incredible Mr. Hall's assertion that he and West Florida Financial Services had no credit repair clients between Mr. Hall's May 25, 1989 interview with Ms. Chang and their receipt of the agency's December 14, 1989 Cease and Desist Order a few days after its issuance.
Respondent Hall testified that he has been on total disability since January of 1990 but presented no supportive evidence to that effect.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties and subject matter of this cause. See, Section 120.57(1) F.S.
Petitioner's authority to regulate and fine credit repair services is contained in a single line in Section 516.07(1) as amplified in Subsections (1)(g) and (i). However, because there is no evidence that these Respondents are/were licensed under Chapter 516 F.S. to make consumer finance loans, the available penalties are restricted to those appropriate for the unlicensed. See, Subsection (2). The relevant statutory provisions are as follows:
515.07(1) The following acts are violations of this chapter and constitute . . . grounds for any of the disciplinary actions specified in subsection (2):
* * *
(g) Any violation of part III of chapter 817. . .
(i) . . . or refused to comply with a subpoena issued by the department.
(2) Upon a finding by the department that any person has committed any of the acts set forth in subsection (1) the department may enter an order taking one or more of the following actions:
* * *
Placing permanent restrictions or conditions upon issuance . . . of a license;
Issuing a reprimand; or
Imposing an administrative fine not to exceed $1000 for each act.
Located in Subsections 516.23(2)(b) and (c) is further authority as follows:
(2) In addition to any other powers conferred upon it to enforce or administer this chapter, the department may:
* * *
Issue and serve upon a person an order requiring such person to cease and desist and take corrective action whenever the department finds that such person is violating, has violated, or is about to violate any provision of this chapter, . . .
Impose and collect an administrative fine against any person found to have violated any provision of this chapter, . . .
Upon the foregoing, it is concluded that the Department of Banking and Finance has authority to enter cease and desist orders and impose administrative fines up to $1,000 per violation for violations of Chapter 516 F.S. and that Section 516.07(1)(g) makes violation of Part III of Chapter 817 such a violation.
Among the relevant provisions of Part III of Chapter 817 F.S. are the following:
817.7001 Definitions.--As used in this part:
* * *
(2)(a) "Credit service organization" means any person who, with respect to the extension of credit by others, sells, provides, performs, or represents that he or she can or will sell, provide, or perform, in return for the payment of money or other valuable consideration, any of the following services:
Improving a buyer's credit record, history, or rating;
Obtaining an extension of credit for a buyer; or
Providing advice or assistance to a buyer with regard to the services described in either subparagraph 1. or subparagraph 2.
(b) "Credit service organization" does not include:
Any person authorized to make loans or extensions of credit under the laws of this state or the United States who is subject to regulation and supervision by this state or the United States or a lender approved by the United States Secretary of Housing and Urban Development for participation in any mortgage insurance program under the National Housing Act;
Any bank, savings bank, or savings and loan association whose deposits or accounts are eligible for insurance by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or a subsidiary of such bank, savings bank, or savings and loan association;
Any credit union, federal credit union, or out-of-state credit union doing business in this state;
Any nonprofit organization exempt from taxation under section 501(c)(3) of the Internal Revenue Code;
Any person licensed as a real estate broker by this state if the person is acting within the course and scope of that license;
Any person collecting consumer claims pursuant to s. 559.72;
Any person licensed to practice law in this state if the person renders services within the course and scope of his or her practice as an attorney and does not engage in the credit service business on a regular and continuing basis;
Any broker-dealer registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission if the
broker-dealer is acting within the course and scope of that regulation; or
Any consumer reporting agency as defined in the Federal Fair Credit Reporting Act, 15
U.S.C. ss. 1681 through 1681t.
* * *
817.7005 Prohibited acts.--A credit service organization, its salespersons, agents, and representatives, and independent contractors who sell or attempt to sell the services of a credit service organization shall not do any of the following:
Charge or receive any money or other valuable consideration prior to full and complete performance of the services the credit service organization has agreed to perform for the buyer, unless the credit service organization has obtained a surety bond of $10,000 issued by a surety company admitted to do business in this state and has established a trust account at a federally insured bank or savings and loan association located in this state; however, where a credit service organization has obtained a surety bond and established a trust account as provided herein, the credit service organiza- tion may charge or receive money or other valuable consideration prior to full and complete performance of the services it has agreed to perform for the buyer but shall deposit all money or other valuable consider- ation received in its trust account until the full and complete performance of the services it has agreed to perform for the buyer;
Charge or receive any money or other valuable consideration solely for referral of the buyer to a retail seller or to any other credit grantor, who will or may extend credit to the buyer if the credit that is or will be extended to the buyer is upon substantially the same terms as those available to the general public;
Make, or counsel or advise any buyer to make, any statement that is false or misleading or that should be known by the exercise of reasonable care to be false or misleading, or omit any material fact to a consumer reporting agency or to any person who has extended credit to a buyer or to whom a buyer is applying for an extension of credit with respect to a buyer's credit worthiness, credit standing, or credit capacity; or
Make or use any false or misleading representations or omit any material fact in the offer or sale of the services of a credit service organization or engage, directly or indirectly, in any act, practice, or course
of business that operates or would operate as fraud or deception upon any person in connection with the offer or sale of the services of a credit service organization, notwithstanding the absence of reliance by the buyer.
817.702 Statement to buyer.--Upon execution of the contract as provided in s. 817.704 or agreement between the buyer and a credit service organization and before the receipt by the credit service organization of any money or other valuable consideration, whichever occurs first, the credit service organization shall provide the buyer with a statement, in writing, containing all the information required by s. 817.703. The credit service organization shall maintain on file for a period of 5 years an exact copy of the statement, personally signed by the buyer, acknowledging receipt of a copy of the statement.
817.703 Information statement.--The informa- tion statement required under s. 817.702 shall include all of the following:
(1)(a) A complete and accurate statement of the buyer's right to review any file on the buyer maintained by any consumer reporting agency, as provided under the Federal Fair Credit Reporting Act, 15 U.S.C. ss. 1681 through 1681t;
A statement that the buyer may review his or her consumer reporting agency file at no charge if a request is made to the consumer reporting agency within 30 days after receiving notice that credit has been denied; and
The approximate price the buyer will be charged by the consumer reporting agency to review his or her consumer reporting agency file.
A complete and accurate statement of the buyer's right to dispute directly with a consumer reporting agency the completeness or accuracy of any item contained in any file on the buyer maintained by the consumer reporting agency.
A statement that accurate information cannot be permanently removed from the file of a consumer reporting agency.
A complete and detailed description of the service to be performed by the credit service organization for the buyer and the total amount the buyer will have to pay, or become obligated to pay, for the services.
A statement notifying the buyer of his right to proceed against the bond or trust account required under s. 817.7005.
The name and address of the surety company which issued the bond, or the name and address of the depository and the trustee and the account number of the trust account.
817.704 Provisions of contract.--
Each contract between the buyer and a credit service organization for the purchase of the services of the credit service organization shall be in writing, dated, signed by the buyer, and shall include all of the following:
A conspicuous statement in boldfaced type, in immediate proximity to the space reserved for the signature of the buyer, as follows: "You, the buyer, may cancel this contract at any time prior to midnight of the fifth day after the date of the transaction. See the attached notice of cancellation form for an explanation of this right";
The terms and conditions of payment, including the total of all payments to be made by the buyer, specifying the amount of the payments to be made to the credit service organization or to some other person;
A full and detailed description of the services to be performed by the credit service organization for the buyer, including all guarantees and all promises of full or partial refunds, and the estimated date by which the services are to be performed or the estimated length of time for performing the services; and
The credit service organization's principal business address and the name and address of its agent in the state authorized to receive service of process.
The contract shall be accompanied by a completed form in duplicate, captioned "Notice of Cancellation," that shall be attached to the contract, be easily detachable, and contain in boldfaced type the following statement written in the same language used in the contract:
NOTICE OF CANCELLATION
You may cancel this contract, without any penalty or obligation, within 5 days from the date the contract is signed.
If you cancel any payment made by you under this contract, it will be returned within 10 days following receipt by the credit service organization of your cancellation notice.
To cancel this contract, mail or deliver a signed dated copy of this cancellation notice, or any other written notice to:
(name of credit service organization)_ at
(address of credit service organization)_,
(place of business) not later than midnight
(date)_.
I hereby cancel this transaction (date)_.
(purchaser's signature)_.
The credit service organization shall give to the buyer a copy of the completed contract and all other documents the credit service organi- zation requires the buyer to sign at the time they are signed.
With regard to the foregoing statutes, it is clear that as to their transactions with Rebecca and Glenda Brown and with Sylvia Gilbert, Respondents did not have a surety bond and trust account in place and therefore were not entitled to charge or receive any money "up front" from these persons. See, Subsection 817.7005(1) F.S. The evidence of record is clear that Rebecca Brown and Sylvia Gilbert did not have copies of their contracts as of the date of formal hearing, but it falls short of establishing they were never given (or at least offered) a copy of their signed contracts. This is, however, a minor point, since it has been shown that the contracts they signed did not meet the requirements of Sections 817.702, 817.703, and 817.704.
Respondents are also charged, pursuant to Subsections 516.07(1)(i) and
516.23 F.S. with refusing to permit inspection of books and records in an investigation or examination by the agency or by refusal to comply with an agency subpoena. This charge hangs upon whether Respondents produced what they had in response to the subpoena issued by Ms. Chang. Respondents produced the blank contracts they were using. Those contracts were faulty, but their production complied with the technical written wording of the subpoena and with Ms. Chang's oral conversation as of the date of return. Respondents could not produce the bond and the trust account papers which they admittedly did not have on the date of return. The fact that Respondents did not have these items constitutes guilt of the other charges, but it cannot be used to bootstrap a charge of noncompliance with the subpoena or refusal to permit inspection as well.
Respondents did not see fit to file post-hearing proposals, but the thrust of their oral closing argument at formal hearing was (1) that there had been no violations since the credit repair business was incidental to Mr. Hall's insurance business; (2) that because Mr. Hall carried on no credit repair business after receipt of the cease and desist order, there should be mitigation; and (3) because the agency promulgated no bond form, Respondents
could not be held guilty for not securing one. Each of these assertions is a non-issue, or in the vernacular, each is a "red herring." Incidental to his main business or not, Mr. Hall was operating West Florida Financial Services as a "credit service organization" as defined in Subsection 817.7001(2)(a). The statute permits a cease and desist order for present violations, past violations, and impending violations, so there is no particular virtue in Mr.
Hall's compliance with the cease and desist order while pursuing his Section 120.57(1) F.S. remedies. The assertion that a licensed insurance agent cannot obtain a surety bond because the agency has not promulgated a form for same is so ludicrous as to require no comment.
The agency has not referred the undersigned to any duly promulgated rules which would assist in fixing a penalty in this cause. However, the fact that Respondents continued to collect fees from Ms. Gilbert after being warned of the consequences by Ms. Chang suggests a severe penalty is in order, as do the facts that they waited until November/December to secure a bond and that their trust account was not opened until one day after the cease and desist order was issued. Even if Respondents did not receive the order until after opening the trust account, Respondents waited six months to set up the trust account and did so under very peculiar circumstances.
Since it is of some concern whether Respondent West Florida Financial Services possesses the status of an entity from whom the agency may collect any fine and since it appears to have been solely an alter-ego of Respondent Hall from April to December 1989, it is important that any fine be ordered payable by both Respondents jointly and severally.
Upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered finding Respondents guilty of three violations of Subsection 817.7005(1) and Sections 817.702, 817.703, and 817.704
F.S. and not guilty of any charges related to failure to respond to a subpoena or cooperate in an investigation and imposing $3,000 administrative fine to be paid jointly and severally by the Respondents within 120 days of the Final Order.
RECOMMENDED this 3rd day of January, 1991, at Tallahassee, Florida.
ELLA JANE P. DAVIS, 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 3rd day of January, 1991.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-1570
The following constitute specific rulings pursuant to Section 120.59(2)
F.S. upon the parties' respective proposed findings of fact (PFOF): Petitioner's PFOF:
1 Accepted, but unnecessary.
2-5 Accepted.
6 Rejected as not supported by the record. Modified to conform with the credible evidence as a whole.
Second No. 4 on pages 4-5 Modified to conform with the evidence as a whole.
Second No. 6 on page 5 and 7 Accepted as modified to conform with the evidence as a whole; otherwise rejected.
8-10 Accepted.
11-17 Except for unnecessary and cumulative detail, accepted. Respondents filed no PFOF
COPIES FURNISHED:
Margaret S. Karniewicz Assistant General Counsel
Department of Banking and Finance Legal Section, The Capitol Tallahassee, Florida 32399-0350
Mark H. Zilberberg, Esquire
313 Williams Street, Suite 2 Tallahassee, Florida 32303
Hon. Gerald Lewis Comptroller, State of Florida The Capitol
Tallahassee, Florida 32399-0350
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 consult with 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.
| Issue Date | Proceedings |
|---|---|
| Jan. 03, 1991 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Jan. 24, 1991 | Agency Final Order | |
| Jan. 03, 1991 | Recommended Order | Credit service corporation defined and disciplined for failure to obtain bond required, establish trust accounts, and use complying contract. |
