STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 90-1720

)

GARY J. DeBELLONIA and ) CAPITAL GROWTH FINANCIAL SERVICES, ) INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was conducted on July 24, 1990, in Tampa, Florida, before Veronica E. Donnelly, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Stephen M. Christian, Esquire

Office of the Comptroller Regional Service Center

1313 North Tampa Street, Suite 615

Tampa, Florida 33602-3394

For Respondent: Michael C. Mone, Esquire

111 Eighth Street

Belleair Beach, Florida 33535 STATEMENT OF THE ISSUES

Whether the Respondent have acted as a mortgage broker and mortgage broker business without having a license, in violation of the Mortgage Brokerage Act.

Should the Department issue a cease and desist order to the Respondents because of the misconduct alleged in the Order and Notice filed February 20, 1990.

PRELIMINARY STATEMENT

On February 20, 1990, the Department of Banking and Finance (the Department) filed a cease and desist order directed to Gary J. DeBellonia (DeBellonia) and Capital Growth Financial Services, Inc. (CGFS, Inc.). The order alleged that the Respondents DeBellonia and CGFS, Inc. have acted as a mortgage broker and a mortgage brokerage business without having been licensed to do so, in violation of Florida laws.

The Respondents denied the factual allegations within the order and requested a formal administrative hearing to resolve the factual dispute. In addition, the Respondent's requested an order directing the Department to stop its harassment of their unregulated business. Attorneys fees and costs were also requested.

During the hearing, the Department presented one witness and filed nine exhibits. Respondent DeBellonia testified on behalf of himself and the corporation. Five exhibits were filed, and the Respondents were granted leave until August 4, 1990, to file a copy of the business advertisement for the Respondents published in the Tampa Tribune the last week of July 1989. The additional exhibit was not filed by the Respondents. All of the exhibits received were admitted into evidence.

The transcript of the proceeding was filed with the Division of Administrative Hearings on August 7, 1990. The only proposed recommended order in the case was filed by the Department. Rulings on the proposed findings of fact are in the Appendix of the Recommended Order.

FINDINGS OF FACT

1. Respondent DeBellonia is president of Respondent CGFS, Inc. At all times material to these proceedings, the Respondents were business consultants who assisted their clients with the preparation and presentation of information for private lenders who were interested in making business loans. Their business offices were located at North Rocky Point Drive, Suite 800, Tampa, Florida.

   
   

2. In late July or early August 1989, Constance J. Jones responded by telephone to an advertisement placed by Respondents in the Tampa Tribune newspaper. The ad communicated to her that the Respondent CGFS, Inc. was interested in providing business financing to new and established businesses. Upon receipt of the telephone call, a secretary at CGFS, Inc. scheduled an appointment for Mrs. Jones with Respondent DeBellonia for August 7, 1989.

   
   

3. Mrs. Jones was excited about the appointment because the seller of commercial real property purchased by her and her husband had recently filed a foreclosure action to recover the property. The suit occurred because she and her husband had been unable to make the final balloon payment on the property. The seller had agreed to forebear the possibility of such a suit the year before when Mrs. Jones gave him twenty thousand dollars ($20,000.00) and the promise that she would obtain financing within a year's time and pay the outstanding balance in full. At the close of the year, Mrs. Jones had not been successful in her attempts to acquire the money to pay for the property. This appointment renewed her hopes that she could minimize her losses, settle the suit, and preserve her interest in the property.

   
   

4. Prior to arranging her appointment with Respondent DeBellonia, Mrs. Jones had made applications for a loan at several banks. Her requests had been turned down because the banks had determined that the present value of the property was insufficient to provide the collateral needed for the secured loan she was seeking.

5. When Mrs. Jones attended her meeting with Respondent DeBellonia, she voluntarily presented him with a copy of her agreement for deed, a property appraisal, and her owner's title insurance policy. Having submitted herself to a number of loan requests at various banks prior to this appointment, she assumed he would want to see the same documents that had been requested during those loan reviews.

   
   

6. Respondent DeBellonia allowed Mrs. Jones to present her situation and her documentation to him in her own manner. He made copies of all of the papers offered to him and returned the originals.

   
   

7. At the close of Mrs. Jones' presentation, Respondent DeBellonia agreed to be her business consultant and to assist her in her search for funding.

   
   

8. Although Mrs. Jones originally stated that she needed to acquire

   $94,000.00, this amount was reduced to $20,000.00 when she was informed that the Respondents charge a professional service fee of ten percent of the loan amount ultimately accepted by the clients. To begin work on the funding project, the Respondents requested a non-refundable professional service fee of $1,900.00.

   
   

9. Although Mrs. Jones did sign the business consultant agreement, she did not have the money with her to pay the non-refundable fee. When she informed Respondent DeBellonia that she did not have the money, he told her he needed the money as soon as possible so that he could go ahead and work on the transaction. He indicated that he could accomplish a fast transaction for the $20,000.00 in about three days time.

   
   

10. According to Mrs. Jones, the seller of the commercial property was willing to forebear on the foreclosure for a while if she could give him

    $20,000.00 now and if she was actively pursuing a loan which would pay off the balance due. This proposal was another reason she changed her request from

    $94,000.00 to the $20,000.00 amount.

    
    

11. Later that evening, Mrs. Jones telephoned Respondent DeBellonia and told him she needed a new document so that her husband could be on the agreement as well.

    
    

12. When the second document was sent, the secretary mistakenly sent out the original agreement with a funding goal of $94,000.00 instead of the reduced request for $20,000.00. Mr. Jones' name had been placed on the document in order to obtain his signature.

    
    

13. Both agreements given to Mrs. Jones clearly state that Respondent CGFS, Inc. is not a mortgage broker.

    
    

14. Before Mrs. Jones returned a fully executed agreement to the Respondents with the non-refundable fee, she decided to call the Comptroller's Office in Tallahassee to get a business rating to see if this was a good-rated business for her own protection.

    
    

15. Although nothing negative was stated by the Comptroller's Office, Mrs. Jones did not get the assurances she was seeking. After that, she decided not to retain the Respondents to provide their business consultant services.

16. Without Mrs. Jones' presumption that the Respondents would eventually seek a mortgage on the real property she intended to purchase, there is no reliable circumstantial evidence which demonstrates that the Respondents were seeking to act as a mortgage broker under the set of facts presented at hearing.

    
    

17. Even if the circumstantial evidence and ill-conceived presumptions were considered reliable, the evidence is outweighed by the clear statement within the consultant agreement that Respondent CGFS, Inc. is not a mortgage broker. In addition, if the Respondents had intended to see a mortgage for Mrs. Jones, they would have required her to have her husband sign the agreement because she was an equitable owner of the property in a tenancy by the entirety. Instead, it was Mrs. Jones who later requested that her husband's name be included on the agreement.

    
    

18. Respondent DeBellonia clearly manufactured Respondents' Exhibit number

    E. If this proceeding had turned on his credibility versus the credibility of others, he would not have prevailed in the factual determination.

    
    

19. Based upon the facts presented at hearing, the Department initially had reason to believe that the Respondents were violating or about to violate the law by acting as a mortgage broker and mortgage broker business without a license. However, the formal hearing process revealed that Mrs. Jones' impressions of what occurred during her meeting with Respondent DeBellonia were faulty. Documentary evidence prepared during the interview and Mrs. Jones' admissions during the cross-examination resolved the case in Respondent's favor.

    
    

20. The actions taken by the Department in filing the Cease and Desist Order were proper, and were not harassment of the Respondents.

    
    

    CONCLUSIONS OF LAW

    
    

21. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding pursuant to Section 120.57(1), Florida Statutes.

    
    

22. Section 494.072(1), Florida Statutes, provides that the Department of Banking and Finance may issue a cease and desist order if there is reason to believe that a person is violating any provision of Chapter 494, Florida Statutes. In this case, the Respondents were accused of having offered to arrange for a mortgage loan for Mrs. Constance Jones when she sought their consulting services in August of 1989. If the allegations originally reported to the Department by Mrs. Jones had been proved at hearing, the Respondent would have been in violation of Section 494.093, Florida Statutes. This statute prohibits nonlicensed or non-exempt persons from arranging mortgage loans in Florida.

    
    

23. At hearing, it was demonstrated that Mrs. Jones presumed that the loan she was seeking would be secured by the commercial real property she wanted to purchase. This presumption was based upon her recent past experiences with a number of different banks and the presentation she made to Respondent DeBellonia about her current financial predicament. It was not based upon any representations by the Respondents.

24. Based upon the actions by the Respondents, it has been established that they were not attempting to arrange a mortgage loan for Mrs. Jones on August 7, 1989. They were attempting to arrange for business funding that could be used by Mrs. Jones to pay the $20,000.00 she needed immediately to preserve her present business location on the commercial property for which she was seeking legal, as well as equitable title.

    
    

25. Although the Respondents requested that the Hearing Officer order the Department to stop harassing the Respondents, the Division of Administrative Hearings is without the authority to issue such orders. Even if such jurisdiction existed, the facts reveal that the Department acted properly, pursuant to the powers granted under Section 494.072, Florida Statutes.

    
    

26. Attorney fees and costs are not addressed in this proceeding. The parties are referred to Rule 221-6.035, Florida Administrative Code, and Section 57.111, Florida Statutes, for directions as to how such matters are pursued.

RECOMMENDATION

Accordingly, it is RECOMMENDED:

That the cease and desist order issued by the Department on February 20, 1990, be dismissed.

DONE and ENTERED this 31st day of September, 1990, in Tallahassee, Leon County, Florida.

VERONICA E. DONNELLY

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 21st day of September, 1990.

APPENDIX TO RECOMMENDED IN CASE NO. 90-1720

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

1. Accepted. See HO number 1.

2. Accepted.

3. Reject the date of the interview. The rest is accepted. See HO number 2-number 6.

4. Accepted.

5. Accepted. See HO number 5.

6. Accepted. See HO number 9 and number 10.

7. Accept the first two sentences. See HO number 9. Reject the third sentence. Contrary to fact. Reject the fourth sentence. Irrelevant.

Docket for Case No: 90-001720

Orders for Case No: 90-001720