STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BANKING & FINANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 91-4169

)

SAMUEL T. HENSON and ) DUPONT FUNDING CORPORATION, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to written Notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Daniel Manry, held a formal hearing in the above-styled case on May 28, 1992, in Ft. Lauderdale, Florida.

APPEARANCES

For Petitioner: Deborah Guller, Assistant General Counsel Office of the Comptroller

401 Northwest 2nd Avenue, Suite 708-North Miami, Florida 33128

For Respondent: Alan Arons, Esquire

Financial Center West, Suite 409 1761 W. Hillsboro Boulevard Deerfield Beach, Florida 33442-1502

STATEMENT OF THE ISSUES

The issues for determination in this proceeding are whether Respondents, Samuel T. Henson and DuPont Funding Corporation, committed multiple acts in violation of applicable statutes and administrative rules and, if so, what, if any, penalties should be imposed.

PRELIMINARY STATEMENT

This matter was referred to the Division of Administrative Hearings for assignment of a hearing officer on July 5, 1991, and assigned to the undersigned on July 11, 1991. After several continuances, a formal hearing was conducted on May 28, 1992.

At the formal hearing, Respondents filed a Motion In Limine. Some of the issues addressed in the Motion In Limine were rendered moot when Petitioner withdrew charges concerning Respondents' alleged failure to maintain loan journals. Petitioner amended the Administrative Complaint by deleting paragraph

7 and 11 in the Findings of Fact and paragraph 20 in the Conclusions of Law. Ruling was reserved on the remaining issues in the Motion In Limine for disposition in this Recommended Order. The parties submitted legal memoranda

addressing the legal issues raised in the Motion In Limine. Having reviewed the record and considered the arguments of counsel in their proposed conclusions of law and supporting memoranda, the Motion In Limine is denied.

Respondent objected to the admissibility of certain exhibits on the grounds that they were not included in Petitioner's exhibit list in the Prehearing Stipulation. Ruling on Respondent's objection was reserved for disposition in this Recommended Order. Respondent's objection is overruled for the reasons stated in the Conclusions of Law.

Petitioner presented the testimony of eight witnesses 1/ and submitted 15 exhibits 2/ for admission in evidence. Petitioner's Exhibits 1, 7, and 10-12 were admitted in evidence without objection. Petitioner's Exhibit 15 was admitted in evidence pursuant the stipulation of the parties. Petitioner's composite Exhibit 4 was admitted in evidence in part without objection and in part over objection. Petitioner's Exhibits 2, 3, 6, 8, 9, 13, and 14 were admitted in evidence over objection. Petitioner's Exhibit 5 was identified but not submitted for admission in evidence. Petitioner's Exhibit 16 was not admitted in evidence pursuant to Respondent's objection. Respondent, Henson, did not testify, called no witnesses, and submitted no exhibits for admission in evidence.

A transcript of the record of the formal hearing was requested and filed with the undersigned on July 8, 1992. Proposed findings of fact and conclusions of law were timely filed by Petitioner on July 17, 1992, and by Respondents on July 10, 1992. The parties' proposed findings of fact are addressed in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Petitioner is the administrative agency charged with responsibility for administering and enforcing the provisions of Chapter 494, Florida Statutes.3 Respondent, DuPont Funding Corporation ("DuPont") is a Florida corporation engaged in the mortgage brokerage business at a single location at 7300 West Camino Real Drive, Boca Raton, Florida 33442.

   
   

2. DuPont is registered with Petitioner under registration number HB 592710662. Respondent, Samuel T. Henson, ("Henson"), is the principal mortgage broker for DuPont. Henson is licensed by Petitioner as a mortgage broker pursuant to license number HA 247542864. As the mortgage broker for DuPont, Henson is responsible for his compliance with Chapter 494, Florida Statutes, as well as that of DuPont.

   
   

3. Petitioner examined and investigated Respondents in response to five complaints received by Petitioner. The investigation involved events allegedly occurring between January 1, 1989 through August 31, 1990.

   
   

   Misuse And Misapplication Of Deposits The Smith Transaction

4. Respondents failed to refund a deposit in the amount of $1,493.00 to Mr. J. W. Smith (the "Smith transaction"). Mr. Smith deposited $1,493.00 with Respondents to pay the costs of a mortgage applied for by the purchaser of commercial property owned by Mr. Smith. According to the terms of the Mortgage Loan Agreement and Application, the deposit was refundable if Respondents were unable to obtain financing for the proposed transaction. After Respondents were

   unable to obtain the financing applied for, they refused to refund Mr. Smith's deposit.

   
   

5. Mr. Smith owned the Esmeralda Inn in Chimney Rock, North Carolina (the "Inn"). The Inn was listed for sale with Daniel Murr of First Commercial Brokers in Asheville, North Carolina, in the amount of $650,000.00.

   
   

6. In October, 1989, Mr. Smith received a full price offer to purchase the Inn from Mr. and Mrs. William C. Robeck. Mr. and Mrs. Robeck were represented by a Mr. Castaldi as the their agent. The terms of the offer required Mr. and Mrs. Robeck to pay $25,000.00 and for Mr. Smith to carry a second mortgage in the amount of $185,000.00. The balance of the purchase price was to be paid in the form of a first mortgage in the amount of $440,000.00. Mr. Smith did not accept the offer of purchase from Mr. and Mrs. Robeck because he considered the amount of the cash invested by the purchasers to be insufficient.

   
   

7. Sometime in December, 1989, Mr. Smith received a full price offer to purchase the Inn from Mr. Andrew Okpych. The terms of the offer required Mr. Okpych to pay $100,000.00 and for Mr. Smith to carry a second mortgage in the amount of $200,000.00. The Branch Bank and Trust Company in Asheville, North Carolina agreed to provide a first mortgage in the amount of $350,000.00.

   
   

8. Mr. Smith wanted to minimize the amount of his second mortgage. He was advised by Mr. Daniel Murr that Respondents had represented to Mr. Murr that they could obtain a first mortgage for the purchase in the amount of $440,000.00 to finance the Smith-to-Okpych transaction. This financing proposal would reduce the second mortgage held by Mr. Smith to $110,000.00. Mr. Smith authorized Mr. Murr to contact Respondents.

   
   

9. Henson contacted Mr. Smith by telephone to discuss the proposed financing in the amount of $440,000.00 on or about December 19, 1989. During that telephone conversation, Henson represented to Mr. Smith that Henson had located a lender which had already approved the needed $440,000.00 loan. Henson refused repeated requests by Mr. Smith to identity the lender. Henson insisted that Mr. Smith sign an agreement to pay the costs of the loan transaction and deposit $1,500.00 with Respondents before Henson would identify the lender which had pre-approved the loan in the amount of $440,000.00.

   
   

10. Mr. Smith and Mr. Okpych signed a Mortgage Loan Agreement and Application (the "agreement") with Respondents on January 5, 1990. Mr. Okpych signed the agreement as borrower and Mr. Smith signed as the person responsible for all expenses incurred in connection with the agreement.

    
    

11. The agreement was signed by Henson on January 5, 1992, and sent by facsimile to Mr. Smith and Mr. Okpych from the office of Mr. Smith's attorney. Mr. Smith and Mr. Okpych made several changes to the agreement and initialed the changes. One such change made the deposit from Mr. Smith a refundable deposit by deleting the prefix "non-" from the word "non-refundable" in the typed form of the agreement. Mr. Smith and Mr. Okpych sent the modified agreement to Henson by facsimile on the same day.

    
    

12. Mr. Smith telephoned Henson on January 5, 1992, to advise Henson that the modified agreement had been sent by facsimile. Henson stated that he had received the agreement and stated that the modifications were acceptable. Henson directed Mr. Smith to wire transfer the $1,500.00 deposit.

13. Mr. Smith wired $1,500.00, less the $7.00 charge for the wire transfer, on January 10, 1990. The wire transfer in the amount of $1,493.00 was sent to the account of Dupont Funding Corporation, account number 3601345943, NCNB, Deerfield Beach, Florida.

    
    

14. Henson notified Mr. Smith by telephone on or about January 15, 1992, that he could not procure the needed financing. The reason given by Henson was that the lender did not want to make the loan because the property was located in North Carolina. Henson still refused to identify the lender to Mr. Smith, but suggested that the needed financing may be obtainable from "General Electric." See Exhibit 12 at 24. The next day, Henson telephoned Mr. Smith and stated that the loan was not available from any lender and that the deposit of $1,493.00 would be refunded to Mr. Smith later in the week. After repeated requests and written demands, Mr. Smith's deposit in the amount of $1,493.00 has not been refunded.

    
    

    The Robeck Transaction

    
    

15. Respondents failed to refund a deposit in the amount of $2,500.00 to Mr. and Mrs. William C. Robeck (the "Robeck transaction"). Mr. and Mrs. Robeck deposited $2,500.00 with Respondents when the Robeck's applied for a mortgage in the amount of $440,000.00 on October 11, 1989, in their unsuccessful attempt to purchase the Inn from Mr. Smith. When Mr. Robeck questioned whether the deposit was refundable, Henson changed the typed form of the Mortgage Loan Agreement and Application (the "loan application") by deleting the prefix "non-" in the typed word "non-refundable". The modified loan agreement was signed by the Robeck's and Henson. Respondents were unable to obtain financing for the proposed transaction. After the Robecks were unable to obtain financing, Respondents refused to refund the Robeck's deposit.

    
    

16. Mr and Mrs. Robeck made an offer to purchase the Inn from Mr. Smith sometime in October, 1989. The offer was rejected, and the Robeck's asked Henson to refund their deposit sometime in January, 1990. Henson refused to refund the deposit and told Mr. Robeck to find another bed and breakfast inn. Mr. Robeck found another bed and breakfast inn for sale in Franklin, North Carolina. He offered to acquire the inn by lease-purchase. His offer was accepted, but Mr. Robeck later found approximately $1,000,000.00 in stolen property on the premises. The owner was arrested, and the lease-purchase transaction was not consummated. Mr. Robeck again requested the refund of his deposit, and Henson again refused the request. Mr. Robeck has never been refunded any portion of his deposit.

    
    

    The Shuster Transaction

    
    

17. Respondents failed to refund a deposit in the amount of $2,500.00 to Mr. Sanford Shuster (the "Shuster transaction"). Mr. Shuster deposited

    $2,500.00 with Respondents when he applied for a mortgage in the amount of

    $3,500,000.00 on February 8, 1990, to finance the acquisition of an Assisted Care Living Facility ("ACLF"). Henson changed the typed form of the Mortgage Loan Agreement and Application (the "mortgage application") by deleting the prefix "non-" in the typed word "non-refundable". The modified mortgage application was signed by Mr. Shuster and Henson. Mr. Shuster was unable to obtain financing, and Respondents refused to refund Mr. Shuster's deposit.

    
    

18. Mr. Shuster made repeated attempts to obtain his refundable deposit from Respondents including several telephone conversations with Henson and two written demands for payment on April 10, 1990, and on June 2, 1990. In every

    instance, Henson agreed to refund the deposit but never did so. Mr. Shuster and Henson entered into a compromise agreement on September 10, 1990. Pursuant to the terms of the compromise agreement, Henson agreed to pay Mr. Shuster

    $2,000.00 in full settlement of the $2,500.00 claim by Mr. Shuster.

    
    

19. Henson paid none of the $2,000.00 required under the settlement agreement with Mr. Shuster. Mr. Shuster sued Henson in Palm Beach County Court and obtained a Final Judgment against Henson on January 31, 1992, in the amount of $2,058.75. On May 7, 1991, Henson paid Mr. Shuster $100.00 toward the amount due under the Final Judgment, but made no other payments. Mr. Shuster has never received the balance of the deposit owed to him and has a claim pending with the Mortgage Brokerage Guaranty Fund.

    
    

    The Linker Transaction

    
    

20. Respondents failed to refund deposits totaling $22,500.00 to Mr. Gerald Linker (the "Linker transaction"). Mr. Linker deposited $22,500.00 with Respondents when he applied for a mortgage in the amount of $1,250,000.00 in May, 1990, to finance the acquisition of an alcohol and drug abuse center (the "center"). Henson obtained a written loan commitment from Nationwide Funding, Inc. ("Nationwide"), on May 23, 1990. Neither Nationwide nor Respondents performed in accordance with the terms of the commitment. Mr. Linker never received his loan and never received his deposits.

    
    

21. Mr. Linker's attorney made repeated attempts to have Mr. Linker's deposits refunded to him. Mr. Linker's attorney filed suit in the Circuit Court of the 15th Judicial Circuit in Palm Beach County, Florida, and obtained separate judgments against Henson and Dupont in the respective amounts of

    $69,023.01 and $69,520.78. Respondents paid none of the $138,543.79 owed to Mr. Linker. Mr. Linker has a claim pending with the Mortgage Brokerage Guaranty Fund.

    
    

    The Barth Transaction

    
    

22. Respondents failed to return a refundable deposit in the amount of

    $10,000.00 to Mr. Andrew J. Barth (the "Barth transaction"). Mr. Barth deposited $10,000.00 with Respondents when he applied for financing in connection with the purchase of the Cardinal Retirement Village in Bradenton, Florida, on November 17, 1989. Mr. Barth was to assume an existing mortgage of approximately $9,800,000.00 in the transaction. Respondents agreed to arrange the assumption. The owners of the Cardinal Retirement Village refused to proceed and Respondents never refunded Mr. Barth's deposit.

    
    

23. The agreement between Mr. Barth and Respondents provided in relevant part:

    
    

    The deposit will be refunded no later than thirty (30) days from this date if this real estate and mortgage transaction is not successfully completed and closed.

    
    

    Mr. Barth made repeated attempts to have his deposit refunded to him. In May, 1990, Mr. Barth's attorney negotiated a Pay Back Agreement with Respondents in which Respondents agreed to pay $1,500.00 a month to Mr. Barth to refund the deposit with interest. Respondents paid only $3,000.00 to Mr. Barth. Mr. Barth has never received the balance owed to him for his refundable deposit.

    Failure To Maintain Escrow Accounts

    
    

24. Respondents failed to maintain an escrow account during 1988 and 1989 and failed to place deposits in escrow. Respondents failed to place deposits in escrow for the Smith, Robeck, Shuster, Linker, and Barth transactions. The accounts to which the monies were deposited by Respondents were not escrow accounts.

    
    

25. Respondents failed to place deposits from numerous other transactions in escrow. Respondents failed to deposit in escrow the following amounts:

    
    

    1. an appraisal fee of $250.00 and a credit report fee of $150.00 collected from Mr. Eric Jason prior to closing a mortgage for

       $101,650.00 on November 30, 1989;

    2. an appraisal fee of $250.00 and a credit report fee of $50.00 collected from Francis J. and Barbara A. Lynch prior to closing a mortgage for $50,000.00 on February 5, 1990;

    3. a deposit of $2,000.00 in part payment of the brokerage fee collected from Mr. Nicholas

       A. Paleveda and Ms. Marjorie Ewing prior to closing a mortgage for $356,400.00 on April 20, 1990;

    4. a deposit of $350.00 collected from Mr. Richard L. Trombley prior to closing a mortgage for $40,000.00 on November 2, 1990; and

    5. a deposit of $350 collected from the Sun Bay Development Corporation prior to closing a mortgage for $292,500.00 on February 6, 1990.

       
       

       Excessive, Duplicate, And Undisclosed Charges

       
       

26. Respondents imposed excessive, duplicate, or undisclosed charges in numerous mortgage transactions. The costs itemized and collected from borrowers in these transactions were not supported by actual expenditures.

    
    

27. Respondents collected $625.00 from Mr. and Mrs. Ernest L. Sego for an appraisal that cost $250.00. Mr. and Mrs. Sego paid $325.00 for an appraisal report at the time they executed a Mortgage Brokerage Agreement on August 17, 1988, for a mortgage in the amount of $151,000.00. At the closing on April 7, 1989, Mr. and Mrs. Sego were charged an additional $300.00.

    
    

28. Respondents collected $50.00 from Mr. and Mrs. Sego for a credit report at the time the Mortgage Brokerage Agreement was executed. At the closing, Mr. and Mrs. Sego were charged an additional $45.00 for a credit report.

    
    

29. Respondents underestimated the closing costs for:

    
    

    1. Mr. Jason in the amount of $590.00;

    2. The Lynch's in the amount of $492.50; and

    3. Mr. and Mrs. Sego in the amount of $1,140.00.

    Failure To Disclose

    
    

30. Respondents failed to disclose costs incurred by numerous borrowers. Respondents failed to disclose changes in the cost of title insurance which occurred between the time the borrowers signed Good Faith Estimate forms and the time the mortgage transactions closed.

    
    

31. The estimated cost for title insurance for the Lynch's was $460.00 while the actual cost was $637.50. The estimated cost of title insurance for Mr. and Mrs. Sego was $200.00 and the actual cost was $263.00.

    
    

32. The Mortgage Brokerage Agreement/Good Faith Estimate was not signed by two borrowers in separate transactions. Neither Mr. and Mrs. Knowlton nor Mr. Trombley signed those documents.

    
    

33. Respondents failed to disclose payments made to a co- broker in two separate transactions. Mr. Nicholas Cancel was hired by Respondents to process loans. Loan processing is limited to preparing the documentation necessary to close a loan. Mr. Cancel is a licensed mortgage broker who was employed by a broker other than Respondents. Respondents failed to disclose payments made to Mr. Cancel in his capacity as an independent broker in the mortgage loans to the Lynch's and Mr. Jason.

    
    

    Failure To Maintain Books And Records And Failure To Cooperate

    
    

34. Respondents failed to maintain books and records at the principal place of business. Respondents maintained only one business location. When Petitioner's investigator visited Respondents' office and asked for the books and records, Henson told the investigator that there were no books and records at the office. Petitioner subsequently served Respondents with a subpoena to produce Dupont's books and records. Respondents produced 57 mortgage files and some banking records.

    
    

35. The files produced by Respondents were incomplete. Most contained only brochures. No files were produced on the Shuster and Linker transactions.

    
    

36. During the investigation Henson represented to the investigator that he was neither president nor a corporate officer of Dupont. However, Henson repeatedly signed loan application and loan closing documents as president of Dupont including the Smith, Robeck, and Shuster transactions. Henson also entered into numerous co-brokerage arrangements as president of Dupont including arrangements with Mr. Cancel and Ms. Patricia Towers, president of Towers Mortgage Corporation, 6971 North Federal Highway, Boca Raton, Florida 33487.

    
    

    Fraud, Deceit, Misrepresentation, And Gross Negligence

    
    

37. Respondents' intent to defraud and deceive the public is evidenced by a consistent pattern and practice of incompetence, gross negligence, misrepresentation, and failure to disclose material facts in multiple transactions over an extended period of time. Respondents knew or should have known that the acts committed by them constituted violations of law.

    Respondents violations resulted in financial loss to numerous individuals and to the public generally. Respondents failed to comply with agreements voluntarily executed by them and failed to pay amounts due under judgments duly entered against them by Florida courts. Respondents failed to cooperate with state investigators and failed to maintain books, records, and escrow accounts required by law.

    CONCLUSIONS OF LAW

    
    

38. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this proceeding. Section 120.57(1), Florida Statutes. The parties were duly noticed for the formal hearing.

    
    

39. The burden of proof is on Petitioner to show by clear and convincing evidence that Respondents committed the violations that were not dismissed at the beginning of the formal hearing and that the penalties requested by Petitioner should be imposed. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

40. Respondents' objection to the admissibility of certified copies of judgments entered against Respondents on behalf of borrowers involved in mortgage transactions at issue in this proceeding is overruled. Respondents' objection alleged unfair surprise caused by Petitioner's failure to include the documents on the exhibit list in the Prehearing Stipulation. The facts evidenced by the court documents were included in the "Examination Report" listed by Petitioner in the Prehearing Stipulation as Exhibit 1 and admitted in evidence as Petitioner's Exhibit 4. Statements by witnesses in the "Examination Report" and their testimony at the formal hearing established the facts contained in the court documents. There was no prejudice from "surprise in fact" as required by the Florida Supreme Court in Binger v. King Pest Control, 401 So.2d 1310, 1313-1314 (Fla. 1981).

    
    

41. Henson is the principal mortgage broker for Dupont. As the principal mortgage broker, Henson is responsible for ensuring compliance with Chapter 494, Florida Statutes. Each principal place of business must be operated under the full charge, control, and supervision of the principal mortgage broker. Section 494.0393(2), Florida Statutes. Dupont had only one place of business.

    
    

42. Respondents violated Section 494.055(1)(b), Florida Statutes, by committing acts which constitute fraud, misrepresentation, deceit, negligence, and incompetence in mortgage financing transactions. Respondents committed such acts in multiple transactions, involving numerous individuals, over an extended period of time. Respondents consistently and systematically misused and misapplied deposits, failed to place deposits in escrow, refused to refund deposits owed to borrowers, failed to disclose costs, charged for costs not supported by actual expenditures, failed to pay judgement against them, failed to maintain books and records, and misrepresented material facts to borrowers and investigators for Petitioners.

    
    

43. Respondents violated Section 494.055(1)(b), Florida Statutes, and Florida Administrative Code Rule 3D-40.008(3)(b) by failing to disclose costs to borrowers on closing statements and by charging costs to borrowers that were not supported by actual expenditures ("unsupported expenses"). The failure to disclose such costs and the charging of unsupported expenses which were deposited to Respondents' operating account constituted fraud, misrepresentation, deceit, gross negligence and incompetence within the meaning of Section 494.055(1)(b).

    
    

44. Respondents violated Sections 494.055(1)(e) and (h), Florida Statutes, by failing to immediately place in escrow any money, fund, deposit, check, or draft entrusted to them. Respondents violated Section 494.055(1)(p), Florida Statutes, by consistently underestimating maximum closing costs.

45. Respondents violated Sections 494.06(1) and (3), Florida Statutes, by failing to maintain and make available to Petitioner at Respondents principal place of business all books, accounts, records, and documents deemed necessary by Petitioner, including closing statements ". . . signed by every borrower." Respondents violated Sections 494.08(5)(a) and (c), Florida Statutes, by failing to obtain and maintain a mortgage brokerage agreement between Respondents and their borrowers and by failing to provide borrowers with a good faith estimate of costs. Respondents violated Florida Administrative Code Rule 3D-40.008(14) by failing to disclose all brokerage fees disbursed to other brokers and the name of such co-brokers.

    
    

46. Section 494.055(1), Florida Statues, provides that violations of Sections 494.055(1)(b), (e), (h), and (p) constitute grounds for the disciplinary action prescribed in Section 494.052. Section 494.055(2) provides that a registrant shall be subject to the disciplinary action prescribed in Section 494.052 for the acts of any officer, director, shareholder, or employee. Section 494.055(3) provides that a principal mortgage broker shall be subject to the disciplinary action prescribed in Section 494.052 for the acts of employees of the registrant.

    
    

47. The minimum penalty prescribed for violations of either Sections 494.055(1)(b), (e), (h), and (p), 494.06(1) and (3), and 494.08(5)(a), Florida Statutes, is a reprimand "and/or" fine of $5,000 for each offense. Section 494.052(4) and (5) and Florida Administrative Code Rule 3D-40.111(2). The maximum penalty authorized for a violation of Sections 494.055(1)(b), (e), (h), and (p) and Section 494.06(1) and (3) is revocation of a license or registration. Section 494.052(1) and Rule 3D-40.111(2)(o), (r), (u), (bb), (cc), and (ee). The maximum penalty authorized for a violation of Section 494.08(5)(a) is probation. Section 494.052(3) and Rule 3D-40.111(2)(jj).

    
    

48. Aggravating and mitigating circumstances may be considered in determining what disciplinary action should be taken for the violations committed by Respondents. Florida Administrative Code Rule 3D-40.111(3)(a). Neither Respondents have any prior disciplinary history within the meaning of Rule 3D-40.111(3)(b)3-5. Respondents acts, however, constituted severe violations. Respondents evidenced a consistent pattern of fraud, deceit, misrepresentation, gross negligence, and incompetence involving multiple transactions over an extended period of time. Respondents acts resulted in permanent financial injury to numerous individuals and permanent harm to the public within the meaning of Rule 3D-40.111(3)(b)2. Respondents never refunded the amounts owed to any individual. Respondents failed to satisfy any judgments against them for such amounts or to otherwise make restitution in any form. Respondents failed to cooperate with the investigation conducted by the state and misrepresented material facts to Petitioner's investigators and borrowers.

    
    

49. Respondents consistent pattern of fraud, deceit, misrepresentation, gross negligence, and incompetence involving multiple transactions over an extended period of time was dishonest and unscrupulous and constituted culpable negligence. Statutory authority for Petitioner to take disciplinary action in the form of suspension or revocation should be aimed at the dishonest and unscrupulous operator. Cf. Rivard v. McCoy, 212 So.2d 672, 674-676 (Fla. 1st DCA 1968); Brod v. Jernigan, 188 So.2d 575, 581 (Fla. 2d DCA 1966).

    
    

50. The severity of the harm to borrowers and the public and the aggravating circumstances in this proceeding suggest that a penalty of revocation is appropriate in this proceeding. The acts committed by Respondents

    were severe, dishonest, unscrupulous, and repeated over a period of time in multiple transactions.

    
    

51. Petitioner recommends in its Proposed Recommended Order that the license issued to Henson be revoked and that each Respondent be fined $5,000.00 for each of the 55 violations committed by each Respondent. The maximum penalty authorized by Florida Administrative Code Rule 3D-40.111(2), however, is revocation; not revocation and a fine.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that:

Petitioner issue a final order revoking the license of Respondent, Henson, and revoking the registration of Respondent, Dupont.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 29th day of September 1992.

DANIEL MANRY

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 29th day of September 1992.

ENDNOTES

1/ Petitioner's witnesses were: Mr. Gerald Linker, an individual who applied through Respondent for mortgage financing for an alcohol and drug abuse facility; Mr. Sanford Shuster, an individual who applied through Respondent for mortgage financing of a proposed project known as Assisted Care Living Facility; Mr. Andrew Barth, Administrator of the Forum of Deer Creek, Deerfield Beach, Florida, and former mortgage broker associated with Respondent; Mr. William Robeck, an employee of the Broward County Sheriff's Office, Organized Crime Division of Racketeering; Ms. Patricia Towers, president and owner of Towers Mortgage Corporation; Mr. Nicholas Cancel, a mortgage broker employed by Howell Mortgage Company and former co-broker with Respondent; Mr. Ralph Scheidt, Financial Investigator for Petitioner; and Ms. Barbara J. Hutchersion, Financial Examiner/Analyst for Petitioner.

2/ Exhibit 1 is a copy of a Second Amended Complaint filed in Gerald Linker v. Nationwide Funding, Inc., DuPont Funding Corporation, Samuel T. Henson, and Bob Abramson, Case No. CL 90- 10919 AO, In The Circuit Court of the 15th Judicial Circuit In And For Palm Beach County, Florida. Exhibit 2 is a copy of a Final Default Judgment entered on December 16, 1991, in Linker (Case No. CL 90-10919 AO). Exhibit 3 is a copy of a letter dated February 27, 1992 from Mr. Feaman

Linker to in connection with the matter at issue in Case No. CL 90-10919. Composite Exhibit 4 is a copy of the Examination Report and Investigative Report prepared by Ms. Hutchersion for Petitioner. Exhibit 5 is a copy of a check in the amount of $2,500 from Mr. Sanford Shuster to DuPont. Exhibit 6 is a copy of the Summary Final Judgment entered in Sanford I. Shuster v. Samuel Henson d/b/a DuPont Funding, Case No. SS-90-18422-RD, In The County Court, In And For Palm Beach County, Florida. Exhibit 7 is a copy of a handwritten letter from Mr.

Henson dated May 7, 1991. Exhibit 8 is a copy of a letter dated April 15, 1992, from Mr. Andrew Grosmaire, Financial Specialist for Petitioner. Exhibit 9 is a copy of a Final Judgment in Andrew J. Barth and Evelyn Barth v. DuPont Funding Corporation and Samuel T. Henson, Case No. 91-1669 COWE, In The County Court In And For Broward County, Florida. Exhibit 10 is a copy of a Mortgage Loan Agreement And Application for a loan in the amount of $425,000 to William C. and Jill E. Robeck, dated October 11, 1989. Exhibit 11 is a copy of a Subpoena Duces Tecum requiring Mr. Henson to appear on January 3, 1991, before Mr. Ralph

J. Scheidt at Petitioner's West Palm Beach office and produce records described in the subpoena. Exhibit 12 is a copy of the transcript of the telephone deposition of Mr. J. W. Smith. Exhibit 13 is a copy of an inventory of documents produced by Mr. Henson at his deposition before Mr. Scheidt. Exhibit 14 is a copy of a bank journal produced by Mr. Henson at his deposition before Mr. Scheidt. Exhibit 15 is a copy of bank statements and cancelled checks for a checking account in the name of DuPont Funding Corp. Inc. at Ameri First Bank. Exhibit 16 is a copy of a computer print out from the Secretary of State showing that Mr. Henson is the sole officer and director for DuPont Funding Corporation.

3/ All statutory references are to Florida Statutes (1989) unless provided otherwise.

APPENDIX

Petitioner submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. No notation is made for unnumbered paragraphs, recited testimony, or proposed findings of fact which do not otherwise conform with the requirements of the order entered by the undersigned on the record at the formal hearing.

The Petitioner's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

Respondents submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. No notation is made for unnumbered paragraphs, recited testimony, or proposed findings of fact which do not otherwise conform with the requirements of the order entered by the undersigned on the record at the formal hearing. The matters listed in the Appendix at the beginning of Respondent's Proposed Recommended Order merely recite the provisions of Section 494.055, Florida Statutes.

The Respondents' Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

1. Rejected for the reasons stated

   in Findings 34-36

2. Rejected as irrelevant and immaterial

3. Rejected for the reasons stated

   in Findings 24-25

4. Rejected for the reasons stated

in Findings 32

5-7 Rejected for the reasons stated

in Findings 26-28

1. Rejected for the reasons stated

   in Finding 33

2. Rejected for the reasons stated

   in Finding 37

3. Rejected as irrelevant and immaterial

COPIES FURNISHED:

The Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350

William G. Reeves, Esquire General Counsel

Department of Banking and Finance

The Capitol, Plaza Level Tallahassee, Florida 32399-0350

Deborah Guller,

Assistant General Counsel Office of the Comptroller

401 N.W. 2nd Avenue, Suite 708-North Miami, Florida 33128

Alan Arons, Esquire

Financial Center West, Suite 409 1761 W. Hillsboro Boulevard Deerfield Beach, Florida 33442-1502

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.

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AGENCY FINAL ORDER

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STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE

DIVISION OF FINANCE

DEPARTMENT OF BANKING AND FINANCE

Petitioner,

Administrative Proceeding

vs. No. 2138-F-3/91

DOAH Case No. 91-4169

SAMUEL T. HENSON and

DUPONT FUNDING CORPORATION,

Respondents.

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FINAL ORDER

This matter has come before the undersigned as head of the Department of Banking and Finance, Division of Finance ("Department"), for the entry of a Final Order in the above referenced proceeding. On September 29, 1992, a Hearing Officer from the Division of Administrative Hearings submitted his Recommended Order, a copy of which is attached hereto as Exhibit A. None of the parties to this proceeding have filed exceptions to the Recommended Order.

The Department respectfully rejects the Hearing Officer's conclusion of law contained in Paragraph 51. of the Recommended Order as misinterpretation of Department Rule 3D-40.111(2), Florida Administrative Code. That rule must be read in para materia with Section 494.052(1), Florida Statutes, which allows for a broad range of penalties to be imposed, including fines, for violations of Chapter 494, Florida Statutes. Rule 3D-40.111(2), Florida Administrative Code, only establishes "floors" and "ceilings" regarding penalties. It does not suggest that any penalties within those two parameters cannot be imposed.

Having rejected this conclusion of law, however, the Department nevertheless concurs with the serious penalty of revocation imposed in this matter.

Having considered the Recommended Order, the pleadings, exhibits, and other documents submitted in this proceeding,

IT IS ORDERED:

1. The Recommended Order is adopted in its entirety except as modified or rejected by this Final Order.

   
   

2. The mortgage broker's license of Respondent Samuel T. Henson is hereby REVOKED.

   
   

3. The mortgage brokerage business registration of Respondent Dupont Funding Corporation is hereby REVOKED.

DONE and ORDERED this 20th day of October, 1992, in Tallahassee, Leon County, Florida.

Gerald Lewis as Comptroller and Head of the Department of Banking and Finance

COPIES FURNISHED:

Randall Holland, Director Division of Finance

Deborah Guller

Assistant General Counsel

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 COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK, DEPARTMENT OF BANKING AND FINANCE, SUITE 1302, THE CAPITOL, TALLAHASSEE, FLORIDA 32399-0350, AND A SECOND COPY, ACCOMPANIED BY THE FILING FEES PRESCRIBED BY SECTION 35.22(3), FLORIDA STATUTES, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, 300 MARTIN L. KING, JR., BOULEVARD, TALLAHASSEE, FLORIDA 32399-1850, OR IN THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true copy of the foregoing Final Order was sent by regular U.S. Mail to Alan Arons, Esquire, Financial Center West, Suite 409, 1761

W. Hillsboro Boulevard, Deerfield Beach, Florida 33442-1502 and to Clerk, Division of Administrative Hearings, The DeSoto Building, 1230 Apalachee Parkway, Tallahassee, Florida 32399-1550, this 21st day of October, 1992.

H. Richard Bisbee Deputy Counsel

Department of Banking and Finance Suite 1302, The Capitol Tallahassee, Florida 32399-0350

(904) 488-9896

Docket for Case No: 91-004169

Orders for Case No: 91-004169