STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BANKING AND FINANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 92-1679

)

) AMERIASIA INVESTMENTS, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Mary Clark, held a formal hearing in the above- styled case on June 4, 1992, in Orlando, Florida.

APPEARANCES

For Petitioner: Tamara L. Gappen, Esquire

Department of Banking and Finance Office of the Comptroller

Hurston South Tower, Suite S225

400 West Robinson Street Orlando, Florida 32801

For Respondent: Counsel of record, Peter J.

Correnti, Esquire, did not appear at the hearing.

STATEMENT OF THE ISSUES

An order to cease and desist and complaint served on Respondent on January 24, 1992, alleges that Respondent violated Section 687.141, Florida Statutes, by collecting an advance fee for services. The central issue for determination is whether that violation occurred and, if so, what fine or penalty is appropriate.

A secondary issue is whether Respondent is deemed to have admitted various facts as a result of late response to Petitioner's Request for Admissions.

PRELIMINARY STATEMENT

The cease and desist order was initially filed in the names of three Respondents: Ameriasia Investments, Inc.,; Colville James Jones; and Kirsten M. Dwyer. Default orders were entered by the agency as to Jones and Dwyer and the Respondent's request for hearing was forwarded to the Division of Administrative Hearings in the name of Ameriasia Investments, Inc., only.

Petitioner's motions to amend the cease and desist order and administrative complaint was GRANTED, without objection, in a telephone conference hearing conducted on June 1, 1992.

On the morning of the scheduled formal hearing, both the Hearing Officer's office and counsel for Petitioner received messages that Respondent's counsel and witnesses would not attend the hearing. No request for continuance was made and no explanation was offered for non-attendance.

The hearing proceeded, as provided by notice.

At the commencement of the hearing, counsel for Petitioner argued that responses to Requests for Admission were untimely and, therefore the facts should be deemed admitted. The argument was taken under advisement. As provided in the following conclusions of law, the requests are deemed admitted.

Petitioner proceeded at hearing to present evidence for a prima facie case through exhibits received as Petitioner's exhibits 1-5, and the following witnesses: Franklin Grey Norris, III, Thomas Kornegay, Robert Forte, and Robert Good, Esquire.

Petitioner's proposed findings of fact are substantially adopted herein.

FINDINGS OF FACT

1. Tekontrol, Inc. (TKI), is a communications software and management consultant firm incorporated in Florida in April 1986. Its address is One Purlieu Place, Winter Park, Florida. Thomas Kornegay is TKI's President, Chief Executive Officer and majority owner.

   
   

   Robert L. Forte` is the company's Executive Vice-President and part owner.

   
   

2. TKI's clients include governmental agencies and private industry. In May or June 1991, the company had just been awarded some large contracts and needed start-up funds.

   
   

   For various reasons, requests for loans were turned down by local banks.

   
   

3. The company hired a financial consultant, Dr. Singh-Derewa, who recommended several potential sources, including Ameriasia Investments, Inc., and Oro International, Inc.

   
   

   In May 1991, Thomas Kornegay received a letter purportedly signed by C.J. Jones, President, Ameriasia Investments, Inc., stating:

   
   

   We thank you for your applied [sic] interest in our firms [sic] ability to assist you in your financial needs.

   Ameriasia Investments is a Capital Merchant and consulting firm with over 7 Million in our personal funding portfolio and over 400 Investors in our data base.

   We feel confident based on the information supplied, via phone, in procuring the necessary funds requested in a credit facility type of use. It is, however, our policy to meet with our potential clients and also

   retain their signature on the enclosed agreement. The sensitivity involved in the release of financial data is a primary concern and we wish to protect your interest as well as ours in this matter. Thank you once again for your interest and we hope to meet soon. (Petitioner's composite exhibit #1, p. 2)

   
   

4. Thomas Kornegay did not immediately respond as he was still trying to obtain a bank loan.

   
   

   He later set up a meeting with C.J. Jones and discussed with him the availability of funds from an entity called Ameriasia International Bank, Ltd., in Antigua, West Indies.

   
   

   In response to the meeting and to documents furnished by Kornegay to Jones, TKI received a "Commitment Proposal" from Ameriasia International Bank, Ltd., offering the alternative of a "guarantee document" or the deposit of a

   $410,000.00 certificate of deposit as collateral for the use of TKI.

   
   

5. Kornegay considered Ameriasia International Bank, Ltd., and Ameriasia Investments, Inc., virtually the same entity, as C.J. Jones was represented as president for both. Kornegay dealt with Jones in the various negotiations.

   
   

6. At the request of C.J. Jones, Kornegay sent an "origination fee" to Jones at Ameriasia Investments, Inc. The requested amount was $4,100.00, but Kornegay wrote the check for $4,200.00

   
   

   Kornegay stopped payment on the check after he learned from the Greater Orlando Minority Business Office that Ameriasia might not be on the "up and up".

   
   

   Jones admitted that he had problems with other people. However, he assured Kornegay that the problems were not his fault.

   
   

7. On August 5, 1991, TKI obtained a cashier's check from Barnett Bank of Central Florida in the amount of $4,100.00, payable to "Ameriasia" and, on the advise of counsel, placed the check in escrow.

   
   

8. When Jones would not agree with the escrow arrangement, the check was hand-delivered by Robert Forte to the Ameriasia Investments, Inc., office on August 19, 1991. By this time, TKI was in urgent need of funds.

   
   

9. In a letter dated August 19, 1991, on Ameriasia Investments, Inc.'s, letterhead, C.J. Jones acknowledged receipt of the cashier's check, and referenced an "origination fee for financial guarantee". (Petitioner's composite exhibit #1, p. 28)

   
   

   This reference confirms Kornegay's understanding of the purpose of the funds paid by TKI to Ameriasia. Consistently in his correspondence to C.J. Jones, Kornegay referred to the "loan origination fee" and this reference was not corrected by Jones.

   
   

10. At various times between August and October 1991, Ameriasia indicated that funds were forthcoming, but the loan never closed.

    At various times, correspondence between the parties discussed a line of credit, "assurity bond," specimen guarantee bond and other types of collateral purportedly to enable TKI to close on a loan for various specified amounts.

    
    

    Ameriasia kept putting off the closing, always stating in correspondence that it was near at hand. Some documents were actually provided by Ameriasia to TKI but they were not accepted as collateral by local banks. The reason given to Kornegay was that the banks could not verify that the funding sources for the collateral were real.

    
    

11. The mode of operation of Ameriasia in this case is typical of many advance fee schemes investigated by the Department of Banking and Finance. In such schemes, a promoter will look for people whose credit has been rejected.

    An up-front fee is required and the loan never materialized. Written material produced by the promoter abounds in mumbo-jumbo, legal-sounding language that is utterly meaningless. For example, in this case, Ameriasia frequently referenced an "assurity bond." No such things exists; the term is not included in any known financial parlance.

    
    

12. In its dealings with TKI, Ameriasia acted as a loan broker; the fee it collected was an advance fee proscribed by Section 687.141, Florida Statutes.

    
    

    Findings regarding Request for Admissions

    
    

13. Petitioner's Request for Admissions was sent to Respondent on March 27, 1992, as reflected in the certificate of service.

    
    

    In the parties' prehearing stipulation, counsel for Respondent states that copies of any discovery information was provided to Petitioner on May 4, 1992, by U.S. Mail and by facsimile transfer. (Prehearing Stipulation filed May 28,1 992, p. 16)

    
    

    Respondent never requested relief from operation of the Rule of Civil Procedure providing for automatic admission.

    
    

    The facts deemed admitted as a result of the untimely response are in the Appendix attached here.

    
    

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has jurisdiction in this proceeding pursuant to Section 120.57(1), Florida Statutes.

    
    

15. The Department of Banking and Finance is the agency authorized to administer Chapter 687, Florida Statutes, regulating lending practices in the state. Section 687.143, Florida Statutes, provides the Department may conduct investigations, issue case and desist orders and impose administrative fines in an amount not to exceed $5,000.00 for each violation of the act or rules promulgated thereunder.

    
    

16. Section 687.141, Florida Statutes, provides, in pertinent apart:

    
    

    687.141 Loan brokers; prohibited acts. -- No loan broker shall:

    (1) Assess or collect an advance fee from a borrower to provide services as a broker.

    * * *

    
    

17. Section 687.14, Florida Statutes, defines "advance fee," "borrower" and "loan broker," as follows:

    
    

    687.14 Definitions. -- As used in this act, unless the text other requires:

    1. "Advance fee' means any consideration which is assessed or collected, prior to the closing of a loan, by a loan broker.

    2. "Borrower" means a person obtaining or desiring to obtain a loan of money, a credit card, or a line of credit.

    * * *

    1. "Loan broker" means any person, except any bank or savings and loan association, trust company, building and loan association, credit union, consumer finance company, retail installment sales company, securities broker

       -- dealer, real estate broker or salesperson, attorney, federal Housing Administration or Veterans' Administration approved lender, credit care company, installment loan licensee, mortgage broker or lender, or insurance company, provided that the person excepted is licensed by and subject to regulation or supervision of any agency of the United States or this state and is acting within the scope of the license; and also excepting subsidiaries of licensed or chartered consumer finance companies, banks, or savings and loan associations; who:

       1. For or in expectation of consideration arranges or attempts to arrange or offers to fund a loan of money, a credit card, or a line of credit;

       2. For or in expectation of consideration assists or advises a borrower in obtaining or attempting to obtain a loan of money, a credit card, a line of credit, or related guarantee, enhancement, or collateral of any kind or nature;

       3. Acts for or on behalf of a loan broker for the purpose of soliciting borrowers; or

       4. Holds himself out as a loan broker.

    
    

18. By competent evidence produced at hearing, the Department proved the elements of its complaint against Respondent Ameriasia; that is, that Respondent, as a loan broker, collected an advance fee from TKI. Respondent's assertion in its request for formal hearing that the $4,100.00 was for reimbursement for expenses paid on behalf of TKI was not supported by any evidence, as Respondent chose to not participate at the hearing.

    
    

19. Aside from the evidence presented by the agency, Respondent is deemed to have admitted all facts material to the elements of the complaint.

Section 120.58(1)(b), Florida Statutes, incorporates into administrative proceedings the rules of civil procedure relating to discovery.

Rule 1.370, Florida Rules of Civil Procedure, provides in pertinent part:

. . . Each matter of which an admission is requested shall be separately set forth. The matter is admitted unless the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter within 30 days after service of the request or such shorter or longer time as the court may allow. . .

* * *

(b) Effect of Admission. Any matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission. Subject to Rule 1.200 governing amendment of a pre-trial order, the court may permit withdrawal or amendment when the presentation of the merits of the action will be subserved by it and the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice him in maintaining his action or defense on the merits. . . .

Service on a party is made by delivering a copy of the pleading or paper or by mailing it. The Requests for Admissions were served on Respondent on March 27, 1992. The 30-day deadline is computed from the following day, March 28, and ends on May 1 (adding the five days for mailing). See Rules 1,080(b) and 9.090(e), Florida Rules of Civil Procedure, and Rule 22I-6.002, Florida Administrative Code.

Respondent's filing was untimely, however barely, but Respondent made no request for enlargement of time, withdrawal or amendment. The Hearing Officer is compelled to conclude that the matters that are the subject of Petitioner's request for admissions are deemed admitted.

. . . The rule provides a liberal standard for the trial court to grant relief by permitting withdrawal or amendment and this court has liberally construed that provision. See Melody Tours, Inc. v. Granville Market Newsletter, Inc., 413 So.2d 450 (Fla. 5th DCA 1982). However, a motion must be made for relief from the admissions automatically resulting from a failure to timely answer a request for admissions. In this regard a trial judge cannot err until he rules on a proper motion for relief. No motion, no relief, no error. Morgan v. Thomason, 427 So.2d 1134 (Fla. 5th DCA 1983).

See also, Singer v. Nationwide Mutuel Fire Insurance, Co., 512 So.2d 1135 (Fla. 4th DCA 1987).

RECOMMENDATION

Based on the foregoing, it is hereby, RECOMMENDED:

That a final order be entered finding that Respondent, Ameriasia Investments, Inc., violated Section 687.141(1), Florida Statutes, and must thereby cease and desist and pay an administrative fine of $5,000.00.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 20th day of July 1992.

MARY W. CLARK

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 20th day of July 1992.

COPIES FURNISHED:

Tamara L. Gappen, Esquire Department of Banking and Finance Office of the Comptroller

Hurston South Tower, Suite S225

400 West Robinson Street Orlando, Florida 32801

Peter J. Correnti, Esquire Suite 205

246 North Westmonte Drive Altamonte Springs, Florida 32714

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

William G. Reeves General Counsel

Department of Banking and Finance The Capitol

Plaza Level, Room 1302 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 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.

Docket for Case No: 92-001679

Orders for Case No: 92-001679