) Case Nos. 98-0772EC
Respondent. ) 98-0773EC
On May 19, 1998, a formal administrative hearing was held in this case in Ft. Pierce, Florida, before Carolyn S. Holifield, Administrative Law Judge, Division of Administrative Hearings.
Advocate: Eric S. Scott
Assistant Attorney General Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050
The issues for determination are: (1)whether Respondent violated Section 112.313(7)(a), Florida Statutes; (2) whether Respondent violated Article II, Section 8, Florida Constitution; and (3) if so, what penalty should be imposed.
On December 5, 1997, the Florida Commission on Ethics (the Commission) entered an Order Finding Probable Cause to believe that Respondent, Kenneth Sattler, while serving as a member of the St. Lucie County Board of Commissioners and the St. Lucie
112.313(7)(a), Florida Statutes, and Article II, Section 8, Florida Constitution.
With regard to the alleged violation of Section 112.313(7)(a), Florida Statutes, Respondent is charged with having a contractual relationship with the Civil Aviation Academy, Inc. (CAA) while CAA was doing business with or being regulated by the Respondent's agency, and by having a contractual relationship with CAA which created a continuing or frequently recurring conflict between his private interests and the performance of his public duties, or which impeded the full and faithful discharge of his public duties. As to the alleged violation of Article II, Section 8, Florida Constitution, Respondent is charged with failing to correctly complete his 1995 Form 6, Full and Public Disclosure of Financial Interests.
The allegations contained in the Order of Probable Cause, were based on two separate complaints filed against the Respondent. On February 11, 1998, the Commission forwarded the files of both cases to the Division of Administrative Hearings for appointment of an administrative law judge. The two separately docketed cases were consolidated and set for hearing.
Prior to the final hearing, the parties stipulated to facts which were admitted and required no proof at hearing. At the final hearing the Advocate called four witnesses: Maurice Warren, Dennis Green, Curtis King, and Dr. John Brown. The Respondent testified on his own behalf and called one witness,
Emma E. Sattler. The parties stipulated to the admission of
fifteen (15) joint exhibits, all of which were received into evidence.
The proceeding was recorded but not transcribed. At the conclusion of the hearing, the parties agreed to file proposed recommended orders on June 8, 1998. The Advocate's Proposed Recommended Order was filed on June 8, 1998. On that same date, Respondent requested an extension of time in which to file his proposed recommended order. Respondent's unopposed request was granted and Respondent timely filed his proposed recommended order under the extended time frame.
At all times pertinent to this proceeding, and since November 1994, Kenneth Sattler (Respondent), served as a Commissioner on the St. Lucie County Board of Commissioners (Board of Commissioners). The Board of Commissioners also acts as the St. Lucie County Port and Airport Authority (St. Lucie Airport Authority). Accordingly, at all times relevant to this proceeding, Respondent was also a member of the St. Lucie Airport Authority.
As a St. Lucie County Commissioner and a member of the St. Lucie Airport Authority, Respondent was subject to the requirements of Part III, Chapter 112, Florida Statutes, the Code of Ethics for Public Officers and Employees.
Respondent first met Maurice Warren at an Elks Club function in early 1995. At this initial meeting, Mr. Warren
mentioned to Respondent that he had a business proposition, but did not specify the nature of the business or any details related thereto. In or about June 1995, Mr. Warren met with Respondent and disclosed to him information about his proposed business venture. Mr. Warren told Respondent about Civil Aviation Academy, Inc. (CAA), a company that he had formed, and about his plans to establish a flight school. Moreover, Mr. Warren discussed the possibility of locating the school at the St.
Lucie Airport.
Later in the summer of 1995, Respondent met with
Mr. Warren and Thomas B. Furse, a colleague of Mr. Warren, to discuss their plans to locate the proposed flight school at the St. Lucie County Airport. Respondent was particularly impressed with Mr. Furse's presentation of CAA's proposal for a flight school and believed that such a project would be good for the economy of St. Lucie County.
In the summer of 1995, when the meetings between Respondent and Mr. Warren took place, CAA had developed a business plan. However, at that time, CAA was not a legal entity and appeared to have no substantial assets. CAA was incorporated by the Secretary of State on October 5, 1995.
Prior to building and operating a flight school at the St. Lucie County Airport, CAA had to comply with the requirements of the St. Lucie Airport Authority. The conceptual lease was a preliminary requirement for obtaining a lease to operate at the
St. Lucie County Airport. Recognizing this, in or about August 1995, CAA took steps to secure a conceptual lease by applying to the St. Lucie Airport Authority.
On August 22, 1995, the Board of Commissioners granted approval for CAA to be given a conceptual lease. The conceptual lease, valid for a year, was set to expire on August 22, 1996. Respondent was not present at the August 22, 1995 meeting and did not participate in the vote.
According to the conceptual lease, CAA was to "establish a full service fixed base operation on airport property." Moreover, under the terms and conditions of the conceptual lease, CAA was required to: (1) make a nonrefundable deposit of five percent of the monthly lease payment to the St. Lucie Airport Authority; (2) survey the property which was the subject of the conceptual lease; (3) develop a site plan for the property; and
(4) submit the site plan to the St. Lucie County Planning and Zoning Board. Once these conditions were met, the St. Lucie Airport Authority was obligated to issue a lease to CAA.
An integral part of CAA's plan to establish and operate a flight school at the St. Lucie County Airport involved purchasing an already existing flight school. At some point, CAA sought to purchase Pro-Flite, an accredited and established flight school, located in Vero Beach, Florida. Mr. Warren believed that by purchasing an accredited and established school, CAA could begin operating its flight school much sooner.
At the time CAA was attempting to purchase Pro-Flite, CAA was aware that Pro-Flite had existing leases at the Vero Beach Airport, some of which extended to 2017. Moreover, CAA
anticipated that the flight school initially would continue to operate from the Vero Beach location. However, if successful in its negotiations to purchase Pro-Flite, CAA fully expected that it would move Pro-Flite's operations to the St. Lucie County Airport as soon as was practical
Respondent became involved with CAA on September 21, 1995, when he gave Mr. Warren $5,000 cash as seed money for CAA. Respondent believed that at least part of the funds would be used to cover the travel expenses of a person from whom CAA was seeking financial backing. Also, part of Respondent's $5,000 was used to pay all or part of the $3,267 deposit that CAA was required to pay the St. Lucie Airport Authority under the terms of the conceptual lease.
In exchange for the $5,000 that Respondent gave to Mr. Warren, Mr. Warren gave Respondent a promissory note with a
face amount of $5,000. The promissory note, given to Respondent by Mr. Warren on September 21 or 22, 1995, listed the borrower as CAA and was signed by Maurice Warren. Under the terms of the promissory note, Respondent would be repaid the $5,000, at an interest rate of nine percent, on September 22, 2000. Although the face amount of the promissory note was $5,000, the value of the note between September and December of 1995, is unknown.
However, as of April 1996, it was determined that the promissory note had no value.
In addition to the promissory note that Mr. Warren gave
Respondent, Mr. Warren offered and wanted to give Respondent 500 shares of CAA stock. In response to the offer of stock in CAA, Respondent told Mr. Warren that he did not want shares of CAA
stock and further indicated that this might create a conflict of interest.
On September 25, 1995, Respondent obtained a power of attorney from Margaret Mansfield, the mother of his late first wife. The durable general power of attorney authorized Respondent to act for Ms. Mansfield and in her "name, place, and stead." On the date that the power of attorney was executed, Ms. Mansfield was eighty-three years old and resided in
Respondent's home. Ms. Mansfield had lived with Respondent since 1977.
At some point, Respondent asked Margaret Mansfield if she wanted shares of the CAA stock. According to Respondent, Ms. Mansfield told Respondent to "do what he wanted."
Subsequently, Respondent asked Mr. Warren to issue the 500 shares of stock in his ex-mother-in-law's name. Mr. Warren complied with the Respondent's request.
Pursuant to the aforementioned power of attorney, Respondent signed Ms. Mansfield's name on the November 16, 1995, CAA "Stockholders Agreement" and on the December 22, 1995, CAA "Stock Subscription Agreement." Ms. Mansfield was never personally involved in either of these transactions or any other business of CAA.
On December 12, 1995, at the end of a meeting of the Board of Commissioners, Respondent announced that a gentleman by the name of Maurice Warren had been in attendance at the meeting,
but had left after a couple of hours. Respondent mentioned that Mr. Warren was associated with the flight school being planned for the St. Lucie County Airport and then urged other commissioners to be supportive of the project. The particular issue being addressed at that time involved a request Mr. Warren recently had made to individual commissioners concerning the proposed flight school. Mr. Warren apparently had invited commissioners to come to the St. Lucie County Airport on December 18, 1995, for his public announcement regarding the flight school.
At no time during the December 12, 1995, meeting of the Board of Commissioners did Respondent indicate that he was involved with Mr. Warren, CAA, and/or the proposed flight school.
In or about March 1996, Respondent learned that CAA had been unable to obtain the financial support that it needed to establish its proposed flight school. At about this time,
Mr. Warren contacted Respondent and asked him to assist CAA in purchasing Pro-Flite, a flight school located in Vero Beach, Florida. Respondent agreed to assist CAA in its effort to purchase Pro-Flite.
In or about March 1996, when Respondent agreed to provide such assistance, he believed that CAA would be operating its proposed flight school in Vero Beach, Florida. Because Vero Beach is located in Indian River County, Respondent did not view his involvement with CAA as a "problem."
On March 22, 1996, at a meeting of the CAA Board of Directors, Respondent was appointed to the CAA Board of Directors and also elected to serve as secretary of the CAA Board. Respondent was present at this meeting.
When Respondent became a director and the secretary of CAA, CAA's conceptual lease remained in effect and the company was moving forward with its attempt to obtain a lease. Moreover, during the time Respondent was a director and the secretary of CAA, CAA was taking steps to purchase Pro-Flite and to eventually move the flight school to St. Lucie County Airport.
After being elected to the CAA Board of Directors, Respondent followed through on his promise to assist CAA in its efforts to acquire Pro-Flite. In this regard, Respondent accompanied Mr. Warren on visits to the Pro-Flite facility in Vero Beach, Florida, and to financial institutions that might provide funds for the acquisition. On at least one occasion, Mr. Warren, Respondent and two other CAA investors went to Sun Bank to seek financing for the purchase of Pro-Flite. During this meeting, Respondent learned that only two people in attendance, Respondent and one of the other CAA investors, had
sufficient assets to collateralize a loan in the amount necessary to purchase Pro-Flite.
In or about April 1996, Respondent withdrew his support of CAA's proposed acquisition of Pro-Flite. The basis of Respondent's decision, as articulated in his April 19, 1996,
letter to Mr. Warren, was because of Respondent's concerns about Mr. Warren's ability to provide leadership to CAA and his business practices.
After withdrawing his support from CAA and its proposed acquisition of Pro-Flite, Respondent and another CAA investor formed another company. The newly formed company obtained a loan from a Vero Beach bank to keep Pro-Flite operating while the principals attempted to negotiate the purchase of the flight school. However, Respondent's new company never purchased Pro- Flite.
After Mr. Warren received Respondent's April 19, 1996, letter and learned of Respondent's forming a new company and attempting to purchase Pro-Flite, the relationship between the two men became acrimonious.
Although Respondent left CAA and withdrew his support of the Pro-Flite purchase, CAA's conceptual lease remained in effect. In or about May 1996, CAA apparently determined that it needed additional time in which to meet the conditions set out in the conceptual lease and, thus, requested that its conceptual lease be extended to December 1, 1996. At its May 14, 1996 meeting, the St. Lucie Airport Authority considered and approved CAA's request for an extension. Respondent abstained from voting on CAA's extension request, and stated that the reason for his abstaining was that he had previously been associated with CAA. On June 10, 1996, Respondent filed a Memorandum of Voting
Conflict regarding the CAA extension request.
While the conceptual lease was in effect, Curtis King, Director of the St. Lucie County Airport, went to Respondent and told him that CAA was "running behind" in complying with the conditions set forth in the conceptual lease and asked Respondent if CAA "could speed this up." After indicating that there was a possibility that CAA would be unable to meet the deadlines, Respondent asked Mr. King whether CAA might receive a refund of its "nonrefundable" deposit of $3,267 paid pursuant to the terms of the conceptual lease. Respondent then indicated to Mr. King that he had money invested in CAA.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject mater of this proceeding. Section 120.57(1), Florida Statutes.
Section 112.322, Florida Statutes and Rule 34-5.0015, Florida Administrative Code, authorize the Commission to conduct investigations and to make public reports on complaints concerning violations of Part III, Chapter 112, Florida Statutes, the Code of Ethics for Public Officers and Employees.
The burden of proof, absent a statutory directive to the contrary, is on the party asserting the affirmative of the issue of the proceedings. Department of Transportation v. J.W.C. Co., Inc., 396 So. 2d 778 (Fla. 1st DCA 1981); Balino v. Department of Health and Rehabilitative Services, 348 So. 2d 349
(Fla. 1st DCA 1977). In this proceeding, it is the Commission, through its Advocate, that is asserting the affirmative: that the Respondent violated Section 112.313(7)(a), Florida Statutes, and Article II, Section 8, Florida Constitution. Therefore, the Commission must establish by clear and convincing evidence the elements of the alleged violations. Lantham v. Florida Commission on Ethics, 694 So. 2d 83 (Fla. 1st DCA 1997), citing Department of Banking and Finance v. Osborne Stern, 670 So. 2d 932 (Fla. 1996) and Ferris v. Turlington, 510 So. 2d 297 (Fla.
1987).
In Evans Packing Co. v. Dept. Of Agriculture and Consumer Services, 550 So. 2d 112, 116, n. 5 (Fla. 1st DCA 1989), the court explained:
"[C]lear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the evidence must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact the firm belief of [sic] conviction, without hesitancy, as to the truth of the allegations sought to be established. Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983).
It has been alleged that Respondent had a contractual relationship with an entity, CAA, in violation of Section 112.313(7)(a), Florida Statutes. That section provides the following:
CONFLICTING EMPLOYMENT OR CONTRACTUAL
RELATIONSHIP. (a) No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he is an officer or employee, excluding those organizations and their officers who, when acting in their official capacity, enter into or negotiate a collective bargaining contract with the state or any municipality, county, or other political subdivision of the state; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his private interests and the performance of his public duties or that would impede the full and faithful discharge of his or her public duties.
Based on the foregoing, Section 112.313(7)(a), Florida Statutes, is violated when either or both of the following situations occur: (1) A public officer or employee is employed by or has a contractual relationship with a business entity or an agency that is subject to regulation of or doing business with the agency of which the person is an officer or employee; and (2) a public officer or employee has an employment or contractual relationship that creates a continuing or frequently recurring conflict between the person's private interests and the performance of his public duties or that impedes the full and faithful discharge of his public duties. Here, it is alleged that Respondent's actions constitute the conduct proscribed by both parts of Section 112.313(7)(a), Florida Statutes.
In order for it to be concluded that the Respondent violated the first part of Section 112.313(7)(a), Florida Statutes, the Advocate must establish the following elements:
The Respondent must have been a public officer or employee.
The Respondent must have been employed by or have had a contractual relationship with a business entity or an agency.
Such business entity or agency must have been subject to the regulation of, or doing business with, the agency of which the Respondent was an officer or employee.
With regard to the first element, the parties have stipulated that Respondent, as a Commissioner of the Board of Commissioners and a member of the St. Lucie Airport Authority,
was a public officer subject to the requirements of Part III, Chapter 112, Florida Statutes.
As to the second element, the Advocate has established by clear and convincing evidence that Respondent had not one, but several contractual relationships with CAA. These contractual relationships arose from Respondent's serving on the CAA Board of Directors; acting on behalf of a CAA stockholder pursuant to a durable power of authority; and receiving a promissory note in exchange for giving CAA $5,000.
First, it is undisputed that Respondent served on the CAA Board of Directors and was also elected secretary. As an officer and director of CAA, Respondent had a fiduciary relationship with CAA as well as its stockholders and, therefore, was obligated to manage the affairs of CAA in a manner that best served those interests. The duties and obligations imposed on Respondent by virtue of his serving as a CAA officer and director constituted a contractual relationship between Respondent and CAA.
Second, Respondent had a contractual relationship with CAA by virtue of the 500 shares of stocks issued to Margaret Mansfield over which he had complete control. It is well established that the ownership of stock creates a contractual relationship between the stockholder and the company. 8A Fla Jur 2d Business Relationships, Section 360. Thus, there is a contractual relationship between Ms. Mansfield and CAA. However,
in this case, although the 500 shares of stock were issued to Margaret Mansfield, at the time of issuance, Respondent had a durable power of attorney on behalf of Ms. Mansfield. Because the power of attorney authorized Respondent to act for
Ms. Mansfield, Respondent maintained control of the stock. By virtue of Respondent's acting for Ms. Mansfield, and in her "name, place, and stead," the contractual relationship between Ms. Mansfield, as a CAA stockholder, and CAA also exists as to Respondent.
Finally, the promissory note given to Respondent in exchange for $5,000 constitutes a contractual relationship between the Respondent and CAA. There is no dispute that Respondent received the promissory note from Mr. Warren and that under the terms thereof, CAA promised to repay Respondent $5,000 plus interest, on September 22, 2000. Although, due to CAA's financial status, the note was ultimately unenforceable, it still represented a valid contract between the Respondent and CAA and/or Mr. Warren.
Based upon the Respondent's status as a director and the secretary of CAA, his control of the 500 shares of stock issued to Ms. Mansfield, and the promissory note executed pursuant to a loan made by Respondent to CAA, the Respondent had contractual relationships with CAA. Thus, the Advocate has established the second element necessary to prove a violation of the first part of Section 112.313(7)(a), Florida Statutes.
Having established that Respondent has a contractual relationship with a company, the Advocate must next establish the third element in order to prove that Respondent violated the first portion of Section 112.313(7)(a), Florida Statutes. The third element requires that the Advocate establish that CAA, the company with which Respondent had a contractual relationship, was doing business with and being regulated by Respondent's agency, the St. Lucie Airport Authority.
The operations at the St. Lucie County Airport, including those proposed by CAA, are under the jurisdiction of the St. Lucie Airport Authority. Therefore, in order to develop and operate a flight school at St. Lucie County Airport, CAA was obligated to comply with the requirements of the St. Lucie Airport Authority.
It was established by clear and convincing evidence that CAA planned to operate a flight school at the St. Lucie County Airport. To this end, CAA applied to the St. Lucie Airport Authority for and was granted a conceptual lease, the preliminary step required prior to being given a lease to operate its flight school at the St. Lucie County Airport. CAA also requested and was granted an extension of that conceptual lease. CAA's efforts in this regard were designed to ultimately result in the company's obtaining a lease to operate at the St. Lucie County Airport.
To accomplish its objective, CAA had to work closely
with the Board of Commissioners and the St. Lucie Airport Authority. It was the St. Lucie Airport Authority that would determine whether CAA had complied with the conditions in the conceptual lease. If the conditions were met, the lease with CAA would have to be executed by the St. Lucie Airport Authority.
Based on the foregoing, the Advocate has established by clear and convincing evidence that CAA's transactions constituted doing business with and being regulated by the St. Lucie Airport Authority in violation of Section 112.313(7)(a), Florida Statutes.
Next, it is alleged that Respondent violated the second part of Section 112.313(7)(a), Florida Statutes, by having a contractual relationship that creates a continuing or frequently recurring conflict between his private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties. In order to prove this allegation, the Advocate must establish the following elements:
The Respondent must have been a public officer or employee.
The Respondent must have held employment or a contractual relationship that will:
create a continuing or frequently recurring conflict between the Respondent's private interests and the performance of the Respondent's public duties;
or
impede the full and faithful discharge of the Respondent's public duties.
For the reason stated in paragraph 36, it has been established that Respondent is a public officer. Therefore, the
first element has been established.
As stated in paragraph 41, it has been established that Respondent had a contractual relationship with CAA. Thus, the second element necessary to establish a violation of the second part of Section 112.313(7)(a), Florida Statutes, has been proven.
The third element that must be established to prove a violation of the second part of Section 112.313(7)(a), Florida Statutes, is that Respondent's contractual relationship with CAA created a continuing or frequently recurring conflict between his private interests and the performance of his public duties or impeded the full and faithful discharge of his duties.
For purposes of determining if a contractual relationship create a continuing or frequently recurring "conflict", guidance is provided in Section 112.312(8), Florida Statutes. That section defines "conflict" or "conflict of interest" as a situation in which regard for a private interest tends to lead to disregard of a public duty or interest.
A determination of a violation of Section 112.313(7)(a), Florida Statutes, requires an examination of the nature and extent of the public officer's duties together with a review of his private employment to determine whether the two are compatible, separate and distinct, or whether they coincide to create a situation which "tempts dishonor." Zeweck v. State Commission on Ethics, 409 So. 2d 57, 61 (Fla. 4th DCA 1982).
In the instant case, Respondent's relationship with CAA and his position as a Commissioner on the Board of Commissioners
and as a member of the St. Lucie Airport Authority imposed different duties and obligations. Where such separate and distinct duties and interests exist, a situation a created which "tempts dishonor". There is evidence of at least two such situations in this case. First, on December 12, 1995, at the meeting of the Board of Commissioner's, Respondent urged his fellow commissioners to support CAA's attempts to open a flight school at the St. Lucie County Airport. However, the Respondent failed to announce to the other commissioners that he had made a
$5,000 loan to or investment in the company. On another occasion, the Respondent spoke with Mr. Curtis King, the St. Lucie County Airport Manager, about CAA's getting a refund of its "nonrefundable" deposit of $3,267 when it appeared that CAA might not meet the conditions of the conceptual lease. While there was no evidence the Respondent pressured Mr. King regarding refund, the Respondent's interests in CAA and his public duty coincided to produce a situation which "tempted dishonor."
The Advocate established by clear and convincing evidence that Respondent violated Section 112.313(7)(a), Florida Statutes, in that he had: (1) a contractual relationship with a business entity that was both regulated by, and doing business with, his agency; and, (2) a contractual relationship with a business entity which created a continuing and frequently recurring conflict between his private interests and the performance of his public duties and impeded the full and
faithful discharge of his public duties.
It is next alleged that Respondent violated Article II, Section 8, Florida Constitution, by failing to list the
promissory note on his 1995 Full and Public Disclosure of Financial Interests. That provisions states:
(a) All elected constitutional officers and candidates for such offices and, as may be determined by law, other public officer, candidates, and employees shall file full and public disclosure of their financial interests.
* * *
(h) Schedule-On the effective date of this amendment and until changed by law:
(l) Full and public disclosure of financial interest shall mean filing with the secretary of state by July 1 of each year a sworn statement showing net worth and identifying each asset and liability in excess of $1,000. . . .
At hearing, no evidence was presented as to the value of the promissory note in 1995. Absent such evidence, the Advocate has not demonstrated by clear and convincing evidence that Respondent violated Article II, Section 8, Florida Constitution.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order and Public Report be entered finding that the Respondent, Kenneth Sattler, violated
Section 112.313(7)(a), Florida Statutes; imposing a civil penalty of $4,100; and issuing a public censure and reprimand.
DONE AND ENTERED this 27th day of July, 1998, in Tallahassee, Leon County, Florida.
CAROLYN S. HOLIFIELD
Filed with the Clerk of the Division of Administrative Hearings this 27th day of July, 1998.
Eric S. Scott
Assistant Attorney General Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050
All parties have the right to submit written exceptions within 15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.
