STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 98-1308

) FRANCIS WALID JACOB and RENTERS ) PARADISE REALTY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on June 17, 1999, by video teleconference between Tallahassee and Miami, Florida, before Claude B. Arrington, a duly-designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Daniel Villazon, Esquire

Department of Business and Professional Regulation

Division of Real Estate Post Office Box 1900

Orlando, Florida 32802-1900

For Respondent: Harold F. X. Purnell, Esquire

Rutledge, Ecenia, Underwood, Purnell & Hoffman, P.A.

Post Office Box 551 Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

Whether Respondents are guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction in violation of Section 475.25(1)(b), Florida Statutes, as alleged in the Administrative Complaint.

PRELIMINARY STATEMENT

By Administrative Complaint filed January 22, 1998, Petitioner alleged certain facts pertaining to invoices submitted to a real estate management company by Respondent, Renters Paradise Realty, Inc., and its qualifying broker, Respondent, Francis Walid Jacob. 1/ The gravamen of the Administrative Complaint was that the invoices were for commissions for tenant referrals that had not been made. Based on those allegations, Petitioner charged Respondents with multiple violations of Section 425.25(1)(b), Florida Statutes. The multiple counts were based on each separate billing for an alleged fraudulent referral. Respondents timely requested a formal administrative hearing, the matter was referred to the Division of Administrative Hearings, and this proceeding followed.

At the formal hearing, Petitioner presented the testimony of Bruce K. Terwilliger, Philip J. Slewett, and Sabina Callwood.

Mr. Terwilliger was, at the times pertinent to this proceeding, a Vice President of Related Management Company of Florida, the

management company that received the alleged falsified billings from the Respondent corporation for referrals to Intercoastal Towers, an apartment complex managed by Related Management Company. Mr. Slewett is a former salesperson of the Respondent corporation (and was one of the initial Respondents in this proceeding). Mr. Callwood was a tenant of Intercoastal Towers. Petitioner presented 18 exhibits, each of which, including the deposition of Inbal Frank, was admitted into evidence. Official recognition was taken of all relevant statutes and rules.

Respondents offered no witnesses and no exhibits.

A Transcript of the proceedings was filed on July 12, 1999.

The Petitioner and the Respondent filed proposed recommended orders, which have been duly considered by the undersigned in the preparation of this Recommended Order.

FINDINGS OF FACT

1. Petitioner is the agency of the State of Florida charged with the responsibility of regulating the practice of real estate pursuant to the provisions of Chapter 475, Florida Statutes, and other pertinent provisions of law and rules.

2. Respondent, Francis Walid Jacob, is a duly-licensed real estate broker having been issued license number 0569854.

3. Respondent, Renters Paradise Realty, Inc., is a duly- licensed real estate brokerage company, having been issued license number 0269583.

4. At all times pertinent to this proceeding, Respondent Jacob was the qualifying broker for the corporate Respondent.

5. At all times pertinent to this proceeding, Philip Jay Slewett was a licensed real estate salesperson employed by the corporate Respondent. Mr. Slewett's license number was 0614888.

6. Related Management Services, Inc. (RMS), was, at all times pertinent to this proceeding, a real estate management company. Intercoastal Towers, an apartment complex, was one of the properties managed by RMS. At all times pertinent to this proceeding, Bruce Terwilliger was the managing Vice President of RMS.

7. At all times pertinent to this proceeding, RMS had a practice of paying commissions to real estate professionals who referred tenants to Intercoastal Towers. The practice required that the real estate professional visit the apartment complex with a client and that the client subsequently lease an apartment at Intercoastal Towers.

8. RMS became suspicious that certain real estate professionals had submitted invoices for clients that they had not referred to the Galahads Apartments, another apartment complex managed by RMS. Because the leasing director at the Galahads had previously been the leasing director for Intercoastal Towers, Mr. Terwilliger investigated whether his company had paid for falsified invoices at the Galahads and at Intercoastal Towers.

9. During his investigation, Mr. Terwilliger reviewed all billings from real estate professionals for commissions based on referrals to Intercoastal Towers, and he interviewed residents to determine whether the billing real estate professional had referred the tenant. Signed statements, including affidavits, were collected during the course of Mr. Terwilliger's investigation, and an investigation by the Miami-Dade Police Department. Based primarily on what Mr. Terwilliger was told by the various residents, he concluded that RMS had paid commissions to the Respondent corporation based on invoices for professional services that had not been rendered. Respondents and the salespersons who generated the billing for a commission split the commission.

10. Mr. Terwilliger met with Respondent Jacob about these invoices. Afterwards, Respondent Jacob had his company reimburse RMS for the invoices at issue in this proceeding.

11. Phillip Slewett was a real estate salesperson employed by the Respondent corporation at the times pertinent to this proceeding. Mr. Slewett admitted that he and another real estate salesperson employed by the Respondent corporation generated the falsified invoices to RMS. Mr. Slewett also implicated two employees of RMS in this billing scam. The evidence did not establish that Respndent Jacob or the Respondent corporation knew or should have known that the invoices generated by Mr. Slewett and the other salesperson were false.

    CONCLUSIONS OF LAW

    
    

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

13. Petitioner has the burden of proving the alleged violations against each Respondent by clear and convincing evidence. Department of Banking and Finance v. Osborne, Stern & Co., 670 So. 2d 932, 935 (Fla. 1996).

14. Section 475.25(1)(b), Florida Statutes, subjects a real estate professional to discipline where the real estate professional has been guilty of the following conduct:

    . . . fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction in this state or any other state, nation, or territory. . . .

    
    

15. Petitioner stipulated that existing law requires it to prove by clear and convincing evidence that Respondents knowingly and intentionally committed acts in violation of Section 475.25(1)(b), Florida Statutes. The evidence failed to establish that either Respondent knew or should have known that salespersons employed by the Respondent corporation were generating falsified invoices. Consequently, it is concluded that Petitioner failed to establish that either Respondent violated Section 475.25(1)(b), Florida Statutes, as alleged by Petitioner.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that Petitioner enter a final order dismissing the Administrative Complaint against both Respondents.

DONE AND ENTERED this 2nd day of November, 1999, in Tallahassee, Leon County, Florida.

CLAUDE B. ARRINGTON

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 2nd day of November, 1999.

ENDNOTE

1/ The Administrative Complaint named as Respondents certain salespersons employed by the Respondent corporation. The salespersons were subsequently dismissed as Respondents.

COPIES FURNISHED:

Daniel Villazon, Esquire Department of Business and

Professional Regulation Division of Real Estate Post Office Box 1900

Orlando, Florida 32802-1900

Harold F. X. Purnell, Esquire Rutledge, Ecenia, Underwood,

Purnell & Hoffman, P.A. Post Office Box 551 Tallahassee, Florida 32301

Herbert S. Fecker, Director Division of Real Estate Department of Business and

Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900

Barbara D. Auger, General Counsel Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

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.

Docket for Case No: 98-001308

Orders for Case No: 98-001308