STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE,

Petitioner,

vs.

PETER H. MYERS,

Respondents.

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) Case No. 02-1763PL

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RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on July 9, 2002, by video teleconference in Tallahassee, and Daytona Beach, Florida, before the Division of Administrative Hearings, by its designated Administrative Law Judge, Barbara J.

Staros.

APPEARANCES

For Petitioner: Donna K. Ryan, Esquire

Department of Business and Professional Regulation

Division of Real Estate

400 West Robinson Street

Hurston Building-North Tower, Suite N308 Orlando, Florida 32801

For Respondent: Howard Hadley, Esquire

2352 Carolton Road

Maitland, Florida 32751

STATEMENT OF THE ISSUES

Is Respondent, Peter H. Myers, guilty of the allegations contained in the Administrative Complaint issued by Petitioner and, if so, what is the appropriate penalty.

PRELIMINARY STATEMENT

Petitioner, in Count I of its Administrative Complaint, accuses Respondent, Peter H. Myers, of failure to properly prepare the required monthly escrow statement reconciliations in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code, and therefore in violation of Section 475.25(1)(e), Florida Statutes.

Count II of the Administrative Complaint accuses Respondent of having operated as a broker without being the holder of a valid and current license as a broker in violation of Section 475.42(1)(a), Florida Statutes, and, therefore, in violation of Section 475.25(1)(e), Florida Statutes.

Based upon the foregoing, Count III of the Administrative Complaint accuses Respondent of having been found guilty for a second time of any misconduct that warrants his suspension in violation of Section 475.25(1)(o), Florida Statutes.

Respondent Myers disputed the allegations in the Administrative Complaint and timely requested an administrative hearing. The request for hearing was forwarded to the Division of Administrative Hearings on or about May 6, 2002. A hearing

was scheduled for July 9, 2002. On July 5, 2002, Respondent filed an Amendment to His Pre-Hearing Statement or in the Alternative Motion to Dismiss.

Respondent's Amendment to Pre-Hearing Statement or in the Alternative Motion to Dismiss was heard at the commencement of the hearing. Respondent was permitted to amend his pre-hearing statement; however, Respondent's Motion to Dismiss was denied.

At hearing, Petitioner presented the testimony of Gail Hand. Petitioner's Exhibits numbered 1, 3, 5, 6, 7, 10, and 11 were admitted into evidence. Petitioner's Exhibit numbered 4 was rejected.1/ Respondent testified on his own behalf and presented the testimony of Joseph Roth. Respondent's Exhibit numbered 1 was admitted into evidence.

Official recognition was taken of Chapters 20, 120, 455, and 475, Florida Statutes, and Chapter 61J-2, Florida Administrative Code.

A Transcript consisting of one volume was filed on July 29, 2002. The parties were given an opportunity to submit post- hearing submissions within 20 days of the filing of the hearing transcript. Respondent filed a Proposed Recommended Order on August 8, 2002. Petitioner filed a Proposed Recommended Order on August 15, 2002. Respondent filed a Motion to Strike Petitioner's Proposed Recommended Order. Petitioner filed a response. Upon consideration, the Motion to Strike is denied.

The parties' Proposed Recommended Orders have been considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. Petitioner is the state agency charged with the responsibility and duty to prosecute administrative complaints pursuant to Section 20.165 and Chapters 120, 455, and 475, Florida Statutes.

2. Respondent Myers is a licensed real estate broker, having been issued license number BK-0646846.

3. Ocean Village Sales & Rentals, Inc. (Ocean Village) is a real estate broker corporation and Respondent is the qualifying broker for said corporation.

   Background

   
   

4. Petitioner and Respondent were involved in earlier disciplinary cases in 1998 and 1999. On or about December 7, 1999, Petitioner and Respondent entered into a Stipulation which resolved DBPR Case Nos. 98-81236 and 99-80423. The Stipulation placed Respondent on probation for a period of one year from the effective date of the Final Order of the Florida Real Estate Commission (FREC), which adopted the stipulation and was issued on or about January 19, 2000. The Stipulation read in pertinent part as follows:

   Respondent agrees not to hold or maintain any escrow, trust or real estate related escrow or trust funds for the one(1) year

   probationary period. Respondent is permitted to be a signatory on the operating and payroll accounts for his brokerage firm only. Respondent shall place all escrow, trust or real estate related funds with a title company, attorney, or other proper depository as permitted under Chapter 475, Fla. Stat., and Fla. Admin. Code r. 61J2.

   
   

   Respondent further agrees not to be a signatory on any escrow, trust or real estate related account with the exception of the operating and payroll accounts for his brokerage firm for the one (1) year probationary period.

   
   

5. In compliance with the terms of the stipulation, Respondent placed his escrow account with Joseph Roth, a certified public accountant and licensed real estate broker in the State of Florida.

6. In the Stipulation, Respondent admitted to, among other things, failure to prepare the required written monthly escrow statement reconciliations in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code, and, therefore, in violation of Section 475.25(1)(e), Florida Statutes.

   Escrow accounts audit

   
   

7. Gail Hand is an Investigation Specialist II with the Department of Business and Professional Regulation (the department). She has approximately 16 years of regulatory and investigative experience with the department. When she started working with the department, she conducted from 20 to 30 trust

   account audits per month. She routinely conducts audits and inspections of the records of real estate brokers.

8. When reviewing escrow accounts, Ms. Hand's review of escrow accounts has two components. First, she reviews the bank statement reconciliations which compares the statement balance to the checkbook balance. Next she reviews a comparison of the bank statement reconciliations with the broker's total trust liability. The broker's total trust liability is the total of all the money that the broker is holding in his trust or escrow account.

9. On or about January 26, 2001, Ms. Hand conducted an office inspection and escrow account audit of Respondent's business, Ocean Village. Respondent and his daughter were present. During this inspection and audit, Ms. Hand requested to inspect financial documents of the company. Respondent and his daughter provided all documents requested and were very cooperative during the course of the audit. Ms. Hand inspected the November and December 2000 bank reconciliation statements from the escrow trust account of Ocean Village and determined that they were properly prepared.

10. However, Ms. Hand determined that the determination of the broker's trust liability was not properly prepared in that she could not identify the broker's total trust liability from a review of the documents provided by Respondent. The

    calculations in Respondent's financial records included broker's money, bank fees, and negative owner balances. According to Ms. Hand, the reconciled checkbook to bank statement balance should be compared to a balance that does not include broker's money, bank fees or negative owner balances. Because of this, she could not identify the total broker's trust liability. She normally does not have trouble identifying a broker's total trust liability when conducting an audit.

11. During the audit, Respondent could not identify the total broker's trust liability. Respondent deferred to his accountant, Mr. Roth. Ms. Hand did not discuss the financial documents which she reviewed as part of the audit with Mr. Roth because, "Mr. Myers was responsible."

    License renewal

    
    

12. Respondent's renewal fees for his corporate registration and his individual broker's license became due in March 1999. Respondent renewed his corporate registration in March 1999 but failed to renew his individual broker's license. Respondent did not renew his individual broker's license until February 2001. At that time, he paid for the time period in which he was in arrears and for another 24 months in the future, as well as a late fee or penalty.

13. Respondent continued to conduct real estate transactions during the period of time that his individual broker's license was in involuntary inactive status.

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this proceeding in accordance with Sections 120.569 and 120.57, Florida Statutes.

15. The Department of Business and Professional Regulation, Division of Real Estate, has the duty to regulate real estate licenses in Florida pursuant to Chapter 475, Florida Statutes. Petitioner has the burden of proving the material allegations of the Administrative Complaint by clear and convincing evidence. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

16. Because he is a broker, Respondent is charged with the knowledge of Chapter 475, Florida Statutes. Wallen v. Florida Department of Professional Regulation, 568 So. 2d 975 (Fla. 3rd DCA 1990).

17. Section 475.25(1)(e), Florida Statutes, authorizes the FREC to take disciplinary action against a licensee who has violated any of the provisions of Chapter 475, Florida Statutes, or any lawful order or any rule made or issued under Chapter 455 or 475, Florida Statutes.

18. Rule 61J2-14.012, Florida Administrative Code, reads as follows:

    61J2-14.0212 Broker's Records.

    
    

    1. A broker who receives a deposit as previously defined shall preserve and make available to the BPR, or its authorized representative, all deposit slips and statements of account rendered by the depository in which said deposit is placed, together with all agreements between the parties to the transaction. In addition, the broker shall keep an accurate account of each deposit transaction and each separate bank account wherein such funds have been deposited. All such books and accounts shall be subject to inspection by the DPR or its authorized representatives at all reasonable times during regular business hours.

       
       

    2. Once monthly, a broker shall cause to be made a written statement comparing the broker's total liability with the reconciled bank balance(s) of all trust accounts. The broker's trust liability is defined as the sum total of all deposits received, pending and being held by the broker at any point in time. The minimum information to be included in the monthly statement- reconciliation shall be the date of reconciliation was undertaken, the date used to reconcile the balances, the name of the bank(s), the name(s) of the account(s), the account number(s), the account balance(s) and date(s), deposits in transit, outstanding checks identified by date and check number, an itemized list of the broker's trust liability, and any other items necessary to reconcile the bank account balance(s) with the balance per the broker's checkbook(s) and other trust account books and records disclosing the date of receipt and the source of the funds.

       The broker shall review, sign and date the monthly statement-reconciliation.

       
       

    3. Whenever the trust liability and the bank balances do not agree, the reconciliation shall contain a description or explanation for the difference(s) and any corrective action taken in reference to shortages or overages of funds in the account(s). Whenever a trust bank account record reflects a services charge or fee for a non-sufficient check being returned or whenever an account has a negative balance, the reconciliation shall disclose the cause(s) of the returned check or negative balance and the corrective action taken.

       
       

19. The evidence established that Respondent committed a technical violation of Rule 61J2-14.012, Florida Administrative Code, and therefore a violation of Section 475.25(1)(e), Florida Statutes. However, Respondent's actions were in strict accordance with a Final Order issued by FREC which prohibited him from holding or maintaining any escrow or trust account.

20. Section 475.25(1)(o), Florida Statutes, provides that discipline may be imposed if it is found that a licensee "has been found guilty, for a second time, of any misconduct that warrants his suspension." The evidence established that Respondent committed a technical violation of Rule 61J2-14.012, Florida Administrative Code. Because this was one basis for the Stipulation and Final Order in the earlier cases involving Petitioner and Respondent, this constitutes a second violation by Respondent for the same offense.

21. Section 475.42(1)(a), Florida Statutes, states that "no person shall operate as a broker or salesperson without being the holder of a valid and current active license." The evidence established that Respondent operated as a broker during the period of time that his broker's license had lapsed due to failure to review in a timely manner in violation of Section 475.42(1)(a), and, therefore, of Section 475.25(1)(e), Florida Statutes.

22. Rule 61J2-24.001, Florida Administrative Code, sets forth a recommended range of penalties for licensees who violate Chapters 455 or 475, Florida Statutes. The Rule states that for purposes of this Rule, the order of penalties, ranging from lowest to highest is: reprimand, fine, probation, suspension, and revocation or denial. The range of penalties for a violation of Section 475.25(1)(e), Florida Statutes, is from an eight-year suspension to revocation and an administrative fine of $1000.00.

23. For a violation of Section 475.25(1)(o), Florida Statutes, the usual recommended range of penalties is an administrative fine of $500.00 and a one-year suspension to revocation.

24. For a violation of Section 475.42(1)(a), Florida Statutes, the recommended range of penalties is a three-year suspension to revocation.

25. Further, aggravating or mitigating circumstances may be considered in arriving at an appropriate penalty, including deviation from these guidelines in imposing or recommending discipline.

26. The circumstances surrounding Respondent's violation of Rule 61J2-14.012, Florida Administrative Code, regarding broker's records, establish mitigation for purposes of the appropriate penalty. The fact that Respondent followed the letter of a FREC Final Order which prohibited him from handling the escrow accounts and relied upon an accountant in accordance with the FREC Order establishes mitigating circumstances to impose a lesser penalty than recommended in Rule 61J2-24.001, Florida Administrative Code.

27. Petitioner proved that Respondent violated Section 475.42(1)(a), Florida Statutes, because he allowed his individual broker's license to lapse. In mitigation, once discovering his error, Respondent paid the license fee in arrears as well as a late fee/penalty.

28. Petitioner recommends a penalty of an administrative fine of $2,500.00. Petitioner does not recommend any period of suspension. Based upon the foregoing, the penalty sought by Petitioner is reasonable and accepted as appropriate. Walker v.

Department of Business and Professional Regulation, 705 So. 2d 652 (Fla. 5th DCA 1998).

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, the evidence of record and the demeanor of the witnesses, it is

RECOMMENDED:

That a final order be entered by the Florida Real Estate Commission finding the Respondent, Peter H. Myers, guilty of violating Sections 475.25(1)(e) and (o), and 475.42(1)(a), Florida Statutes, and imposing a fine of $2,500.00.

DONE AND ENTERED this 4th day of September, 2002, in Tallahassee, Leon County, Florida.

BARBARA J. STAROS

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 4th day of September, 2002.

ENDNOTE

1/ Petitioner did not offer Exhibits numbered 2, 8, or 9.

COPIES FURNISHED:

Christopher J. De Costa, Esquire Department of Business and

Professional Regulation

400 West Robinson Street

Hurston Building North Tower, Suite N308 Orlando, Florida 32801

Howard Hadley, Esquire 2352 Carolton Road

Maitland, Florida 32751-3625

Dean Saunders, Chairperson Florida Real Estate Commission

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900

Hardy L. Roberts, III, General Counsel Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-2202

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: 02-001763PL

Orders for Case No: 02-001763PL