STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

Petitioner,

vs.

JOHN WALKER,

Respondent.

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) Case No. 06-3781PL

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RECOMMENDED ORDER

A duly-noticed final hearing was held in this case by Administrative Law Judge T. Kent Wetherell, II, on November 7, 2006, in St. Petersburg, Florida.

APPEARANCES

For Petitioner: Sorin Ardelean, Esquire

Department of Business and Professional Regulation

400 West Robinson Street, Suite 810N Orlando, Florida 32801-1757

For Respondent: Daniel Villazon, Esquire

Daniel Villazon, P.A. 1020 Verona Street

Kissimmee, Florida 34741

STATEMENT OF THE ISSUE

The issue is whether Respondent violated Section 475.25(1)(e) and (1)(m), Florida Statutes, and Florida

Administrative Code Rule 61J2-2.027(2), and, if so, what discipline should be imposed.

PRELIMINARY STATEMENT

The Department of Business and Professional Regulation (Department) alleged in an Administrative Complaint dated November 15, 2005, that Respondent violated Section 475.25(1)(e) and (1)(m), Florida Statutes, and Florida Administrative Code Rule 61J2-2.027(2), by failing to disclose a 1972 felony attempted robbery conviction on his license application. On or about December 9, 2005, Respondent requested a hearing on the allegations in the Administrative Complaint.

The case was referred to the Division of Administrative Hearings (DOAH) on October 4, 2006, for the assignment of an Administrative Law Judge to conduct the hearing requested by Respondent. The record does not reflect why it took the Department 10 months to refer the case to DOAH.

The final hearing was scheduled for and held on November 7, 2006. At the hearing, the Department presented the testimony of Justin Moore. The Department’s Exhibits P-1, P-2, and P-4 were received into evidence. Respondent testified in his own behalf and did not present any other witnesses. Respondent’s Exhibits R-1 and R-2 were received into evidence.

Official recognition was taken of Section 475.25, Florida Statutes (2006),1 and Florida Administrative Code Rule 61J2-

1. The Department’s request for official recognition of various New York laws was granted, subject to the Department filing copies of the correct versions of those laws along with its proposed recommended order (PRO). See Transcript (Tr.), at 13-15. The Department subsequently “withdrew” its request for official recognition of the New York laws. See Department’s PRO, at 3.

   The one-volume Transcript of the final hearing was filed on November 22, 2006. The parties were given 10 days from that date to file PROs. The Department timely filed a PRO on December 4, 2006. Respondent filed a PRO on December 7, 2006.

   The PROs have been given due consideration.

   
   

   FINDINGS OF FACT

   
   

   1. Respondent is 58 years old. He is employed full-time as a real estate sales associate.

   2. Respondent holds an active real estate sales associate license. His license number is SL706350.

   3. The license was issued to Respondent based upon his sworn application for licensure submitted on or about March 14, 2001.

   4. Question No. 9 on the license application asked whether Respondent had “ever been convicted of a crime, found guilty, or entered a plea of guilty or nolo contendere (no contest), even if [he] received a withhold of adjudication.”

   5. The following explanation is provided as part of the question:

      This question applies to any violation of the laws of any municipality, county, state or nation, including felony, misdemeanor and traffic offenses (but not parking, speeding, inspection, or traffic signal violations), without regard to whether you were placed on probation, had adjudication withheld, were paroled, or pardoned. If you intend to answer “NO” because you believe those records have been expunged or sealed by court order pursuant to Section 943.058, Florida Statutes, or applicable law of another state, you are responsible for verifying the expungement or sealing prior to answering “NO.” (Emphasis supplied)

      
      

   6. Immediately following Question No. 9 is the following statement in all capital letters:

      YOUR ANSWER TO THIS QUESTION WILL BE CHECKED AGAINST LOCAL, STATE AND FEDERAL RECORDS. FAILURE TO ANSWER THIS QUESTION ACCURATELY MAY RESULT IN THE REVOCATION OF YOUR LICENSE OR THE DENIAL OF A REAL ESTATE LICENSE. IF YOU DO NOT FULLY UNDERSTAND THIS QUESTION, CONSULT WITH AN ATTORNEY OR THE DIVISION OF REAL ESTATE.

      
      

   7. Respondent checked the box marked “NO” for Question No.

      
      

      9 on the application that he submitted.

      
      

   8. Respondent’s negative answer to Question No. 9 was a material misstatement of his criminal record.

   9. On March 27, 1972, Respondent pled guilty to attempted robbery in the third degree in the Erie County Court in New York. The offense was a felony.

   10. On May 5, 1972, Respondent was sentenced to five years of probation for that offense. Respondent’s probation was revoked on January 14, 1974, and he was sentenced to “the care and custody of the NY State Narcotic Addiction Control Commission for an indefinite period of 60 months.” The latter sentence ran concurrently with a sentence imposed for another offense, the substance of which is not reflected in the record.

   11. On August 3, 1992, the Erie County Court issued a Certificate of Relief From Disabilities to Respondent, which relieved him of “all disabilities and bars to employment, excluding the right to be eligible for public office.” The certificate expressly states that it “shall NOT be deemed nor construed to be a pardon,” and it is limited to the “crime or offense specified [t]herein.”

   12. The Certificate of Relief From Disabilities makes no mention of expungement or sealing of the records related to the enumerated offense.

   13. The only offense enumerated in the Certificate of Relief From Disabilities is the third degree attempted robbery conviction with a sentence date of May 5, 1972. No other offenses are mentioned.

   14. On February 18, 1993, the New York Executive Department, Board of Parole, issued a Certificate of Good Conduct to Respondent. The certificate referenced three

       offenses: the third degree attempted robbery conviction discussed above; a second degree robbery conviction with a sentence date of May 8, 1975; and a federal distribution of heroine conviction with a sentence date of May 1, 1978.

   15. The purpose of the Certificate of Good Conduct was to “remove all legal bars and disabilities to employment, license and privilege except those pertaining to firearms . . . and except the right to be eligible for public office.” The certificate states that it “shall be considered permanent.”

   16. The Certificate of Good Conduct makes no mention of expungement or sealing of the records related to the enumerated offenses.

   17. Respondent testified that his negative answer to Question No. 9 was based upon his understanding of the legal effect of the Certificate of Relief from Disabilities and the Certificate of Good Conduct. Specifically, Respondent testified that although he understood that the certificates did not “remove” his criminal history or expunge his records, it was his understanding that the certificates provided him a “safe harbor” to answer “no” to Question No. 9 because all legal bars to employment had been removed by the certificates.

   18. Respondent’s understanding regarding the legal effect of the certificates and his obligation to disclose his prior

       offenses based upon the certificates was based, in part, on advice he received from an attorney in New York.

   19. Respondent knew that the Department would learn of his criminal history through the background check based upon the fingerprint card that he submitted with his license application, and he credibly testified that he did not intend to mislead the Department regarding his criminal history through his negative answer to Question No. 9.

   20. Respondent was unaware at the time he submitted his license application that the Department and/or the Florida Real Estate Commission (Commission) processed applications in which no criminal history was disclosed differently than applications in which a criminal history is disclosed.2

   21. Respondent’s understanding regarding the legal effect of the certificates was erroneous. Respondent acknowledged as much in his testimony at the final hearing (Tr. 54) and in his PRO (at ¶29).

   22. The record does not establish precise legal effect of the certificates,3 but it is inferred that the certificates restore the civil rights that Respondent lost due to his felony convictions. It is also inferred that the reason that the Certificate of Good Conduct does not mention Respondent’s misdemeanor offenses (See Endnote 5) even though it was issued after those offenses is because misdemeanor convictions

       typically do not result is the loss of civil rights as is the case with felony convictions.4

   23. Neither of the certificates expunge or seal any of Respondent’s criminal records and, contrary to his understanding at the time, the certificates did not excuse Respondent from disclosing his criminal offenses in response to Question No. 9 on the license application.

   24. The evidence clearly and convincingly establishes that Respondent was convicted of third degree attempted robbery, a felony, in 1972; that the offense was not sealed or expunged; and that Respondent failed to disclose that conviction on his license application when he answered “no” to Question No. 9.5

   25. The evidence does not clearly and convincingly establish that Respondent intentionally misrepresented or fraudulently concealed his criminal history from the Department by answering “no” to Question No. 9.6 To contrary, the evidence establishes that Respondent’s negative answer to Question No. 9 was based upon his good faith, albeit erroneous belief, that he was not required to disclose his prior criminal offenses in light of the Certificate of Relief from Disabilities and/or the Certificate of Good Conduct.

   26. It has been 34 years since Respondent’s third degree attempted robbery conviction, which is the basis of the Administrative Complaint. It has been more than 18 years since

       Respondent’s last criminal offense, which was a misdemeanor petit larceny offense.

   27. All of Respondent’s criminal offenses occurred in the state of New York. He has remained out of trouble with the law since he came to Florida in 2000.

   28. Respondent has not been the subject of any disciplinary action, other than this proceeding, since receiving his license.

   29. Respondent did not present the testimony of any character witnesses, but he credibly testified that he has completely turned his life around since the time of his criminal offenses in New York.

   30. Respondent served in the U.S. Air Force Security Service in Viet Nam. He was honorably discharged.

   31. Respondent was licensed as a mental health counselor in New York and Virginia prior to coming to Florida and obtaining his real estate sales associate license.

   32. Respondent testified that he was required to disclose his criminal background and undergo a background check in order to obtain those licenses; that he did not disclose his criminal background on the license applications based upon his understanding of the certificates described above; that his criminal background was not an issue to the licensing agencies in New York and Virginia, even though it was not disclosed on

       his license applications; and that this experience (along with the advice he received from the attorney in New York) led him to believe that his criminal records were sealed and need not be disclosed. Respondent offered no evidence to corroborate this self-serving testimony, and it is given very little weight because it is unknown how, if at all, the disclosure requirements and licensure regimes for mental health counselors in New York and Virginia compare with the disclosure requirements and licensure regime for real estate sales associates in Florida.

       CONCLUSIONS OF LAW

       
       

   33. DOAH has jurisdiction over the parties to and subject matter of this proceeding pursuant to Sections 120.569, 120.57(1), and 120.60(5), Florida Statutes.

   34. The Department, through its Division of Real Estate, is the state agency responsible for investigating and prosecuting licensed real estate professionals under Part I of Chapter 475, Florida Statutes. See § 475.021(1), Fla. Stat.

   35. The Commission is responsible for disciplining licensed real estate sales associates. See § 475.25(1), Fla. Stat. Therefore, the Final Order in this case will be issued by the Commission, not the Department.

   36. The Department has the burden to prove the allegations in the Administrative Complaint by clear and convincing evidence. See Dept. of Banking & Finance v. Osborne, Stern & Co., 670 So. 2d 932 (Fla. 1996); Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

   37. Section 475.25, Florida Statutes, provides in pertinent part:

       1. The commission may deny an application for licensure, registration, or permit, or renewal thereof; may place a licensee, registrant, or permittee on probation; may suspend a license, registration, or permit for a period not exceeding 10 years; may revoke a license, registration, or permit; may impose an administrative fine not to exceed $5,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing, if it finds that the licensee, registrant, permittee, or applicant:

          
          

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          (e) Has violated any of the provisions of this chapter or any lawful order or rule made or issued under the provisions of this chapter or chapter 455.

          
          

          * * *

          
          

          (m) Has obtained a license by means of fraud, misrepresentation, or concealment.

          
          

          § 475.25(1)(e), (m), Fla. Stat.

          
          

   38. Florida Administrative Code Rule 61J2-2.027(2)(a) requires each applicant for licensure as a real estate sales associate to disclose whether he or she was “ever convicted of a

       crime, or if any judgment or decree has been rendered against the applicant for fraud or dishonest dealings.” This rule requirement is the basis of Question No. 9 on the license application.

   39. The disclosure required by Florida Administrative Code Rule 61J2-2.027(2)(a) is necessary for the Department to determine “whether the applicant is honest, truthful, trustworthy, of good character, and bears a good reputation for fair dealings, and will likely make transactions and conduct negotiations with safety to investors and to those with whom the applicant may undertake a relation of trust and confidence.” Fla. Admin. Code R. 61J2-2.027(2). See also § 475.17(1)(a), Fla. Stat.

   40. An applicant’s failure to disclose prior criminal convictions is a violation of Florida Administrative Code Rule 61J2-2.027(2), which subjects the applicant or, in this case, the licensee, to discipline pursuant to Section 475.25(1)(e), Florida Statutes.

   41. It is not necessary to prove intent to establish a violation of the disclosure requirement in Florida Administrative Code Rule 61J2-2.027(2). All that must be proven is that the applicant had a criminal history that he or she failed to disclose.

   42. The Department met its burden of proof with respect to the violation of Florida Administrative Code Rule 61J2-2.027(2) and, hence, Section 475.25(1)(e), Florida Statutes. See Finding of Fact 24. See also Respondent's PRO, at ¶29 (conceding that Respondent violated Florida Administrative Code Rule 61J2- 2.027(2) and Section 475.25(1)(e), Florida Statutes, because "Respondent's records were not sealed as Respondent believed").

   43. In order to establish a violation of Section 475.25(1)(m), Florida Statutes, “fraud, misrepresentation, or concealment” must be proven, which requires proof of intent. See Walker v. Dept. of Business & Professional Reg., 705 So. 2d 652, 654 (Fla. 5th DCA 1998); Munch v. Dept. of Business & Professional Reg., 592 So. 2d 1136, 1143-44 (Fla. 1st DCA 1992). But cf. Dept. of Business & Professional Reg. v. Threnhauser, Case No. 01-1599PL, 2001 Fla. Div. Adm. Hear. LEXIS 2742 (DOAH Aug. 10, 2001), modified by, Final Order No. BPR-2001-04836 (FREC Nov. 29, 2001) (concluding that Section 475.25(1)(m), Florida Statutes, requires proof of an intentional act, not an intent to deceive), aff’d, 821 So. 2d 1217 (Fla. 5th DCA 2002).

   44. Intent may be proven by direct or circumstantial evidence. Walker, 705 So. 2d at 654. The Department offered only circumstantial evidence of Respondent’s intent to obtain a license by fraud, misrepresentation, or concealment. The Department failed to meet its burden of proof with respect to

       the violation of Section 475.25(1)(m), Florida Statutes. See Finding of Fact 25.

   45. Having determined that Respondent violated Florida Administrative Code Rule 61J2-2.027(2) and Section 475.25(1)(e), Florida Statutes, it becomes necessary to determine what penalty is appropriate.

   46. The applicable penalty guidelines are in Florida Administrative Code Rule 61J2-24.001. The guidelines establish “the range of penalties which normally will be imposed for each count during a formal or an informal hearing” in the absence of aggravating or mitigating circumstances. Fla. Admin. Code R. 61J2-24.001(1). The penalties range from a reprimand to revocation of the license. Id.

   47. For a violation of Section 475.25(1)(e), Florida Statutes, the “usual action of the Commission shall be to impose a penalty from an 8 year suspension to revocation and an administrative fine of $1,000.” Fla. Admin. Code R. 61J2- 24.001(3)(f). The Department is seeking a one-year suspension and a $1,000 fine in this case. See Department’s PRO, at 22-23. Respondent argues that a reprimand is appropriate. See Respondent's PRO at "Recommendation."

   48. The Commission may deviate from the “usual” penalty range based upon evidence of aggravating or mitigating circumstances including, but not limited to:

       1. The degree of harm to the consumer or public.

          
          

       2. The number of counts in the Administrative Complaint.

          
          

       3. The disciplinary history of the licensee.

          
          

       4. The status of the licensee at the time the offense was committed.

          
          

       5. The degree of financial hardship incurred by a licensee as a result of the imposition of a fine or suspension of the license.

          
          

       6. Violation of the provision of Chapter 475, F.S., wherein a letter of guidance as provided in Section 455.225(3), F.S., previously has been issued to the licensee.

       
       

       Fla. Admin. Code R. 61J2-24.001(4)(b).

       
       

   49. Application of those factors to this case warrants a lesser penalty than the “usual” range in Florida Administrative Code Rule 61J2-24.001(3)(f), particularly since the penalty sought by the Department is less than the “usual” range established in that rule.7 Furthermore, there was no evidence that Respondent’s failure to disclose his criminal background caused any harm to consumers or the public; Respondent has no disciplinary history with the Commission since receiving his license in 2001; a revocation or lengthy suspension of Respondent’s license would impose a substantial hardship on him because he relies upon his license to support his family; Respondent’s failure to diclose his criminal history was based

       upon his good faith, albeit erroneous, interpretation of the two certificates issued by the New York courts; and, in light of the lapse of time since since Respondent’s last criminal offense, there is no evidence that the public will be endangered if Respondent remains licensed.

   50. In Threnhauser, supra, the the Commission imposed a one-year suspension, a $2,000 fine, and a one-year probation for a violation similar to that in this case. In Department of Business and Professional Regulation v. Solomon, Case No. 00- 0426, 2000 Fla. Div. Adm. Hear. LEXIS 5258 (DOAH May 2, 2000; FREC July 19, 2000), the Commission imposed a 30-day suspension and a $250 fine under for a violation similar to that in this case. See also Dept. of Business & Professional Reg. v. Lozano, Case No. 04-2375PL, 2005 Fla. Div. Adm. Hear. LEXIS 796 (DOAH June 1, 2005) (recommending a 30-day suspension and $1,000 fine for a violation of Section 475.25(1)(m), Florida Statutes).

   51. The facts in Solomon are more analogous to the facts of this case than are the facts in Threnhauser. For example, the licensee’s most recent criminal conviction in Solomon was eight years prior to the filing of his license application, whereas the licensee in Threnhauser was convicted of a criminal offense in the month prior to the submittal of his license application. Thus, imposition of a penalty similar to that

       imposed in Solomon is more appropriate in this case than the imposition of a penalty similar to that in Threnhauser.

   52. An administrative fine and a 30-day suspension of Respondent’s license, followed by the placement of Respondent on probation for one year is an adequate penalty for Respondent’s failure to disclose his criminal record on his license application. See Solomon, supra; Lozano, supra.

   53. The probation shall be subject to "such conditions as the Commission may specify.” Fla. Admin. Code R. 61J2- 24.001(2).

   54. The Department also requests the imposition of its investigative costs against Respondent in the amount of

       $1,237.50. See Department’s PRO, at 22, 23. No authority is cited for the request.

   55. Part I of Chapter 475, Florida Statutes, which governs the regulation of real estate professionals, does not specifically provide for an assessment of investigative costs as part of the successful prosecution of an administrative complaint against a licensed real estate sales associate.

   56. Section 455.227(3)(a), Florida Statutes, generally authorizes the Department to recover “costs related to the investigation and prosecution of the case excluding costs associated with an attorney’s time.” That statute applies to

       “boards,” which is defined to include the Commission. See § 455.01(1), Fla. Stat.

   57. The record contains no evidence regarding the amount of the Department’s investigative costs; the basis of the

$1,237.50 requested by the Department is unknown. The amount of costs to be imposed will need to be established by the Commission if the parties are unable to reach an agreement on the issue.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that the Commission issue a final order that:

1. finds Respondent not guilty of violating Section 475.25(1)(m), Florida Statutes (Count I of the Administrative Complaint);

2. finds Respondent guilty of violating Florida Administrative Code Rule 61J2-2.027(2) and, hence, Section 475.25(1)(e), Florida Statutes (Count II of the Administrative Complaint);

3. imposes an administrative fine of $1,000;

   
   

4. suspends Respondent’s license for 30 days;

   
   

5. places Respondent on probation for one year after the end of the suspension period; and

6. imposes the costs related to the investigation and prosecution of this case, excluding costs associated with an attorney’s time.

DONE AND ENTERED this 21st day of December, 2006, in Tallahassee, Leon County, Florida.

S

T. KENT WETHERELL, II 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 21st of December, 2006.

ENDNOTES

1/ For ease of reference, all citations to the Florida Statutes in this Recommended Order are to the 2006 version that was officially recognized at the Department’s request. The 2000 version of Section 475.25, Florida Statutes, in effect at the time Respondent filed his license application and the 2005 version of the statute in effect at the time the Administrative Complaint was filed are materially the same as the 2006 version of the statute.

2/ On this issue, it is noted that there is no evidence in the record regarding the difference in procedure suggested by the Department’s counsel at the final hearing, i.e., “that the Commission would issue [Respondent] a license right away if he answered no on the application versus that the special procedure that is followed when the applicants answer yes, if that would

delay or even deny a license to him.” Tr. 55. See also Department’s PRO, at 5.

3/ The Certificate of Relief From Disabilities states that its “reverse side” includes an “explanation of the law governing this certificate,” but the copy of the certificate received into evidence is a single-sided document. See Exhibit R-1.

Respondent credibly testified (Tr. 37) that he does not recall ever receiving a two-sided copy of the certificate, and on this issue, it is noted that the original certificate that was initially offered into evidence was a single-sided document.

See Tr. 56 (substituting a copy of the certificate for the original that was initially offered into evidence).

4/ This inference is consistent with, and helps to explain the advice that Respondent testified that he was given by his New York attorney regarding the scope of the certificates. See Tr.

51. And cf. §§ 940.05, 944.292, Fla. Stat. (Florida law governing the restoration of civil rights)

5/ Respondent also failed to disclose all of the felony offenses enumerated on the Certificate of Good Conduct (see Finding of Fact 14) as well as the misdemeanor offenses listed in Exhibit

P-4. The misdemeanor offenses included disorderly conduct, resisting arrest, obstructing governmental administration, and petit larceny. Respondent’s failure to disclose these other criminal offenses on his license application was not charged in the Administrative Complaint and, therefore, cannot be used as a basis to discipline Respondent in this proceeding. See Trevisani v. Dept. of Health, 908 So. 2d 1108, 1109 (Fla. 1st DCA 2005). Evidence regarding the other criminal offenses was offered and received for the limited purpose of showing Respondent’s motive, knowledge, intent and/or lack of accident or mistake with respect to his failure to disclose the third degree attempted robbery conviction on his application. See Tr. 10, 58; §§ 90.404(2)(a), 120.57(1)(d), Fla. Stat.

6/ In making this finding, the undersigned took into account Respondent’s misdemeanor offenses that were not mentioned on either of the certificates. See Endnote 5. However, the fact that those offenses were not disclosed in response to Question No. 9 even though they were not mentioned in either of the certificates relied upon by Respondent as the basis for his failure to disclose his third degree attempted robbery conviction does not, in the undersigned’s view, tend to prove that Respondent’s failure to disclose the third degree attempted

robbery conviction (which is the sole basis of the Administrative Complaint) was an intentional misrepresentation or fraudulent concealment of his criminal history.

7/ See Department's PRO, at 22-23. It is also noteworthy that the penalty sought by the Department is less than the “usual” range established in Florida Administrative Code Rule 61J2- 24.001(3)(n) for the alleged violation of Section 475.25(1)(m), Florida Statutes. The rule provides that for a violation of Section 475.25(1)(m), Florida Statutes, that, as in this case, is not brought to the attention of the Department by the licensee, the “usual action of the commission shall be to impose a penalty of revocation and an administrative fine of $1,000.”

COPIES FURNISHED:

Nancy B. Hogan, Chairman Real Estate Commission Department of Business and

Professional Regulation

400 West Robinson Street, Suite 801N Orlando, Florida 32801

Sorin Ardelean, Esquire Department of Business and

Professional Regulation

400 West Robinson Street, Suite 801N Orlando, Florida 32801-1757

Daniel Villazon, Esquire Daniel Villazon, P.A.

1020 Verona Street

Kissimmee, Florida 34741

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: 06-003781PL

Orders for Case No: 06-003781PL