STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
FLORIDA ELECTIONS COMMISSION, )
)
Petitioner, )
)
vs. ) Case No. 07-0099
)
RODERICK HARVEY, )
)
Respondent. )
)
RECOMMENDED ORDER
Robert E. Meale, Administrative Law Judge of the Division of Administrative Hearings, conducted the final hearing by videoconference in Tallahassee, Florida, on May 21, 2007. The parties, attorneys for the parties, witnesses, and court reporter participated by videoconference in Miami, Florida.
APPEARANCES
For Petitioner: Eric M. Lipman
Assistant General Counsel Florida Elections Commission
107 West Gaines Street, Suite 224 Tallahassee, Florida 32399-1050
For Respondent: Mark Herron
Messer, Caparello & Self, P.A. Post Office Box 1876 Tallahassee, Florida 32302-1876
STATEMENT OF THE ISSUE
The issue is whether Respondent, as campaign treasurer, signed two checks drawn on the candidate's primary campaign
account when such account lacked sufficient funds to cover the checks and, if so, what penalty should be imposed.
PRELIMINARY STATEMENT
By Order of Probable Cause dated December 1, 2006, Petitioner found probable cause that Respondent violated Chapter 106, Florida Statutes. The Order contains 11 counts, but the case proceeded to hearing on only Counts 10 and 11.
Count 10 alleges that, on or about October 27, 2005, Respondent violated Section 106.11(4), Florida Statutes, by signing a $3625.63 check to The Miami Times and drawn on the campaign account without sufficient funds on deposit in the account. Count 11 alleges that, on or about November 22, 2005, Respondent violated Section 106.11(4), Florida Statutes, by signing a $2000 check to radio station WMBM and drawn on the campaign account without sufficient funds on deposit in the account.
By Petition filed January 5, 2007, Respondent disputed the facts related to Counts 10 and 11. The Petition states that campaign personnel made all of the bank deposits and several counter withdrawals of cash, which caused the bank balance to fluctuate. The Petition states that Respondent implemented internal controls to avoid checks with insufficient funds, but others failed to follow these controls.
By letter dated January 8, 2007, the Chairman of the Florida Elections Commission transmitted the file to the Division of Administrative Hearings.
Subsequently, Respondent obtained counsel to represent him. On May 17, 2007, his counsel filed a Notice of Disputed Material Facts. The notice states that Respondent did not know that, by failing to contest the other nine counts, he was admitting that he "willfully" violated Florida's election laws. The notice states that Respondent does not determine the question of willfulness by informal hearing. The notice states that Respondent intends to raise the issue of willfulness in any informal hearing, which will necessitate the referral of these remaining counts to the Division of Administrative Hearings.
The notice does not request any relief, so the Administrative Law Judge did not rule on the motion. However, upon discussion of this issue at the start of the hearing, the Administrative Law Judge noted that he did not have jurisdiction of these counts. Petitioner never transmitted these claims to the Division of Administrative Hearings evidently because, at the time of the transmittal, Respondent had not raised any disputed issue of fact as to these counts.
At the hearing, Petitioner called four witnesses and offered into evidence 17 exhibits: Petitioner Exhibits 1-2,
5-7, 8D, 8E, 8I, 8J, 8M, 8N, 8O, 8P, 8Q, 8R, and 25. Respondent
called no witnesses and offered into evidence one exhibit: Respondent Exhibit 1. With leave of the Administrative Law Judge, Petitioner filed two post-hearing exhibits: the transcripts of the depositions of Nakisha Smith and Jenise Gibson. All exhibits were admitted.
The court reporter filed the transcript on June 25, 2007. The parties filed Proposed Recommended Orders on July 24, 2007.
FINDINGS OF FACT
Respondent has been a certified public accountant since 1996. Since 2000, Respondent has been employed with a Hollywood, Florida accounting firm, where he is now a partner. Respondent has been licensed since 1996 to practice accounting in Florida.
Sometime prior to June 2005, a friend of Respondent told him that a candidate for office in Miami needed help with his campaign. Respondent agreed to meet with the candidate, Richard Dunn, who was running for the District 5 seat on the City of Miami Commission. At the meeting, Respondent became acquainted with Mr. Dunn, who is a minister and an experienced candidate for public office.
During the meeting, Mr. Dunn asked Respondent to serve as his campaign treasurer. Mr. Dunn explained that his main duty would be to maintain the campaign checkbook and make
deposits of campaign contributions. Respondent also understood that he would have to attend some fundraising events.
Respondent had never previously served as a campaign treasurer, but the parties agreed upon a satisfactory payment, and Respondent assumed his duties as campaign treasurer in July 2005.
When Respondent started as treasurer, Mr. Dunn's campaign staff gave him checkbooks and deposit slips. At no time did Respondent ever investigate whether the election laws imposed upon him any special requirements. No one on Mr. Dunn's campaign staff gave Respondent a copy of the explanatory campaign materials provided each campaign by the Clerk's Office of the City of Miami. These materials include all relevant campaign finance laws.
Respondent's lack of familiarity with the duties of a campaign treasurer emerged early. He learned that he had to file campaign treasurer reports when campaign staff informed him of this responsibility. At the same time, Respondent learned that campaign staff, including Mr. Dunn, were not careful in the management of the campaign's finances. In trying to prepare his first report, Respondent had problems obtaining all of the necessary information, such as all of the checks that had been written.
Despite his lack of familiarity with campaign finance laws, Respondent knew that he could not write a check if an account had insufficient funds. Respondent assumed (wrongly, as noted below in the Conclusions of Law) that he could sign a check, even if the account lacked funds to cover it, as long as sufficient funds would be deposited before the check was presented for payment at the payor's bank.
Respondent was not the first campaign treasurer for this campaign. However, the existence of a prior treasurer did not make it any easier for Respondent to assemble the necessary documents, such as copies of bank statements, so that he could do his job. Also, 30-45 days after taking over as treasurer, Respondent learned that the campaign maintained at least one other checking account.
In short order, Respondent learned that the bank mailed the statements to Mr. Dunn, not the treasurer. Respondent suggested to Mr. Dunn that the bank issue a copy to Respondent. Mr. Dunn agreed with this proposal, but the bank, Wachovia Bank, said that it could not do so. Respondent never suggested to
Mr. Dunn that he direct the bank to mail the statements to Respondent, who would then send a copy to Mr. Dunn.
Quickly, Respondent also learned that Mr. Dunn was writing most of the checks, including counter checks. Respondent repeatedly impressed upon Mr. Dunn the importance of
keeping Respondent informed about these checks, but Mr. Dunn and his campaign staff did not routinely do so.
After failing to convince Mr. Dunn to restrict check- issuing privileges to Respondent, Respondent prepared a check authorization form that Mr. Dunn and his campaign staff could use each time that they issued checks. However, despite all of these efforts, consisting of five to ten telephone calls and meetings, Respondent never succeeded in obtaining Mr. Dunn's cooperation for very long.
On the 10-15 occasions that Respondent wrote and signed campaign checks, he often, but not invariably, contacted the bank and asked it to fax transaction reports or partial statements to cover a specific date range. On those 10-15 occasions, Respondent often, but not invariably, called Mr. Dunn for confirmation of deposits before writing. If Respondent ever attempted to obtain this information by online banking, he never so indicated during the hearing. Although Respondent did something to update himself on current activity in the checking account each time that he had to write and sign a check, his information was necessarily incomplete.
Overall, Respondent admits that he never was able to get the accounting problem within the campaign under control. Although Respondent wrote and signed relatively few checks, he
wrote and signed the two checks at issue in this case many months after discovering the problems described above.
On October 27, 2005, Respondent signed a check to The Miami Times for $3625.63 and drawn on the campaign account. Account balances were $542.34, $792.34, and $1892.34 on
October 26, 27, and 28, 2005, respectively. Clearly, Respondent signed this check at a time that the account lacked sufficient funds to cover it.
Respondent delivered the $3625.63 check to a member of the Dunn campaign and instructed her to ensure that the account had sufficient money before giving it to the payee. He added that she should deliver the check only to Mr. Dunn.
On the same day, Mr. Dunn signed a check drawn on the same account in the amount of $500 and payable to the prior campaign treasurer, Johnny Studstill.
Although the October bank records reveal no insufficient funds fees, the November bank records reveal seven instances of insufficient funds: November 10, 21, 22, and 30 (four times). Respondent explained that the bank imposed these fees because deposits had not yet cleared, but the imposition of these fees was sufficient to alert Respondent to mounting problems, and two of these instances had arisen prior to the date on which he signed the November 22 check, which is the second check at issue in this case.
On November 22, 2005, Respondent signed a check to radio station WMBM for $2000 and drawn on the campaign account. Account balances were $694.25, $2909.25, and $6091.84, on November 21, 22, and 23, 2005, respectively. The relevant day is November 22, so it would appear that the bank balance was sufficient to cover this check. However, on the same day, Respondent signed checks in the amounts of $1065 and $1492.65 and payable to ASAP Mailing Service and Dodd Printing, although the latter check was marked void shortly after Respondent signed it. Thus, the total of the $2000 check to WMBM and $1065 check to ASAP (counsel for Petitioner conceding at the hearing that a voided check should not count) exceeded the account balance of
$2909.25.
On the same day, Mr. Dunn signed three checks drawn on the same account. One was in the amount of $850 and payable to radio station WEDR, one was in the amount of $185 and payable to Isaiah Walker, and the third was in the amount of $2000 and payable to radio station WHQT.
About three weeks prior to the end of the campaign, Respondent realized that the situation was unworkable, even though his administrative assistant at the accounting firm was devoting 20 hours weekly to campaign-related bookkeeping work. Respondent remained with the campaign only to avoid the negative appearance that would be created by his leaving his post in the
days running up to the election. Respondent asked Mr. Dunn not to leave him "high and dry," but Respondent was never paid for his services to the campaign, beyond a single $1000 check to cover costs.
When signing the October 27 check, Respondent knew that, due to the campaign's poor financial management practices, he lacked even the information to determine whether the account balance would be sufficient when the check was presented to Wachovia. He did not consider whether the account balance was sufficient when he signed the check because he was not aware of this requirement of law.
Respondent's violation of law was willful when signing the October 27 check. By this time, Respondent had been serving as campaign treasurer for nearly four months. He was increasingly aware that he did not have the full cooperation of the candidate. Although he did not know the relevant requirement of law, Respondent recklessly disregarded this requirement because he had never made any effort--let alone a reasonable effort--to inform himself of this legal requirement.
The circumstances likewise establish recklessness in the signing of the November 22 check. Factually, Respondent's acts and omissions on November 22 were less defensible because the account had twice incurred insufficient-funds fees in the two weeks preceding the signing of the November 22 check, and he
had another month to see that Mr. Dunn and the campaign staff would not agree to reasonable financial-management controls. Legally, Respondent's ongoing failure to inform himself of the applicable legal requirements imposed upon him as a campaign treasurer remained entirely unreasonable, with the passing of another month, the incurring of insufficient-funds fees, and the repeated confirming that Respondent would not have any significant cooperation from Mr. Dunn as his campaign approached its completion.
The key factual determination in this case is that Respondent willfully violated the legal requirement that sufficient funds be in the account when the checks were signed. Respondent was understandably unfamiliar with this requirement, which is different from the more common requirement, with which he was familiar, that sufficient funds must be available when a check is presented to the issuing bank for payment. The requisite finding of Respondent's recklessness in failing to exercise any apparent effort to inform himself of this requirement of law is facilitated by the manner in which he handled the more common responsibilities of bookkeeping. Respondent proceeded recklessly in this area, as well. Respondent knew that the probability of bounced checks elevated considerably, the longer that more than one person wrote checks and the campaign staff was so lax in getting him the information
on their activity in the account. Reckless disregard for the proper discharge of basic bookkeeping responsibilities is evidence of Respondent's overall state of mind at the relevant time. If Respondent did not initially realize his ignorance of campaign finance laws, he had to understand the limits of his knowledge when campaign staff told him he had to file campaign treasurer reports. By not informing himself of Section 106.11(4), Florida Statutes, by the time that he signed the two checks that are the subject of this case, Respondent displayed reckless disregard of his legal obligations. Under the law set forth below, Respondent's reckless disregard of the law constitutes a willful violation of the law. Here, Respondent, an accountant, has wholly disregarded Section 106.11(4), Florida Statutes, without making any reasonable inquiry into the limitations on check signing in a campaign.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter. §§ 106.25(5), 120.569 and 120.57(1), Fla. Stat. (2007).
Section 106.11(4), Florida Statutes (2005), provides, in relevant part:
Each candidate and each political committee which designates a primary campaign depository pursuant to s. 106.021(1) shall make expenditures from funds on deposit in such primary campaign depository only in the
following manner, with the exception of expenditures made from petty cash funds provided by s. 106.12:
* * *
(4) No candidate, campaign manager, treasurer, deputy treasurer, or political committee or any officer or agent thereof, or any person acting on behalf of any of the foregoing, shall authorize any expenses, nor shall any campaign treasurer or deputy treasurer sign a check drawn on the primary campaign account for any purpose, unless there are sufficient funds on deposit in the primary depository account of the candidate or political committee to pay the full amount of the authorized expense, to honor all other checks drawn on such account, which checks are outstanding, and to meet all expenses previously authorized but not yet paid. . . . As used in this subsection, the term "sufficient funds on deposit in the primary depository account of the candidate or political committee" means that the funds at issue have been delivered for deposit to the financial institution at which such account is maintained. The term shall not be construed to mean that such funds are available for withdrawal in accordance with the deposit rules or the funds availability policies of such financial institution.
Section 106.25(3), Florida Statutes (2005), requires that a violation be willful:
For the purposes of commission jurisdiction, a violation shall mean the willful performance of an act prohibited by this chapter or chapter 104 or the willful failure to perform an act required by this chapter or chapter 104.
Section 106.37, Florida Statutes (2005), defines "willful" as follows:
A person willfully violates a provision of this chapter if the person commits an act while knowing that, or showing reckless disregard for whether, the act is prohibited under this chapter, or does not commit an act while knowing that, or showing reckless disregard for whether, the act is required under this chapter. A person knows that an act is prohibited or required if the person is aware of the provision of this chapter which prohibits or requires the act, understands the meaning of that provision, and performs the act that is prohibited or fails to perform the act that is required.
A person shows reckless disregard for whether an act is prohibited or required under this chapter if the person wholly disregards the law without making any reasonable effort to determine whether the act would constitute a violation of this chapter.
Section 106.265(1), Florida Statutes (2005), provides:
The commission is authorized upon the finding of a violation of this chapter or chapter 104 to impose civil penalties in the form of fines not to exceed $1,000 per count. In determining the amount of such civil penalties, the commission shall consider, among other mitigating and aggravating circumstances:
The gravity of the act or omission;
Any previous history of similar acts or omissions;
The appropriateness of such penalty to the financial resources of the person, political committee, committee of continuous existence, or political party; and
Whether the person, political committee, committee of continuous existence, or political party has shown good
faith in attempting to comply with the provisions of this chapter or chapter 104.
Petitioner must prove the material allegations by clear and convincing evidence. Diaz de la Portilla v. Florida
Elections Commission, 857 So. 2d 913 (Fla. 3d DCA 2003). If Respondent wishes to litigate the appropriateness of the penalty given his financial resources, though, he has the burden of proof as to this issue. Id. Respondent presented no evidence on this issue.
The maximum civil penalty in this case is $2000. The fine should be $500 for several reasons. Respondent has not been involved with political campaigns previously. He did not pick a well-run campaign, but probably trusted Mr. Dunn's experience and vocation. Although Respondent devoted considerable resources to trying to perform his responsibilities in a professional manner, including half of the time of his administrative assistant at the accounting firm, he was never paid by the campaign for his work, nor did he even receive much cooperation from Mr. Dunn and his staff, who, it appears, exploited Respondent's naiveté.
It is
RECOMMENDED that the Florida Elections Commission enter a final order finding Respondent guilty of two counts of violating
Section 106.11(4), Florida Statutes, and imposing a civil penalty of $500.
DONE AND ENTERED this 21st day of August, 2007, in
Tallahassee, Leon County, Florida.
S
ROBERT E. MEALE
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 day of August, 2007.
COPIES FURNISHED:
Barbara M. Linthicum, Executive Director Florida Elections Commission
The Collins Building, Suite 224
107 West Gaines Street Tallahassee, Florida 32399-1050
Patsy Rushing, Clerk
Florida Elections Commission The Collins Building, Suite 224
107 West Gaines Street Tallahassee, Florida 32399-1050
Eric M. Lipman, Esquire Florida Elections Commission Collins Building, Suite 224
107 West Gaines Street Tallahassee, Florida 32399-1050
Mark Herron, Esquire
Messer, Caparello & Self, P.A. 2618 Centennial Place
Post Office Box 15579 Tallahassee, Florida 32317
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.
| Issue Date | Document | Summary |
|---|---|---|
| Nov. 30, 2007 | Agency Final Order | |
| Aug. 21, 2007 | Recommended Order | Five hundred dollar fine for two counts of campaign finance treasurer`s signing two checks on an account that, at time of signings, lacked sufficient funds to pay each check. Reckless disregard of legal duty. |
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