STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL SERVICES,

Petitioner,

vs.

LATESIA LASHONDA CHAVIS,

Respondent.

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) Case No. 07-3134PL

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RECOMMENDED ORDER

A formal hearing was held in this case on September 6, 2007, in Fort Pierce, Florida, as previously noticed, before Eleanor M. Hunter, an Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Thomas A. David, Senior Attorney

Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-0333

For Respondent: Latesia Lashonda Chavis, pro se

2309 North 44th Street Fort Pierce, Florida 34946

STATEMENT OF THE ISSUE

Whether the licenses as a limited surety (bail bond) agent and as a legal expense agent held by Latesia Lashonda Chavis should be revoked.

PRELIMINARY STATEMENT

On February 23, 2007, the Department of Financial Services ("Petitioner" or "Department") filed an Administrative Complaint alleging that the limited surety (bail bond) agent license and the legal expense agent license held by Latesia Lashonda Chavis ("Respondent" or "Chavis"), should be revoked for the alleged violations of the Florida Insurance Code1 (hereinafter "the Code"). Chavis timely responded to the Administrative Complaint, by filing an Election of Rights notice dated June 6, 2007, requesting that a hearing be conducted in accordance with Section 120.57(1) Florida Statutes (2007). The matter was referred to and filed with DOAH on July 11, 2007. Initially set for hearing before Administrative Law Judge Larry J. Sartin, the case was subsequently transferred to the undersigned.

At the hearing held on September 6, 2007, the Department presented the testimony of Albert Estes, Sr., Norman Luther Britten, Jr., Michael C. Pilver, Sr., and Terry Flynn. The Department also offered three Exhibits that were received into evidence. Chavis testified on her own behalf, and offered no exhibits. The transcript was filed on September 18, 2007. A Proposed Recommended Order was filed by the Department on September 28, 2007. None was received from Chavis.

FINDINGS OF FACT

1. Chavis has been licensed in Florida as a limited surety (bail bond) agent, pursuant to Chapter 648, Florida Statutes and as a legal expense agent, pursuant to Chapter 642, Florida Statutes, since 1994, and has performed related work since 1991.

2. In an application dated April 27, 2006, Chavis sought to receive an additional license as a resident managing general insurance (bail bond) agent. On that Application, Chavis answered "NO" to the following questions:

   Have you ever had any insurance agency contract terminated by an insurance company or managing general agent for any alleged cause?

   Are you currently indebted to any insurer, managing general agent, agent, or premium finance company?

   
   

3. The Department alleged in Count I of the Administrative Complaint that Chavis’ answers to those two questions were false. In Count II, the Department alleged that Chavis owed money for checks that had been returned for insufficient funds for premiums and a build up fund ("BUF") account due, based on a contractual relationship with the Al Estes General Agency, Inc. (the "Estes Agency"), Chavis' managing general agent. Count III alleged that Chavis misappropriated, converted and withheld funds owed to the Estes Agency.

   Count I

   
   

4. Chavis testified that, on April 27, 2007, when she filed the pending application, she was not aware that her contract with the Estes Agency had been terminated, having not been informed until she was contacted by the Department's investigator, Terry Flynn, sometime in August 2006.

5. Chavis also testified that she had been in touch with Al Estes, in January, February, and March about her family problems that were taking her away from devoting herself to the bail bond business and offered to take out a loan to pay him what she owed him. She testified that she was trying to help run a family business, a group home, that her aunt died of cancer in April, and that her mother is still battling cancer. Estes confirmed in his testimony that he recalled her telling him that her husband had used her checkbook to take money out of her account and that her mother was sick.

6. It is undisputed that a letter from the Estes Agency, dated February 9, 2006, was sent to Chavis at her address-of- record with the Estes Agency on that date, in Cocoa, Florida. The letter was "A Termination Notice and Demand for Payment and Accounting." Chavis testified that she did not receive the letter.

7. The Estes Agency also sent, on February 9, 2007, a "Termination Request" for Chavis to be terminated as an agent to their insurer, Safety National Casualty Corporation in Iowa.

8. In addition, the Estes Agency notified the Department of the termination of Chavis as their agent by letter dated February 17, 2006, sent to the Department's Orlando office. In that letter, the Estes Agency listed the following reasons for its actions:

   1. Un-report [sic] executed powers, owes premium

   2. N.S.F. checks for Premium and BUF accounts

   3. Unpaid Premium an (sic) BUF

   4. Unpaid Forfeitures and judgments

   5. Business phone has been turned off.

   6. No response to correspondence sent

   7. Will not return phone calls

      
      

9. On or about March 27, 2006, the Estes Agency sent as its representative, Norman Britten who was apparently accompanied by other people, to Chavis' Cocoa address to seize the files. When Britten arrived, a neighbor told him that Chavis had moved. The neighbor telephoned Chavis, and asked her if he should tell Britten where she had moved. Britten then also talked to Chavis by telephone and she gave him her address in Fort Pierce, and agreed to meet him at her new address to give him the files on pending cases and accounts. Chavis agreed that these activities took place in late March or early April, just before her aunt's death.

10. The files were taken so that the Estes Agency could meet the requirements and minimize the risks of having unpaid forfeitures become judgments within sixty days that, if not paid within thirty-five days, would result in the State's prohibiting an agency from posting additional bonds. The files were also taken to keep an accounting of remissions, and refunds of forfeited bonds after criminal defendants have been caught.

11. Given the conversations concerning moneys owed, notices, seizure of files, and investigations, all activities that took place in January, February and March 2006, it is reasonable to conclude that Flynn testified truthfully that he informed Chavis of her termination while he was conducting the Department's investigation of her in March 2006. Chavis's testimony to the contrary, that she did not know prior to filing the application in April 2006, that she was answering the two questions cited in the Complaint falsely is rejected as untrue. Nor is Chavis relieved of her personal responsibility to be truthful, because she testified that some other unnamed company with whom she planned to become affiliated told her to give the false answers to those questions, because her BUF account should take care of any money that she owed. There is no showing that the other company knew of the returned checks and unpaid premiums and no reasonable expectation that these debts that were not incurred in the regular course of business would be

    covered by a BUF account. Additional evidence of her actual knowledge of the termination of her contract with the Estes Agency is the fact that Chavis was negotiating with and seeking licensure with another company, while she admittedly was still dealing with her family's problems that were causing her to neglect her bail bond business.

12. The Department proved the allegations in Count I of its Administrative Complaint that Chavis made material misstatements in response to two questions on an application dated April 27, 2006.

    Counts II and III

    
    

13. Contrary to her explanation that she filed the pending application thinking the BUF account would cover any funds owed to the Estes Agency, Chavis testified that, in conversations with Estes in February and March, she offered to take out a loan to pay the money owed to the Estes Agency, and that he mentioned that she owed approximately $12,000. She said she offered to take out a loan because she did not have the money, but that she did not think that either of them had taken into account the BUF account at that time.

14. Chavis agreed that once the BUF account was depleted, if she still owed money to the Estes Agency, she has not paid it. She also testified that she has not paid anything to cover

    the checks she issued with insufficient funds and does not deny that she owes that money to the Estes Agency.

15. The senior agent for the Estes Agency testified that, after taking into consideration insufficient funds checks, unpaid and unremitted premiums, the BUF account, and remissions total liabilities incurred by or on behalf of Chavis are

    $18,851.00.

    
    

16. The Department proved the allegations of Counts II and III that Chavis owes money to the Estes Agency, that was misappropriated, converted, or willfully and improperly

    withheld.

    
    

    CONCLUSIONS OF LAW

    
    

17. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2007).

18. Pursuant to the Code, the Department has jurisdiction to regulate the insurance licenses and appointments held by the Respondent, and to determine her eligibility for the license for which she is an applicant.

19. The Department has the burden in this case to prove the allegations of its complaint by clear and convincing evidence. See Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987); and Dep't of Banking and Finance v. Osborne Stern & Co., 670 So. 2d 932 (Fla. 1996).

20. The Administrative Complaint filed by the Department alleged that this Respondent violated provisions of Subsection 648.45(2), Florida Statutes (2006), which state in pertinent part:

    1. The department shall deny, suspend, revoke, or refuse to renew any license or appointment issued under this chapter or the insurance code, and it shall suspend or revoke the eligibility of any person to hold a license or appointment under this chapter or the insurance code, for any violation of the laws of this state relating to bail or any violation of the insurance code or if the person:

       1. Lacks one or more of the qualifications specified in this chapter for a license or appointment.

       2. Has made a material misstatement, misrepresentation, or fraud in obtaining a license or appointment, or in attempting to obtain a license or appointment.

          
          

          * * *

          
          

          1. Has demonstrated lack of fitness or trustworthiness to engage in the bail bond business.

          2. Has demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.

          3. Has engaged in fraudulent or dishonest practices in the conduct of business under the license or appointment.

          4. Is guilty of misappropriation, conversion, or unlawful withholding of moneys belonging to a surety, a principal, or others and received in the conduct of business under a license.

          
          

          * * *

          1. Has demonstrated lack of good faith in carrying out contractual obligations and agreements.

          2. Has failed to perform a contractual obligation or agreement with a managing general agent or insurer which results in an unrecovered loss due to nonpayment of a forfeiture or judgment by the licensee.

          
          

          * * *

          
          

          (p) Has demonstrated a course of conduct or practices which indicate that the licensee is incompetent, negligent, or dishonest or that property or rights of clients cannot safely be entrusted to him or her.

          
          

          § 648.45(2), Fla. Stat. (2006).

          
          

21. The Administrative Complaint filed by the Department also alleged that the Respondent violated provisions of Subsection 648.45(3), Florida Statutes, which state in pertinent part:

    1. The department may deny, suspend, revoke, or refuse to renew any license or appointment issued under this chapter or the insurance code, or it may suspend or revoke the eligibility of any person to hold a license or appointment under this chapter or the insurance code, for any violation of the laws of this state relating to bail or any violation of the insurance code or for any of the following causes:

    * * *

    1. Violation of any law relating to the business of bail bond insurance or violation of any provision of the insurance code.

    2. Failure or refusal, upon demand, to pay over to any insurer the bail bond agent represents or has represented any money coming into his or her hands which money belongs to the insurer. . . .

    
    

    § 648.45(3), Fla. Stat. (2006).

    
    

22. By clear and convincing evidence the Department established the allegations in Count I of the Administrative Complaint that the Respondent made two material misstatements or misrepresentations in an attempt to obtain a license or appointment in violation of Subsection 648.45(2)(b), Florida Statutes (2006).

23. In so doing, the Department also established by clear and convincing evidence, as alleged in the Administrative Complaint, that the Respondent lacks the fitness or trustworthiness to engage in the bail bond business in violation of Subsection 648.45(2)(e), Florida Statutes (2006).

24. By clear and convincing evidence, the Department proved the allegations in Count II that the Respondent conducted her business with negligence, dishonesty and in a manner that otherwise indicated that she cannot entrusted to handle safely the property or rights of her clients, in violation of Subsection 648.45(2)(p), Florida Statutes (2006); and that she failed or refused, on reasonable demand to pay over to an insurer that she represented or has represented any money that she held that belonged to the insurer, in violation of Subsection 648.45(3)(d), Florida Statutes(2006).

25. As further alleged in both Counts II and III of the Administrative Complaint, the Department established by clear and convincing evidence that the Respondent failed to perform and demonstrated a lack of good faith in performing contractual obligations with a managing general agent or insurer which resulted in unrecovered losses due to the Respondent's failure to pay for forfeitures and judgments, in violation of Subsections 648.45(2)(l) and (m), Florida Statutes (2006); that the Respondent engaged in fraudulent or dishonest practices in the conduct of business under her license(s) or appointment(s) in violation of Subsection 648.45(2)(g), Florida Statutes (2006); demonstrated a lack of fitness or trustworthiness to engage in the bail bond business in violation of Section 648.45(2)(e), Florida Statutes (2006); misappropriated, converted, and unlawfully withheld moneys owed to a surety and received in the conduct of business under her license(s) in violation of Subsection 648.45(2)(h), Florida Statutes (2006).

26. The only allegation of the Complaint that is not established by clear and convincing evidence, and could only be deduced from the proven allegations, is that the Respondent is incompetent and lacks reasonably adequate knowledge and technical competence to engage in the bail bond business, in violation of a portion of Subsections 648.45(2)(p) and (2)(f), Florida Statutes. Her history of having operated successfully

    from 1994 until 2006, suggests that she had the technical skills and knowledge. Assuming she has the skills, her recent violations are viewed as aggravated by that fact.

27. The evidence is clear and convincing that the Department should deny and revoke the Respondent's insurance licenses for the violations of the Code established in this

case.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that all licenses held by the Respondent under the Code are revoked and that her pending application be denied.

DONE AND ENTERED this 6th day of November, 2007, in Tallahassee, Leon County, Florida.

S

ELEANOR M. HUNTER

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 6th day of November 2007.

ENDNOTE

1/ Chapters 624 through 632, 634, 635, 636, 641, 642, and 651, Florida Statutes, constitute the “Florida Insurance Code.” See

§ 624.01, Fla. Stat.

COPIES FURNISHED:

Latesia Lashonda Chavis 2309 North 44th Street

Fort Pierce, Florida 34946

Thomas A. David, Esquire Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399

Honorable Alex Sink Chief Financial Officer

Department of Financial Services The Capitol, Plaza Level II Tallahassee, Florida 32399-0300

Daniel Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level II Tallahassee, Florida 32399-0307

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: 07-003134PL

Orders for Case No: 07-003134PL