STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL SERVICES,

Petitioner,

vs.

ANDREW O'NIEL BRYAN,

Respondent.

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) Case No. 11-1074PL

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RECOMMENDED ORDER

On December 15 and 16, 2011, Robert E. Meale, Administrative Law Judge, conducted the final hearing by videoconference in Tallahassee and Lauderdale Lakes, Florida.

APPEARANCES

For Petitioner: David J. Busch, Esquire

Division of Legal Services Department of Financial Services 612 Larson Building

Tallahassee, Florida 32399-0300

For Respondent: Andrew O'Niel Bryan, pro se

17635 Southwest 32nd Street Miramar, Florida 33029

STATEMENT OF THE ISSUES

The issues are whether Respondent, as a licensed insurance agent, is guilty of various violations of law in the sale of an annuity policy and the failure to remit to the insurer $4607.22 in premiums, and, if so, what penalty should be imposed.

PRELIMINARY STATEMENT

Count I of the Administrative Complaint alleges that Respondent is a licensed health and life (2-18) insurance agent. Count I alleges that, in October 2006, Respondent solicited Daphne Isaacs, then aged 66 years, to purchase an annuity policy from American General Life Insurance Company (AIG). Count I alleges that, in November 2006, Respondent induced Ms. Isaacs to surrender an annuity policy that she had purchased one year earlier from AXA Equitable Life Insurance Company (AXA Equitable), which caused Ms. Isaacs to incur a cash surrender charge of $6300. Count I alleges that Ms. Isaacs used the remaining proceeds of $91,038 to purchase an AIG annuity policy from Respondent, who earned a commission of $4550.

Count I alleges that, in inducing the purchase of the AIG annuity, Respondent misrepresented or failed to disclose three items of information. First, Ms. Isaacs allegedly informed Respondent that she needed free access to her funds in case of emergencies or family needs, and Respondent failed to disclose that her penalty-free withdrawal rights under the contract were limited to one withdrawal annually of no more than ten percent of the premium, starting after the annuity contract had been in place for one year. Second, Respondent allegedly failed to disclose to Ms. Isaacs the surrender charge of over $6000 on the AXA Equitable annuity policy. Third, Respondent failed to

disclose to Ms. Isaacs that the AIG annuity policy provided for a 30-day period during which she could cancel the transaction without charge, and, when Ms. Isaacs learned of this right from another source and exercised it, Respondent failed to notify AIG.

Count I alleges that the AIG annuity policy was not appropriate for a person the age and financial circumstances of Ms. Isaacs, who was unable to restrict her access to her retirement funds, and Respondent sold this contract to

Ms. Isaacs to exploit the trust that she placed in him and for the sole purpose of earning a commission. Lastly, Count I alleges that Respondent failed to explain to Ms. Isaacs how the purchase of the AIG annuity policy would affect her income.

Count I alleges that Respondent therefore is guilty of wilful misrepresentation or deception in the sale of an annuity contract, in violation of section 626.611(5), Florida Statutes; a lack of fitness or trustworthiness to engage in the business of insurance, in violation of section 626.611(7); fraudulent or dishonest practices in the conduct of business under the license, in violation of section 626.611(9); unfair methods of competition or unfair or deceptive acts or practices in the conduct of business under the license or otherwise showing oneself to be a source of injury or loss to the public interest, in violation of section 626.621(6); and the commission of a

violation of the life insurance agent Code of Ethics, in violation of section 626.621(9).

Count II alleges that Respondent had agreed with Monumental Life Insurance Company (Monumental) to collect premiums from its policyholders and deposit these premiums in a designated Monumental bank account. Count II alleges that Respondent failed to transmit to Monumental premiums that he had collected from Monumental policyholders. Count II alleges that Monumental terminated its contract with Respondent and determined, in a final audit, that Respondent owed Monumental a total of

$4607.22. Count II alleges that Respondent has converted, misappropriated, and wrongfully withheld these fiduciary funds. Count II alleges that, on March 27, 2009, Monumental demanded payment of this sum, but Respondent refused to make payment.

Count II alleges that Respondent therefore is guilty of a failure to account for and pay all premiums and funds owed an insurer, in violation of section 626.561(1), Florida Statutes; a lack of fitness or trustworthiness to engage in the business of insurance, in violation of section 626.611(7); fraudulent or dishonest practices in the conduct of business under the license, in violation of section 626.611(9); the conversion, misappropriation, or wrongful withholding of funds belonging to an insurer and acquired in the conduct of licensed business, in violation of section 626.611(10); and the commission of a

violation of the life insurance agent Code of Ethics, in violation of section 626.621(9).

The Administrative Complaint concludes that Petitioner intends to revoke or suspend Respondent's license.

Respondent requested a formal hearing on the allegations.

At the hearing, Petitioner called four witnesses and offered into evidence 21 exhibits: Petitioner Exhibits 1, 3,

1. , 8-12, 15-17, and 21-29. Respondent called two witnesses and offered into evidence one exhibit: Respondent Exhibit 1. The parties offered one joint exhibit. All exhibits were admitted, except that, as to Petitioner Exhibit 17, the clients' affidavits were not admitted for the truth of their contents.

   The court reporter filed the transcript on January 26, 2012. The parties filed proposed recommended orders by February 21, 2012.

   FINDINGS OF FACT

   
   

   1. At all material times, Respondent has held licenses as a life and health agent (2-18) and health insurance agent

      (2-40). Respondent has held licenses issued by Petitioner or its predecessor agency for 21 years. Respondent has never been disciplined, except for a consent order dated February 25, 2008, requiring Respondent to pay a $250 administrative fine for failing to comply with the continuing-education requirements for the period ending November 30, 2007.

      
      

   2. Daphne Isaacs, who was born in 1940, moved from Jamaica to the United States in 1970. She completed the equivalent of high school while in Jamaica. For many years, Ms. Isaacs worked as a collateral clerk in the accounts receivable department for CIT in New York. Formerly known as Commercial Investment Trust, CIT is a finance corporation. During the period described below, Ms. Isaacs resided with her daughter and her daughter's husband. Also living in the home were two disabled sons of

      Ms. Isaacs, who was their primary means of support.

      
      

   3. While employed by CIT, Ms. Isaacs participated in a pension plan. In 1995, Ms. Isaacs suffered injuries in an accident and drew benefits from a long-term disability policy for the next ten years. Retiring from CIT in 2005, Ms. Isaacs elected a cash payout of $124,000, rather than annuity-like payments, from her pension plan. At the time of her retirement, Ms. Isaacs also had a 401(k) plan, but she later closed this account. From 2005 to present, Ms. Isaacs' sole sources of income were the investments described below and the Social Security Administration, which paid her about $12,000 annually.

   4. On June 21, 2005, Ms. Isaacs invested $90,000 in an AXA Equitable annuity policy and purchased certificates of deposit from Wachovia Bank with $20,000-$25,000 of the remaining

      $34,000. Although she knew Respondent at the time through church, Ms. Isaacs decided instead to invest with an AXA

      
      

      Equitable insurance agent located at the Wachovia Bank branch where she conducted business.

   5. One year after the issuance of the AXA Equitable annuity policy, the insurance agency employing the agent represented to the insurer that it had issued Ms. Isaacs the wrong annuity policy. After the insurance agency delivered an indemnification to AXA Equitable, on July 6, 2006, AXA Equitable retroactively changed Ms. Isaacs' policy to a policy with a guaranteed minimum income benefit.

   6. Several factors belie the agency's claim that it had issued the wrong policy. First, the AXA Equitable agent testified at the hearing. He is a highly competent professional who is attentive to detail. It is highly unlikely that he would have permitted the agency to order and the insurer to issue the wrong policy. Second, Ms. Isaac's application for the guaranteed minimum income policy was dated June 17, 2006. One would expect that the application would have been dated in 2005, or else the agency might not have been able to confirm that

      Ms. Isaacs actually had applied for the guaranteed minimum income policy in 2005. In a striking example of thoughtful ambiguity, the AXA Equitable agent testified that he sold the guaranteed income policy in "2005 or 2006." On these facts, it is at least as likely that, after purchasing the original AXA Equitable annuity policy, Ms. Isaacs told her agent that she

      
      

      changed her mind and demanded the guaranteed minimum income annuity policy, and the agency did what it had to do to effect this change at no cost to Ms. Isaacs.

   7. At the time of the 2005 and 2006 transactions, the AXA Equitable agent explained to Ms. Isaacs that the annuity policies that she was purchasing were long-term investments and imposed substantial cash surrender penalties for several years. The AXA Equitable agent also explained that she could rescind the transactions, at no cost, for a short period after receiving the annuity policies. Ms. Isaacs understood these disclosures.

   8. Notwithstanding her knowledge of the cash surrender penalties attached to her AXA Equitable annuity policy,

      Ms. Isaacs decided to cancel this policy and replace it with the AIG annuity policy. The primary reason for the switch was

      Ms. Isaacs' need for monthly income payments--and, of course, her decision to maintain a large fraction of her financial resources in an annuity policy.

   9. The need for more frequent payments of income arose, ironically, by Ms. Isaacs' decision, four months earlier, to exchange her original AXA Equitable annuity policy for the AXA Equitable annuity policy with guaranteed minimum income. This decision changed Ms. Isaacs' income payments from monthly to annual. Compare Section 7.01 with the second paragraph under "Conditions of this Rider." As a model of succinctness, the AIG

      
      

      annuity policy admitted into evidence seems to omit any provision concerning the frequency of income payments, but Respondent testified that it paid income monthly, and an AIG brochure accompanying the policy advises that "[i]ncome payments are usually made monthly." This is early evidence of

      Ms. Isaacs' bad decisionmaking as to her annuity investments.

      
      

   10. Ms. Isaacs failed to establish by her testimony any fault on Respondent's part in her purchase of the AIG annuity policy. Ms. Isaacs admitted that, in trying to make the sale, Respondent suggested that he, she, and the AXA Equitable agent meet to discuss the two annuity policies. Respondent's testimony that he warned Ms. Isaacs of the cash surrender penalty on the AIG policy, as reflective of its status as a long-term investment, is credited over the testimony of

       Ms. Isaacs that he failed to make this disclosure. Respondent candidly admitted that he did not know if the AXA Equitable policy had a cash surrender penalty, but his failure to mention this fact is irrelevant because Ms. Isaacs knew that this policy carried such a charge, as she had received this warning, for a second time, from her AXA Equitable agent just four months earlier.

   11. It is unclear whether Respondent specifically mentioned the 30-day free look period for the AIG policy. As was the case with the cash surrender penalty, though, the AXA

       
       

       Equitable agent had recently explained a similar provision in the AXA Equitable policy, so Ms. Isaacs was aware of the existence of such a provision. More importantly, this provision was featured prominently on the first page of the AIG policy immediately below the contract data, so any testimony from

       Ms. Isaacs that she did not know about this provision cannot be credited.

   12. Ms. Isaacs also testified that Respondent failed to deliver timely her election to cancel the AIG annuity policy. She purchased the policy on October 24, 2006. By contract, Ms. Isaacs had 30 days from receipt to cancel the AIG annuity at no cost. The record does not contain documentary evidence of the date on which Ms. Isaacs received the AIG annuity policy. Respondent recalled meeting with Ms. Isaacs three times: to deliver the policy, to have her sign the "ownership change form," and to have her sign or receive additional forms. The testimony suggested that these events occurred in this sequence. The "ownership change form" is the Request to Transfer Funds, which Ms. Isaacs signed on October 24. The evidence thus fails to establish that Ms. Isaacs received her copy of the AIG annuity policy after October 24.

   13. At different times, Ms. Isaacs has offered different versions of when she tried to cancel the AIG annuity policy. In an undated letter to AIG (Petitioner Exhibit 24), Ms. Isaacs

       
       

       claimed that she told Respondent on November 7, 2006, that she wanted to cancel the annuity policy that she had purchased two weeks earlier. At hearing, Ms. Isaacs testified that she first tried to cancel the annuity policy on December 7, 2006. A letter from Ms. Isaacs to AIG dated May 23, 2007, briefly mentions her attempt to cancel the annuity policy in December 2006, but focuses mostly on her receipt of a check for $833 in January 2007 and her inability to live off 3.5% annual income. Referring to the low interest rate of the AIG annuity policy, the letter states: "I needed this issue to be resolved or my money moved back to AXA and my $6300 (AXA Equitable cash surrender fee) returned to me." On this record, it is impossible to find that Ms. Isaacs unequivocally attempted to cancel the AIG annuity policy at anytime during the 30-day free look period. The May 2007 letter also suggests that Ms. Isaacs had decided, after purchasing the AIG annuity policy, that the frequency of income payments was not as important as the interest rate paid under the policy.

   14. For a complainant, Ms. Isaac was an oddly uncooperative witness. Her evasiveness at the hearing is consistent with some discomfort at testifying that she could recall nothing, except that she trusted Respondent, or that Respondent hounded her into purchasing the AIG annuity policy. Neither claim harmonizes easily with the fact that Ms. Isaacs

       
       

       resisted Respondent's sales efforts 18 months earlier when she purchased the first AXA Equitable annuity policy. Three or four times, when responding to a question, Ms. Isaacs paused to recall the facts and appeared ready to start an answer--before retreating to her preferred response of claiming not to remember and that she had trusted Respondent. Even after the Administrative Law Judge warned her to be more responsive,

       Ms. Isaacs continued to respond evasively to questions.

       
       

   15. In its proposed recommended order, Petitioner claims that Respondent replaced a qualified annuity policy with an nonqualified annuity policy, thus potentially exposing

       Ms. Isaacs unnecessarily to income tax liability. This is a potentially serious claim, but one that was not made in the Administrative Complaint. The Administrative Complaint alleges that Respondent failed to explain how the AIG annuity policy would affect her income, but the omission of any mention of "taxable income" guides the reader to consideration of such issues as guaranteed interest rates and cash surrender penalties. Petitioner may thus not predicate liability on the tax treatment of the exchange of annuity policies.

   16. Even if the Administrative Complaint had alleged a failure by Respondent to explain the tax treatment of the exchange of the AXA Equitable annuity policy for the AIG annuity policy, Petitioner's proof would have been insufficient.

       
       

       Respondent testified that he explained to Ms. Isaacs that the AIG policy was nonqualified, but, given Respondent's long history in industrial life insurance, as discussed below, and his general knowledge level, it is doubtful whether Respondent understands the difference between a qualified and nonqualified annuity. More to the point, Petitioner failed to prove the materiality of any change in tax status of Ms. Isaacs' annuity policy or the failure to disclose such a change. Even though the liquidation of a qualified annuity followed by the purchase of a nonqualified annuity would presumably have generated substantial taxable income, Ms. Isaacs did not pay any income tax resulting from the AIG transaction, which, as noted below, was later unwound, but not by the deadline for filing income tax returns for 2006. Petitioner does not satisfy its burden by relying implicitly on taxpayer noncompliance, in the face of comprehensive reporting requirements. On the other hand, given Ms. Isaacs' modest income, additional deductions for disabled dependents, and the vestigial progressivity of the federal personal income tax, the ongoing annuity payments would possibly escape taxation.

   17. In attempting to portray Respondent's sale of the AIG annuity policy as inappropriate, Petitioner attempted to prove that Ms. Isaacs had been justly satisfied with her (second) AXA Equitable annuity. Toward this end, the AXA Equitable agent

       
       

       testified that Ms. Isaacs had no complaints about her AXA Equitable product(s). But this testimony failed to account for the facts that Ms. Isaacs canceled her first AXA Equitable annuity policy after one year and her second AXA Equitable annuity policy after only four months. Given Ms. Isaacs' modest resources, her desire for monthly, not annual, income payments was reasonable and justified her preference for the AIG annuity policy over the second AXA Equitable annuity policy, notwithstanding other advantages that the second AXA Equitable annuity policy may have had over the AIG annuity policy.

   18. In the final analysis, Ms. Isaacs emerges, not as an unsophisticated annuity consumer, but as someone who could not decide what she wanted in an annuity contract, even after she had purchased several. Counting her decision to take cash rather than annuity-like payments from her CIT pension, in a little over 18 months, Ms. Isaacs changed the form of her annuity investments three times. Her long experience with security agreements held by a major finance corporation necessarily taught her two things--the importance of documentation and that there are no free lunches, especially when dealing with the financial industry. It is thus impossible to portray Ms. Isaacs as naïve in the matter of purchasing annuities.

       
       

   19. To the contrary, although Ms. Isaacs understood that annuity contracts all contained a complex set of bargained-for rights and responsibilities, she was quite willing, after closing on her purchases, to repudiate her agreements and attempt to negotiate new terms and conditions. What is noteworthy about Ms. Isaacs is her success in post-closing negotiations. As noted above, she managed, at no cost, to replace her original AXA Equitable annuity policy with the second AXA Equitable annuity policy. And, as noted below, she managed this feat a second time.

   20. Without doubt, Ms. Isaacs understood the long-term nature of annuity investments and the cash surrender penalties attached to all three of her annuity policies. Even if she somehow did not know of the 30-day free-look period attached to the AIG annuity policy, she should have known of this provision, given her recent experience with her AXA Equitable agent and the prominent disclosure of this right in the AIG annuity policy. But, for Ms. Isaacs, the free-look period extended far beyond 30 days, as reflected by these facts: 1) 18 months after purchasing the AIG annuity policy, Ms. Isaacs was still trying to negotiate, post-purchase, a more favorable interest rate and

       2) AIG and AXA Equitable eventually yielded to Ms. Isaacs' demands and restored her, at no cost, to where she was immediately prior to the exchange of the second AXA Equitable

       
       

       annuity policy for the AIG annuity policy. Thus, Petitioner's proof concerning the adequacy of the disclosures concerning the long-term nature of the AIG contract, the cash surrender penalties of the AXA Equitable contract, and the 30-day free- look period for the AIG contract fails for another reason, unique to the circumstances of this case: in retrospect, these cash-surrender and free-look provisions were entirely immaterial to Ms. Isaacs, as neither insurer enforced its cash surrender provision, and AIG did not enforce the 30-day limit to the right to rescind.

   21. Most of Respondent's insurance career has been spent in selling industrial life insurance, which is also known as debit or burial insurance. From the insured's perspective, industrial life insurance provides low-value policies with limited death benefits and high premiums that are often collected in person by the agent. In the past, agents visited insureds to collect the premiums on a weekly basis, but agents now collect the premiums mostly on a monthly basis. Industrial life insurance imposes on the agent considerable responsibilities in collecting the premiums and remitting them to the insurer and preventing lapses through nonpayment of premiums and imposes relatively few responsibilities in originating new policies. The industry nomenclature reflects these responsibilities: sales agents are also known as debit

       
       

       agents, the agent's policyholders are known as the debit book, and the route to collect premiums from the policyholders is known, simply, as the debit. See NLRB v. United Ins. Co. of Amer., 390 U.S. 254 (1968); United Ins. Co. v. Dienno, 248 F.

       Supp. 553 (E.D. Pa. 1965).

       
       

   22. Respondent has worked with several industrial life insurance insurers that, through a series of transactions, eventually became Monumental. Over a 15-year span, Respondent was employed for two years as a sales agent, eight years as a sales manager, and four years as a district manager. While district manager of the Miami office, Respondent managed 30 sales agents handling $4 million of premiums annually.

   23. After leaving Monumental, Respondent worked about six years for AIG selling employee benefit packages and later general insurance products. It is during this latter period that Respondent sold the AIG annuity policy to Ms. Isaacs, described above. Respondent enjoyed little success and, in September 2007, perhaps fancifully describing his departure from AIG as a "retirement," Respondent rejoined Monumental as a sales agent. Assigned the only available debit, which was in Belle Glade, Respondent resided in the Miami area and had to drive 100 miles one way to reach his closest debit account.

   24. The Belle Glade debit was in bad shape when Respondent acquired it. The previous sales agent had not maintained the

       
       

       accounts accurately. However, Respondent soon exacerbated the situation by his own poor bookkeeping practices.

   25. Respondent admits that he did not use the laptop computer that his sales manager, Michael Weintraub, had assigned to him for use in recording payments collected on the debit and deposits in the Monumental bank account, as well as making reconciliations. Respondent testified that the laptop was too heavy to lug around and did not have enough battery power. Although Mr. Weintraub gave him an AC adapter so the Respondent's car could power the computer, Respondent complained that none of the agents used the adapter. The insubstantiality of these excuses require no elaboration.

   26. Upon receipt of payments from policyholders, the debit agent is required to issue receipts. This requirement is especially important due to the large number of cash transactions. Regardless of the form of payment, though, Monumental requires each of its debit agents to deposit in its bank account all of the collections by the end of the second day after inputting these payments into the computer. Prohibiting its agents from withholding their commissions from these deposits, Monumental pays the commissions separately after it has received the gross premiums.

   27. Each morning, Respondent left his home at 7:30 am or 8:00 am. Many debit accounts are serviced at the policyholders'

       
       

       homes, but many policyholders are not home until they finish work. This meant that Respondent often had to work after dinner riding his debit. Although Respondent could key in collections in an office in Belle Glade and at the few homes of policyholders equipped with the internet, Respondent often had to input the collections after returning home late into the evening or very early the following morning. Weary, Respondent invited trouble by sometimes relying on his memory, rather than notes, for making these date entries and reconciliations, which required him to allocate collections among premiums, repayments of principal on policy loans, payment of interest on policy loans, and payment of other fees and charges. Then, by 8:00 am the next day, Respondent was back on the road, again riding his debit.

   28. Respondent complained that, at some point while Respondent was assigned the Belle Glade debit, Mr. Weintraub added to Respondent's debit book more policyholders, many of whom were slow-paying and none of whose accounts had recently been audited. This complaint has more merit than the complaints about the laptop computer, but not much more. Respondent was uniquely qualified, given his years' experience in selling industrial life insurance, to examine this new business and identify shortfalls in individual accounts, but he never did so.

       
       

       Instead, Respondent applied his haphazard means of accounting for payments to these troublesome new accounts.

   29. Late in 2008, Mr. Weintraub decided to perform an audit of Respondent's debit book. Although Mr. Weintraub was now a district manager--a position that he held for one year before Monumental restored him to his previous position as a sales manager--he did not wish to rely on an inexperienced sales manager to perform the audit. Mr. Weintraub found errors in every account of Respondent and recommended that Monumental terminate Respondent. Without delay, Monumental did so, effective November 7, 2008, and Mr. Weintraub "turned off his computer and fired him."

   30. Following the termination of Respondent, Monumental conducted a three-month audit of Respondent's debit book, in which Mr. Weintraub or another Monumental employee visited each policyholder, and found that Respondent had issued receipts for about $4600 in premiums that had never been remitted to Monumental. Monumental paid these premiums and reinstated the three life insurance policies that had been lapsed. Many other persons claimed to have paid premiums to Respondent, but failed to produce receipts, and Monumental denied all of their claims for credit or reinstatement.

   31. Monumental subsequently demanded repayment of the unremitted $4600, and Respondent has declined to do so.

       
       

   32. Respondent seemed more intent on showing that he did not steal money than that he competently discharged his duties. Toward the end of the hearing, Respondent asked when he and a Monumental representative would get together to arrive at the exact shortfall, revealing that he may have understood that he owes at least some of the $4600, but also that he has treated casually his obligation to repay this sum. The problem for Respondent's defense as to Count II is that the evidence establishes: 1) Respondent negligently and recklessly handled his debit accounts; 2) Respondent's handling of these accounts was inexcusable, and 3) as a result, Respondent failed to remit to Monumental about $4600 in payments from policyholders, even after Monumental demanded payment of this sum. The first two findings are sufficient to establish Respondent's unfitness to engage in the business of insurance, and the third finding is sufficient to establish that Respondent unlawfully withheld

       money owed an insurer.

       
       

       CONCLUSIONS OF LAW

       
       

   33. The Division of Administrative Hearings has jurisdiction over the subject matter. §§ 120.569 and 120.57(1), Fla. Stat. All statutory references are to Florida Statutes (2006).

       
       

   34. Section 626.611 provides:

       
       

       The department shall deny an application for, suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, agent, title agency, adjuster, customer representative, service representative, or managing general agent, and it shall suspend or revoke the eligibility to hold a license or appointment of any such person, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist:

       
       

       * * *

       
       

       (5) Willful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising.

       
       

       * * *

       
       

       (7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

       
       

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       1. Fraudulent or dishonest practices in the conduct of business under the license or appointment.

          
          

       2. Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license or appointment.

       
       

   35. Section 626.621 provides:

       
       

       The department may, in its discretion, deny an application for, suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, agent, adjuster, customer representative, service representative, or managing general agent, and it may suspend or revoke the eligibility to hold a license or appointment of any such person, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 626.611:

       
       

       * * *

       
       

       (6) In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part IX of this chapter, or having otherwise shown himself or herself to be a source of injury or loss to the public.

       
       

       * * *

       
       

       1. If a life agent, violation of the code of ethics.

          
          

   36. Section 626.561(1) provides:

       
       

       All premiums, return premiums, or other funds belonging to insurers or others received by an agent, insurance agency, customer representative, or adjuster in transactions under the license are trust funds received by the licensee in a fiduciary capacity. An agent or insurance agency shall keep the funds belonging to each insurer for which an agent is not appointed, other than a surplus lines insurer, in a separate account so as to allow the department or office to properly audit such funds. The licensee in the applicable regular course of business shall account for and pay the same to the insurer, insured, or other person entitled thereto.

       
       

   37. Petitioner must prove the material allegations by clear and convincing evidence. Dep't of Bank. & Fin. v. Osborne Stern & Co., Inc., 670 So. 2d 932 (Fla. 1996).

   38. For the reasons set forth in the Findings of Fact, Petitioner has failed to prove any of the material allegations against Respondent as to the Isaacs transaction.

   39. However, Petitioner has proved that Respondent has violated sections 626.611(7) and (10) as to the payments that Respondent failed to remit to Monumental, even after Monumental demanded repayment. Respondent displayed a lack of fitness or trustworthiness to engage in the business of insurance, and he unlawfully withheld money belonging to Monumental that he had acquired in the conduct of insurance business.

   40. Florida Administrative Code Rule 61B-231.080(7) and

       
       

       1. provides for suspensions of six months and 12 months, respectively, for violations of section 626.621(7) and (10). The same conduct constitutes the violation of both subsections, so only the greater penalty is applicable.

   41. Rule 69B-231.160 lists the factors to consider in mitigating or aggravating a penalty. These factors include the degree of actual or potential harm to the victim, the presence of restitution, the financial gain to the licensee, and prior discipline.

       
       

   42. After considering these factors, the recommended 12- month suspension should be increased to 15 months. To this point, Monumental has lost about $4600, for which Respondent has made no restitution. It is doubtful that there is a more vulnerable class of insureds than the Belle Glade residents who made up Respondent's debit book. But the proof does not allow consideration of any injuries possibly suffered by persons who claimed to be policyholders, but were unable to produce receipts; Petitioner failed to prove that Respondent mishandled any payments from these persons.

   43. During Respondent's long history in the industrial life insurance business, he has not received any serious discipline. Also, the range of behavior described by section 626.611(10) includes intentional offenses, which should be punished more severely. Petitioner did not prove that Respondent consciously intended to steal money from the policyholders and Monumental. Petitioner proved only that Respondent has retained about $4600 in client payments by his negligent and reckless bookkeeping, even though he intentionally declined to repay this sum in response to Monumental's demand and has intentionally thereafter failed to try to initiate communications with Monumental identify the amount due and repay it. In light of these factors, the length of the suspension should be increased by three months.

RECOMMENDATION

It is RECOMMENDED that Petitioner enter a final order dismissing Count I, finding Respondent guilty of violating section 626.611(10) in Count II, and suspending Respondent's insurance licenses for 15 months.

DONE AND ENTERED this 24th day of April, 2012, 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

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

Filed with the Clerk of the Division of Administrative Hearings this 24th day of April, 2012.

COPIES FURNISHED:

David J. Busch, Esquire Department of Financial Services

Division of Legal Services 612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399 david.busch@myfloridacfo.com

Andrew O'Niel Bryan

17635 Southwest 32nd Street Miramar, Florida 33029-2328

Julie Jones CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-0390

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: 11-001074PL

Orders for Case No: 11-001074PL