STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA REAL ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 77-1275

)

JAMES HENKEL, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in the above-captioned matter, after due notice, at Coral Gables, Florida, on November 7, 1977 before the undersigned Hearing Officer

APPEARANCES

For Petitioner: Richard J. R. Parkinson and

Louis Guttnan, Esquires Associate Counsel

Florida Real Estate Commission 2699 Lee Road

Winter Park, Florida 32789

For Respondent: Respondent appeared in his own behalf.

ISSUE PRESENTED

Whether Respondent's license issued by Petitioner should be revoked or suspended, or the licensee be otherwise disciplined, for alleged violations of Sections 475.25(1) (a) and 475.25(3) Florida Statutes as set forth in the Administrative Complaint. This case was consolidated for hearing with that of other respondents by Order of the undersigned Hearing Officer dated August 8, 1977. The consolidated cases heard on November 7, 1977 are as follows:

Case No. 77-1269, Florida Real Estate Commission vs. John Glorian and General American Realty Corporation

Case No. 77-1275, Florida Real Estate Commission vs. James Henkel

Case No. 77-1277, Florida Real Estate Commission vs. Alfred Landin

Case No. 77-1278, Florida Real Estate Commission vs. Joseph Macko

The evidence in this case consisted solely of the testimony of the Respondents in the above listed four cases, and Petitioner's Composite Exhibit 2 (Petitioner's Exhibit 1 withdrawn) which consisted of certain written material furnished to prospective clients by the Florida Landowners Service Bureau, including a listing and brokerage agreement sample form.

Petitioner sought to elicit the testimony of Kenneth Kasha and Theodore Dorwin, but both of these prospective witnesses invoked their Fifth Amendment privilege against self-incrimination and declined to testify in this case. After inquiring into the basis of their claims, the Hearing Officer permitted the same and they were excused from the hearing. Both individuals based their claims on the fact that they are currently under criminal investigation by state law enforcement authorities with respect to their prior activities as real estate brokers in advance fee transactions. Although Petitioner contended that Dorwin had waived his privilege by testifying in prior administrative proceedings brought by the Florida Real Estate Commission which led to the revocation of his broker's license, and that Kasha also had waived his privilege by testifying in an administrative proceeding brought by the Florida Division of Land Sales and Condominiums concerning advance fee sales, it was determined by the Hearing Officer that any such waivers did not extend to the instant proceeding.

Petitioner then sought to introduce into evidence the prior testimony of Dorwin and Kasha in the aforementioned administrative proceedings, but such admission was not permitted by the Hearing Officer because the Respondents herein had not been afforded an opportunity to cross examine the witnesses at the time they gave such testimony.

Respondent James Henkel appeared at the hearing after it had commenced unaccompanied by legal counsel. The Hearing Officer advised him of his rights in the administrative hearing.

Respondent Henkel is a registered non-active real estate sales percentian, and was at all times alleged in the Administrative Complaint, a registered salesman in the employ of General American Realty Corporation, a registered corporate broker (Petitioner's Exhibit 4).

FINDINGS OF FACT

1. General American Realty Corporation was first registered by Petitioner as a corporate broker in 1970. In 1972 John Glorian became the president of the firm and active broker. He was hired by Richard T. Halfpenny who was the owner and principal stockholder at the time. Alfred Landin, a registered real estate salesman, joined the firm in February, 1975. At that time, General American was in the business of selling acreage property in Florida. In the summer of 1975, Glorian recommended to Halfpenny that the firm become involved in the "advance fee" business. Such transactions in the trade involved the telephone solicitation of out-of-state landowners to list their land in Florida for sale with a Florida broker for a prescribed fee which would become part of any sales commission if and when the particular property was sold. Halfpenny expressed no objections to the idea and Glorian thereafter contacted Theodore Dorwin who was then associated with Florida Landowners Service Bureau in Miami. Kenneth Kasha was the President of that firm which was involved in the advance fee business. Glorian introduced Dorwin to the firm's salesmen, who included Joseph Macko, James H. Henkel, and Landin. Dorwin instructed these personnel in the method of soliciting prospective clients and provided an outline of the information that was to be given to those individuals called by the salesmen. He told the General American personnel that once the property was listed with Florida Landowners Service Bureau, it would be advertised in newspapers and catalogs, and that bona

   fide efforts would be made by his organization to sell the property. (Testimony of Glorian, Landin, Petitioner's Composite Exhibits 5-6).

   
   

2. General American commenced its advance fee operation approximately August, 1975. The procedure followed was for a salesman to call an out-of-state landowner picked from a computer print-out list and inquire if he would be interested in selling his property at a higher price than he had paid for it. This was termed a "front" call and the salesman was termed as "fronter". If the prospect expressed interest in listing his property, his name was provided to Florida Landowners Service Bureau who then mailed literature to the property owner describing the efforts that would be made by that organization to sell his property. Also enclosed with this material was a listing and brokerage agreement. This agreement provided that the owner of the property would pay a prescribed listing fee to Florida Landowners Service Bureau which would be credited against a ten percent commission due that firm upon sale of the property. In return, Florida Landowners Service Bureau agreed to include the property in its "listing directory" for a one-year period, direct its efforts to bring about a sale of the property, advertise the property as deemed advisable in magazines or other mediums of merit, and to make an "earnest effort" to, sell the property. The accompanying literature explained that the listing fee was necessary in order to defray administrative costs of estimating the value of the property, merchandising, advertising, brochuring, and cataloging the information. The material also stated that advertising would be placed in various foreign countries and cities of the United States. In addition, it stated that Florida Landowners Service Bureau would "analyze" the property, comparing it to adjacent property to arrive at a price based on recent sales of neighboring property, and also review the status of development and zoning in the immediate area of the property to' assist in recommending a correct selling price for approval by the owner.

   
   

3. During the course of their calls to prospects, Macko, Henkel, and Landin advised them that the property would be advertised internationally and in the United States, and that bona fide efforts would be made by Florida Landowner "service Bureau to sell the property. All salesmen represented themselves to be salesmen for that organization. Henkel told prospects that foreign investors were buying Florida property; however, in fact, he was unaware as to whether any property had ever been sold by Florida Landowners Service Bureau and never inquired in this respect. Henkel and Landin had observed copies of the literature sent to prospects in the General American office, but Macko had only seen the listing agreement.

   
   

4. After the promotional literature was sent to a prospect, the General American salesmen made what were called "drive" calls to answer any questions and to urge that the property be listed. After making these calls, the salesmen had no further contact with the property owner. The listing fee initially was

   $250 and was later raised to $350. The salesman received approximately one third of the fee. Glorian was paid several hundred dollars a month by General American, but received no portion of the listing fees. He was in the office once or twice a week to supervise the activities of the salesmen who made their telephone calls during the evening hours. Halfpenny was seldom there and did not take an active part in the advance fee operation.

   
   

5. None of the salesmen or Glorian were aware that any of the property listed with Florida Landowners Service Bureau was ever sold and none of them ever saw any advertising, although Land in saw a catalog of listings at one time. Although Macko customarily recommended a listing price of the property to prospects based on the general rise in value of land since the date of purchase,

   Henkel merely accepted the price desired by the property owners. General American terminated its advance fee business in early 1976 after being advised that Petitioner was conducting investigations into the advance fee business (Testimony of Macko, Landin, Henkel Glorian).

   
   

6. All of the Respondents in these cases testified at the hearing that they had made no false representations to prospects during the course of their telephone conversations and otherwise denied any wrongdoing.

   
   

   CONCLUSIONS OF LAW

   
   

7. Petitioner has charged the Respondent with violations of Section 475.25(1)(a) and 475.25(3) Florida Statutes. Petitioner's charges allege that the Respondent, while a salesman for General American Realty Corporation, solicited and obtained listings by telephone of property owners on behalf of Florida Landowners Service Bureau, and that as an inducement to list the property, falsely represented to the property owners that the property could be sold for several times the purchase price, would be advertised nationwide and in foreign countries, and that the company had foreign buyers wanting to purchase United States property. The complaint further alleges that the Respondent made such false representation to induce members of the public to pay advance listing fees while knowing that no bona fide effort would be made to sell any of the properties. As a result of these allegations, Petitioner charges the Respondent with a violation of Section 475.25(1)(a) Florida Statutes and also `seeks to establish a violation of Section 475.25(3) Florida Statutes. These provisions provide pertinently as follows:

   
   

   "475.25 Grounds for revocation or suspension.

   1. The registration of a registrant may be suspended for a period not exceeding 2 years, or until compliance with a lawful order imposed in the final order of suspension, or both, upon a finding of facts showing that the registrant has:

      1. Been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing, trick, scheme or device, culpable negligence, or breach of trust in any business transaction, in this state or any other state, nation, or territory; has violated a duty imposed upon him by law or

         by the terms of a listing contract, written, oral, express or implied, in a real estate transaction; . . . has formed an intent, design, or scheme to engage in any such misconduct, and has committed an overt act in furtherance of such intent, design

         or scheme.

         (3) The registration of a registrant may be revoked if . . . he shall be found guilty of a course of conduct or practices which show that he is so incompetent, negligent, dishonest or untruthful that the money, property, transactions and rights of investors or those with whom he may

         sustain a confidential relation,

         may not safely be entrusted to him."

8. Although the evidence establishes that the Respondent told prospects that their property would be advertised as alleged, and that foreign investors were buying Florida property, no evidence was presented that he made a statement that Florida Landowners Service Bureau had foreign buyers wanting to purchase listed property nor was there any showing that listed property had not been sold by that firm to foreign buyers. Neither was there any evidence that the property was not advertised as promised. Respondent had been told by his supervisors that bona fide efforts would be made to sell listed properties and the evidence failed to establish that such was not the case. Therefore, it is concluded that Petitioner has failed to establish any violations of the statutory provisions in question.

RECOMMENDATION

That the charges against Respondent James Henkel be dismissed.

DONE and ENTERED this 16th day of December, 1977, in Tallahassee, Florida.

THOMAS C. OLDHAM

Hearing Officer

Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Richard J. R. Parkinson, Esquire Louis Guttman, Esquire

Associate Counsel

Florida Real Estate Commission 2699 Lee Road

Winter Park, Florida 32789

James Henkel

c/o Dory Auerbach

456 Northeast 29th Street Miami, Florida 33137

Docket for Case No: 77-001275

Orders for Case No: 77-001275