STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT OF ) BANKING AND FINANCE, DIVISION OF ) SECURITIES, )

)

Petitioner, )

)

vs. ) CASE NO. 78-1269

)

FRED MERCURO, JR., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James E. Bradwell, held a public hearing in this case on March 30, 1979, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Frarklyn J. Wollett, Esquire

Office of the Comptroller The Capitol

Tallahassee, Florida 32301 For Respondent: 1/

By its administrative charges and complaint filed on or about June 5, 1978, the Petitioner seeks a revocation of the Respondent's registration as a salesmen of securities in this state pursuant to Section 517.16, Florida Statutes, essentially on grounds that the Respondent engaged in fraudulent transactions, falsification or concealment of facts by luring investors into investing in land notes and by inflating the value of the land on which the notes were secured without any attempt on his part to determine the actual value of such properties.

Based upon by examination of the entire record herein, including the exhibits introduced during the hearing, the following relevant facts are found.

FINDINGS OF FACT

1. The Respondent, Fred Mercuro, Jr., is a registered salesman of securities and has been since on or about May 12, 1976, and currently holds license Number 3946, which was issued by the Petitioner on or about January 1, 1978.

   
   

2. On March 16, 1978, Respondent pled guilty to four counts of fraudulent sale of securities in violation of Section 517.301, Florida Statutes.

3. The Respondent's plea of guilty was made in recognition of the following factual basis:

   
   

   1. That from June 1, 1974, to June 1, 1975, Respondent was president of Florida First Mortgages, Inc. During this period, Respondent employed, supervised and directed the activities of Clarence Stern and Martin Mayer, who held salesmen positions with Florida First Mortgages, Inc. During this period, Florida First Mortgages, Inc., sold notes for High Ridge Associates, Inc., which were backed by mortgages on property known as High Ridge Estates in Clay County, Florida. Under Respondent's direction and supervision and with his knowledge, employee Stern sold High Ridge notes and mortgages to Jacob Craig, David Wilding and Morris Feldman. Also under Respondent's direction and supervision and with his knowledge, Martin Mayer sold a High Ridge note and mortgage to Richard Sanders. Under Respondent's direction and supervision and with his knowledge, employees Stern and Mayer made the following statements to Jacob Craig, Morris Feldman, David Wilding and Richard Sanders:

      
      

      1. That the land upon which the investors were to receive mortgages was worth twice the amount invested or that the land was worth in excess of

         $5,000.00. Respondent made such statements in an effort to induce the above investors to believe that their investment was safe because of the value of the land and that the statement was made as an inducement to inflate the actual market value of the property. These statements respecting the market value were based upon an appraisal of High Ridge Estates prepared by Elmer Mullen which did not reflect the then existing fair market value of the High Ridge property, but rather, reflected the value of other developed properties sold by corporate sellers to out-of-state buyers over the phone on long-term agreements for deed. Respondent made no effort to determine the actual market value of the High Ridge property nor did he inform the investors that the appraisal was not based on actual sales of property in High Ridge Estates.

         
         

      2. The Circuit Court of the Fifteenth Judicial Circuit, Criminal Division, in and for Palm Beach County, Florida, in Criminal Information 77- 1933-CF, accepted the Respondent's plea of guilty, withheld adjudication of guilt and placed the Defendant Mercuro on probation for five years and fined him

         $5,000.00. As a condition of probation, Respondent Mercuro was required to voluntarily surrender, relinquish and divest himself of all licenses granted to him by the State of Florida with the exception of driving and fishing licenses within ninety (90) days of the date of the imposition of the Court's sentence. (See Petitioner's Exhibits 1 and 2.)

         
         

      3. Respondent offered no evidence to refute the documentary evidence received during the course of this hearing.

         
         

         CONCLUSIONS OF LAW

         
         

      4. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action. Chapter 120.57(1), Florida Statutes.

         
         

      5. The authority of the Petitioner is derived from Chapter 517, Florida Statutes.

         
         

      6. The parties were duly noticed pursuant to the notice provisions of Chapter 120, Florida Statutes.

      7. Subsection 517.16(1)(c), Florida Statutes, provides in pertinent pert that a registrant under Section 517.12 (under which pro vision Respondent was licensed) may be revoked or suspended by the Department if, after a reasonable notice and a hearing, the Department determines that such applicant or registrant so registered:

         
         

         1. Has been guilty of a fraudulent act in connection with any sale of securities...

         2. Has made any misrepresentation or false statement to, or concealed any essential or material fact from, any person in the sale of a security

to such person;...

(h) Has demonstrated his unworthiness to transact the business of dealer or salesman;. "

1. Additionally, Rule 3E-30.10, Florida Administrative Code, provides in relevant part that prima facie evidence of unworthiness to transact the business of a dealer, investment advisor, executive officer or salesman in the State of Florida shall include, but shall not be limited to:

   
   

   (2) any federal agency. . . or any court of competent jurisdiction."

   
   

2. Further, Section 517.301, Florida Statutes, provides in relevant part:

   
   

   517.301 Fraudulent transactions; falsification or concealment of facts.--It is unlawful, and a violation of the provisions of this part, for any person:

   1. To employ any device, scheme, or artifice to defraud;

   2. obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading;

   3. to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon any person

   in connection with the purchase or sale of any security.

   * * * * *

   (3) In any matter within the jurisdiction of the department, to knowingly and willfully falsify, conceal, or cover up, by any trick, scheme, or device, a material fact, or make any false, fictitious, or fraudulent statement or representation, or make or use any false writing or document, knowing the same to contain any false, fictitious, or fraudulent statement or entry.

   
   

3. Based thereon, competent and substantial evidence was offered during the course of this hearing which would authorize or provide a basis for the Petitioner to revoke the Respondent's registration.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions, it is hereby, RECOMMENDED:

That the Respondent's registration as a salesman of securities (license Number 3946) be REVOKED.

RECOMMENDED this 3rd day of May, 1979, in Tallahassee, Florida.

JAMES E. BRADWELL

Hearing Officer

Division of Administrative Hearings Room 101, Collins Building

Mail: 530 Carlton Building Tallahassee, Florida 32301

(904) 488-9675

ENDNOTE

1/ Although properly noticed, the Respondent, Fred Mercuro, Jr., failed to appear or otherwise have representatives at the hearing to offer any evidence to defend or otherwise refute the allegations contained in the Petitioner's administrative charges and complaint filed herein.

COPIES FURNISHED:

Honorable Gerald A. Lewis Comptroller of Florida The Capitol

Tallahassee, Florida 32301

Franklyn J. Wollett, Esquire Office of the Comptroller The Capitol

Tallahassee, Florida 32301

Fred Mercuro, Jr. 4020 Galt Ocean Drive

Fort Lauderdale, Florida 33308

Stephen H. Rose, Esq.

2000 S. Dixie Highway, Suite 209

Miami, Florida 33133

Docket for Case No: 78-001269

Orders for Case No: 78-001269