STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT OF ) PROFESSIONAL REGULATION, BOARD ) OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 79-1029

) P.D. 3452-DADE COUNTY CAROL S. REED, and FANTASY REALTY, )

INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was held before Charles C. Adams, a Hearing Officer with the Division of Administrative Hearings. The hearing was conducted on July 18, 1979, at 1:00 p.m. in the State Office Building, Room 359, 1350 Northwest 12th Avenue, Miami, Florida.

APPEARANCES

For Petitioner: Kenneth M. Meer, Esquire

Staff Counsel

Board of Real Estate Post Office Box 1900 Orlando, Florida 32802

The Respondents had been provided adequate notice of the hearing but did not attend.

ISSUES

The Administrative Complaint in this cause contains four counts. Count I charges that the Respondent, Carol S. Reed, while acting in the capacity of a real estate broker in the property transaction between Joel A. Savitt, Seller, and Branko Lukas, buyer, provided false information about the terms and conditions of the sale, to the extent that the Respondent fraudulently received

$7,000 to which she was not entitled and kept that money for her benefit and by such action, was guilty of fraud, concealment, false pretenses, and breach of trust in a business transaction in the State of Florida, in violation of Subsection 475.29(1)(a), Florida Statutes. Count II charges the Respondent, Carol S. Reed, with converting the $7,000 in question to her own use or some other purpose than for which it was entrusted to her by the buyer, by depositing the money in her checking account and thereby she is allegedly guilty of dishonest dealing in a business transaction in the State of Florida, in violation of Subsection 475.25(1)(a), Florida Statutes.

Count III accuses the Respondent of depositing the $7,000 in a personal bank account which is not designated for use by the Respondent as an escrow trust account in violation of Subsection 475.25(1)(a), Florida Statutes.

Count IV alleges that the Respondent, Carol S. Reed, by her dealings in the transaction above is guilty of a course of conduct which shows that she is so dishonest, that money, property, transactions, and rights of investors or those with whom she may sustain a confidential relationship may not safely be entrusted to her, in violation of Subsection 475.25(3), Florida Statutes.

Fantasy Realty, Inc., is named as a Respondent in the Administrative Complaint; however, there are no substantive allegations against Fantasy Realty, Inc., set forth in the Administrative Complaint.

FINDINGS OF FACT

1. This cause comes on for consideration based upon the Administrative Complaint filed by the Petitioner, State of Florida, Department of Professional Regulation, Board of Real Estate, against the Respondents, Carol S. Reed and Fantasy Realty, Inc. This complaint is identified as Petitioner's Progress Docket No. 3452-Dade County.

   
   

2. At all times pertinent to this Administrative Complaint, the Respondent, Carol S. Reed, was the holder of a license to act as a real estate broker in the State of Florida. This license was issued by the then Real Estate Commission which has become the Board of Real Estate. A copy of this license and the Respondent, Carol S. Reed's application for licensure may be found as the Petitioner's Composite Exhibit No. 2 admitted into evidence.

   
   

3. During the same time period, Fantasy Realty, Inc., was licensed as a corporate broker by the Florida Real Estate Commission, now Board of Real Estate. A copy of this license and request for renewal of the initial certificate for certificate for corporation/partnership may be found as Petitioner's Composite Exhibit No. 3 admitted into evidence.

   
   

4. The Petitioner, State of Florida, Department of Professional Regulation, Board of Real Estate, is an agency of the State of Florida charged with the duty to regulate those individuals who are engaged in the sale of real estate in the State of Florida. This function includes the requirement of licensure and disciplinary action on those occasions when registrants violate the provisions of the laws and rules associated with the Petitioner's function.

   
   

5. The facts in this case reveal that Joel A. Savitt of Dade County, Florida, decided to sell a condominium identified as Unit 9-E, Jockey Club Condominium Unit No. 1, according to the Declaration of Condominium recorded in the Official Records Book 6152 at page 51, Dade County, Florida. Mr. Savitt was asking $165,000 from the sale of his condominium and this was made known to the real estate brokers involved in the sale. In connection with his efforts at selling this real estate, he listed the property with Nancy Conli, Realtor, and Jockey Club Realty, Inc.

   
   

6. One Branko Lukas, a resident of Farmington Hills, Michigan, eventually purchased the property and the Respondent, Carol S. Reed, assisted him in her capacity as real estate broker for Fantasy Realty, Inc.

   
   

7. The seller, Joel A. Savitt, had also enlisted the assistance of Donald Flanse to assist in the sale of the property.

8. Ms. Reed had a couple of conversations with Flanse, in the course of which she led Flanse to believe that the buyer, Lukas, would only pay $158,000 for the property. Savitt agreed to that price, believing that this was Lukas' best offer.

   
   

9. In fact, Lukas was willing to pay $165,000 for the property, but had acquiesced in a scheme developed by the Respondent, Reed, which created the appearance at the closing held on the property, that only $158,000 was being paid. Under this scheme, Lukas paid $17,000 as an earnest deposit; $10,000 of which was written to the Jockey Club Reality, Inc., which in turn placed the money in its escrow account and that deposit was reflected as part of the

   $158,000 cost shown in the closing statement. The additional $7,000 deposit earnest money deposit was paid directly to Carol S. Reed on a check drawn by Branko Lucas. By way of explanation, Reed had told Lukas that Mr. Savitt would only agree to sell the property if the $7,000 was received separately and she in turn would give that money to Mr. Savitt.

   
   

10. After the closing, Lukas decided to discuss the matter of the $7,000 with his attorney, Robert Trescott. After this conversation, Mr. Trescott then contacted Flanse to indicate that there were some discrepancies in the sale, specifically, that Trescott's client, Lukas, understood there had been a $7,000 check given to Mr. Savitt "under the table". This conversation took place after Trescott had spoken to the Respondent subsequent to the closing, at which point Reed had told Trescott that the reason for the $7,000 not being reflected in the closing was that there was some tax problem which Savitt was having, and this problem would not allow the money to be reflected and, in addition, that Savitt and Flanse were part of a criminal organization, the Mafia, and any further inquiry about the $7,000 might promote serious repercussions for those persons making the inquiry.

    
    

11. Trescott's follow-up investigation showed that, neither Savitt nor Flanso are members of any underworld organization. Savitt did not have a tax problem when this sale took place, and it was not the desire on the part of Savitt to receive the $7,000 separately. He had accepted the $158,000 offer, believing that this was the only amount that Lukas was willing to pay, when in fact Lukas was willing to pay $165,000. The Respondent had created a misimpression in the mind of the seller concerning the amount that the buyer was willing to pay and a misimpression in the mind of the buyer in terms of the method by which the payment should be made.

    
    

12. The $7,000 at issue was deposited in Respondent Reed's personal bank account at the Second National Bank of North Miami, North Miami, Florida, and has never been paid to Savitt or returned to Lukas. No other persons involved in this real estate transaction have received the proceeds from that $7,000 check.

    
    

13. Carol S. Reed, through Fantasy Realty, Inc., did receive $1,580 as earned commission on the transaction and this was an amount which the Respondents were entitled to receive.

    
    

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has, jurisdiction over the parties and subject matter of this cause.

15. When the facts are analyzed, the necessary proof has been established to show that Carol S. Reed has been guilty of fraud, concealment, false pretenses and breach of trust in the Savitt property sale business transaction in the State of Florida, in violation of Subsection 475.25(1)(a), Florida Statutes, as alleged in Count I. In addition, the Respondent, Carol S. Reed's act of depositing the $7,000 check from Lukas in her private bank account in the Second National Bank of North Miami, North Miami, Florida, was effectively a conversion of those funds to her use or to some use other than as intended by the buyer, and this constituted dishonest dealing in a business transaction in the State of Florida in violation of Subsection 475.25(1)(a), Florida Statutes, as alleged in Count II. The Respondent, Carol S. Reed, is also guilty of a violation alleged in Count III in That the act of placing the $7,000 check in her personal account with Second National Bank of North Miami, North Miami, Florida, was a failure on her part to immediately place the check entrusted to her by a person dealing with her as a broker, in an escrow account with a title company or banking institution or savings and loan association located and doing business in Florida, or in a trust or escrow bank account maintained by her or by the Respondent, Fantasy Realty, Inc., such bank or saving loan association located or doing business Florida, all in violation of subsection 475.25(1)(i), Florida Statutes. Finally, the facts in the Savitt transaction demonstrates that the Respondent, Carol S. Reed, is guilty of a course of conduct which shows that she is so dishonest that the money, property, transactions and rights of investors, or those with whom she may sustain a confidential relationship may not be safely entrusted to her and she is, therefore, in violation of Subsection 475.25(3), Florida Statutes, as alleged through Count IV.

    
    

16. Although Respondent Reed was operating in the Savitt/Lukas transaction through Fantasy Realty, Inc., an organization which she served as president and treasurer, there is no showing that the Respondent, Fantasy Realty, Inc., as an entity shared in the swindle which brought $7,000 into Reed's personal bank account. The money which Fantasy Realty, Inc., received out of the transaction was $1,580, a commission to which it was entitled. There is an even more fundamental problem with this case as it relates to the corporate broker, Fantasy Realty, Inc. The problem exists because the Administrative Complaint did not make a substantive allegation against Fantasy Realty, Inc., related to any of the counts set out. Nonetheless, in view of the fact that Reed was the principal officer and active real estate broker for Respondent, Fantasy Realty, Inc., the loss of her license could affect the corporate license of Fantasy Realty, Inc. See Section 475.15, Florida Statutes. Any action taken in accordance with the provisions of Section 475.15, Florida Statutes, must be in accordance with the operation of that provision due to the penalties imposed against the Respondent, Carol S. Reed, as opposed to action taken against Fantasy Realty, Inc., for specific substantive violations committed by that entity on this occasion.

RECOMMENDATIONS

In connection with the allegations placed against the Respondent, Carol S. Reed, it is,

RECOMMENDED:

That the real estate broker's license of Respondent, Carol S. Reed, be suspended for a period of two (2) years for the violations established through Count I; that Respondent, Carol S. Reed, have her real estate broker's license suspended for a period of two (2) years for the violation established through Count II, to run concurrently with the penalty found in Count I; that the

Respondent, Carol S. Reed, have her real estate broker's license suspended for a period of two (2) years for the violation established in Count III, to run concurrently with the penalty in Count I; and that the Respondent, Carol S. Reed, have her real estate broker's license revoked for the violation established in Count IV. It is recommended that this action against the corporate broker's license of Fantasy Realty, Inc., be dismissed.

DONE AND ORDERED this 9th day of August, 1979, in Tallahassee, Florida.

CHARLES C. ADAMS

Hearing Officer

Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 9th day of August, 1979

COPIES FURNISHED:

Kenneth M. Meer, Esquire

Department of Professional Regulation Board of Real Estate

Post Office Box 1900 Orlando, Florida 32802

Ms. Carol S. Reed

1655 North East 115th Street Apartment 14-B

North Miami, Florida 33161

Fantasy Realty, Inc. 11510 Biscayne Boulevard

North Miami, Florida 33161

Docket for Case No: 79-001029

Orders for Case No: 79-001029