STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

THEODORE D. WALKER, )

)

Petitioner, )

)

vs. ) CASE NO. 80-1991

) STATE OF FLORIDA, DEPARTMENT ) OF BUSINESS REGULATION, )

DIVISION OF PARI-MUTUEL )

WAGERING, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was held before Charles C. Adams, a Hearing Officer with the Division of Administrative Hearings. This hearing was conducted in Room 341A, Palm Beach County Courthouse, West Palm Beach, Florida. The date for hearing was December 16, 1988, commencing at 9:30 a.m.

APPEARANCES

For Petitioner: Robert L. Shevin, Esquire, and

David A. Gunter, Esquire SPARBER, SHEVIN, ROSEN, SHAPO

& HEILBRONNER, P.A.

30th Floor, 1 Southeast Third Avenue Miami, Florida 33131

and

Ronald Sales, Esquire Post Office Box 3187

West Palm Beach, Florida 33482

For Respondent: Daniel C. Brown, Esquire

Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32381

ISSUE

The question presented here concerns the entitlement of the Petitioner, Theodore D. Walker to be approved to serve as Chief of Security, Palm Beach Jai Alai, Palm Beach County, Florida, in the face of the Director, Division of Pari- Mutuel Wagering's disapproval of that request.

FINDINGS OF FACT

1. The Petitioner in this cause, Theodore D. Walker, has made application to serve as Chief of Security for the Fronton, Inc., in its fronton known as Palm Beach Jai Alai, Palm Beach County, Florida, for the seasons 1980-81. This

   request has been denied by the Respondent in the person of the Director of the Division of Pari-Mutuel Wagering. The justification for this denial is premised upon the alleged conflict of interest between the employment responsibilities of the Petitioner in his part- time employment as Chief of Security at the Palm Beach Fronton and his primary duty responsibilities as Lead Investigator in the State Attorney's office, Fifteenth Judicial Circuit, Palm Beach County, Florida, which is the State Attorney's office with jurisdiction over the County in which the Palm Beach Jai Alai is located. As authority for his denial, the Director has referred to Rule Subsections, 7E-3.03(11) and (12), Florida Administrative Code. 1/

   
   

2. The Petitioner has held seasonal employment as a security officer with the Fronton, Inc. in its West Palm Beach facility from 1965 until the Director's denial of approval which occurred on August 26, 1988. Beginning in 1972, Petitioner had been approved as Chief of Security at the aforementioned fronton.

   
   

3. Walker has worked as an investigator in the State Attorney's office, Fifteenth Judicial Circuit, continuously beginning in 1973, and at the time he was hired in his primary employment as investigator, he held the secondary employment as Chief of Security with the Palm Beach Fronton. The Honorable David Bludworth, State Attorney, Fifteenth Judicial Circuit, knew of Mr. Walker's secondary employment as Chief of Security for the fronton when Walker was hired.

   
   

4. Over the years, Walker has been promoted from the position of investigator to the position of Lead investigator. Presently his duties for the State Attorney's office involve assisting the attorneys in that office in the preparation of their cases for trial; original investigations that do not have their origins with other law enforcement agencies, in particular "white collar" crime, including public officials and law enforcement personnel and the primary responsibility to head up the "organized" crime unit of that State Attorney's office. In connection with his duties, the Petitioner is granted arrest powers and carries a weapon. As a full-time employee of the State, Walker is paid by the State of Florida. His salary is approximately $23,888 per year in contrast to his salary as a Chief of Security which has been in the amount of $14,888 for tax year, constituted of two meetings (seasons) at the fronton. (Pending the outcome of these matters, the Respondent's secondary employment with the Palm Beach Fronton, is that of floor supervisor at an undisclosed amount of compensation.)

   
   

5. Walker's responsibilities as Chief of Security for the fronton include the hiring and supervising of security officers; the security of the physical plant at the fronton, to include the ejection of unruly patrons with the assistance of local law enforcement; initial contact with individuals over betting disputes which are ultimately referred to the Respondent; initial investigation of irregularities involving the computer system utilized by the fronton in running its facility; supervision of watchmen; initial investigation of matters involving betting on credit; investigation of shortages of money involving employees of the Fronton end prohibiting prostitutes and "book makers" from plying their trades on the fronton premises. In connection with his duties as Chief of Security, the Petitioner has no special expertise in the field of computers.

   
   

6. When the Director of the Division of Pari-Mutuel Wagering disapproved the Respondent's request to serve as Chief of Security for the Fronton, Inc., he contended and continues to hold that belief, that the Petitioner's dual employment as Investigator for the State Attorney's office and as Chief of

   Security for the fronton, would serve to undermine public confidence in the integrity of the sport of jai alai and, therefore, was not in the best interest of the pari-mutuel industry. Consequently there was ample cause to reject Walker's request, according to the Director.

   
   

7. In elaborating on his position, the Director expressed the opinion that law enforcement type officials should not be allowed to hold secondary employment in a fronton in a capacity as security official within the same geographical area in which the individual applicant has law enforcement responsibilities. To that end, six to eight other individuals, excluding the Petitioner, have also been disapproved as security officials at pari-mutuel wagering establishments, following the Walker disapproval. Gary Rutledge, Director of the Division of Pari- Mutuel Wagering in stating the reasons for denying Walker's request, goes on to say that the Chief of Security is a primary person responsible for detecting violations of law at the fronton and Rutledge has a concern that those matters might not be investigated by the Chief of Security or that the appearance might be created that the matters might not be investigated. Moreover, the Director worries about the potential flow of information from the State Attorney's office to the fronton, in particular, when there is, in his mind, the aura of "organized crime" which surrounds the pari- mutuel wagering industry.

   
   

8. In response to concerns referred to above, neither the Petitioner nor the Respondent has shown any acts of impropriety on the part of Walker in serving in the capacity as Investigator for the State Attorney's office or in his part-time employment as Chief of Security for the Fronton, Inc., or do they have any reason to suspect that Walker is less than a man of utmost integrity in his profession and in his private life. There was, however, one instance in 1978, in which a fire occurred at the Palm Beach Fronton and State Attorney Bludworth made the judgment not to allow Walker to serve as State Attorney Investigator on that case, in which arson was suspected. This decision on Bludworth's part was made to protect against the appearance that might be created that as investigator to the prosecutor, some special knowledge and advantage could possibly be afforded to Walker in his role as Chief of Security for the fronton. Although Walker was above reproach in this matter, the State Attorney lost the advantage of his services as investigator in a circumstance wherein other law enforcement officials felt that it would have been extremely helpful to have Walker serving in his primary duty as State Attorney Investigator in attempting to solve the arson case. This instance points up the viability of the Director's argument on the issue of public confidence in the industry, in particular, in avoiding the appearance of fraud or dishonesty in that industry, and it is no less valid in the face of Walker's insistence that he would step down in future cases such as the 1978 incident and the State Attorney's indication that he would give serious consideration to the role that Walker would play in investigations involving incidences at the fronton in West Palm Beach. As stated before, criminal acts have occurred at the fronton and it is a reasonable expectation those events shall take place in the future.

   
   

9. Alleged conflict of interest is the only ground upon which the Petitioner has been denied his request to act as Chief of Security at the Palm Beach Fronton. There has been some suggestion concerning a rumor that the Director had denied the application based upon a lack of good moral character on the part of the Petitioner and the ensuing effect that this has had on the community, and in particular, the black community in Palm Beach County of which the Petitioner is a member; however, Director Rutledge has never offered lack of good moral character as a reason for denying the permit application, and his decision to deny Walker's application was not racially motivated.

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action.

    
    

11. During the course of the hearing, argument was entertained on the question of which of the parties would have the burden of proof in this case and the parties in the person of their counsel were further allowed to argue their position by submitting memoranda, post-hearing. (Those memoranda have been received and reviewed prior to the entry of this Recommended Order.)

    
    

12. In keeping with the holding set forth in Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977), and McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977); the Petitioner would have the obligation to establish his entitlement to the employment by demonstrating his good moral character; by showing that he has not been refused a license by any other state racing commission or racing authority which extends to the Florida Division of Pari-Mutuel Wagering, reciprocal courtesy to maintain disciplinary control and the Petitioner would have the obligation to show that be has not violated or is currently under suspicion or charge for violating any of the rules and regulations of the Division governing the conduct of persons who are connected with jai alai frontons. See Section 558.18, Florida Statutes, and Section 551.12, Florida Statutes.

    
    

13. If the Petitioner carries his burden in connection with the aforementioned obligations, as be has done in this instance, it is then incumbent upon the Respondent to establish its entitlement to deny the Petitioner his employment as Chief of Security at the Fronton, Inc.'s facility.

    
    

14. The Respondent on this occasion is trying to deny Walker's request through the development of incipient agency policy, that is through adjudication as opposed to rule making, by creating a standard of conflict of interest as a basis for denying this application and the concomitant necessity to prove that Walker's employment as Chief of Security at the Fronton, Inc., in a secondary role, and his primary employment as Lead Investigator for the State Attorney's office in the Fifteenth Judicial Circuit creates that conflict of interest.

    
    

15. A reading of Chapters 550 and 551, Florida Statutes, leads to the conclusion that there is no right to deny Walker's employment as Chief of Security based upon an alleged conflict of interest per se. Subsection 550.02(3), Florida Statutes, made applicable to persons desiring employment in a jai alai fronton by virtue of Section 551.12, Florida Statutes, allows the Director to make rules-and regulations involving the control, supervision and direction of applicants, permittees and licensees within these frontons, provided that the rules and regulations must be uniform in their application and effect. It further makes the exercise of this control and power mandatory upon the Division. The fact that the statutory mandate contemplates the passage of rules and regulations dealing with the question of entitlement to act as an employee within a fronton, does not foreclose the opportunity to formulate agency policy on the question of the license or function through the process of adjudication as described in McDonald, supra. This approach is further condoned in the decision Florida Cities Water Company v. Florida Public Serv., 284 So.2d 1280 (Fla. 1980)

    
    

16. Using the rationale expressed in Subsection 112.313 (7)(a), Florida Statutes, dealing with conflict of interest for public employees within the

    State of Florida and the definition of conflict found in Subsection 112.312(6), Florida Statutes; the Director of Pari-Mutuel Wagering borrows from the Public Employees Code of Ethics in creating a conflict of interest standard related to secondary employment within the pari-mutuel industry and primary employment in the law enforcement field wherein that primary employment includes jurisdictional responsibilities related to the pari-mutuel wagering establishment. Coupled with the general authority to license set forth in Subsection 550.02 (3), Florida Statutes, as made applicable to frontons pursuant to Section 551.12, Florida Statutes, and the specific licensing requirement of Section 550.18, Florida Statutes, and the right to approve or disapprove of a Chief of Security in the fronton found through Rule Subsections 7E-3.03(11) and (12), Florida Administrative Code, the Director has the right to develop a conflict of interest standard for licensure and approval through the adjudicatory process, provided that standard is reasonably related to the regulatory mandate to the Director in his function as overseer of the licensing process.

    
    

17. When examined in this context, the decision to implement a conflict of interest standard for licensure or employment within the pari-mutuel industry and to do so by the process of adjudication, the decision is not found to be arbitrary or capricious and it is not inconsistent with the regulatory responsibility reposed in the Director. Particularly not in view of the high susceptibility of the pari-mutuel industry to fraud, dishonesty and over reaching. See The Division of Pari-Mutuel Wagering v. Caple, 362 So.2d 135 (Fla. 1978). If the utilization of a conflict of interest standard prevents fraud and serves to preserve the public's confidence in the industry, then it is a reasonable requirement. See also, Florida Board of Business Regulation v. N.L.R.B., 605 Fed.2d 916 (5th Cir. 1979)

    
    

18. The prevention of fraud and the preservation of public confidence in this sensitive industry is necessary to protect public funds collected through the wagering process which are distributed to State and local government and constitute a significant portion of the financial base for those governmental bodies.

    
    

19. Turning to the question of whether there exists a conflict of interest when an individual whose primary function, as is the Respondent's, is in the law enforcement service, chooses to work part-time in a pari-mutuel industry, such conflict of interest is found to exist. The general duties and function of the State Attorney's office, found in Chapter 27, Florida Statutes, and the function of the State Attorney's investigators, in particular, as related to Section 27.255, Florida Statutes, makes it obligatory for the officials within that office to enforce the laws of the State of Florida and to promote the prosecution of those persons who would offend those laws.

    
    

20. In this instance Walker, as investigator to the State Attorney, theoretically could be called upon to investigate a violation in the Palm Beach Fronton. The violations might involve computer offenses within the meaning of Sections 815.04 and 815.06, Florida Statutes; investigation of robbery by a public official within the meaning of Section 838.015, Florida Statutes; systematic schemes to defraud within the meaning of Section 817.035, Florida Statutes, and the offense of forgery of a receipt for money within the meaning of Section 838.01, Florida Statutes.

    
    

21. At the juncture where an individual is called upon to make difficult decisions about the high responsibility entrusted to him as a law enforcement officer and the daily task to serve as bread winner for his family by holding

    secondary employment to supplement his income, that individual comes squarely against the temptations that represent the conflict of interest. It matters not in this situation that Walker is a man of utmost integrity and that he has not been guilty of abusing his good offices; the potential for such abuse exists for that person whose principles may not be so applauded. There exists in our society persons who would take advantage of the intelligence to be gained from access to confidential files within the State Attorney's office and use those matters to advantage or have information arrived at as Chief of Security of a fronton that might lead to a criminal investigation of activities in the fronton and fail to report those matters to the State Attorney's office. The fact that a violation has not occurred in Walkers case; does not remove the reasonable expectation that such a violation will occur in the future involving this very sensitive industry. As a result, Respondent must look to other sources to supplement his income.

    
    

22. In the course of the hearing, the Petitioner offered as evidence the deposition of Warren D. Holmes, a polygraph examiner who bad administered a polygraph examination to the Petitioner for purposes of bolstering testimony related to the Petitioner's good moral character. The Petitioner's character is not an issue in this cause, in that his good moral character has been conceded by the Respondent agency, therefore, the deposition is not relevant to the inquiry. Even assuming the relevancy of the deposition, results of a polygraph are not the type of evidence commonly relied upon by reasonably prudent persons in the conduct of their affairs. (See Subsection 120.58(1)(a), Florida Statutes.) Consequently, Petitioner's Exhibit No. 5 is denied admission as evidence.

    
    

23. The Petitioner in arguing its case, suggested that the Respondent is estopped from denying Petitioner's appointment as Chief of Security at the Fronton, Inc., or in the alternative has waived the opportunity to deny the Petitioner's application on the basis of conflict of interest. Neither of these theories are persuasive. For reasons as stated in these Conclusions of Law, the Director has acted appropriately in his treatment of this case and the past responses made by other Directors or this Director in considering a similar request for approval would not prohibit the present Director from adjudicating the issue of conflict of interest.

    
    

24. It has been contended by the Petitioner that the Respondent has denied the Petitioner "administrative" equal protection by denying the Petitioner's application to be Chief of Security at the Fronton, Inc., and then later looking for persons in similar positions to deny. A review of the facts indicates that the Respondent was not arbitrary and capricious in reviewing the Petitioner's application contrasted with the facts related to other individuals who sought such employment in a similar position.

    
    

25. The Respondent has complied with the standards set forth in Rules Subsection 7E-3.03(12), Florida Administrative Code, in denying the Petitioner's application.

    
    

26. The Respondent's actions in denying the Petitioner's application to become Chief of Security of the Fronton, Inc., is neither arbitrary nor capricious, nor in abuse of discretion, and the actions taken were not ultra vires, that is outside the dictates of Chapters 550 and 551, Florida Statutes.

    
    

27. The Petitioner, through his counsel, has filed a letter protesting the filing of the Respondent's Memorandum of Points and Authorities offered in argument of this case on the basis that this memorandum was three days late.

While Petitioner's counsel is correct in his assertion concerning the tardiness of the Respondent's counsel's Memorandum and although this memorandum is not in keeping with the instructions of the undersigned on the question of its submission, no prejudice having been shown to the Petitioner, the Memorandum is allowed to stand as offered. Counsel for the Respondent is cautioned that the failure to comply with the schedule for the filing of post-hearing memoranda in the future may cause the rejection of such memoranda.

Based upon a full consideration of the facts found herein and the conclusions of law, it is,

RECOMMENDED:

That the Director, Division of Pari-Mutuel Wagering's disapproval of Petitioner, Theodore D. Walker's request to be employed as Chief of Security of the Fronton, Inc., in its Palm Beach Fronton be upheld.

DONE and ENTERED this 15th day of January, 1981, 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 15th day of January, 1981.

ENDNOTE

1/ (11) Each association holding meetings shall submit to the Division, for approval, not less than thirty (30) days prior to the date approved by the Division for .the meeting to begin at said fronton, a complete list of all jai- alai officials.

The officials of a meeting are: General Manager, Assistant General Manager, Comptroller, Players' Manager Match Maker, Chief of Security, and Mutuels Manager. Names of these officials shall be carried in the daily program.

No operating official may hold more than one position at a track or fronton unless written permission is obtained from the Division at least ten (10) days prior to the beginning of a meet. After the beginning of a meet if an operating official is required to fill more than one position due to emergencies, a full written report of the circumstances must be filed with the Division requesting approval of such action.

(12) All fronton officials herein designated shall be appointed by the association, but all appointments are subject to the approval of the Division, which reserves the right to demand a change of personnel or official or employees designated herein if any such officials or employees have not met all the requirements of this chapter and the laws of the State of Florida. This list must be filed in the office of the Division at least thirty (30) days prior to the opening.

APPENDIX

The Petitioner in this action, through his counsel, has submitted Proposed Findings of Fact pursuant to Subsection 120.57(1)(b)(4), Florida Statutes, and it is requested that the Hearing Officer adopt those findings of fact or if they are rejected that the reason be given for rejection. Having considered those findings of fact, all facts as found have been utilized in the entry of this Recommended Order except for those enumerated paragraphs which are rejected for the following reasons:

Paragraph four is not found to be relevant to this inquiry. That provision of paragraph five commencing with the words, "he is considered a model citizen .

. ." is rejected as not relevant to this inquiry. That provision of paragraph ten beginning with the words, "not a shred of evidence was presented . . ." is rejected as not being in keeping with the testimony offered in the course of this hearing. Paragraph fifteen of the findings of fact is found to be a conclusion of law, and is therefore, rejected.

COPIES FURNISHED:

Robert L. Shevin, Esquire, and David A. Gunter, Esquire SPARBER, SHEVIN, ROSEN, SHAPO

& HEILBRONNER, P.A.

30th Floor, 1 S.E. 3rd Avenue Miami, Florida 33131

Ronald Sales, Esquire Post Office Box 3107

West Palm Beach, Florida 33402

Daniel C. Brown, Esquire Department of Business

Regulation

725 South Bronough Street Tallahassee, Florida 32301

Docket for Case No: 80-001991

Orders for Case No: 80-001991