STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 81-1916

)

ED RICH, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause came on for administrative hearing before P. Michael Ruff, duly designated Hearing Officer of the Division of Administrative Hearings, on February 3, 1982, at Hallandale, Florida.

APPEARANCES

For Petitioner: Michael Colodny, Esquire

626 Northeast 124 Street North Miami, Florida 33161

For Respondent: Ed Rich

1950 South Ocean Drive Hallandale, Florida 33009

By its Administrative Complaint filed herein, the Petitioner seeks to suspend or revoke or take other disciplinary action against the Respondent in his capacity as a licensed real estate salesman. It is alleged by the Petitioner that the Respondent acted as a salesman for a "sub-broker", Irwin Kane and Wintex Realty Corporation, of Miami, Florida, which was involved in the advertising promotion and sale of five (5) parcels of land in Cochran County, Texas, then owned by Agriland, Inc. It is charged that the Respondent aided and abetted by others, devised a scheme and artifice to defraud and obtain money and property by false and fraudulent representations, in that the Respondent is accused of inducing or attempting to induce certain persons, by means of mailings, sales literature, letters and other written representations, to purchase portions of 1500 acres of land in Cochran County, Texas, about which representations were made concerning its alleged abundant water supply, ideal soil and climate conditions for agricultural purposes as well as a representation about the possibility of oil in the area of the subject property. The complaint consists of two counts, paragraphs 3 through 7, which consist of background information concerning the difference between the purchase price paid by Agriland, Inc. represented by the Respondent and the purchase price which it was offered for sales, as well as times the sales would be commenced together with the charge that the sales were commenced by the Respondent approximately a month before Agriland, Inc. actually acquired title to the subject undeveloped land. Paragraphs 8, A through D of Count I, contains the actual substance of the charges, and all concern written representations, which the Petitioner

charges were false and fraudulent when made and in violation of Subsection 475.25(1)(b), Florida Statutes (1979)

Count II of the Administrative Complaint alleges that the Respondent was indicted by the United States District Court for the Eastern District of Wisconsin for a violation of Title 18, United States Code, Section 1341 for using the mails in a scheme to defraud and that the Respondent pled nolo contendere to that charge and was found guilty, being placed on probation for three years. The Petitioner thus charges the Respondent to have been guilty of a crime relating to the activities of a licensed real estate salesman which involves moral turpitude and fraudulent or dishonest dealing, citing Subsection 475.25(1)(f) Florida Statutes (1979).

The issue, of course, is whether the Respondent is guilty of the charges predicated on the two above subsections and, if so, what, if any, penalty is warranted. Subsequent to the hearing, the parties elected to order a transcription of the proceedings and avail themselves of the right to file proposed findings of fact and conclusions of law.

FINDINGS OF FACT

1. The Respondent, Ed Rich, is a registered real estate salesman, holding license number 0073256. The Petitioner, State of Florida, Department of Professional Regulation, Board of Real Estate is an agency of the State of Florida, having as its duty the regulation of matters pertaining to real estate brokers and salesmen within the state, including regulation of their licensure status.

   
   

2. From approximately April 16, 1977, through November 17, 1977, the Respondent participated in a scheme to sell parcels of undeveloped land in Cochran County, Texas. The land was owned by Agriland, Inc. The Respondent acted as a salesman for a "sub-broker" by the name of Irwin Kane and Wintex Realty Corporation, all of Miami, Florida. That entity, with Broker Kane, was involved in the advertising, promotion and sales of these five acre parcels of unimproved west Texas land. The Respondent participated in the scheme by making long distance phone calls to prospective purchasers, attempting to induce them to buy these parcels of land. In this telephone sales campaign, the Respondent used a script prepared for him by Irwin Kane, his broker and employer. That script extolled the virtues of the subject unimproved property in an arid region of Texas, representing, for instance, that the land was possessed of an ideal climate, abundant water supply and rich soil conditions and was ideal agricultural acreage. The land was represented to be "a few miles west" of Lubbock, Texas, when in fact it was 72 miles from Lubbock, Texas, in a region characterized by sand dunes, weeds, poor soil, shifting sand and high winds. It was also represented that in addition to favorable agricultural and climatic conditions, that "the existence of oil in Cochran County should lead to a strong growth pattern and that oil companies were interested in the area surrounding the property."

   
   

3. The charges in the Administrative Complaint concern alleged preparation of various written literature containing the subject misrepresentations and the communication by the Respondent of these misrepresentations through placement in the mail. The Respondent, by an indictment filed in the United States District Court for the Eastern District of Wisconsin, was charged with use of the United States mails in a scheme to defraud in violation of Title 18, U.S.C., Sections 1341 and 1342, as well as the use of wire communication in a scheme to defraud in violation of Title 18, U.S.C., Section 1343. There is no allegation in the

   Administrative Complaint herein concerning the commission of any crime involving the use of wire communication in a scheme to defraud. The Administrative Complaint only concerns fraudulent use of the mail. The charges against the Respondent concerning Title 18, U.S.C., Sections 1341 and 1342 involving the use of the mails to defraud were dropped, the Respondent ultimately pled nolo contendere on November 17, 1978, to the charge involving a wire communication scheme to defraud in violation of Title 18, U.S.C., Section 1343, was found guilty, with imposition of a sentence of imprisonment being suspended, with the Respondent placed on probation for three years.

   
   

4. The Respondent's testimony was not contradicted and establishes that he had no part in the preparation of any written materials or script which he used in making the telephone conversations representing the above described attributes of the property he was attempting to sell on behalf of his broker. The written "script" which he read from or consulted as he was communicating with prospective purchasers was prepared by his broker or others. The Respondent established that he had no knowledge of the truthfulness or falsity of the representations concerning soil, water, the alleged advantageous location or the interest of oil companies in the adjoining parcels of property. The Respondent did not, however, inquire regarding the truthfulness or veracity of the statements in the script he was ordered to follow in making the telephone calls. The Respondent's uncontradicted testimony establishes that he had no part, however, in preparing any written materials, literature, brochures or written communications of any kind, nor in transmitting such through the mails in an attempt to defraud the prospective purchasers of the land. He made no representations by verbal communication which he knew to be false when he made them. The Respondent has never been the subject of any disciplinary proceedings by the petitioner in the past.

   
   

   CONCLUSIONS OF LAW

   
   

5. The Division of Administrative Hearings has jurisdiction of the subject matter of and the parties to this proceeding.

   
   

6. The Respondent is charged with violation of Subsection 475.25(1)(b), Florida Statutes (1979), as well as Subsection 475.25(1)(f), which subsections provide in pertinent part as follows:

   
   

   1. The board may deny an application for licensure or renewal, may suspend a license for a period not exceeding 10 years, may revoke a license, may impose an administrative fine not to exceed $1,000 for each count or separate offense, or may issue a reprimand,

      if it finds that the licensee or applicant has:

      (b) Been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by 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 aided, assisted, or conspired with any other person engaged in any such misconduct and in furtherance thereof; or has formed an intent,

      design, or scheme to engage in any such mis- conduct and has committed an overt act in furtherance of such intent, design, or scheme. It shall be immaterial to the guilt of the licensee that the victim, or intended victim, of the misconduct has sustained no damage or loss or the damage or loss has been settled and paid, after discovery of the misconduct, or whether such victim, or intended victim, thereof, was a customer or a person in con- fidential relation with the licensee, or was an identified member of the general public:

      * * *

      (f) Been found guilty, regardless of whether adjudication was withheld, of a crime against the laws of this state or any other skate or

      of the United States, which crime directly re- lates to the activities of a licensed broker or salesman or involves moral turpitude or fraudulent or dishonest dealing. The record of a conviction certified or authenticated in

      such form as to be admissible in evidence under the laws of the state shall be admissible as prima facie evidence of such guilt;

      
      

7. The charges in Count I of the Administrative Complaint concern alleged fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, or breach of trust in a business transaction in this state or another state, all of which charges involve the element of intent or scienter. Although the facts found above show that the Respondent made the subject telephone calls to prospective purchasers wherein he made representations concerning the quality and favorable features of the property offered for sale, which were not accurate, there was no evidence to show that he knew that the representations he was making were indeed false. The record reflects, in an unrefuted way, that the Respondent merely related information from a prepared script prepared by his superiors and had no knowledge at the time he was making the representations that they were false. The evidence simply does not show that the Respondent had any intent to defraud any of these prospective purchasers or to deal dishonestly with them or to commit any other of the intentional acts enumerated in Section 475.25(1)(b), Florida Statutes (1979). To be punishable, a misrepresentation must be made which is material, and with knowledge by the one making the misrepresentation that it is indeed false. See Shelton v. Florida Real Estate Commission, 120 So.2d 191 (2nd DCA Fla. 1960).

   
   

8. All of the allegations contained in Count I relate to misrepresentations being made by means of drafting or aiding in the drafting and mailing of sales literature, letters and other written representations, none of which the Respondent was proven to have had a part in the drafting of, or delivery of, by mail or otherwise, wholly aside from the fact that no fraudulent intent was established. The only evidence in this proceeding shows that the only communications the Respondent made with any prospective purchasers were by telephone, thus since the evidence establishes that no communications were made to prospective purchasers by the Respondent through use of the mails or written literature, then none of the charges in Count I of the Administrative Complaint have been proven.

9. With regard to Count II of the Administrative Complaint, the Petitioner has charged the Respondent with being found guilty of a crime related to activities of a licensed real estate salesman involving moral turpitude and fraudulent or dishonest dealing in violation of Subsection 475.25(1)(f), depicted above. Moral turpitude has recently been defined as a crime having as its essential element the intent by the perpetrator to defraud or deceive another. Winestock v. Immigration and Naturalization Services, 576 Fed. 2d 234 (Cir. 1978). The Petitioner's own proof of that conviction consisting of the indictment, resulting plea of nolo contendere and adjudgment of guilt shows that he was found guilty of a charge of using wire communication to defraud or attempt to defraud the prospective purchasers, which is a violation of Title 18, U.S.C., Section 1343. The Petitioner has only charged that the Respondent was found guilty of a violation of Title 18, U.S.C., Sections 1341 and 1342 relating to use of the mails in a scheme to defraud. Given the definition of moral turpitude delineated above requiring the element of intent, it has not been shown that the Respondent was actually guilty of a crime of moral turpitude in this instance since it was not shown in the proceeding that the Respondent had any knowledge of the falsity of his statements. The operative facts underlying the guilty verdict of the Federal Judge are not shown on the face of the judgment in evidence nor in Counts 12 and 13 of the indictment, which merely allege that the Respondent for the purpose of executing the "aforesaid scheme and artifice to defraud and attempting to do so" transmitted a communication in interstate commerce by means of a wire or telephone communication to named recipients, without alleging any underlying facts, details or circumstances.

   
   

10. Further, since there is no allegation in the Administrative Complaint that the Petitioner was seeking to prosecute an action against the Respondent's license for a crime of moral turpitude consisting of wire fraud resulting from a violation of Title 18, U.S.C., Section 1343, the Respondent has not been put on sufficient notice of the theory supporting the Petitioner's prosecution so that a cogent defense to it could be presented. The Respondent, of course, already knew that the charges regarding mail fraud which were alleged as being a crime of moral turpitude in Count II of the Administrative Complaint had been dropped. He had never been found guilty of them and he was not on notice that he would have to defend this administrative action with regard to his conviction of a violation of Title 18, U.S.C., Section 1343 involving wire fraud. The law in Florida on the specificity required in a Administrative Complaint is predicated upon principles of notice and due process required to be afforded by such a Petitioner to a Respondent so a Respondent may have sufficient specific knowledge of the totality of the charges and proposed penalty and the theory supporting them so that a cogent defense to them may be presented. To the extent the sanctions sought for the charge involving a crime of moral turpitude are predicated on acts within the knowledge of Petitioner which have not been plead in the Administrative Complaint, the complaint in this regard is deficient. Lester v. The Department of Professional and Occupational Regulation, 348 So.2d 923 (Fla. 1st DCA 1977) The charging agency may not go outside the facts alleged in its complaint in order to support its case. Department of Professional Regulation v. Lerro, DOAH, case number 80-1330, Recommended Order, January 2, 1981. Cases of this nature involving the potential suspension or revocation of the right to practice a livelihood are penal in nature and the statutes involved must be strictly construed with any doubt regarding prosecution pursuant to them resolved in favor of the Respondent. Bowling v. Department of Insurance, 395 So.2d 165 (Fla. 1st DCA 1981). Accordingly, it must be concluded that clear and convincing proof of the charges in the Administrative Complaint has not been presented and that the complaint should be dismissed.

RECOMMENDATION

Having considered the foregoing findings of fact and conclusions of law, the evidence in the record, the candor and demeanor of the witness and the pleadings and arguments of the parties, it is, therefore

RECOMMENDED:

That the Administrative Complaint filed herein against Ed Rich be DISMISSED.

DONE and ENTERED this 19th day of July, 1982 at Tallahassee, Florida.

P. MICHAEL RUFF Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

FILED with the Clerk of the Division of Administrative Hearings this 19th day of July, 1982.

COPIES FURNISHED:

Michael Colodny, Esquire 626 Northeast 124 Street North Miami, Florida 33161

Mr. Ed Rich

1950 South Ocean Drive Hallandale, Florida 33009

Frederick H. Wilsen, Esquire Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

Samuel R. Shorstein, Secretary Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

C. B. "Joe" Stafford, Executive Director Florida Real Estate Commission

P.O. Box 1900

Orlando, Florida 32802

Docket for Case No: 81-001916

Orders for Case No: 81-001916