Judges: K. N. AYERS
Agency: Department of Business and Professional Regulation
Latest Update: Apr. 12, 1982
Summary: Broker not guilty of fraud where she made representations about time-share units which turned out to be unprofitable for her clients.
81-2231STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF PROFESSIONAL ) REGULATION, BOARD OF REAL ESTATE,)
)
Petitioner, )
)
vs. ) CASE NO. 81-2231
) JEAN E. PREUS, TAX SHELTER REAL ) ESTATE, INC., and TAX SHELTER ) REAL ESTATE OF AMERICA, INC., )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above- styled case on 11 February 1982 at St. Petersburg, Florida.
APPEARANCES
For Petitioner: Grover C. Freeman, Esquire
4600 West Cypress Street Tampa, Florida 33607
For Respondents: L. C. Schowe, Esquire
Post Office Box 360
St. Petersburg, Florida 33731
By Administrative Complaint dated 27 August 1981 the Department of Professional Regulation, Petitioner, seeks to revoke, suspend or otherwise discipline the real estate broker's license of Jean E. Preus and the corporate broker's licenses of Tax Shelter Real Estate, Inc., and Tax Shelter Real Estate of America, Inc. As grounds therefor it is alleged that Jean E. Preus, who also served as active firm member for the two corporate brokers, violated Section 475.25(1)(b), Florida Statutes, in making a presentation with her husband to the owners of Peebles Tractor Company, involving the sale of real estate for inclusion in a Keogh Plan for the company's employees. Specifically, the Administrative Complaint alleges that Respondents made fraudulent representations, attempted to obtain money by false and fraudulent representations and promises, obtained Keogh documents from Lincoln Trust Company and Flagship Bank by fraudulent representations, fraudulently altered these documents to increase the establishment fee, used these documents in the presentation made to Peebles, and attempted to sell for inclusion in the Keogh Plan for Peebles employees time-sharing condominium units which were improper for such employee pension plan.
At the hearing one witness and the deposition of two other witnesses were presented by Petitioner, Respondent called four witnesses, including Respondent; and a total of fourteen exhibits, including the deposition, were admitted into evidence. The parties stipulated that Respondents were licensed as alleged at all times relevant to these proceedings.
At the conclusion of the hearing, the parties were given ten days following the filing of the transcript of these proceedings to submit proposed findings of fact, conclusions of law and a recommended order. The transcript was filed March 22, 1982. Proposed findings were timely submitted by Respondent.
Petitioner's proposed recommended order was not timely filed but has been received and considered. Those proposed findings not included herein were not supported by the evidence or were deemed immaterial to the results reached.
FINDINGS OF FACT
Jean E. Preus is a registered real estate broker and was so registered at all times here relevant. Tax Shelter Real Estate, Inc., and Tax Shelter Real Estate of America, Inc., are corporate brokers registered by the Florida Board of Real Estate and were so registered at all times here relevant.
Tax Shelter Real Estate, Inc., and Tax Shelter Real Estate of America, Inc., are wholly owned subsidiaries of another corporation controlled by S. William Preus, the husband of Respondent. The family owns the majority, if not all, of the stock in this controlling corporation.
S. William Preus is president of Corporate Financial Planning of Florida, whose business is primarily providing computer printouts and expertise to insurance agents setting up retirement plans for clients. Preus holds the degree of Chartered Life Underwriter (CLU) although at present he sells no insurance, but deals primarily with the insurance companies in assisting their agents.
On 28 October 1980 at the request of insurance agents, Edward LaGrave and Don Hansman, S. William Preus, enroute from a seminar in Daytona to his office in St. Petersburg, met with the owners of Peebles Tractor Company in Winter Haven, Florida, to present information on a Keogh Plan for employees of Peebles. Jean E. Preus accompanied her husband to this meeting.
LaGrave and Hansman provided Preus with a list of employees of Peebles, their ages and salaries, from which it was determined that some $27,000 per year could be invested in an employee retirement plan such as a Keogh Plan.
In the presentation Preus used prototype trust documents prepared by Lincoln Trust Company and, if the Peebles Tractor Company opted for the plan he presented, it was his intention to forward the application to Lincoln Trust to serve as trustee of the plan.
Preus had purchased one or more time-sharing condominium units and was impressed with the appreciation he had noticed in the selling price of such units in the past two years. He was especially impressed with the Bahia Mar development at which he had purchased a unit and who had additional time-sharing units to sell. Time-sharing is those housing units sold to various individuals for one week out of the year as a vacation home with the capability of swapping usage with similar units in other places. At Bahia Mar the unit owner sold one- week usage per year on a 99-year lease with the property managed by the developer and rented if the owner does not want to occupy the unit during his
week's ownership. Preus proposed time-sharing units as a suitable investment vehicle for the Peebles Tractor Company employees retirement fund and Jean E. Preus showed pictures of the condominium units they owned at Bahia Mar. Peebles was not interested in purchasing time-sharing units for their employees' retirement fund and no sales were made. Had Peebles bought any of the Bahia Mar units, Respondents would have received a ten percent commission.
Preus had obtained the Lincoln Trust forms from Lincoln Trust Company at an earlier date by simply requesting the forms. He obtained additional forms from Flagship Bank in a similar fashion. William A. Preus, the adult son of Respondent who also works with his father, had called Lincoln Trust before the October 28 meeting and learned the fees had been changed since the forms he had on hand were printed. He amended the forms used by S. William Preus to reflect this change in the fees charged by Lincoln Trust Company when the presentation was made to Peebles Tractor Company.
The day following the Peebles meeting Preus contacted Lincoln Trust Company and learned they would no longer accept financed real estate in an employee retirement plan for which they served as trustee. Specifically, they would not accept funds to invest in financed time-shared condominium units. Formerly, Lincoln Trust had accepted financed raw land at Sugarwood Mills (in Florida) in such a retirement plan (Exhibit 11).
In order to protect employee benefit plans Congress enacted the Employees Retirement Income Security Act (ERISA), 29 USCS 1001, et seq. Tax advantages accrue to those plans complying with ERISA, the federal tax laws and regulations promulgated pursuant thereto. All investments are not acceptable; however, the principal requirement is that funds placed in such accounts be prudently invested. Regulations have been promulgated disqualifying investments and certain personal property such as gold coins in ERISA plans, which type investment was formerly allowed. No regulations specifically authorize or bar ERISA investments in time-shared condominium units. Although trustees such as Lincoln Trust Company will not accept time-shared units in ERISA accounts, testimony was presented that Flagship Bank of Tampa would accept such investments in ERISA accounts.
No evidence was presented that Jean E. Preus made any representations regarding the acceptability of time-shared units in an employee retirement account. According to her testimony she has no knowledge of ERISA plans and her participation in the October 28 1980, meeting was limited to showing pictures of and describing the time-shared unit she owned at Bahia Mar.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of these proceedings.
Respondent moved for dismissal of these charges on grounds that 29 USCS 1144 removes the alleged misconduct from the jurisdiction of state tribunal. 29 USCS 1144 provides in pertinent part:
. . . The provisions of this title and title IV . . . shall supersede all state laws insofar as they may now or hereafter may relate to any employee benefit plan described in section. . .
(Emphasis added.)
Respondent is charged with violating Section 475.25(1)(b), Florida Statutes, which provides the Board may revoke or suspend a license or award an administrative fine not to exceed $1,000 if it finds the licensee has:
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 on 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 misconduct 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; that the damage or loss has been settled and paid after discovery of the misconduct, or
that such victim or intended victim was a customer or a person in confidential relation with the licensee, or was an identified member of the general public. . .
This statute does not relate to any employee benefit plan but is solely directed toward disciplinary action against licensees found guilty of fraudulent conduct in any business transaction. Accordingly, the motion for dismissal was denied and that denial is here reaffirmed.
While there was divergence of opinion among the witnesses respecting the suitability or appropriateness of time-shared units of property in an ERISA plan, a determination of the suitability of time-shared units for ERISA plans is not necessary to a resolution of the issues here presented. It is to be noted that no evidence was presented that Respondent, Jean E. Preus, made any representation regarding the suitability of time-shared units in an ERISA plan. All she did was show photographs and described the unit she owned. No contracts to purchase were prepared nor did the Peebles Tractor Company indicate any desire to acquire any such property interests. No evidence was presented regarding a conspiracy between Respondent and her husband to defraud Peebles and the joint appearance of Respondent and her husband at the 28 October meeting is insufficient evidence of conspiracy, particularly since the evidence presented is insufficient to support a finding of fraud on the part of anyone.
The evidence presented indicates that time-shared condominium units would not be a suitable investment for ERISA plans absent a guaranteed appreciation in value. However, this does not lead to the inexorable conclusion that Respondent Preus was guilty of fraud, misrepresentation, breach of trust, etc., because her husband believed time-shared units would appreciate rapidly in value and would therefore be suitable for inclusion in an employee retirement plan. Not only is Respondent not the one who made the representations regarding time-shared units, but also such representations did not constitute fraud as
contemplated by Section 475.25(1)(b), Florida Statutes. Fraud, under the circumstances of this case, contemplates intentional misrepresentation. It is an offense involving specific intent and the evidence does not support an intent on the part of S. William Preus to defraud, let alone such an intent on the part of Respondent.
Any findings of fact herein made which also constitute a conclusion of law is adopted as a conclusion of law. Any conclusion of law herein made which also constitutes a finding of fact is adopted as a finding of fact.
From the foregoing it is concluded that the preponderance of the evidence will not support a finding that Respondents were guilty as alleged. It is, therefore,
RECOMMENDED that all charges against Respondents resulting from the October 28, 1980, meeting with Peebles Tractor Company representatives be dismissed.
ENTERED this 12th day of April, 1982, in Tallahassee, Florida.
N. AYERS 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 12th day of April, 1982.
COPIES FURNISHED:
Grover C. Freeman, Esquire 4600 West Cypress, Suite 410
Tampa, Florida 33607
C. Showe, Esquire Post Office Box 360
St. Petersburg, Florida 33731
Frederick H. Wilsen, Esquire Department of Professional
Regulation
130 North Monroe Street Tallahassee, Florida 32301
C. B. Stafford, Executive Director Board of Real Estate
Department of Professional Regulation
Post Office Box 1900 Orlando, Florida 32802
Samuel R. Shorstein, Secretary Department of Professional
Regulation
130 North Monroe Street Tallahassee, Florida 32301
Docket for Case No: 81-002231
Orders for Case No: 81-002231
| Issue Date |
Document |
Summary |
|
Apr. 12, 1982 |
Recommended Order
|
Broker not guilty of fraud where she made representations about time-share units which turned out to be unprofitable for her clients.
|
