STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, BOARD OF REAL )

ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 81-2798

) FREDERICK A. LEWIS, CHINELLY ) REAL ESTATE, INC., JOHN C. )

CHINELLY, SR., RICHARD M. ) CHINELLY, PAUL JAMES FLECK, ) NANCY J. GOOCH, MARY E. HULSEY, ) JAMES A. MUNDEN, JOSEPH TRESSER, ) REGINALD D. LUCAS, HAROLD E. ) WHITTEN, ASA F. BRAND, JOSEPHINE )

B. SHANEFELT, BRETT A. SLABE, ) WILLIAM F. KUEMERLE, JR., and ) MARSHALL FEINSILBER, )

)

Respondents, )

) DEPARTMENT OF PROFESSIONAL )

REGULATION, BOARD OF REAL )

ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 82-469

)

ELAINE P. STEIN and VILMA )

SARDIELLO, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, R. L. Caleen, Jr., held a formal hearing in this case on May 4 through 6, 1982, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Harold M. Braxton, Esquire

45 Southwest 36 Court Miami, Florida 33135

For Respondents: Howard Todd Jaffe, Esquire

Frederick A. Lewis 1915 Harrison Street

and Elaine P. Stein Hollywood, Florida 33020

Reginald D. Lucas Rodger L. Spink, Esquire 6600 Taft Street, Suite 404

Hollywood, Florida 33024

For Chinelly Real Estate, Inc., Michael J. Garavaglia, John C. Chinelly, Sr., Richard Esquire

M. Chinelly, Paul James Fleck, 3111 Cardinal Drive

Nancy J. Gooch, Mary E. Hulsey, Vero Beach, Florida 32960 James A. Chinelly, John C.

Chinelly, Jr., Shana Munden, Joseph Tresser, Harold E. Whitten, Asa F. Brand, Josephine

B. Shanefelt, Brett A. Slabe, William F. Kuemerle, Jr.,

and Marshall Feinsilber

Vilma Sardiello, pro se 5207 Hayes Street

Hollywood, Florida 33020

ISSUE

Whether respondents' licenses as real estate brokers and salespersons should be disciplined for alleged misrepresentation, fraud, breach of trust, culpable negligence, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, violation of a duty imposed by statute and contract, and aiding and conspiring with other persons engaged in misconduct-- all in violation of Section 475.25(1)(b), Florida Statutes (1981).

BACKGROUND

On October 6, 1981, petitioner Department of Professional Regulation, Board of Real Estate /1 ("Department"), filed an initial administrative complaint against respondents: Frederick A. Lewis, Chinelly Real Estate, Inc., John C. Chinelly, Sr., Richard M. Chinelly, Paul James Fleck, Nancy J. Gooch, Mary E. Hulsey, James A. Chinelly, John C. Chinelly, Jr., Shana Munden, Joseph Tresser, Reginald D. Lucas, Harold E. Whitten, Asa F. Brand, Josephine B. Shanefelt, Brett A. Slabe, William F. Kuemerle, Jr., and Marshall Feinsilber. On January 25, 1982, the Department filed a second administrative complaint against respondents Elaine P. Stein and Vilma Sardiello.

The initial complaint against the first group of respondents contains three counts. Count I alleges that the named respondents are guilty of misrepresentation, breach of trust, and culpable negligence, in violation of Section 475.25(1)(b), Florida Statutes (1981), in connection with the preparation of a contract, dated March 25, 1981, for sale of real property by Wayne L. and Gladys E. Hunter to Mordechai and Nuti Antebi. It alleges that the contract for the purchase and sale of the Hunters' property at 1704 North 44th Avenue, Hollywood, Florida, was prepared with the advice and counsel of respondents.

Count II of the initial complaint alleges that named respondents are guilty of misrepresentation, breach of trust, and culpable negligence, in violation of Section 475.25(1)(b) in connection with the preparation of a contract dated March 26, 1981, for the sale of real property by Wayne L. and Gladys E. Hunter to Mordechai and Nuti Antebi. It alleges that the contract for the purchase and

sale of the Hunters' property at 1704 North 44th Avenue, Hollywood, Florida, was prepared with the advice and counsel of respondents and that they knew or should have known that the actual deposit on the purchase offer by the Antebis was only

$500, and not the sum of $8,000 represented to Wayne L. and Gladys E. Hunter.

Count III alleges that respondents are guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, breach of trust in a business transaction, violating a duty imposed by law and contract, and aiding and conspiring with other persons engaged in such misconduct, in violation of Section 475.25(1)(b) . It alleges that the respondents concocted and entered into a conspiracy to defraud Wayne L. and Gladys E. Hunter; that in furtherance of said scheme or conspiracy a complaint for interpleader was filed in Broward County Circuit Court, a complaint alleged to be so inaccurate and misleading as to constitute a fraud on the court.

The Department's second administrative complaint was filed against respondents Elaine P. Stein and Vilma Sardiello. It alleges that respondents are guilty of fraud, misrepresentation, concealment, dishonest dealing by trick, scheme, or device, breach of trust in a business transaction, violating a duty imposed by law and contract, and aiding and conspiring with other persons engaged in such misconduct, in violation of Section 475.25(1)(b). It further alleges that Frederick A. Lewis, a broker with Chinelly Real Estate, Inc., prepared a contract on or about March 26, 1981, between Mordechai and Nuti Antebi, buyers, and Wayne L. and Gladys E. Hunter, sellers, in connection with the purchase and sale of the Hunters' property at 1704 North 44th Avenue. And it further alleges that the two respondents then went ahead with their scheme to deposit personal funds into escrow with a view towards continuing to influence the Hunters to sell the subject property, pursuant to the March 26, 1981, contract. Since both administrative complaints involve the same subject matter, the parties agreed that they should be consolidated for final hearing.

At hearing, the Department called as witnesses: Nuti Antebi, James Chinelly, Wayne L. Hunter, Alex Olson, Gladys E. Hunter, Elaine P. Stein, Ann Shetter, John Chinelly, Jr., Frederick A. Lewis, and Reginald D. Lucas. It offered Petitioner's Exhibit Nos. 1 through 7 and 9, each of which was received into evidence. The respondents offered Respondents' Exhibit Nos. 1 through 7, each of which was received.

Thereafter, the parties filed proposed findings of fact and conclusions of law by May 19, 1982. No transcript of hearing has been prepared.

Based on the evidence presented at hearing, the following facts are determined:

FINDINGS OF FACT

1. On March 25, 1981, Elaine P. Stein, a licensed real estate salesperson, showed Mordechai and Nuti Antebi a house for sale at 1704 North 44th Avenue, Hollywood, Florida. The house was owned by Wayne L. and Gladys E. Hunter and listed with Murray Realty. The listing broker for Murray Realty was Warren Stein, and the salesperson directly involved in the listing was Alex Olson. Elaine Stein was a salesperson in the Emerald Hills office of Chinelly Real Estate, Inc.; the manager for that office was Frederick A. Lewis, a licensed real estate salesperson. (Testimony of Stein, Antebi, Olson, Lewis.)

2. The Antebis, who were in the process of selling their present Pembroke Pines house through the Hollywood Hills office of Chinelly Real Estate, Inc., liked the house and expressed a desire to purchase it. They were told that if they assumed the existing mortgage on the Hunters' house, the interest rate would escalate on the day of closing. (Testimony of Olson, Stein.)

   
   

3. The Antebis and Ms. Stein then returned to the Emerald Hills office where a written offer was prepared by Ms. Stein, Vilma Sardiello--a licensed real estate salesperson who frequently worked with her--and Alex Olson, the listing Murray Realty salesperson. Ms. Antebi told Ms. Stein and Ms. Sardiello that she had only $500 to place as an earnest money deposit. The purchase price was $106,000. Ms. Stein then spoke with Mr. Lewis, who advised her that the problem could be handled by executing an assignment of funds. Such an assignment would allow proceeds from the scheduled sale of the Antebis' Pembroke Pines house to be used in the Hunter-Antebi transaction. Ms. Stein, who was unfamiliar with assignments, then procured a written assignment of funds from Ms. Antebi for the sum of $19,500 and prepared a written offer. Ms. Antebi signed the offer and provided a $500 earnest money deposit. (Testimony of Stein, Olson, Sardiello, Antebi; P-1, R-1.)

   
   

4. Immediately thereafter, Alex Olson, Murray Realty's listing agent, telephoned the offer to the Hunters in Ocala, Florida. He informed them that the Antebis were offering to purchase their house for $106,000, consisting of a

   $20,00 deposit, $15,000 at closing, and assumption of the current mortgage of approximately $43,000 at the prevailing interest rate. In addition, the Hunters were to take back a $28,000 purchase money mortgage at 12 percent for five years, with only interest payable monthly (He did not inform them that $19,500 of the $20,000 deposit was in the form of, an assignment of funds from the sale of the Antebis' Pembroke Pines house. He was unaware of the assignment, which Ms. Stein had inadvertently failed to disclose in the written offer.). The Hunters telegraphed their acceptance of the offer pursuant to Mr. Olson's instructions. (Testimony of Olson, W. Hunter, G. Hunter, Antebi, Stein; P-1, P- 4.)

   
   

5. After receiving the Hunters' telegram, Ms. Stein realized that the phrase, "assignment of funds," had been mistakenly omitted from the written offer. She alerted Mr. Lewis, who, in turn, contacted Mr. Olson on March 26, 1981, and advised him that $19,500 of the deposit would come from an assignment of the proceeds from the sale of Antebis' Pembroke Pines house. Mr. Olson responded that he would not transmit another offer to the Hunters without a written letter from Chinelly Real Estate, Inc., verifying the amount of deposit held in escrow on the Hunter-Antebi transaction. (Testimony of Olson, Lewis, Stein.)

   
   

6. Consequently, on March 26, 1981, Mr. Lewis telephoned Ann Shetter, bookkeeper and accounts supervisor at Chinelly Real Estate, Inc.`s main office. He asked her for the amount of money on deposit in the escrow account for the Antebi transaction. She replied that there was $8,000 held in escrow on the Antebi transaction; but she failed to indicate whether she was referring to the Hunter-Antebi transaction or the Antebi sale of their Pembroke Pine house which was being handled by another Chinelly Real Estate, Inc., office at that time. Mr. Lewis reasonably (although mistakenly) assumed that she was referring to the Hunter-Antebi transaction, the only Antebi transaction being handled by his office (He was unaware that the Antebis' Pembroke Pines house was being sold by another office of Chinelly Real Estate, Inc.). Instead, Ms. Shetter was referring to $8,000, which was being held in escrow, on the Antebis' sale of their Pembroke Pines house. (Testimony of Lewis, Shetter.)

7. Mr. Lewis then in response to Mr. Olson's request, signed and delivered an escrow letter to Mr. Olson on March 26, 1981, verifying that Chinelly Real Estate, Inc., was holding $8,000 in escrow on the Hunter-Antebi transaction. (Testimony of Lewis; P-6.)

   
   

8. Mr. Olson then telephoned the Hunters in Ocala on March 26, 1981, and told them that the deposit would be $8,000 instead of $20,000, and that $27,000 would be paid at closing instead of the agreed upon $15,000 (These changes did not affect the total purchase price.). He also told them that be felt an $8,000 deposit would be sufficient. The Hunters agreed to the changes and at Mr. Olson's request, sent a confirming telegram to the Emerald Hills office of Chinelly Real Estate, Inc. (Testimony of Olson, Hunter, Stein; P-5.)

   
   

9. Shortly thereafter, Mr. Olson picked up the revised contract which had been prepared by Ms. Stein and signed by the Antebis; without reading it, he sent it to the Hunters for execution. This contract, fully executed by buyers and sellers, provided for a purchase price of $106,000, an initial $500 deposit, an additional deposit paid to Chinelly Real Estate, Inc.`s trust account on or before March 26, 1981, in the amount of $7,500, an assumption by buyers of an existing first mortgage held by American Savings and Loan at prevailing interest rate in the principle amount of $43,000, a $28,000 purchase money mortgage bearing interest at 12 percent for five years, interest only, payable monthly, balloon in five years, and approximately $27,000 due at closing, including

   $12,000 provided by assignment of funds from the sale of the Antebis' current house. (Testimony of Stein, Olson, W. Hunter, G. Hunter; P-2.)

   
   

10. On April 9, 1981, Nancy Gooch, vice-president in charge of processing transactions for Chinelly Real Estate, Inc., discovered the discrepancy in the Hunter-Antebi transaction, that the contract indicated that $8,000 would be deposited in the firm's escrow account while, in fact, only $500 had been deposited. She alerted her boss, John Chinelly, Jr., a licensed real estate broker, who, upon further investigation, found the Lewis letter which mistakenly represented that $8,000 was held in escrow on the Hunter-Antebi transaction. (Testimony of Chinelly; P-9.)

    
    

11. Mr. Chinelly, who was about to depart on a four-day religious retreat, called in Reginald D. Lucas, general sales manager and a licensed real estate broker, and instructed him to find out the facts surrounding the discrepancy and solve the problem. On April 9-10, 1981, Mr. Lucas called Mr. Lewis and obtained his explanation of the escrow discrepancy; after discussing alternative courses of action, Mr. Lucas told him to meet with Ms. Stein and Ms. Sardiello and decide how they would solve the problem. Various options discussed included:

    (1) canceling the transaction, (2) persuading the Antebis to place an additional

    $7,500 into escrow, and (3) depositing the personal funds of Mr. Lewis, Ms. Stein, and Ms. Sardiello to cover the escrow shortage. On Friday, April 10, 1981, and during the ensuing weekend, they discussed among themselves possible penalties, such as loss of their jobs and licenses, and what course of action would be ethical and proper. After Ms. Stein failed to persuade Ms. Antebi to place an additional $7,500 into escrow, the three real estate salespersons--Mr. Lewis, Ms. Stein, and Ms. Sardiello--reluctantly agreed to each loan the Antebis

    $2,500 to make up for the Hunter-Antebi escrow shortage (They obtained a promissory note dated April 10, 1981, from the Antebis requiring repayment when the Pembroke Pines house was sold.). (Testimony of Lucas, Stein, Lewis; R-5.)

12. Mr. Lewis, Ms. Stein, and Ms. Sardiello acted on their belief that Murray Realty and the Hunters had been told of the escrow discrepancy and consented to their loaning money to the Antebis to make up for the difference. Mr. Lucas led them to believe that such was the case. Between April 10 and 13, 1981, he had telephoned Mr. Olson to tell him about the escrow shortage. Because Mr. Olson was out of town, he spoke with Warren Stein (unrelated to Elaine Stein), the listing broker for Murray Realty. He and Mr. Stein agreed that they should promptly notify the Hunters of the situation. (Testimony of Lewis, Stein, Sardiello, Lucas.)

    
    

13. Shortly thereafter, on April 13, 1981, Mr. Lucas went to Mr. Stein's Murray Realty office for the purpose of jointly notifying the Hunters. In the ensuing telephone call, the Hunters were told of a problem with the escrow account, that the three sales persons--Ms. Stein, Ms. Sardiello, and Mr. Lewis-

    -had agreed to make up for the shortage by depositing $7,500 of their own money into escrow, and that the closing would be unaffected. The Hunters knew of and consented to the three salespersons contributing $7,500 into escrow (There is conflicting testimony on whether the Hunters were told of this $7,500 contribution. The Hunters deny it while Mr. Lucas insists they were told of and consented to the arrangement. Mr. Lucas's testimony on this question is accepted as persuasive. The Hunters' testimony conflicts with the statements contained in their complaint filed with the Department.). (Testimony of Lucas; R-7.)

    
    

14. When Mr. Olson returned to Murray Realty on April 14, 1981, and learned of the events which had transpired in his absence, he requested written verification from John C. Chinelly, Jr., that the three real estate salespersons had placed the $7,500 in escrow. Mr. Chinelly verified that the money had been placed into escrow and wrote a letter to Murray Realty confirming that fact. At that time, Mr. Chinelly--based on his conversations with Mr. Lucas and Mr.

    Stein--also believed that the Hunters had consented to the salespersons depositing the additional $7,500 into escrow. (Testimony of Chinelly, Olson, Lucas; P-7.)

    
    

15. Closing of the Hunter-Antebi transaction was scheduled for April 28, 1981. At closing, the Antebis complained about the condition of the roof, pool, and air conditioner. The Antebis also did not have sufficient funds to close the transaction. The transaction failed to close. (Testimony of Stein, Antebis, Olson.)

    
    

16. Subsequently, the Antebis closed on the scheduled sale of their Pembroke Pines house. As a condition to this closing, $7,500 was placed into escrow pending a court decision on a complaint for interpleader filed in Broward County Circuit Court by Chinelly Real Estate, Inc., concerning the Hunter-Antebi transaction.

    
    

17. At all times material to the proceeding, respondents John C. Chinelly, Sr., Richard M. Chinelly, Paul James Fleck, Nancy J. Gooch, Mary E. Hulsey, James A. Chinelly, John C. Chinelly, Jr., Shana Munden, Joseph Tresser, Reginald

    D. Lucas, Harold E. Whitter, Asa F. Brand, Josephine B. Shanefelt, Brett A. Slabe, William F. Kuemerle, Jr., and Marshall Feinsilber were the qualifying brokers for Chinelly Real Estate, Inc.

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Section 120.57(1), Fla. Stat. (1981).

    
    

19. Section 475.25(1)(b), Florida Statutes (1981), authorizes disciplinary action against licensed real estate brokers and salespersons when they are found to have been guilty of:

    
    

    [F] raud, 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 have] aided, assisted, or conspired with any other person engaged in any such

    misconduct and in furtherance thereof; . . .

    
    

20. License revocation proceedings are penal in nature. Bowling v. Department of Insurance, 394 So.2d 165 (Fla. 1st DCA 1981). In such proceedings, the term "substantial competent evidence" takes on vigorous implications. Bowling, supra at 171. The agency must prove its charges by evidence "which is indubitably as 'substantial' as the consequences [for the licensee]." Id. at 172.

    
    

21. Measured by this standard, it is concluded that the charges contained in the two administrative complaints against respondents are wholly unsubstantiated by the evidence. The administrative complaints must, therefore, be dismissed, with prejudice, based on failure of proof.

    
    

22. The parties' proposed findings of fact which are incorporated in this recommended order are adopted; otherwise, they are rejected as unsupported by the evidence or unnecessary to resolution of the issues presented.

RECOMMENDATION

Based on the foregoing, it is RECOMMENDED:

That the two administrative complaints and all charges against respondents be dismissed, with prejudice.

DONE AND RECOMMENDED this 14th day of June, 1982, in Tallahassee, Florida.

R. L. CALEEN, JR., 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 14th day of June, 1982.

COPIES FURNISHED:

Harold M. Braxton, Esquire

45 Southwest 36 Court Miami, Florida 33135

Howard Todd Jaffe, Esquire 1915 Harrison Street

Hollywood, Florida 33020

Rodger L. Spink, Esquire 6600 Taft Street, Suite 404

Hollywood, Florida 33024

Michael J. Garavaglia, Esquire 3111 Cardinal Drive

Vero Beach, Florida 32960

Vilma Sardiello 5207 Hayes Street

Hollywood, Florida 33020

Frederick H. Wilsen, Esquire Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

Carlos B. Stafford Executive Director

Florida Real Estate Commission 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: 81-002798

Orders for Case No: 81-002798