vs. ) CASE NO. 82-1715
Respondent. )
This matter came on for hearing in Tallahassee, Florida, on October 12, 1982, before the Division of Administrative Hearings and its duly appointed Hearing Officer, R. T. Carpenter. The parties were represented by:
For Petitioner: Harold F. X. Purnell, Esquire
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
For Respondent: Steven A. Werber, Esquire
This matter arose on Petitioner's Administrative Complaint/Notice to Show Cause charging the Respondent and some of its stockholders with filing false official statements supporting the application for an alcoholic beverage license. Respondent is charged primarily with concealing an interest in the licensed operation held by a convicted felon.
The parties submitted proposed findings of fact and conclusions of law. The proposed findings have been considered and are incorporated herein to the extent they are relevant and consistent with the evidence.
Respondent, Seminole Park and Fairgrounds, Inc., holds alcoholic beverage license number 69-255, Series 12, RT, which licensed premises is located at Seminole Greyhound Park, a greyhound racing facility in Casselberry, Florida. The officers of this corporation who are accused of filing false personal questionnaires with Petitioner are Paul Dervaes, Jack Demetree, William Demetree and Ernest Drosdick. Paul Dervaes and William Demetree also filed a certificate of incumbency and stock ownership which is also alleged to have been false.
The principal issue concerns the involvement of John Fountain in the affairs of Seminole Park and Fairgrounds, Inc. Fountain is a convicted felon who was adjudicated guilty of bookmaking in the Jacksonville Federal District Court in October, 1972. The principal parties to this matter, Paul Dervaes, Jack and William Demetree and Ernest Drosdick knew from the outset that John Fountain was a convicted felon ineligible for licensing in this state under either the pari- mutuel or beverage laws.
John Fountain conceived the idea of acquiring Seminole Park and Fairgrounds, Inc., a money-losing harness racing facility, and obtaining necessary legislation to convert the facility to greyhound racing. Fountain first brought this idea to his long-term friends and business associates, Jack and William Demetree, in the mid to late 1970's. Fountain also initiated the involvement of another longtime friend, Paul Dervaes, as President of Seminole Park and Fairgrounds, Inc.
When the enterprise was short of cash in late 1978 and early 1979, Fountain made successive loans of $152,000 and $169,499.82 to the corporation through Paul Dervaes for use in converting and operating Seminole Park. When the necessary legislation was passed to convert to a greyhound facility, John Fountain, for several months, worked long hours without any salary as head of the physical conversion project for the Demetrees. Fountain originated the Super 8 betting feature at Seminole Park, one of the cornerstones of the track's promotion and publicity endeavors. Fountain also, after the conversion was complete and the facility was opened for business, authorized complimentary meals and drinks at the licensed premises at Seminole Park and authorized petty cash disbursements for a wedding present for a newspaper reporter and the distribution of gasoline without charge from Seminole Greyhound Park's fuel tanks.
On March 31, 1980, Paul Dervaes, who at the time held 53 percent of the outstanding stock of Seminole Greyhound Park, sent a memo to William Demetree and sought to extricate himself from a managerial position at the track on the basis that the Demetrees appeared not to be satisfied with his managerial abilities. In this memo, Dervaes identified himself as a minority stockholder of the enterprise, despite his then ownership of a majority of 53 percent of the shares of stock. Respondent has sought to explain such incongruity by candidly admitting that Dervaes was fronting for John Fountain as to 43 shares or 43 percent of the stock in Seminole Park.
As this time, Ernest Drosdick, who had for years handled all legal affairs for Seminole Park as well as for William Demetree, advised Dervaes and Jack and William Demetree that the loans to Seminole from John Fountain through Paul Dervaes had to be repaid so that the involvement of Fountain could be terminated. Drosdick's advice was predicated on Fountain's felony conviction and he noted that Fountain's continued involvement in such manner would be violative of the pari-mutuel and beverage licensing laws.
The corporation thereupon obtained $321,499.82 in early April of 1980, such sum being the total of the principal but not interest due on the $152,000 and $169.499.82 loans made from John Fountain to Seminole Park through Paul Dervaes. Drosdick's advice was not consistently applied, however, with regard to recalling the loans from John Fountain. The $321,499.82 was paid by check to Paul Dervaes on April 1, 1980, which Dervaes deposited in his bank account. William Demetree then asked Dervaes if $160,000 of the funds just paid him could be borrowed back from Fountain despite Drosdick's advice against such loans.
The re-loan was agreeable with Fountain and on April 9, 1980, Dervaes wrote a
check in the amount of $160,000 back to Seminole Park and Fairgrounds, and on April 21, repaid the remaining $161,499.82 to Fountain. The $160,000 loan was reflected in an April 9, 1980, note signed by William Demetree as Chairman of Seminole Park and Fairgrounds, Inc. It was also acknowledged by William Demetree that he knew the money was coming from John Fountain. It is this loan, which was repaid as to principal only in November of 1980, that was not reflected on the personal questionnaires of each of the principal parties.
At the time the April 9, 1980, $160,000 loan was made by Fountain to Seminole Park through Dervaes, all of the principal parties, Paul Dervaes, Jack and William Demetree and Ernest Drosdick, knew that John Fountain was a convicted felon and knew that his involvement through loans would be impermissible under pari-mutuel and beverage licensing statutes. It was established that the $160,000 loan was not listed on the personal questionnaires filled out in July of 1980, by each of the aforementioned individuals despite the clearly expressed directive of such questionnaire forms, which states:
List the total amount and sources of money you personally are investing in the
proposed operation. Also, list any persons, corporations, partnerships, banks,
and mortgage companies who have or will invest or lend money in the proposed operation.
Immediately prior to the applicant's signature line on the personal questionnaire form is the following statement:
I swear or affirm under penalty
of perjury as provided for in Florida Statute 837.06 that the foregoing information is true to the best of my knowledge, and that no other person, persons, firm or corporation, except as indicated herein, has an interest in the alcoholic beverage license for which these statements are made.
Immediately under the signature line is a boxed-in passage entitled "WARNING" with the word "warning" capitalized and underlined and the following:
Read carefully, this instrument is
a sworn document. False answers could result in criminal prosecution, subject to fine and/or imprisonment.
The principal parties seek to excuse their failure to include the Fountain loan on their personal questionnaires by claiming that Drosdick, who is now deceased, was unaware of the $160,000 loan, that he filled out the questionnaires for them and that they merely signed them under oath and attested to their veracity without reading them. This testimony is not credible in view of the material, self-serving omission made on these questionnaires. Therefore, Respondent's agents, who are experienced businessmen, must be held responsible for their sworn statements.
The principals have also sought to excuse their conduct on the basis that any matters which transpired between John Fountain and Paul Dervaes in
connection with the loan were personal matters between Dervaes and Fountain and thus immaterial to the corporation. However, this theory avoids recognizing that personal questionnaires were submitted by four individuals and not by the corporate entity. It was established that each of the four individuals had knowledge of the $160,000 loan in question and thus were required to list such loan on their personal questionnaires.
It was Fountain who conceived the idea of conversion, who supplied the capital necessary to effectuate the conversion, who without salary headed the physical conversion of the facility and who after the opening of the track authorized the expenditure of funds and the giving of certain gratuities at the track. Fountain was clearly and intimately involved with the overall success of the track. Indeed, the original loans in the amount of $152,000 and $169,499.82 from Fountain called for the payment of 10 percent interest and the $160,000 loan called for the payment of 15 percent interest, none of which has ever been paid. Such interest, as of September 30, 1982, had accrued in the amount of
$15;173. Dervaes acknowledged that such interest was but a "paper transaction" in that the principal parties and Fountain all knew and agreed that Fountain would not be paid until such time as the track paid Dervaes the interest.
Consequently, Fountain has held with the full knowledge of all the principal parties, an impermissible pecuniary interest in the licensed facility which continues to the present time.
The Certificate of Incumbency and Declaration of Stock Ownership submitted as part of the beverage license application process was likewise incorrect. It reflected Jack and William Demetree as 50 percent each owners of Seminole Park and Fairgrounds, Inc. when, in fact, the separate corporate entity Seminole Greyhound Park, was the sole stockholder of this corporation. Such document was signed by William Demetree and certified as being true and correct by Paul Dervaes under oath. William Demetree and Paul Dervaes attempt to place the blame on Drosdick for improperly preparing the document. However, they signed this document and cannot avoid responsibility for their sworn statements.
CONCLUSIONS OF LAW
Section 561.29, Florida Statutes, provides in part:
The division is given full power and authority to revoke or suspend the license of any person holding a license
under the Beverage Law, when it is determined or found by the division upon sufficient cause appearing of:
Violation by the licensee or his or its agents, officers, servants, or employees, on the licensed premises, or
elsewhere while in the scope of employment, of any of the laws of this state. . .except
that whether or not the
licensee or-his or its agents, officers, servants, or employees have been convicted in any criminal court of any violation
as set forth in this paragraph shall not be considered in proceedings before the division for suspension or revocation of a license except as permitted by chapter
92 or the rules of evidence.
* * *
(f) A determination that a person
who is interested directly or indirectly in the license or licensed business authorized to sell spirituous beverages is not qualified.
Section 837.06, Florida Statutes, provides in part:
Whoever knowingly makes a false statement in writing with the intent to mislead a public servant in the performance of his official duty shall be guilty of a misdemeanor of the second degree.
The above provisions empower Petitioner to revoke or suspend a beverage license for violation of Florida law by the licensee or its agents. In filing the official statements, which omitted reference to the $160,000 loan from a convicted felon, Respondent's agents violated Sections 837.06 and 561.29, Florida Statutes, quoted above.
Sections 561.15 and 561.17, Florida Statutes, expressly forbid the issuance of any license where any person directly or indirectly interested in the business has been convicted of a felony within the past 15 years. Here, Fountain was such an individual and did hold an indirect interest in the business through his loan and forbearance to collect interest thereon. Additionally, his services which were not compensated gave rise to an expectation of continued participation in the enterprise. Thus, Respondent is guilty as charged in Count Six of the Administrative Complaint/Notice to Show Cause.
The actions of Respondent's agents were aimed at concealing Fountain's involvement so as to avoid license problems. Therefore, their claims of ignorance in signing the false questionnaires are not credible. Respondent should be found guilty as charged in Counts One through Four of the Administrative Complaint/Notice to Show Cause.
Respondent is likewise guilty as charged in Count Five of the Administrative Complaint/Notice to Show Cause. This violation involved an incorrect Certification of Incumbency and Declaration of Stock Ownership which was submitted by Respondent as part of its beverage license application.
Finally, Paul Dervaes, William Demetree and Jack Demetree are charged with a lack of "good moral characters' required of beverage licensees or their corporate officers under Section 561.15, Florida Statutes. It was established that these individuals attempted to evade the beverage law licensing requirements by filtering Fountain's loans through Dervaes, and by withholding direct payment to Fountain for his services. Further, by intentionally making false sworn statements and by admitted lack of concern for the veracity of such sworn statements, they have shown little regard for the laws of Florida as they pertain to the beverage licensing process. Such attempts to evade the law indicate that these individuals lack the requisite moral character as charged in Count Seven of the Administrative Complaint/Notice to Show Cause.
That Petitioner enter a Final Order revoking Respondent's alcoholic beverage license no. 69-255.
DONE and ENTERED this 23rd day of November, 1982, in Tallahassee, Florida.
R. T. CARPENTER, Hearing Officer Division of Administrative Hearings The Oakland Building
Filed with the Clerk of the Division of Administrative Hearings this 23rd day of November, 1982.
Harold F. X. Purnell, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
Steven A. Werber, Esquire 2000 Independent Square
Charles A. Nuzum, Director Division of Alcoholic Beverages and Tobacco
Gary R. Rutledge, Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
