vs. ) CASE NO. 82-2542
JAMES S. SHENKENBERGER and )
Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William B. Thomas, held a formal hearing in this case on February 9, 1983, in Fort Lauderdale, Florida. The transcript was filed on February 25, 1983, and the parties were allowed 30 days thereafter to submit proposed findings of fact and conclusions of law. The Petitioner made its submission in a timely manner, and these proposed findings and conclusions have been adopted. Nothing was received from the Respondents.
For Respondents: Owen L. Luckey, Jr., Esquire
By Administrative Complaint issued on May 26, 1982, the Respondents were charged with II counts of violations of the Florida real estate licensing law, more specifically set forth below. In support of the Complaint, the Petitioner presented four witnesses. These were an officer of the bank in Oakland Park where the Respondents held accounts, the complaining witness who resides in Pennsylvania, the operating officer of Florida Hendry Land, Inc., and one of the investigators of the Department of Professional Regulation. Eighteen exhibits were offered and received in evidence.
No evidence was presented by or on behalf of the Respondents.
The Respondent Habitat Corporation is a corporate real estate broker holding license number 0217261, with a registered business address of 3835 North Andrews Avenue, Fort Lauderdale, Florida 33309. The Respondent James S.
Shenkenberger is the qualifying broker for the corporate licensee, and holds license number 0079972.
Prior to January 2, 1981, Shenkenberger was qualifying broker for American Overseas Investment Corporation, then a licensed Florida corporate real estate broker operating in Fort Lauderdale, Florida. On January 2, 1981, Shenkenberger placed the real estate license of American Overseas Investment Corporation on inactive status, and obtained an active license for the Habitat Corporation.
From July of 1977, Shenkenberger had an oral agreement with Florida Hendry Land, Inc., to act as a broker in selling property belonging to Florida Hendry Land, Inc. The terms of this agreement were that Shenkenberger was to be paid on a commission basis, and that he would present sales agreements for the approval of Joe Hendry, the owner of the corporation. When a sales contract was complete, then Florida Hendry would issue the Warranty Deed and order the title insurance.
In early 1980, Irvin Adams, pursuant to a newspaper advertisement advertising land for $800 an acre, contacted Jim Shenkenberger and arranged to meet with him. On February 9, 1980, Adams flew to Florida from Pennsylvania and was shown Florida Hendry land by Shenkenberger. On this date, Adams decided to purchase lots four and five for a total purchase price of $64,000. Shenkenberger told Adams that if he made all the payments within one year, the purchase price would be reduced by 10 percent. As a down payment, Adams gave Shenkenberger a check for $14,000, payable to the order of American Overseas Investment Corp., and $2,000 in cash. At no time was Adams presented with a sales contract for Lots four and five.
Adams returned to Pennsylvania, and contacted Shenkenberger several times during 1980 when he became worried that he had not received any requests for further payments. Shenkenberger informed Adams that the land was tied up, that Mr. Hendry had an obligation to the State of Florida, and that the land had been put up as a bond. In December of 1980, Shenkenberger contacted Adams and told him that the property was clear.
On January 10, 1981, Adams flew to Florida a second time. He met with Shenkenberger, and again viewed the Hendry property. Adams decided to change the property he was purchasing to tract 18. Adams gave Shenkenberger a check payable to the order of American Overseas Investment Corp. in the amount of $12,800, and Shenkenberger gave him a receipt reflecting that Adams had paid in full for tract 18. At no time was Adams presented with a sales contract for tract 18. On this same date, Shenkenberger showed Adams three more Hendry tracts, and Adams gave Shenkenberger a down payment for Lots six, seven and ten in the amount of
$11,900. Shenkenberger made out and signed the offers to purchase the three lots in the presence of Adams, but did not give them to Adams to sign. Adams never received a receipt for deposit or a sales contract on any of the three lots.
Polly Hodge, who operated Florida Hendry Land, Inc. on a day-to-day basis, was first informed in March of 1980 that Irvin Adams might be interested in purchasing certain of their properties. The first money received by Florida Hendry Land, Inc., relating to sale of property to Irvin Adams, was by a $300 check from Shenkenberger dated January 15, 1981. Shenkenberger represented that the funds were a binder for the purchase by Adams of tracts six, seven and ten. Florida Hendry Land, Inc., never received a written offer to purchase the properties. After Florida Hendry received the binder, Polly Hodge asked
Shenkenberger on several occasions about the status of the sale to Adams. Shenkenberger repeatedly advised her only that Adams would be coming to Florida in the near future.
After Adams returned to Pennsylvania from his trip to Florida in January of 1981, he contacted Shenkenberger and advised him that he wished to purchase one lot in full rather than Lots six, seven, and ten. On January 26, 1981, he sent Shenkenberger a check in the amount of $14,650 for payment in full of tract ten of the Hendry property. At no time did Adams receive a deposit receipt for this payment, nor did he receive a sales contract.
When Adams became concerned because he had not received deeds to the two properties, he contacted Shenkenberger, and was told that the Hendry Land Office was slow in preparing the deeds.
On February 26, 1981, Adams visited the offices of Florida Hendry Land, Inc., and spoke briefly with Polly Hodge. Adams informed her that he wished to purchase tract ten only, and was not pursuing the purchase of tracts six and seven. Later, Adams met with Shenkenberger, and again inquired about the deeds. Shenkenberger assured him that he would have the deeds shortly.
On February 27, 1981, Shenkenberger wrote a check to Florida Hendry Land in the amount of $23,895 which, together with the binder of $300, was the full purchase price of tract ten less Shenkenberger's 10 percent commission, and the deed was sent for recordation. Polly Hodge also gave Shenkenberger the Warranty Deed to tract 18 after Shenkenberger represented to her that he would be closing the property on the weekend, and would then deliver the purchase money to her. After the Warranty Deed was given to Shenkenberger, Polly Hodge inquired several times as to the progress of the transaction, but Shenkenberger repeatedly told her that Adams had not arrived to close.
After returning to Pennsylvania, Adams was contacted by Shenkenberger on or about March 12, 1981. Shenkenberger told Adams that he had talked to J.B. Hendry and that Hendry did not feel that he had gotten enough money from Adams for tract 18. Shenkenberger told Adams that he would give Adams his money back for tract 18 or that Adams would have to pay him an additional $3,600. In response, Adams sent Shenkenberger a check payable to the order of American Overseas Investment Corporation in the amount of $3,600.
Adams received the recorded deed for tract 10 on March 14, 1981, and received the recorded deed for tract 18 on April 11, 1981.
In total, Adams paid American Overseas Investment Corporation $32,400 for tract 18 and $26,500 for tract 10.
Florida Hendry Land, Inc., received no monies from either Irvin Adams or James Shenkenberger for the purchase by Adams of tract 18. At the time tract 18, consisting of 40 acres, was conveyed to Adams, the purchase price was
$72,000 less 10 per cent because it was a cash purchase. Florida Hendry Land, Inc., was entitled to $64,800 less 10 per cent for Shenkenberger's real estate commission, for a total amount due to Florida Hendry Land of $58,320.
Shenkenberger was aware of the purchase price for tract 18 from his long business relationship with Florida Hendry Land, Inc., and from plat maps given to him by Hodge that showed lot prices.
In 1980 and 1981, Florida Hendry Land processed sales on a "walk-in" basis, processing and completing a conveyance while the purchasers waited in the office. Florida Hendry had no problems with any governmental agencies, nor was there any other impediment, which prohibited them from conveying their properties.
The checks on the account of Irvin Adams were made payable to the order of American Overseas Investment Corporation at the specific instruction of Shenkenberger.
On February 11, 1980, Shenkenberger opened a bank account for American Overseas Investment Corporation in what was then the First Bank of Oakland Park, Oakland Park, Florida. This account was not an escrow account or trust account. On January 12, 1981, after American Overseas Investment Corporation had been placed on inactive status, Shenkenberger deposited two checks in the amounts of
$12,800 and $11,900 in this account. On February 2, 1981, Shenkenberger deposited the check for $14,650 drawn by Adams into this account. On March 12, 1981, Shenkenberger deposited the check for $3,600 given by Adams into this account.
Although Shenkenberger received payment in full for tract 10 shortly after January 26, 1981, he did not deliver the payment to Florida Hendry Land until February 27, 1981.
The payments made by Adams to American Overseas Investment Corporation for the purchase of tract 18 were converted to Shenkenberger's own use.
In August, 1981, when Florida Hendry Land, Inc., became aware that Shenkenberger had recorded the deed for tract 18, and that the property had in fact been conveyed to Irvin Adams, they attempted to get payment for this tract from Shenkenberger, but were unsuccessful. Thereafter, Florida Hendry filed suit against Shenkenberger and Irvin Adams. Irvin Adams employed the services of an attorney to defend him in the action which was still pending on the date of the final hearing in this case.
During the course of the investigation of this matter by the Department of Professional Regulation, a Subpoena Duces Tecum was served on Shenkenberger, as President of American Overseas Investment Corporation, on January 25, 1982. This subpoena requested Shenkenberger to produce all listings, contracts to purchase, binder deposits, deposits of checks and/or monies into bank accounts, receipts, closing statements, and correspondence involving all real estate transactions between Florida Hendry Land, Inc., and Irvin Adams. The Respondent failed to honor the Department's subpoena, and never delivered the requested documents for examination.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.
Shenkenberger's license to operate American Overseas Investment Corporation was placed on inactive status on January 2, 1981. Thereafter, Shenkenberger directed Adams to make out checks to American Overseas Investment Corporation, accented the checks on behalf of American Overseas Investment Corporation, and deposited checks into a commercial bank account for American Overseas Investment Corporation. Throughout the transactions with Adams,
Shenkenberger held himself out as broker for American Overseas Investment Corporation. As a result, the Respondents have violated Section 475.42(1)(a), Florida Statutes, in that they operated American Overseas Investment Corporation as a broker corporation when it did not have a valid and current license. A violation of Section 475.42(1)(a), Florida Statutes, is a violation of Section 475.25(1)(a), Florida Statutes, and subjects the licensees to discipline by the Florida Real Estate Commission.
The American Overseas Investment Corporation account into which Shenkenberger placed the checks from Adams was not an escrow or trust account. The Respondent Shenkenberger is thus guilty of failing to place checks entrusted to him by persons dealing with him as a broker in an escrow or trust account, in violation of Section 475.25(1)(k), Florida Statutes. The Respondent Shenkenberger is also guilty of violating Rule 21V-14.10, Florida Administrative Code, which provides, in pertinent part, as follows:
Real Estate Brokers. Every licensed real estate broker who shall receive from his salesman, principal, prospect, or other person interested in any real estate transaction, any deposit, fund, money, check, draft, personal property, or item of value shall immediately place the same in a solvent bank savings and loan association, or trust company or title company having trust powers, in an escrow or trust account.
A violation of Rule 21V-14.10 is a violation of Section 475.42(1)(e) Florida Statutes, which provides that no person shall violate any lawful rule of the Commission, and is thus a violation of Section 475.25(1)(a), Florida Statutes, and subjects the licensee to disciplinary action.
In failing to timely deliver to Florida Hendry Land, Inc., the monies received from Adams for the purchase of tract 10, and in failing to deliver any monies at any time for the purchase of tract 18, the Respondents are guilty of failing to deliver to Florida Hendry Land, Inc., at the time which had been agreed upon, or was required by law, the monies for payment of the Hendry Properties, which had come into their hands and which were not their property and which in law and equity they were not entitled to retain under the circumstances. As such, the Respondents are in violation of Section 475.25(1)(d), Florida Statutes.
In acting as the real estate broker for Adams, and in accepting money from Adams without providing him with any contract or deposit receipt, and in demanding additional funds from Adams by falsely representing that Florida Hendry Land deemed the price inadequate for tract 18, the Respondent Shenkenberger is guilty of fraud, misrepresentation, concealment, false pretenses, breach of trust, and dishonest dealing by trick, scheme or device, in violation of Section 475.25(1)(b), Florida Statutes.
The scheme whereby the Respondent Shenkenberger obtained an executed Warranty Deed from Florida Hendry Land, Inc., and whereby he represented that the deed would be tendered to Adams upon receipt of the full purchase price, and whereby he recorded the deed to Adams without the knowledge of Florida Hendry Land, Inc., and whereby he converted the funds paid by Adams to his own use,
consists of a series of acts of misrepresentation, concealment, false promises, breach of trust, and dishonest dealing by trick, scheme or device, in violation of Section 475.25(1)(b), Florida Statutes.
By falsely representing to Florida Hendry Land, Inc., on January 19, 1981, that he had received only $300 from Adams as a deposit on tract 10, when in fact he had received some $11,900, and by keeping the entire purchase price for tract 10 for several weeks before delivering it to Florida Hendry Land, Inc., the Respondent Shenkenberger is guilty of misrepresentation, concealment, dishonest dealing by trick, scheme, or device and breach of trust in violation of Subsection 475.25(1)(b), Florida Statutes.
By all of the foregoing, the Respondent Shenkenberger has also intentionally made misleading, deceptive, untrue and fraudulent representations in the practice of real estate, in violation of Section 455.227(1)(a), Florida Statutes, and thus in violation of Section 475.25(1)(a), Florida Statutes.
When the investigative subpoena was served upon the Respondent Shenkenberger, he had the duty to make available to the Department the books and records requested, in compliance with Rule 21V-14.12, Florida Administrative Code, which provides:
Broker's records. A broker who received a deposit such as defined herein shall preserve and make available to the department or its authorized representative, all deposit slips and statements of account rendered by the bank or trust company, or title company with trust powers in which said deposit is placed, together with all agreements between the parties
respecting the transaction, particularly the deposit, and all contracts, agreements, instructions, and directions to or with the said depository and &hall keep an accurate account in his books
of each deposit transaction as well as an account in his books of each separate bank account wherein such trust funds have been deposited,
such accounts by such additional data as good accounting practice requires. All such books and accounts shall be subject to inspection by the department or its authorized representatives at all reasonable times during regular business hours.
Shenkenberger did not challenge the subpoena in accordance with Chapter 120, Florida Statutes. Consequently, he was obligated to comply with the subpoena and turn over the records requested. Failure to do so is a violation of this Rule, and is a violation of Section 475.42(1)(e), Florida Statutes, and Section 475.25(1)(a), Florida Statutes.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the licenses of the Respondents, James S. Shenkenberger,
and the Habitat Corporation, be revoked.
THIS RECOMMENDED ORDER ENTERED this 2nd day of May, 1983, in Tallahassee, Florida.
WILLIAM B. THOMAS
Filed with the Clerk of the Division of Administrative Hearings this 2nd day of May, 1983.
Owen L. Luckey, Jr., Esquire Post Office Box 865
William M. Furlow, Esquire Post Office Box 1900 Orlando, Florida 32802
Harold Huff, Executive Director Florida Real Estate Commission Post Office Box 1900
