Pollock, a Hearing Officer with the Division of Administrative Hearings, in Miami, Florida on April 1, 1985. The issue for consideration in this case was whether Respondent's alcoholic beverage license should be disciplined because of the misconduct outlined in the Notice to Show Cause filed herein by the Petitioner.
For Petitioner: Louisa A. Hargrett, Esquire
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
not represented by counsel. BACKGROUND INFORMATION
On or about February 27, 1984, the Division of Alcoholic Beverages and Tobacco, (DABT), Petitioner herein, filed a Notice to Show Cause against the Respondent, Biscayne Menage Club, Inc. (Club), alleging that on various dates between October 22, 1982 and December 3, 1982, the Respondent, through its agents, servants, or employees, unlawfully sold a controlled substance, cocaine, on the licensed premises. The Notice to Show Cause alleges various violations by the purchase of stolen property on various occasions between November 18, 1982 and December 16, 1982 by agents of Respondent on Respondent's premises.
Respondent, through counsel, requested a formal hearing on the charges in this matter and the case was referred to the undersigned for hearing. A hearing was
set in this case initially for June 1, 1984. However, the day before the hearing, Respondent submitted a stipulation of settlement to be considered by the Director of the Division which resulted in a postponement of the hearing date. A continuance was granted but apparently the stipulation was never finalized as hearing was again scheduled for February 26, 1985. Before this hearing could take place, the parties agreed to postpone the hearing date to April 1, 1985 and the hearing was held on that date as scheduled.
On March 29, 1985, a hearing by telephonic conference call was held attended by the hearing officer and counsel for both parties to consider Petitioner's motion to remand on the basis that counsel for Respondent had indicated Respondent would not attend the hearing and would not contest action by DABT. At the hearing, however, inquiry of Respondent's counsel revealed that there was, nonetheless, a substantial issue of fact. On the basis of that representation, the Hearing Officer denied Petitioner's Motion to Remand and indicated the hearing would be held as scheduled with the exception that the location of the hearing would be in the Graham state office building in Miami rather than the Ruth Rhodes state office building in Miami. Counsel for Respondent clearly indicated he understood the nature of the change and that the hearing was to be held in a different location with which he was familiar. The hearing was scheduled to commence at 10 am on April 1, 1955. The Hearing Officer delayed convening the hearing until 10:25 am. Neither Respondent nor its counsel appeared either prior to the commencement of or at any time during the hearing.
At the hearing, Petitioner presented the testimony of Louis J. Terminello, an investigator with the Miami office of DABT; Benjamin C. Wetzel, an employee of McKessin Division of Palm Beach Crown distributors; Jose Iturralde, currently a police officer with the Metro Dade Police Department, (Metro), but formerly an investigator with DABT; and Jonas Sears and Alexander Ramirez, both police officers with Metro; and introduced Petitioner's Exhibits 1 through 8.
Respondent, not being present at the hearing, presented no testimony or documentary evidence.
At all times pertinent to the issues herein, Respondent Bisayne Menage Club, Inc., trading as Chantel Menage on the Bay, located at 2333 Brickell Avenue, Miami, Florida held 4-COP-SRX alcoholic Beverage license No 23-4231. The Respondent being a corporation, records of the Division of Business Regulation reflected that the sole corporate officer was Mitchell J. Segal who was president, secretary, and treasurer.
On October 22, 1982, pursuant to an ongoing investigation, Officer Jonas Sears, in an undercover capacity, entered the Respondent's club where he met with Jose' Carballea (Coco), who he knew from some other narcotic transactions prior to this time which occurred off the licensed premises. At this time, Coco took Sears back into the kitchen area and, from a small metal key container which he had in his pocket, removed two small plastic bags containing a white powdery substance, one of which he sold to Sears for $80.00. The substance purchased by Sears then was subsequently identified as cocaine. From the access that Carballea had to all areas of the club, utilizing keys in his possesssion, and from the fact that he had advised Sears that his nephew owned the club, Sears concluded, and the evidence clearly establishes, that Core was, in some form or fashion, substantially high in the management of the operation.
Sears, accompanied by Detective Ramirez, went back to the club on October 26, 1982 in the afternoon. As on the previous visit, the club was not open to the public at this time and the two officers met with Coco in the office area and then walked into the lounge. At this point Sears advised Coco he was there to buy another gram of cocaine. Coco took him to one of the offices off the kitchen where from a desk he removed a clear plastic bag containing a white powdery substance from the metal container he had used previously. He gave this bag to Sears in return for which Sears gave him $80.00. Before leaving, Sears was served a beer by Coco. The white powder substance purchased by Sears on this occasion was subsequently identified as cocaine.
On November 9, Sears, again accompanied by Ramirez and another officer went to the club at 3:45 p.m. and met Coco in the kitchen. After a short discussion there, Coco took Sears into his office where he removed two plastic packages of white powder from the three that were in his metal key container. Sears gave Coco $160.00 for the two packets which were subsequently identified as containing cocaine.
On this occasion, Coco indicated to Sears that consistent with the previous conversation they had had, he was interested in buying "Club" which was another name for Canadian Club whiskey. He took a piece of paper from a legal pad and wrote thereon the words, Canadian Club" and several other liquors including "J&B," "Amaretto," "Tia Maria," and "Red/Black" asking Sears if he could get the liquor the same day. This conversation transpired after Sears had asked Coco if his boss still wanted liquor. Coco had previously asked if Sears could get filet mignon.
On November 18, 1982, in the afternoon, Sears, Ramirez, and a U.S. Customs agent, all in an undercover capacity, entered the club, When they arrived there, they were advised that Coco was not there. After a short wait, the officers left, returning approximately 40 minutes later. At this time, Sears came in by himself, meeting Coco in the lounge area. When Coco asked about the meat, Sears replied that none was available. However, he had the requested liquor in a friend s car parked outside. The liquor in question was liquor which had been purchased by the Miami Police Department for this operation and consisted of various liquors in case lots. It included some whiskeys that Coco had not mentioned. Coco negotiated with Ramirez in Spanish during which Ramirez allowed himself to be beaten down considerably in price from the original asking figure. Once the par ties struck the bargain the officers were instructed by Coco to carry and stack the cases in the rear office previously mentioned. This office was occupied by Letitia Thomas who was seated at a desk in the office. It was Ms. Thomas who took $245.00 from the pile of cash on her desk and paid Ramirez. Ms. Thomas was obviously an employee of the club.
On the way out, Coco called Sears and Ramirez over and asked if Sears wanted to buy any more cocaine. When Sears said he did not have enough money with him, Ramirez offered to pay and Coco removed a small plastic bag containing a white powder from the small metal key container he carried and sold it to Sears for $80.00. This substance was subsequently identified as cocaine.
When Sears and Ramirez went into the club again on December 3, 1982, to meet with Coco as per a prior arrangement, Coco again asked Sears if he wanted to buy cocaine. At this point, Sears said he wanted he grams. On this occasion, Coco sold Sears two packages of a substance subsequently identified as cocaine for $70.00 per package instead of the normal $80.00 per package. On December 8, 1982, Sears and Ramirez again went to the Respondent's club. They
had previously discussed with Coco not only the sale of liquor and meat but also video recorders which the officers had clearly represented as being stolen. On this occasion, Coco said that his nephew wanted a recorder for his home and when this nephew, identified as Roberto Carbajal, arrived at the club, they discussed the video recorder with him. During this conversation, Carbajal indicated that he knew that the merchandise was stolen. After discussion back and forth, the parties arrived at a purchase price of $120.00 for the brand new unit. The officers were instructed by Carbajal to put the recorder in Coco's office and Carbajal paid Ramirez from his pocket. Carbajal, at this time, was a management employee of the license holder.
On December 16, 1982, Sears and Ramirez went to the licensed premises as instructed by Coco. At that time, they had 56 cases of Dom Perignon champagne. Coco had told them to bring the champagne, which, he had indicated, was to be used by the club management. Their understanding with Coco was that he would buy the champagne upon delivery and would also sell them larger amounts of cocaine. When they arrived, Coco was not there and they dealt with other people in the club's employ. The man who approached them was identified as Mario Cordoves, who indicated that neither Coco nor Carbajal were there. Cordoves went off for a moment and returned a few moments later with an individual identified as John Radney who, he indicated, would be interested in buying the champagne. Radney agreed to take all 56 cases but stated that he could not take delivery at the club. He asked them to put some of it in his car. He also indicated that part of the 56 cases could be sold to someone else through his arrangement which was all right with Ramirez so long as the price remained the same.
While this was going on, another individual, identified as George Kovacs, approached Ramirez and Sears, and negotiated to buy 18 of the cases of champagne for $100.00 per case. Kovacs left and came back with another individual who was to help him load the champagne into his car. All of this took place on the licensed premises attended by a bartender and two kitchen helpers in addition to Cordoves, Radney, Kovacs, and Kovacs assistant. When the deal was set, all the parties moved out into the parking lot and part of the champagne was placed into Kovacs vehicle. When this was done, Ramirez and Sears identified themselves as police officers and placed Kovacs under arrest.
While this transaction was unfolding, Sears was told by Kovacs or someone at the club that the champagne would be sold in the club as part of a "Dom Perignon special" at $100.00 per bottle instead of the normal $200.00 per bottle they usually got. At the time of their arrest, Kovacs and Radney indicated they were up-front operators for the licensed club through an arrangement with Mr. Carbajal but were having difficulty with him. They indicated that Carbajal was the actual owner of the club while Mr. Segal was referred to as an attorney who was acting as registering agent for the corporation which he had set up. Neither Sears nor Ramirez ever saw Segal at the club on any of the visits they made there. Regardless of who was the beneficial owner of the stock in the corporation, Segal was listed as the sole officer and as such, was responsible for the operation.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding.
In the Notice to Show Cause, Respondent is alleged to have violated Section 561.29(1)(a), Florida Statutes, by, through its agent, servant or employee, (Jose Carballea - Coco), unlawfully selling or delivering a controlled substance, cocaine, to a detective of the Metro Dade Police Department on the premises on October 10 and 26, November 9 and 18, and December 3, 1982.
The testimony of Officer Sears to the effect that either by himself or in the company of Ramirez and other officers, he entered the licensed establishment on the dates set out and without any difficulty, purchased a white powdered substance subsequently chemically analyzed and determined to be cocaine from an individual known to him as Jose Carballea (Coco). The evidence is also quite clear that Coco was at the time, and on each occasion, an employee of the licensee. Consequently there is no doubt that the allegations concerning the sale of cocaine have been clearly established.
In the second allegation of the Notice to Show Cause, Petitioner contends that on November 18, 1982, the same employee of the licensee, while on duty and at the club, unlawfully trafficked in property he knew or believed was stolen in violation of Section 561.29(1)(a), Florida Statutes. Trafficking in stolen property is a crime under the provisions of sections 812.019(1) and 812.022(3), Florida Statutes.
Here again the evidence shows that on the dates set out, Coco negotiated with officer Sears and officer Ramirez for the purchase of property, the seven cases of liquor, which he thought was stolen. Thereafter the property was delivered and another employee of the license holder, Letitia Thomas, paid for it in cash even though it had been represented to her as stolen property. This evidence not only establishes the allegations in subparagraph 2 but also subparagraph 3 of the Notice to Show Cause.
In subparagraph 4 of the Notice to Show Cause, Petitioner alleges that through the employee, Roberto Carbajal, the licensee purchased property represented as stolen, to wit: a Panasonic VHS video recorder. Here the evidence clearly establishes chat Carbajal was an employee of the club and did purchase a video recorder which to his understanding was stolen. However, the evidence is also quite clear that he purchased it for his personal use and not for the club and though the purchase took place on the club property by an employee of the club, it cannot be said that this is a violation which cam be attributed to the licensee since Carbajal, the employee, was not an officer of the corporation. Though there was some evidence that Carbajal was the beneficial owner, there was no direct evidence to that effect and there is insufficient proof to assess liability on this allegation.
This rationale does not, however, apply to the December 16 purchase of champagne by Kovacs, Rodney, Cordoves, and Blois. Here there is some evidence to establish that Kovacs and Radney had a lease agreement with Carbajal, the beneficial owner of the licensed premises, and were operating it for Carbajal under that lease agreement. Under the circumstances of the arrangement Carbajal had with Radney, Kovacs, Carballea, and Letitia Thomas, there is enough of a connection between Radney and Kovacs and the licensed premises to have their conduct in purchasing champagne which they understood to be stolen for the club considered as a violation of the statute. The evidence is clear that a good portion of the champagne in question here was purchased for use at the club as a part of a promotion. Even if the entire 56 cases were not to be included in that category, the 18 cases which were is sufficient to constitute a violation of the statute as alleged.
Here the license holder is a corporation, the sole officer of which is Mr. Segal, who the evidence tends to indicate, is no more than a straw officer with the operating control of the license in the hands of Mr. Carbajal and his associates. There is no evidence that Mr. Segal personally violated the law but there is adequate evidence that his employees in the person of Carballea, Carbajal, Thomas, Kovacs, and Radney did and the licensee has the obligation to maintain a sufficient intelligence with regard to his establishment so as to know, at least generally, what his employees are doing. His failure to do so constitutes a lack of reasonable diligence and a failure of proper management. G & B of Jacksonville, Inc., v. State, Department of Business Regulation, 371 So. 2d 138 (Fla. 1st DCA 1979). The license here was the "property" of Mr. Carbajal and his associates and these same individuals were the ones who were repeatedly and knowingly involved in a broad spectrum of criminal activity all of which is in violation of the statute and none of which is appropriate for holders of a liquor license. Under the circumstances here, there can be no question that management of the licensee knew that the violations were taking place since they participated in them directly and this is a perfect example of a situation where revocation of a license is the only appropriate course of action.
