and 561.17, Florida Statutes (1983).
Based on this denial, Petitioner requested a formal hearing at which Petitioner presented the testimony of Karen Alford, president of Petitioner Karen Alford, Inc.; Harry Katz, attorney for Petitioner; Arthur L. Eisen, Petitioner's landlord at the licensed premises; Rosemond Eisen, Karen Alford's sister and former wife of Arthur Eisen; and Bobby Joe McClain, former business associate of Arthur Eisen and current manager of Petitioner's licensed premises. Petitioner also presented Petitioner's Exhibits numbered 1-8. Respondent presented the testimony of Wendell M. Reeves, a beverage investigator with Respondent, and introduced Respondent's Exhibits A-C.
From 1972 until 1982, Bay Street, Inc., a Florida corporation, held a COP-type quota liquor license for the operation of a bar known as Howard's G- String at 102 East Bay Street in Jacksonville, Florida. Arthur Eisen and Bobby Joe McClain were owners of the stock in Bay Street, Inc., and Howard's G-String was operated by McClain as manager.
After Bay Street's liquor license was revoked in October 1982, for reasons not pertinent here, a beer and wine license was issued to Lloyd Barrow, McClain's father-in-law, for an operation at the same East Bay Street location.
The owner of the building at 102 East Bay Street is Arthur Eisen. Lloyd Barrow pays Eisen $1,000 per week for rental of the premises.
On June 14, 1983, pursuant to foreclosure, the liquor license held by Jax's Bar, Inc., doing business as Terminal Bar (the license at issue here), was sold for $28,500 on the Duval County Courthouse steps. Purchaser of the license was Karen Alford. The money used to make this purchase was a loan from Arthur Eisen. This loan was repaid by Karen Alford by means of an undated check numbered 4-0486533 drawn on the Hollywood Federal Savings and Loan Association in the amount of $28,500 payable to the order of Harry Katz Escrow Account. Mr. Katz, in turn, transferred the sum of $28,500 by his escrow account check numbered 4125 to the said Arthur Eisen on November 3, 1983.
Ms. Alford purchased the Hollywood Federal check with money drawn from two other accounts at the Hollywood Federal Savings and Loan Association. One portion, totalling $19,528, came from account number 341343 in the name of Karen Alford as trustee for Rosemond Eisen. The additional amount of $9,761 was drawn from account number 387056. This latter account was a joint account in the names of Karen Alford and Rosemond Eisen. The $789 difference between the
$29,289 (the total of the two components) and the $28,500 repayment check was deposited into a third account in the name of Karen Alford, account number 141730.
Petitioner introduced a copy of certificate of deposit number 8590 dated June 8, 1978, in the name of Karen J. Alford in the amount of $55,761 which, on January 9, 1979, was redeposited into account number 341356, which reflected that Karen J. Alford was trustee for Rosemond Eisen as beneficiary. Accompanying that certificate and deposit card is a notarized statement dated February 27, 1984, from Alicia Dyce, assistant manager/assistant secretary of the Hollywood Federal Savings and Loan Association, which indicates that Karen
J. Alford was the sole owner of certificate account number 341375. The statement further indicates that when an account reads "in trust for" (ITF) it
is to designate a beneficiary in the case of the death of the owner of the account. The statement further says that if the account had been owned by both parties the account would have stated the two names connected by the word "and" and not "ITF."
Ms. Alford contends that the $55,761 utilized to purchase the initial certificate of deposit from which the subsequent $28,500 payment was made came from a divorce settlement received from her estranged and former husband and not from Arthur Eisen. Respondent was unable to present any evidence to contradict this contention by Petitioner.
There is, however, other evidence dealing with the business relationship between Ms. Alford, as president of the Petitioner corporation, and Bobby McClain and Arthur Eisen, as manager and landlord respectively, which causes some question to arise as to the true relationship between the parties. Ms. Alford contends that as a result of the business arrangement she was to receive a draw of $500 per week from the operation plus a return on the investment of $750 per month. On a four-week month, this would amount to a return of approximately $2,750. In addition, out of the operation Ms. Alford was to make weekly rental payments of $1,000 to Arthur Eisen and, at Eisen's suggestion, was to pay Bobby Joe McClain a salary of $500 per week and an automobile expense of $50 per week. McClain was to make daily bank deposits from the business proceeds and was to send Ms. Alford weekly computer printouts reflecting the income and expenses for the period. Only one of these computer printouts was introduced. Covering the period from January 30, 1984, through February 4, 1984, the printout showed a gross profit before expenses of
$2,868.03 and expenses of $2,923.44, with a net loss of $55.41. However, using the figures contained on the printout and computing profit on the basis of gross sales less cost of goods sold reflects a gross profit of $2,722.43 which, when thereafter subtracting the weekly expenses of $2,923.44, reflects a net loss of
$201.01. It should be noted that the weekly expenses include such items as rent of $1,000, payroll of $1,235.30, utilities of $243.08, sales tax of $195.06, and a miscellaneous payment of $250. If this printout is a representation of the continuing success of the business, it is obvious that Ms. Alford will never see her stated profit, much less a return of her investment, while Arthur Eisen is drawing $1,000 per week ($4,000 per month) in rent receipts and his former associate, McClain, is receiving a handsome income from the business as well.
Taken together, these figures tend to raise an inference that not only Eisen, but McClain as well, has an interest in the business, which is supported by the evidence that it was Eisen who suggested the investment to Ms. Alford in the first place, made the investment for her using his own funds, and insisted that he not be repaid until the redemption time had expired on the license foreclosure. It is also noteworthy that Eisen was the individual who suggested to Ms. Alford that she hire Bobby Joe McClain to manage the bar; and, notwithstanding Ms. Alford's contention that she had known McClain for close to
20 years, the fact also remains that McClain was a former associate and co-owner of another bar with Arthur Eisen.
There are other inconsistencies in Ms. Alford's testimony and in the Petitioner's case which give rise to a suspicion that Ms. Alford is not in fact the true "owner" of the business but that the entire transaction is a screen to hide the interest by Arthur Eisen who, because of his prior license revocation location, would be ineligible to hold this license. Ms. Alford indicated that
she put the money in question in trust for her sister so that, if anything would happen to her, the sister, Miss Rosemond Eisen, would be able to retrieve the money and, at her discretion, distribute it to Ms. Alford's children. Ms.
Alford contends that her children are not equipped to handle money of this magnitude, yet she relates that one is an investment counselor and stock broker and another son is a geophysicist.
Another inconsistency is that Ms. Alford contends she has invested as much as $35,000 in this business; yet she does not know how many people were hired by McClain, she does not know on what account checks were written, the checking accounts involved were in McClain's name and not hers, and she does not even recall the name on the checks she received. She contends that while it was in operation the bar grossed between $4,000 and $4,200 a week; yet, as was shown previously, the one income statement introduced by Petitioner reflected a gross income of substantially less than that and a net loss. Ms. Alford further contends that she does not know from a review of the weekly computer printouts what the liquor expense was. Her reason for this was that her son, who she claims is incapable of handling inherited funds, would review all the submissions made by McClain. She further contends that she has visited the bar three or four times since it has been in operation but cannot recall when these visits were. She did not see the business before she invested her money in it but relied solely on the advice given her by her former brother-in-law, Arthur Eisen. By her own admission, it was Eisen who did all the preliminary work relative to buying the license and setting up the business without her, and she had no participation save for the investment of money until she came up to apply for the licenses, at which time she met and worked with Mr. Katz.
Eisen contends he asked Ms. Alford to invest in this business because he knew she had the money and knew she would be receptive to it. He called her by telephone and told her he had a business proposition for her, and, when she indicated some interest, he went to Miami to see her and tell her about it. He told her how much it would cost and what she should earn if she made the investment and operated it properly. He told her that McClain would manage it for her and that he did not want to do it himself because of his extended interests in the Houston area, on which he wanted to concentrate. Eisen states he felt safe in representing McClain because they had worked together for 18 years previously and that his only participation in this business owned by Ms. Alford is the lease which brings him $1,000.00 per week. This was, he claims the primary motivation for the deal. Eisen contends no participation in the business, either operational or financial. Notwithstanding this denial, the overwhelming circumstantial evidence indicating otherwise prevails.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings.
The Division of Alcoholic Beverages and Tobacco has denied Petitioner a transfer of license and change in business name of COP License No. 26-323 on two grounds. The first is that the applicant, Ms. Alford, is not believed to be of good moral character due to her filing of false financial documentation. The second basis for denial is than an individual who has a direct or indirect interest in the business (Arthur Eisen) is not disclosed on the application form and has an impairment of qualification under the beverage law.
As to the first, Respondent relies in part for the denial of the transfer on the provision of Section 561.15(1), Florida Statutes (1983), which
states clearly that licenses shall be issued only to persons of good moral character or, if the license is issued to a corporation, only to corporations whose officers are of good moral character. It is not questioned that Karen Alford is the sole owner and president of Karen Alford, Inc. Respondent has not shown any evidence of poor moral character on the part of Ms. Alford, notwithstanding the fact that her application may have had a false statement on it. The fact that an individual may falsely swear to an application does not, however, make that individual not of good moral character. It is this apparently false statement which Respondent claims as the sole basis for concluding that Ms. Alford is not of good moral character. That conclusion is not supported.
Respondent also relies for denial on Section 559.791, Florida Statutes (1983), which states:
"Any license issued by the Department of Business Regulation which is issued or renewed in response to an application upon which the person signing under oath or affirmation has falsely sworn to a material statement, including, but not limited to, the names and addresses of the owners or managers of the licensee or applicant, shall be subject to denial of the application or suspension or
revocation of the license, and the person falsely swearing shall be subject to any other penalties provided by law."
The personal questionnaire which accompanies the application signed by Karen June Alford was, in fact, signed under oath on October 27, 1983. If, therefore, that portion of the questionnaire which lists only the Federal Savings and Loan as the source of cash and financing and omits listing Arthur Eisen as a source of cash and financing is determined, as here, to be false, that misstatement alone would be sufficient for Respondent to deny the application. Under the circumstances here, the facts and circumstances surrounding the generation of the business deal and its operation raise a strong inference that Arthur Eisen is, in fact, a silent partner if not the true owner of the business.
Petitioner has attempted to show that the source of funds with which she repaid Arthur Eisen for his advance of the $28,500.00 to pay for the license was her own deriving from the sale of the house which was a part of her divorce settlement. The account from which the moneys ostensibly came from to repay Mr. Eisen was opened in 1979, some three years before the genesis of the instant business. However, a careful examination of the account numbers reflects that they do not track. Therefore, her evidence does not overcome the inference of Mr. Eisen's interest in this business raised by the other evidence notwithstanding the banker supported explanation of the trust nature of the bank accounts.
Section 561.17, Florida Statutes (1983), states in part: ". . . If the applicant or any person
