STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL REGULATION, ) DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 86-0883

)

LIZ CALDWELL and )

LIZ CALDWELL REALTY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

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 July 17, 1986, in Ft. Walton Beach, Florida. The transcript was filed on September 9, 1986, and the parties were allowed 21 days thereafter to submit proposed findings of fact and conclusions of law. These were received and have been considered. A ruling has been made on each proposed finding of fact in the Appendix to this Recommended Order.

APPEARANCES

For Petitioner: James R. Mitchell, Esquire

Post Office Box 1900 Orlando, Florida 32802

For Respondents: Howard Hadly, Esquire

827 Deltona Boulevard

Deltona, Florida 32725

By Administrative Complaint filed on February 11, 1986, and amended at the hearing, the Respondents are charged with violating Sections 475.25(1)(b) and (c), Florida Statutes, prohibiting fraudulent, dishonest, or culpably negligent practices, or breach of trust in business transactions, and false, fraudulent, misleading or deceptive advertising of services or property. Specifically, the Respondents are charged with submitting to the owner/developer of a real estate project 18 purchase agreements reflecting the receipt by the Respondents of 18 deposits of $1,000 each which were being held in escrow, and with advertising that the real estate project was 95 percent sold, and then that it was 100 percent sold, when it was not.

At the hearing, the Petitioner called as witnesses Sharon M. Meehan, Thomas

1. Wright, James H. Bryan, Lloyd H. Waldorff, Marlin B. Waldorff, James Gregory Johnson, Kelly Wilson Hill, Charles Waters and Richard Watson. Petitioner's Exhibits 1-16 were received into evidence. The Respondents presented no witnesses and offered no exhibits into evidence.

   FINDINGS OF FACT

   
   

   1. At all times pertinent to the charges, the Respondent Liz Caldwell was a licensed real estate broker in the State of Florida, holding license number 0122036, and Liz Caldwell was the owner, president and qualifying broker for the Respondent Liz Caldwell Realty, Inc., a corporation registered as a real estate broker, holding license number 0181836.

      
      

   2. Waldorff Properties of Fort Walton, Inc., is a corporation organized under the laws of the State of Florida. In 1983 and 1984 the principal officers included among others, Lloyd H. Waldorff, as president, and Marlin B. Waldorff, as vice president.

      
      

   3. In 1983, Waldorff Properties was the developer of a townhome project in Fort Walton Beach, Florida, known as La Mar West Townhomes. Phase One, which had already been completed prior to the time period relevant to this proceeding, consisted of six units in one building. Phase Two originally was to consist of two to three more buildings of five units each. Phase Two was expanded to include the entire balance of the project consisting of 25 units in five buildings, a pool, tennis court, clubhouse, and a boat dock.

      
      

   4. On or about June 13, 1983, an Exclusive Right of Sale Agreement was entered into between Waldorff Properties and the Respondents, wherein the Respondents would market and sell the townhome units at La Mar West Townhomes on behalf of Waldorff Properties.

      
      

   5. Thereafter, the Respondents presented to Lloyd H. Waldorff, president of Waldorff Properties, 18 Purchase Agreements, purportedly executed by 17 separate purchasers, which reflected receipt by the Respondents of 18 deposits of $1,000 each for a total of $18,000, to be held in the Respondents' escrow account. On behalf of Waldorff Properties, Lloyd H. Waldorff accepted and executed these contracts.

      
      

   6. On the strength of the 18 purchase agreements presented to Waldorff Properties by the Respondents, Lloyd H. Waldorff applied to Security Federal Savings and Loan in Panama City, Florida, for a construction loan. On November 2, 1983, Security Federal granted to Waldorff Properties a loan in the amount of

      $1,100,000 at 13.25 per cent interest for the construction of the La Mar West Townhome project. The 18 purchase agreements were instrumental in the approval of this loan.

      
      

   7. The project was completed in August or early September, 1984. As completion of the project approached, Lloyd H. Waldorff notified Respondent Caldwell that she needed to line up the purchasers and get ready to close on the purchase agreements.

      
      

   8. However, the purchase transactions failed to close. In October or November, 1984, Respondent Caldwell met with Lloyd H. Waldorff and, in answer to the question by Mr. Waldorff: "Liz, are these contracts bogus?", Respondent Caldwell nodded in the affirmative.

      
      

   9. Respondent Caldwell testified at a deposition taken on January 8, 1986, in a civil case in Okaloosa Circuit Court, that Lloyd Waldorff needed a construction loan to proceed with the La Mar West Townhome project, and he felt that if he had contracts for sale of the units the bank would give him the loan. She testified that Lloyd Waldorff asked her to "get up some contracts," because they were needed for the construction loan. She further testified in response

      to a question "did he (Lloyd Waldorff) ask you to get fraudulent contracts for him?", that "he asked me to work with him". In response to the question "did he ask you to go get bogus contracts for him?", Respondent Caldwell responded, "yes". In response to a question "he asked you to get bogus contracts that he would fraudulently submit to a construction lender?", Respondent Caldwell stated, "that is correct". Respondent Caldwell testified that "those contracts (referring to the 18 purchase agreements) were made up for Mr. Waldorff" and "they (the purchase agreements) were prepared in a couple of hours for him."

      She also stated under oath, "he (Lloyd Waldorff) needed a construction loan and I helped him obtain it. He asked me if we could prepare some contracts that he could take to the bank. And he felt that way, the bank would give him the loan. And we discussed it, made up the contracts and he picked them up".

      
      

   10. Finally, in this deposition Respondent Liz Caldwell adopted counsel's statement that "Our position relative to these contracts are as follows: Number one, that the contracts were prepared within a span of about two hours after a request for those contracts and delivered the next morning in total solely for the purpose of ... a construction loan. And number two, the contracts, themselves, are not enforceable contracts." "The names that appear on them are names - - some are actual purchasers; some are fictitious names..."

       
       

   11. Kelly Wilson Hill worked as secretary and bookkeeper for the Respondents from December, 1982, until June of 1984. A signature purporting to be that of Kelly Hill appears on 17 of the 18 purchase agreements as a witness to either the buyer or the seller. The name of Kelly Hill signed to the purchase agreements was not her signature, and she did not sign as a witness. There was no other employee at the Respondent's company named Kelly Hill.

       
       

   12. One of the purchase agreements showed the purchaser to be Charles Waters with an address of Sandalwood Drive in Destin, Florida. This purchase agreement is dated July 10, 1983. Charles W. Waters lives at 661 Sandalwood Drive in Destin, Florida, and he lived there on July 10, 1983. Mr. Waters acquired the house on Sandalwood Drive in 1982 through the Respondent's agency. Mr. Waters bought two other homes and a business in 1981 through the Respondent.

       
       

   13. Although a signature which purports to be Charles Waters appears on the Charles Waters purchase agreement, Charles W. Waters did not sign this agreement, and did not agree to purchase a townhome unit at La Mar West Townhomes. He did not put down a $1,000 deposit, and he had never seen the purchase agreement until a couple of months prior to the hearing.

       
       

   14. Respondent Liz Caldwell also admitted to Marlin Waldorff that the purchase agreements were not good contracts.

       
       

   15. Richard Watson has worked as a broker/salesman with the Respondents for approximately 6 years. A signature purporting to be that of Richard Watson appears on 17 of the 18 purchase agreements as a witness to either the buyer, the seller, or both. Richard Watson did affix his signature to the purchase agreements as a witness, but he did not see the buyers and/or the sellers sign the agreements. Richard Watson was aware that the purchase agreements were false, bogus contracts.

       
       

   16. Despite the written representation of Respondent Liz Caldwell on the purchase agreements that a $1,000 deposit had been received on each of the 18 purchase agreements, for a total of $18,000, and that these deposits had been placed in the Respondent's escrow account, the deposits were not received and were not placed in escrow.

   17. On July 3, 1983, the Respondents caused an advertisement to appear in the Playground Daily News in Fort Walton Beach, Florida, wherein it was stated that the La Mar West Townhome project was 95 percent sold. On July 10, 1983, the Respondents caused an advertisement to appear in the Playground Daily News in Fort Walton Beach, Florida, in which it was stated that the La Mar West Townhome project was 100 percent sold. The assertions in these advertisements were false, in that the project was neither 95 percent sold nor 100 percent sold when the ads were published.

       
       

       CONCLUSIONS OF LAW

       
       

   18. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this case, pursuant to Section 120.57(1), Florida Statutes.

       
       

   19. Section 475.25(1), Florida Statutes, authorizes the Florida Real Estate Commission to suspend a real estate license for a period not exceeding 10 years, revoke a license, impose an administrative fine not to exceed $1,000 for each count or separate offense, and issue a reprimand, if it finds a licensee:

       
       

       1. Has been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction...

       2. Has advertised property or services in a manner which is fraudulent, false, deceptive, or misleading in form or content.

          
          

   20. The findings detailed above demonstrate that the Respondents presented to Waldorff Properties 18 purchase agreements that were, in fact, false or bogus 1/ in nature. Respondent Caldwell signed each purchase agreement representing that she had received and was holding in trust the total sum of $18,000 in deposits. Further, the signatures of both purchasers and a witness were affixed to the purchase agreements when those individuals never signed the agreements, or knew of them. Finally, these purchase agreements were prepared with the knowledge that they would be used for the purpose of obtaining a construction loan.

       
       

   21. While Respondent Caldwell's deposition tends to suggest that Lloyd Waldorff was not only aware of the situation but was a participant from the inception, this fact is irrelevant to a finding of guilt. The fact that Lloyd Waldorff was a part of the scheme does not change the facts or affect his credibility as to the basic underlying facts that he testified to, i.e., that the contracts were bogus.

       
       

   22. The Respondents also contend that the owner/developer did not register the townhome project as a condominium with the appropriate governmental agency, and that the Respondents cannot, therefore, be subjected to disciplinary proceedings. However, any such infraction by the developer is also irrelevant to the issues in this case.

       
       

   23. The findings detailed above also demonstrate that the Respondents advertised the property in a false and fraudulent manner by stating in

       advertisements that the project was 95 percent and 100 percent sold when the project was not sold to that extent. If the 18 units supposedly sold are subtracted from the 25 available units, then only seven of the units could have been sold at the time of the ads.

       
       

   24. Therefore, the Respondents are guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction, in violation of Section 475.25(1)(b), Florida Statutes.

       
       

   25. The Respondents are also guilty of having advertised property in a manner which is fraudulent, false, deceptive and misleading in form or content, in violation of Section 475.25(1)(c), Florida Statutes.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that license number 0122036 held by the Respondent, Liz

Caldwell, be revoked, and that license number 0181836 held by the Respondent,

Liz Caldwell Realty, Inc., be revoked.

THIS Recommended Order entered on this 18th day of November, 1986, in Tallahassee, Leon County, Florida.

WILLIAM B. THOMAS

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 18th day of November, 1986.

ENDNOTE

1/ The word "bogus" is defined in Websters Dictionary to be: not genuine, counterfeit, sham.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 86-0883

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties in this case.

Rulings on Proposed Findings of Fact Submitted by the Petitioner 1.-24. Accepted.

Rulings on Proposed Findings of Fact Submitted by the Respondent

1.-4. Accepted.

5.-16. Rejected, as irrelevant.

COPIES FURNISHED:

Fred Roche, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Harold Huff, Executive Director Department of Professional Regulation Division of Real Estate

Post Office Box 1900

400 West Robinson Street Orlando, Florida 32

James R. Mitchell, Esquire Post Office Box 1900 Orlando, Florida 32802

Howard Hadley, Esquire 827 Deltona Boulevard

Deltona, Florida 32725

Docket for Case No: 86-000883

Orders for Case No: 86-000883