STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOSE A. (TONY) TORRES, )

)

Petitioner, )

)

vs. ) CASE NO. 86-2473

)

OFFICE OF THE COMPTROLLER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on March 30, 1987, in Tampa, Florida. The issue for determination in this proceeding is whether petitioner is entitled to be registered as a mortgage broker in Florida.

APPEARANCES

For Petitioner: Dick Greco, Esquire

Molloy, James & Greco, P.A.

501 East Kennedy Boulevard, Suite 910 Tampa, Florida 33602

For Respondent: Sharon L. Barnett

Assistant General Counsel Office of the Comptroller 1313 Tampa Street, Suite 713

Tampa, Florida 33602-3394 INTRODUCTION

In support of his position that he possesses the necessary qualifications for licensure as a mortgage broker, petitioner testified in his own behalf and also presented the testimony of Frederick L. Roberts, Peyton Story, III, Iris M. Zdziebloski, Walt Zdziebloski, Josefa Torres, Arthur M. James and Diane Evans.

Petitioner's Exhibits 2 through 5 were received into evidence, as were Joint Exhibits 1 through 6.

The respondent presented the testimony of Robert A. Schadler, Antonio L. Machado, M.D., Pamela Day, Lynn Davidson and Sharon Traynham, and its Exhibits 1, 2 and 4 were received into evidence.

Subsequent to the hearing, the parties submitted proposed findings of fact and proposed conclusions of law. The factual findings proposed by the parties have been accepted and/or incorporated in this Recommended Order except as noted in the Appendix hereto.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, as well as the parties' stipulations of fact, the following relevant facts are found:

1. The petitioner Jose A. (Tony) Torres was employed by the respondent Office of the Comptroller, Department of Banking and Finance, Division of Finance from approximately June of 1963 until February of 1986. For about 13 years, he held the position of Area Financial Manager in the Tampa office and was responsible for and in charge of regulating mortgage brokerage businesses and licensees in ten counties along the west coast of Florida.

   
   

2. By letter dated February 11, 1986, petitioner was notified of the respondent's intent to dismiss him from employment on the grounds that, in spite of prior warnings, he had obtained loans from licensed individuals and institutions he was responsible for regulating. Petitioner was given the opportunity to respond to this notice, did so and the respondent thereafter affirmed its intent to dismiss him. Petitioner did not contest or appeal his dismissal.

   
   

3. On March 6, 1986, petitioner submitted to the respondent his application for registration as a mortgage broker. By Order dated and filed on May 23, 1986, respondent denied his application, concluding that petitioner does not have the requisite experience, background, honesty, truthfulness or integrity to act as a mortgage broker in Florida. The factual bases cited for this conclusion are that petitioner was arrested in September of 1979 for gambling; that he declared bankruptcy in 1980; and that he obtained loans in 1981, 1983, and 1984 from individuals and/or financial institutions which were licensed by the Division of Finance, and also that said loans have never been repaid.

   
   

4. The Centro Asturiano Club is a private social club where gambling (poker) regularly occurs. On Friday, August 31, 1979, at approximately 3:00 p.m., petitioner and others were arrested for gambling at the Centro Asturiano. At the time of the arrest, the police seized certain items including a Smith and Wesson .38 caliber firearm and $670. A motion to suppress evidence and a motion to dismiss were ultimately granted and the petitioner was not convicted.

   
   

5. The gambling arrest occurred on a regular business day in the Office of the Comptroller. Petitioner states that he was on annual leave at the time. An employee in his office observed petitioner's secretary make changes in the petitioner's leave slip forms on the afternoon of August 31, 1979. It was not established that such alterations were not proper.

   
   

6. On May 30, 1980, petitioner filed a petition pursuant to Title 11, United States Code. An order for relief was entered under Chapter 7, with a Discharge of Debtor ordered on October 8, 1980, by the United States Bankruptcy Court for the Middle District of Florida (Bankruptcy No. 80-00750). At least six entities listed as creditors in petitioner's bankruptcy proceeding were licensees of the Department of Banking and Finance. At the time, petitioner was charged with examining and regulating those six entities in his capacity as the Area Financial Manager for the Division of Finance. In 1979 and/or 1980, petitioner's superiors in the Department admonished him to refrain from obtaining loans from the industry he regulated, and that such activity constituted a violation of Departmental policy and the Code of Ethics for Public Officers and Employees, Chapter 112, Florida Statutes.

7. On March 1, 1983, petitioner obtained a signature loan of approximately

   $2,200 from the A. L. Machado, M.D. Pension Trust. Colonial Mortgage, Inc., which was then licensed with the Division of Finance as a mortgage broker, serviced the loan. Darrell T. DiBona, the director of Colonial, became licensed as an additional broker on June 19, 1983. The payment record on this loan, discovered during an examination by the Division of Finance in May of 1985, reflected that four interest payments had been made, but that the principal balance was still outstanding. Darrell T. DiBona made a check payable for one of the petitioner's interest payments owed to the Machado pension fund.

   
   

8. The petitioner's version of the facts surrounding the Machado loan is not credible. He states that he had known Darrell T. DiBona for many years. DiBona handled petitioner's insurance needs, and petitioner, wishing to increase his coverage, had had a medical examination which indicated either an irregular heartbeat or fatty tissues in his blood. According to petitioner, he was having lunch with DiBona one day, and DiBona needed to stop by Dr. Machado's office on business. DiBona apparently handled pension funds for various physicians.

   While at Dr. Machado's office, the subject of petitioner's medical condition arose. Petitioner states that Dr. Machado offered to check his irregular heartbeat and gave him an EKG. During that examination petitioner asserts that he told Dr. Machado that he was having financial difficulties, and Dr. Machado offered to loan him $2,200. Petitioner insists that he made three or four payments on a note, and then paid it off in full in May or July of 1984. This latter payment, according to petitioner, was made in cash and handed to DiBona. Petitioner never received a receipt for the "$2,200 in cash plus the interest." Petitioner states that he subsequently asked for a receipt or the note on several occasions, but was told that it could not be found.

   
   

9. The note and payment record were found by the respondent during an examination of Colonial Mortgage in May of 1985. As noted above, the payment record revealed that only three or four interest payments had been made. Dr. Machado has no recollection of examining petitioner in his office or otherwise discussing a loan with him. Had petitioner been examined by Dr. Machado, a ledger card or chart would have been prepared. No ledger card or chart for the petitioner could be discovered in Dr. Machado's office. Dr. Machado did not become aware that money from his pension fund was lent to petitioner until after DiBona's death. His office manager was then asked to write a letter stating that the petitioner's loan had been paid in full. Such a letter was written and petitioner picked up the letter from Dr. Machado's office. Although he had no knowledge concerning the loan, Dr. Machado agreed to sign the letter because he thought that petitioner could be one of DiBona's innocent victims. He, as well as other physicians, lost pension fund monies from accounts handled by Darrell DiBona.

   
   

10. Beneficial Mortgage Company was licensed with the Division of Finance in November of 1984 as a mortgage broker. During that time, petitioner contacted the regional supervisor of Beneficial, who does not himself regularly take loan applications, regarding a home mortgage loan for his mother. On November 20, 1984, a $30,590 mortgage loan from Beneficial Mortgage was obtained, and petitioner co-signed the loan documents. The loan proceeds were utilized to pay off two prior mortgages, one of which was Colonial Mortgage. Petitioner's mother is elderly, speaks little English and petitioner often handled her financial affairs. According to the regional supervisor, petitioner was asked to co-sign the note in order to avoid any questions which might arise in the future regarding Mrs. Torres' competency to enter into such a transaction. As a co-signer, however, petitioner was guaranteeing the account.

    While the mortgage loan was for an amount less than the house was appraised and contained no preferential terms or rates, Beneficial required no standard credit report, income analysis or other financial documentation concerning the petitioner. Mrs. Torres' income and debt ratio were barely sufficient to make the monthly payments on the loan. Petitioner has two brothers and a sister who also live in Tampa.

    
    

11. On December 6, 1984, petitioner obtained a $2,000 signature loan from

    N. D. Properties, Inc. N. D. Properties was solely owned at that time by Ben Langworthy, Jr., who also owned Diversified Mortgage Associates, Inc. At that time, both Diversified and Langworthy were licensed with the Department of Banking and Finance, Division of Finance. The petitioner made at least two loan payments directly to Ben Langworthy, who he knew was licensed by the Department. The $2,000 check given to petitioner was signed by Ben Langworthy. According to petitioner, Mr. Langworthy told him that N. D. Properties, Inc. was owned by two private investors. Petitioner's loan payment record with N. D. Properties shows that the loan has not been timely repaid.

    
    

    CONCLUSIONS OF LAW

    
    

12. An applicant for a license carries the burden of establishing that he meets the statutory criteria for licensure. Among the criteria which the respondent must evaluate when reviewing mortgage broker applications are the experience, background, honesty, truthfulness, integrity and competency of the applicant as to financial transactions involving primary or subordinate mortgage financing. These qualities, or lack thereof, must be reviewed in conjunction with and with due regard to the paramount interests of the public. Section 494.04(4), Florida Statutes.

    
    

13. The undersigned has carefully reviewed the evidence adduced in this proceeding, and has taken into account the demeanor of the petitioner, the inconsistencies in his own testimony and the credibility of his testimony as compared with logic and the testimony of others with regard to the various transactions at issue. While any single one of the occurrences, when taken alone, may not provide grounds for denial of his application for licensure, the totality of circumstances and events demonstrate that the petitioner lacks the requisite qualifications for licensure as a mortgage broker in Florida.

    
    

14. Certainly, neither the 1979 arrest for gambling nor the 1980 bankruptcy declaration alone, or even taken together, provide grounds for denial of his application. However, these events are important because it was during this period of time that petitioner was admonished and made fully aware of the Departmental policy and statutory prohibition against obtaining loans from members of the industry he was charged with examining and regulating.

    
    

15. For many years, petitioner held a supervisory position with State government which required him to examine and regulate mortgage brokers and financial institutions. It has long been the policy of this State that public employees are agents of the people and hold their positions for the benefit of the public. State employees are prohibited from having any interest, financial or otherwise, direct or indirect, engaging in business transactions, or

    incurring any obligations which are in substantial conflict with the proper discharge of their duties in the public interest. Section 112.311 (5) and (6), Florida Statutes. More specifically, the Legislature has declared that a state officer or employee may not

    
    

    ... have or hold any... contractual relationship with any business entity

    ... which is subject to the regulation of ... an agency of which he is an officer or employee nor shall an officer or employee of an agency have

    or hold any ... contractual relationship that will create a continuing or frequently recurring conflict between

    his private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties."

    Section 112.313(7)(a), Florida Statutes.

    
    

16. In spite of previous warnings, petitioner disregarded Departmental policy and statutorily mandated ethical considerations and continued to enter into financial arrangements with those regulated by him. There was no evidence that he attempted to seek prior approval for the loans he obtained from licensees in 1983 or 1984. Instead, it appears from his explanations at the hearing that he is either attempting to conceal his financial dealings with licensees or that he simply lacks either the competency or the experience to understand the impropriety of his actions.

    
    

17. To contend that two of the three loans were signature loans as opposed to mortgage loans begs the issue. The unsecured Machado/DiBona and Langworthy loans were clearly obtained from licensees and clearly created a conflict between petitioner's private financial affairs and the performance of his duties as the supervisory examiner and regulator of those licensees. The fact that these two loans remain unpaid is further indication that petitioner has been willing and able to use his position of authority to obtain financial advantages for himself. An indebtedness from a regulatory supervisor to a licensee is precisely the type of contractual relationship prohibited by Section 112.313(7)(a), Florida Statutes. It creates a continuing conflict between the supervisor's private affairs and the performance of his public duties.

    
    

18. The evidence as a whole demonstrates that petitioner, who was specially charged with the duty of enforcing and administering the provisions of The Mortgage Brokerage Act, obtained personal benefits for himself at the expense of and in substantial conflict with the proper discharge of his duties in the public interest. Admittedly, there was no evidence that this conflict manifested itself through official actions on petitioner's part. However, the appearance of impropriety can be equally as damaging in the public eye. If petitioner would misuse his position of authority and management within the regulating agency to obtain financial benefit for himself or his family, there is no reason to believe that he would not utilize his mortgage broker's license to obtain such benefits to the detriment of the citizens of this State.

    
    

19. In summary, the burden in this proceeding was upon the petitioner, as an applicant for licensure. It is concluded that petitioner has failed to meet the burden of demonstrating that he possesses the requisite qualities of

experience, background, honesty, truthfulness, integrity and competency to be licensed as a mortgage broker in Florida.

RECOMMENDATION

Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the application of Jose A. (Tony) Torres for registration as a mortgage broker in Florida be DENIED.

Respectfully submitted and entered this 3rd day of June, 1987, in Tallahassee, Florida.

DIANE D. TREMOR

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 3rd day of June, 1987.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 86-2473

The proposed findings of fact submitted by the petitioner and the respondent have been fully considered and have been accepted and/or incorporated in this Recommended Order, except as noted below.

Petitioner

p.1, last paragraph: Rejected; legal conclusion as

opposed to factual finding

p.2, 2nd paragraph,

2nd sentence: Rejected, irrelevant and immaterial p.2, 3rd paragraph: Rejected; immaterial

p.2, 5th paragraph: Rejected; argumentative p.3, 1st two paragraphs: Rejected; argumentative

p.3, paragraphs 7, 8 & 9: Accepted, but not included as

irrelevant to ultimate disposition p.4, last four paragraphs: Rejected; contrary to the

greater weight of the evidence p.5, paragraphs 3 - 5: Rejected; contrary to the

greater weight of the evidence

p.7, paragraphs 1 and 3: Rejected; not proper factual findings p.8, paragraphs 1 through 7: Rejected; argumentative and

improper factual findings

Respondent

#6: Rejected; not supported by competent, substantial evidence

#20 & 21: Rejected; not supported by competent, substantial evidence

COPIES FURNISHED:

Dick Greco, Esquire Molloy, James & Greco, P.A.

501 East Kennedy Boulevard Suite 910

Tampa, Florida 33602

Sharon L. Barnett Assistant General Counsel Office of the Comptroller

1313 Tampa Street, Suite 713

Tampa, Florida 33602-3394

Honorable Gerald Lewis Comptroller, State of Florida The Capitol

Tallahassee, Florida 32399-0305

Charles Stutts General Counsel

Department of Banking and Finance The Capitol - Plaza Level Tallahassee, Florida 32399-0305

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AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA DEPARTMENT OF BANKING & FINANCE

DIVISION OF FINANCE

IN RE:

ADMINISTRATIVE PROCEEDING

JOSE A. "TONY" TORRES NO. 660-F-5/86

/ DOAH NO. 86-2473

FINAL ORDER

The State of Florida, Department of Banking and Finance, Division of Finance (hereinafter referred to as the "Department"), being authorized and directed to administer and enforce the provisions of Chapter 494, Florida Statutes, the Florida Mortgage Brokerage Act, after due consideration of the subject matter hereof, and review of the record in this matter, finds as follows:

FINDINGS OF FACT

1. Upon the timely filing of a petition for hearing, and after proper notice, an administrative bearing was held in the instant matter before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on March 30, 1987, in Tampa, Florida.

   
   

2. On June 3, 1987, the Hearing Officer issued a Recommended Order copies of which were duly and timely furnished to the parties. No exceptions to the Recommended Order were filed. The Recommended Order of record is incorporated by reference herein and made a part hereof.

   
   

3. The Department hereby adopts in the instant final order each of the findings contained in the Findings of Fact of the Recommended Order, with the exception of the last sentence of paragraph (5), which the Department rejects.

   
   

   CONCLUSIONS OF LAW

   
   

4. The Hearing Officer concluded as a matter of law that the Petitioner, JOSE A. "TONY" TORRES, had failed to meet the burden of demonstrating that he possesses the requisite experience background, honesty, truthfulness, integrity and competency to be licensed as a mortgage broker in the State of Florida.

   
   

5. The Department hereby adopts in this Order each of the conclusions of law and points set forth in the Hearing Officer's Conclusions of Law contained in the Recommended Order.

It is therefore, upon consideration ORDERED:

That based upon the foregoing Findings of Fact and Conclusions of Law, the application of JOSE A. "TONY" TORRES, for a licensure as a mortgage broker be, and the same is hereby DENIED.

DONE AND ORDERED this 26th day of August 1987.

GERALD LEWIS, as Comptroller and Head of the Department of Banking and Finance

COPIES FURNISHED:

Diane D. Tremor Hearing Officer

Division of Administrative Hearings The Oakland Building

2900 Apalachee Parkway

Tallahassee, Florida 32301

Dick Greco, Esquire Molloy, James & Greco, P.A.

501 E. Kennedy Blvd., Suite 910 Tampa, Florida 33602

Sharon L. Barnett Assistant General Counsel Office of the Comptroller

1313 Tampa Street, Suite 713

Tampa, Florida 33602-3394

Randy Holland, Director Division of Finance Office of the Comptroller The Capital

Tallahassee, Florida 32399-0305

NOTICE OF RIGHT TO JUDICIAL REVIEW

Judicial review of the attached Final Order may be sought as provided in Section 120.68, Florida Statutes. Appellate proceedings are commenced by filing one copy of a Notice of Appeal with the agency clerk of the Department of Banking and Finance and a copy of that Notice of Appeal, accompanied by filing fees prescribed by law, with the First District Court of Appeal, or with the District Court of Appeal in the appellate district where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.

WALTER W. WOOD

Deputy General Counsel Department of Banking and Finance,

The Capitol, Room 1302 Tallahassee, Florida 32399-0350

(904) 488-9896

Docket for Case No: 86-002473

Orders for Case No: 86-002473