STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) DOAH CASE NO. 86-3775

) DPR CASE NO. 0151222

REYNOLD DIAZ, t/a PROGRESSIVE ) and 0068598 DEVELOPERS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice a hearing was held in this cause on December 3, 1986, in Tampa, Florida, before Diane A. Grubbs, a Hearing 0fficer with the Division of Administrative Hearings.

APPEARANCES

For Petitioner: James R. Mitchell, Esquire

Senior Attorney

Department of Professional Regulation Division of Real Estate

400 West Robinson street Orlando, Florida 32802

For Respondent: Reynold Diaz, Pro Se

7908 N. Florida Avenue Tampa, Florida 33604

ISSUE

Whether respondent committed the acts alleged in the Administrative Complaint, and, if so, whether respondent's license should be revoked, suspended or otherwise disciplined.

BACKGROUND

On July 31, 1986, petitioner filed an eight count Administrative Complaint against the respondent. The complaint alleged that respondent was a licensed real estate broker; that until June of 1985 he managed four rental units for John Stephen; that Mr. Stephen demanded from respondent the $630.00 respondent had collected from a tenant, Ms. Thompson, in April May, and June of 1985; that respondent denied collecting the money; that respondent had not delivered to Mr. Stephen the $630.00 or any part thereof; and that respondent did not provide to Mr. Stephen a timely accounting and delivery of rental money received from tenants. The complaint also alleged that respondent managed rental property for Sandra Nelson; that he received a $325.00 security deposit from a tenant, Mr.

Pasco, on August 2, 1984; that in October, 1985, Ms. Nelson demanded payment of the deposit; and that respondent failed to account for or deliver the security deposit to Ms. Nelson. The complaint further alleged that respondent failed to make available for inspection his business records and real estate brokerage escrow account bank records upon request of petitioner and that respondent operated his business under the names "Ron Diaz", "Progressive Real Estate Developers", and "Progressive Real Estate Developers, Inc."

Based on the foregoing factual allegations, respondent was charged with two counts of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by tricks, scheme or devise, culpable negligence and breach of trust in a business transaction in violation of subsection 475.25(1)(b), Florida Statutes; two counts of failure to account and deliver rental money in violation of subsection 475.25(1)(d), Florida Statutes; two counts of failure to place and maintain rental money in a real estate brokerage trust account until disbursement was properly authorized, in violation of subsection 475.25(1)(k), Florida Statutes; failure to make available for inspection his real estate brokerage records in violation of Rule 21-14.12, Florida Administrative Code, and, thus, subsection 475.25(1)(e), Florida Statutes; and operating a real estate brokerage business under a trade name not properly licensed in violation of subsection 475.42(1)(k), Florida Statutes, and, thus, subsection 475.25(1)(a), Florida Statutes.

Petitioner disputed the factual allegations contained in the Administrative Complaint and requested a formal hearing pursuant to Section 120.57(1), Florida Statutes. The matter was referred to the Division of Administrative Hearings on September 29, 1986.

At the hearing petitioner presented the testimony of Linda Whidden, records custodian for Bay Gulf Credit Union; John H. Stephen, the owner of rental property-managed by respondent; Roslyn Thompson, former tenant of Mr. Stephen; Joseph Ira Pasco, former tenant of Ms. Nelson; Sandra K. Nelson, owner of rental property managed by respondent; Lorraine Mootoo, former employee of respondent; and Leo Huddleston, an investigator for the Department of Professional Regulation, Division of Real Estate. Petitioner's exhibits 1 through 9 were admitted into evidence. Respondent presented the testimony of Lorraine Mootoo and testified on his own behalf. Respondent's exhibits 1 and 2 were admitted into evidence.

The petitioner filed proposed findings of fact and conclusions of law. The respondent filed a letter, the numbered paragraphs of which are considered his proposed findings of fact. A ruling on each of the proposed findings of fact submitted by the parties has been made in the appendix to this order.

FINDINGS OF FACT

1. At all times pertinent to the charges, Reynold Diaz was a licensed real estate broker in the State of Florida, having license number 0379909. The respondent was registered under the trade name of "Progressive Developers" from August 20, 1983 to July 25, 1986.

   
   

2. Respondent, in his capacity as a real estate broker, managed four rental units owned by John H. Stephen located at 3405-3407 Nebraska Avenue, Tampa, Florida. Mr. Stephen initially met Mr. Diaz when Mr. Stephen purchased the rental properties from him in 1984, and Mr. Stephen retained respondent to manage the properties at a fee of ten percent of the monies collected.

3. At the end of April, 1985, respondent rented one of the units owned by Mr. Stephen to Ms. Roslyn Thompson. During the course of Ms. Thompson's tenancy, the respondent received from Ms. Thompson a total of $630.00, which represented two months rent and a security deposit of $180.00. None of this money was returned to Ms. Thompson and none of it was delivered to Mr. Stephen by respondent.

   
   

4. When Mr. Stephen inquired about the rental money from the unit, in June or July of 1985, Mr. Diaz advised Mr. Stephen that the tenant had not paid her rent for a couple of months. Thereafter, Mr. Stephen went to the rental unit to talk to Ms. Thompson about her payments. Ms. Thompson advised Mr. Stephen that she had paid her rent and produced receipts for the $630.00 which she had paid to respondent.

   
   

5. Mr. Stephen terminated respondent's services in June of 1985. In September of 1985 Mr. Stephen met with Mr. Diaz in an attempt to obtain an accounting of the monies received by respondent from Mr. Stephen's tenants. Although respondent had provided monthly statements and payments to Mr. Stephen throughout 1984, respondent stopped providing statements in 1985. Thus, Mr. Stephen had not received a statement in April, May, or June of 1985. When Mr. Stephen met with respondent in September, respondent failed to provide a full accounting of the money he had received from Mr. Stephen's tenants and failed to deliver the money he had received. However, subsequent to the meeting, Mr. Stephen did receive from respondent the amount he was owed on two of the rental units. However, respondent failed to deliver the money he had received from Ms. Thompson.

   
   

6. Respondent contends that of the $630.00 he received from Ms. Thompson, he paid Mr. Stephen $225.00 in September and then paid the $405.00 balance in two installments. However, the evidence does not support this contention, and I accept Mr. Stephen's testimony that he never received any rent payments on the Thompson unit. Further, although the evidence does show that respondent paid Mr. Stephen $405.00 in two checks, these payments were for the money owed on the other rental units. Mr. Diaz has failed to account for or deliver to Mr. Stephen the $630.00 received from Ms. Thompson.

   
   

7. Respondent, in his capacity as a real estate broker, also managed rental property owned by Sandra K. Nelson located at 1208 East Chelsea Street, Tampa, Florida. Ms. Nelson first met Mr. Diaz when she purchased the rental property, and she retained respondent to manage the property at a fee of ten percent of the monies collected.

   
   

8. In August of 1984, the respondent rented the Nelson property to Joseph Ira Pasco. At the time of renting the unit, the respondent received from Mr. Pasco a security deposit of $325.00. However, Mr. Diaz advised Ms. Nelson that Mr. Pasco had not paid his security deposit, and withheld $275.00 from a rental payment to hold as a security deposit. Subsequently, after Ms. Nelson started eviction proceedings, she discovered that Mr. Pasco had a receipt signed by Mr. Diaz for a $325.00 security deposit. However, despite Ms. Nelson's demands, the respondent failed to deliver to Ms. Nelson the $325.00 security deposit or any portion thereof. Further, the security deposit was not returned to Mr. Pasco. However, respondent did ultimately deliver to Ms. Nelson the $275.00 that he had retained from the rental payment.

   
   

9. Respondent maintained an escrow account at the Hay Gulf Federal Credit Union from August 8, 1984 until November 26, 1984, when the account was closed. When petitioner's investigator, Leo Huddleston, requested of the respondent all

   documentation associated with the Stephen and Nelson transactions, respondent produced the carbon copies of three deposit slips and twenty checks drawn on the Bay Gulf account. The documents covered only the months of September and October of 1984, and none of the documents appear to be connected to the Stephen and Nelson transactions. The respondent failed to produce his real estate brokerage escrow account statements, his business records, leases, contracts or other documentation required to be kept by the respondent and produced to the petitioner upon request.

   
   

10. At no time did respondent place or maintain the $325.00 security deposit on the Nelson property in an escrow or trust account. Further, since respondent's escrow account was closed at the times respondent collected the rent money and deposit from Ms. Thompson, it is apparent that none of the

    $630.00 was placed in an escrow or trust account. Respondent admitted that he did not properly handle the funds received from the Nelson and Stephen properties, stating that he managed the properties on the basis of friendship rather than a professional basis. However, he did admit retaining ten percent of all the money collected.

    
    

11. From August 20, 1983, until July 25, 1986, the respondent was registered with the Real Estate Commission under the trade name "Progressive Developers." However, at various times during this period, the respondent transacted business both as "Progressive Real Estate Developers" and "Progressive Real Estate Developers, Inc." These names were not registered with the Real Estate Commission.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes (1985).

    
    

13. Section 475.25(1), Florida Statutes (1985), gives the Florida Real Estate Commission the authority to discipline a licensee. It provides:

    
    

    1. The commission...may suspend a license or permit for a period not exceeding 10 years; may revoke a license or permit; may impose an administrative fine not to exceed

       $1,000 for each count or separate offense; and may issue a reprimand, or any or all of the foregoing, if it finds that the licensee, permittee or applicant:

       1. Has violated any provision of s. 475.42....

       2. 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....

          ....

          1. Has failed to account or deliver to any, person. at the time

             which has been agreed upon is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery, any personal property such as money, fund, deposit, check

             ... or other document or thing of

             value . . . which has come into his hands and which is not his property or which

             he is not in law or equity entitled to retain under the circumstances.

          2. Has violated any of the provisions of this chapter or any lawful order or rule made or issued

          under the provisions of this chapter or chapter 455.

          ....

          (k) Has failed, if a broker, to immediately place, upon receipt, any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as a broker in escrow with a title company, banking institution, or saving and loan association located and and doing business in this state, or to deposit such funds in a trust or escrow account maintained by him with some bank or savings and loan association located and doing business in this state, wherein the funds shall be kept until disbursement thereof is properly authorized....

          
          

14. Section 475.42(1)(k), Florida Statutes, provides as follows:

    
    

    No person shall operate as a broker under a trade name without causing the same to be noted in the records of the commission and placed on his license....

15. Rule 21V-14.12, Florida Administrative Code, provides: A broker who received a deposit. 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... 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 shall 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, together with a record of all withdrawals therefrom, and shall support such accounts by such additional data as good accounting practice requires.

    
    

16. The evidence established that respondent violated Section 475.42(1)(k) by operating under the trade names "Progressive Real Estate Developers" and "Progressive Real Estate Developers, Inc." during the period of time that respondent was registered with the Florida Real Estate Commission as operating under the trade name "Progressive Developers." Therefore, respondent is subject to discipline pursuant to Section 475.25(1)(a), Florida Statutes, as alleged in Count V of the Administrative Complaint.

    
    

17. The evidence established that respondent violated Rule 21V-14.12, Florida Administrative Code, by failing to preserve and make available to the petitioner the records required by the rule. Indeed, respondent failed to preserve or produce any records relating to the Stephen and Nelson transactions. Therefore, respondent is subject to discipline pursuant to Section 475.25(1)(e), Florida Statutes, as alleged in Count IV of the Administrative Complaint.

    
    

18. Respondent failed to place in a trust account the rental payments and deposits received by him as a broker for the Nelson property and the Stephen property. Thus, respondent is subject to discipline pursuant to Section 475.25(1)(k), Florida Statutes, as alleged in Counts III and VIII of the Administrative Complaint.

    
    

19. The evidence established that respondent failed to account for or deliver to Mr. Stephen or Ms. Nelson the money he received as rental payments and/or deposits on their property. Therefore, respondent is subject to discipline pursuant to Section 475.25(1)(d), Florida Statutes, as alleged in Counts II and VII of the Administrative Complaint.

    
    

20. Finally, the evidence established that respondent has been guilty of misrepresentation, concealment, and a breach of trust in his business transactions with Ms. Nelson and Mr. Stephen. He misrepresented to both Ms. Nelson and Mr. Stephen the status of the payments on their property. He advised them that payments had not been made when he knew that such payments had been made. Even when faced with evidence of the payments, he failed to account for or deliver the money he had received. Thus, respondent is subject to discipline pursuant to Section 475.25(1)(b), Florida Statutes, as alleged in Counts I and VI of the Administrative Complaint.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order

suspending respondent's license for a period of two (2) years and imposing an administrative fine of $1,150 to be assessed as follows: Counts I and VI, $200 for each count; Counts II and VII, $200 for each count; Counts III and VIII,

$100 for each count; Count IV, $100; and Count V, $50.

Respectfully submitted and entered this 9th day of March, 1987, in Tallahassee, Florida.

DIANE A. GRUBBS

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 9th day of March, 1987.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3775

Petitioner's Proposed Findings of Fact:

1. Accepted in paragraph 1.

2. Accepted in paragraph 2.

3. Accepted in paragraph 3.

4. Accepted in paragraphs 5 and 6.

5. Accepted in paragraph 7. 6-7. Accepted in paragraph 8.

1. Accepted generally in paragraphs 6 and 8.

2. Accepted in paragraph 10.

3. Accepted in paragraph 9.

4. Accepted in paragraph 11.

Respondent's Proposed Findings of Fact:

1. Accepted that respondent managed Mr. Stephen's property. Second sentence rejected as irrelevant; further, the evidence established that Mr. Stephen first met Mr. Diaz when Mr. Stephen purchased the subject property from Mr. Diaz and retained him to manage it. Third sentence accepted in paragraph 10. Fourth sentence rejected as to the money received from Ms. Thompson, but accepted that money was delivered to Mr. Stephen in paragraph 6. Last sentence rejected as not a finding of fact.

2. Accepted that $275 was paid to Ms. Nelson in paragraph 8; however, reject by contrary finding that the $275 payment was partial payment on the $325 security deposit.

3. Reject, for lack of any evidence that improper name registration was computer error. Remainder rejected as not findings of fact.

COPIES FURNISHED:

James R. Mitchell, Esquire Harold Huff, Executive DPR - Division of Real Estate Director

400 West Robinson Street DPR - Division of Real Estate Orlando, Florida 32802 400 West Robinson Street

Orlando, Florida 32802

Reynold Diaz

7908 N. Florida Avenue Tampa, Florida 33604

Docket for Case No: 86-003775

Orders for Case No: 86-003775