STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OFFICE OF COMPTROLLER, )

)

Petitioner, )

vs. ) CASE NO. 87-1648

)

ROLANDO POZO, )

)

Respondent. )

)

RECOMMENDED ORDER

Upon due notice, formal hearing in this cause was held in Miami, Florida, on September 2, 1987, before Ella Jane P. Davis, the duly assigned Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Malcolm S. Greenfield, Esquire

Office of Comptroller The Capitol, Suite 1302

Tallahassee, Florida 32399

For Respondent: Michael S. Pasano, Esquire

2100 Ponce de Leon Boulevard, Suite 1100 Coral Gables, Florida 33134

ISSUE

The parties' Pretrial Stipulation executed herein, limits the issues framed by the Amended Administrative Charges and Complaint for Removal:

1. Do Respondent's acts between January 1, 1980 and May 22, 1981 constitute conduct that is an unsafe or unsound practice as that term is defined in Section 655.005(1)(d), F.S. (1985)?

   
   

2. Do Respondent's acts of commission or omission between January 1, 1980 and

   May 22, 1981 constitute conduct that is a breach of fiduciary duty as utilized and understood under Title XXXVIII, Banks and Banking, F.S. (1985)?

   
   

3. Do Respondent's acts between January 1, 1980 and May 22, 1981 constitute a violation of any other law involving fraud or moral turpitude which constitutes a felony, to wit, a violation of Section 517.301(1), F.S. (1985)?

BACKGROUND AND PROCEDURE

The Prehearing Stipulation was admitted as Hearing Officer Exhibit A. Petitioner presented the oral testimony of Thomas Flood and Gualalupe

Prada, and had admitted one exhibit in evidence. Respondent presented the oral testimony of Thomas Flood, Manuel Diner, and Rolando Pozo, and had admitted nine exhibits in evidence.

Petitioner filed the transcript. The parties timely submitted posthearing proposed findings of fact and conclusions of law which have been duly considered and which are ruled upon in the appendix hereto pursuant to Section 120.59(2), Florida Statutes.

FINDINGS OF FACT

1. Respondent Rolando Pozo was and is an officer of Capital Bank, Miami, Florida, having held the following positions: Assistant Vice-President, from July 25, 1978 to December 28, 1978; Vice-President and Branch Manager of the Downtown Branch from December 28, 1978 to September 1, 1980; Vice-President, Commercial Loans at the North Bay Village Branch (Main Office) from September 1, 1980 to May 22, 1981; and from February 3, 1986 to the present in the capacity of Vice-President and Branch Manager of the Downtown Branch. Mr. Pozo is fluent in both Spanish and English.

   
   

2. The downtown branch offices of Capital Bank are located at 145 East Flagler Street, Miami, Florida.

   
   

3. Guadalupe Prada is a female Mexican national with limited command of the English language. Her native language is Spanish.

   
   

4. Ms. Prada, the state's chief complaining witness, testified through a qualified interpreter. In making the following findings of fact, it has been necessary to weigh the relative credibility of Mr. Pozo's version of the events and chronology thereof against the narrative of events and chronology of events related by Ms. Prada. Wherever possible, Ms. Prada has been taken at her word and every benefit of doubt that may accrue to her as a result of possible unfamiliarity with the English language has been accorded her. Wherever possible, extrinsic evidence, either documentary or oral by way of other witnesses, has been used to resolve all discrepancies of fact so that all witnesses may be found to speak the truth. However, in some respects, Ms. Prada's testimony is simply not internally or externally consistent and/or credible. Her memory is "convenient" to say the least. Her concept of time and chronology was elastic on direct examination and contradictory on cross- examination. Her version of the "truth" of crucial events and with regard to her finances varies with the circumstances and with the type of legal action in which she has been involved. Most telling to the undersigned is that with regard to every effort at impeachment of her testimony by Respondent's attorney, Ms. Prada either asserted that too many questions confuse her or asserted that her prior contradictory assertions under oath within various lawsuits, including a 1981 divorce, were the result of having been told by a succession of attorneys to perjure herself; then, she claimed that one of her prior attorneys also tried to swindle her. The final impression left by Ms. Prada's testimony is that when events work out to suit her, she considers herself in charge, and when events do not work out to suit her, she considers it everybody's fault but Ms. Prada's.

5. Ms. Prada entered the United States in 1979 and between 1979 and May 1981 was unemployed and actively seeking a job and investment opportunities. She was a customer of the downtown branch of Capital Bank, during the period 1979 to and including May 22, 1981.

   
   

6. Guadalupe Prada was and is affluent. Among other personal individual assets, she held certificates of deposit (CDs) issued by Capital Bank during 1979 through and including May 22, 1981 in varying amounts up to and including

   $90,000.

   
   

7. Ms. Prada met Respondent Pozo in 1979 while her then-husband, Frank Prada, was trying to obtain a loan at the Capital Bank, downtown branch. Ms. Prada's husband, with whom she was in business in a jewelry manufacturing company called "Caribe Manufacturing", urged her to come in on the corporate loan which Pozo had agreed to grant, provided a guarantor was found. In the course of loan negotiations with both the Pradas, Pozo candidly explained to Ms. Prada that if she co-signed the loan, she could lose the bulk of her individual assets if her husband/the corporation defaulted on the loan. Therefore, Ms. Prada, on her own initiative, declined to become her husband's guarantor and developed confidence in Pozo's honesty and financial acumen. This confidence was in part due to Pozo's fluency in Spanish.

   
   

8. In the course of reviewing Mr. and Mrs. Prada's respective individual financial statements for the loan application, Pozo became familiar with Ms. Prada's 1979 financial arrangements at Capital Bank, including the aforementioned CDs and a small checking account, and with her assets remaining in Mexico. He formed the initial opinion that she was a knowledgeable businesswoman.

   
   

9. Thereafter, Ms. Prada would speak to Respondent Pozo from time to time at Capital Bank, however, Ms. Prada's personal banking needs were attended-to either by tellers or by a Capital Bank officer named Margarita Gonzalez.

   
   

10. Ms. Prada continued to seek out Mr. Pozo and a personal friendship developed. Mr. Pozo and Ms. Prada met on mixed business/social occasions away from the Capital Bank and they spoke on the telephone on matters wholly unrelated to development of Capital Bank depository accounts.

    
    

11. Between 1979 and May 1981, Ms. Prada and Respondent discussed potential investments for Ms. Prada and how she was going to get a job. These discussions were usually initiated by Ms. Prada but Mr. Pozo was a willing participant. In testimony, Ms. Prada named several investment opportunities she says Pozo recommended during this period of time. She also claims he told her to withdraw money from Capital Bank. Contrariwise, Pozo testified that he told her to leave her money in the bank and not to invest in these projects, two restaurants and a boutique, but he admits that he did refer Ms. Prada to a Mr. Savloff for a possible job in an electronics store. Ms. Prada describes the referral to Mr. Savloff as one for investment purposes. Mr. Savloff was also a Capital Bank customer. The disparity of testimony on these contacts is largely immaterial because even if each were an investment opportunity, which is hardly to be believed on the undersigned's assessment of Ms. Prada's overall credibility, each "opportunity" was rejected by Ms. Prada. In each instance, Ms. Prada acted as a knowledgeable investor at least to the extent of controlling her own money and to the extent of choosing when and in which projects she would invest. Neither Ms. Prada's nor Mr. Pozo's testimony gives the slightest hint that he exerted undue pressure to get her invest any of her money from any source or depository in any of these alleged investment ventures.

    During the time Mr. Pozo was employed at Capital Bank, Ms. Prada never withdrew any of the monies which she had entrusted to Capital Bank.

    
    

12. After being transferred to Capital Bank's North Bay Village branch in September, 1980, Mr. Pozo did not maintain an office at, nor did he work out of Capital Bank's downtown branch offices at Flagler street.

    
    

13. On or about May 23, 1981, Mr. Pozo commenced employment at Miami National Bank, located at 8101 Biscayne Boulevard, Miami, Florida. Thereafter, Mr. Pozo had no relationship with Capital Bank until he resumed employment at Capital Bank in February, 1986.

    
    

14. In June 1981, Respondent Pozo and Ms. Prada became involved together in a business project known as "Hobby Market, Inc." This involvement occurred after Pozo had severed his association with Capital Bank and at a time Ms. Prada was not a customer at Miami National Bank, the Bank with which Pozo was then- associated. Pozo did not at first approach Prada with the investment opportunity. He had arranged with another Capital Bank customer, George Leijtman, to invest 50-50 in this project. Prada overheard Pozo's end of a telephone conversation concerning his arrangement while she was visiting him in his Miami National Bank office in early June 1981. She then urged Pozo to allow her to buy into the Hobby Market project and to help her get a job as a salesperson with the new corporation so that she would have a continuing source of income.

    
    

15. At this time, Mr. Pozo knew Ms. Prada to be a qualified salesperson. He also knew she had money and assets in Mexico besides her money at Capital Bank. The record is unclear whether he knew she also had at least a $5,000 checking account at Southeast Bank in Miami, but she did.

    
    

16. The agreement ultimately reached involved Ms. Prada, Jorge Lejtman, and Rolando Pozo and is memorialized by letter agreement and by assignment of stock interest executed on June 15, 1981, and June 16, 1981 respectively. Mr. Lejtman invested $10,000 in the business for 2,000 stock shares. In addition to the money, Lejtman's contribution was to be expertise and experience in the toy/hobby business. Lejtman would operate the first store in Omni Mall. The agreement called for Ms. Prada to pay $20,000 to Mr. Pozo in return for 800 shares of the 4000 shares of the company's outstanding stock. Pozo had subscribed to 2,000 shares of Hobby Market stock on June 12, 1981, at $10 per share. Pozo had $15,000 in savings and anticipated borrowing the remaining

    $5,000 needed to fulfill his subscription. Instead, he raised the necessary

    $20,000 by selling 800 of his subscribed-to but unpaid-for 2,000 shares to Ms. Prada, not his the $10 per share subscription price, but at $25 per share. The result enabled Pozo to secure 1200 shares free and clear without delving into his savings and without borrowing. Pozo immediately turned the money he received from Prada over to the business. In addition to his money investment, Pozo's contribution to the venture was to be his financial experience and his assistance to Hobby Market in obtaining credit from toy/hobby suppliers. Ms.

    Prada also agreed to tender $20,000 in loans to the business and to fund another

    $25,000 in loans in the future. In return, Ms. Prada received two promissory notes for $10,000, each note to bear interest at 18 percent. Ms. Prada ultimately failed to fund the additional $25,000 loan but in return for providing the first $20,000 and promising the additional $25,000, Ms. Prada was also guaranteed a job at a second Hobby Market store to be opened with the additional monies she was going to provide, but did not. Ms. Prada's contribution in expertise was purely as a salesperson.

17. Ms. Prada was eventually paid $7,000 principal and interest on the cash loans.

    
    

18. The Hobby Market transaction was conducted at the law offices of attorney Manuel Diner. The documents were drafted by Diner in English. All negotiations were in Spanish. Signature authority for all Hobby Market bank accounts were in Lejtman and Prada jointly. These were opened at Central National Bank located in the Omni Mall where a lease was obtained for the first store. Prada was made corporate Secretary. Prada initialed certain written English changes indicating her assent to various agreements formalized after oral negotiations in Spanish.

    
    

19. With regard to the cash that Ms. Prada turned over to Pozo/Hobby Market Inc., her testimony is that Pozo told her to take it out of Capital Bank and she did. His testimony is that he did not and that he thought she was transferring her Mexican funds.

    
    

20. Subsequently, Ms. Prada and Mr. Lejtman had disagreements. Ms. Prada never funded the additional loans and the second Hobby Market store was unable to open. Ultimately, Mr. Lejtman offered to purchase back from Ms. Prada and Mr. Pozo their respective interests in the business. Ms. Prada rejected an offer that would have paid her back the monies she had invested and she later filed a lawsuit against Mr. Pozo, Mr. Lejtman, and the business. In that litigation, Prada v. Lejtman, Pozo, et al., Case No. 82-1370 (Eleventh Circuit Court in and for Dade County, Florida), Ms. Prada received a money judgment against Rolando Pozo. That judgment states in part:

    
    

    . . . considered that it was the Defendant Rolando Pozo who committed the fraud against the Plaintiffs and thereby caused Plaintiffs to suffer the loss of funds due to the conversion of the stock.

    
    

    The case was affirmed on appeal. This judgment, admitted by stipulation, shows that Ms. Prada's son, who apparently had an interest only in her monies still in Mexico in 1981, joined in the lawsuit as a co-plaintiff. His joinder strongly suggests that her Hobby Market investment monies came from her family funds in Mexico, not from her personal funds anywhere in the United States. As to the issue of fraud, the judgment is not binding on the undersigned finder of fact in this de novo proceeding, due to different rules as to the quantum of proof in each case. The classic tort of fraud or deceit requires proof only by a preponderance of the evidence. A license disciplinary case, such as the instant one, requires proof by the "clear and convincing standard." See, Rigot v.

    Bucci, 245 So.2d 51 (Fla. 1971); and Spayberry v. Sheffield Auto and Truck Service, Inc., 422 So.2d 1073 (Fla. 1st DCA 1982).

    
    

21. Rolando Pozo is held in high esteem at Capital Bank, has an excellent and unblemished work record, and has an excellent reputation in that limited "community" for truth and honesty.

    
    

22. Capital Bank has never initiated or joined in any complaint against Rolando Pozo relating to Mr. Pozo's association with Ms. Prada.

    
    

23. The only evidence of banking standards presented at formal hearing was that presented by Mr. Thomas Flood, Senior Vice-President of Capital Bank, who is personally very supportive of Mr. Pozo. He stated that it is internal policy of Capital Bank, when it deems it to be a prudent decision, to advise persons

    with whom it has a banking relationship that the bank will sever that banking relationship and will request or require that person to remove his or her deposits from Capital Bank; that such severance of relationship is extraordinary and is a bank decision that would have been transmitted to a bank manager such as Mr. Pozo; that Capital Bank made no such decision with regard to Guadalupe Prada; and that it would be "extraordinary" for a branch manager, which is the position Respondent held from January 1, 1979 through 1980, to tell a depositor to invest elsewhere. At no time did Mr. Flood characterize such a suggestion as a breach of banking standards or ethics.

    
    

    CONCLUSIONS OF LAW

    
    

24. The Division of Administrative Hearings has jurisdiction of the parties and subject matter of this cause.

    
    

25. At the close of Petitioner's case in chief, Respondent moved to dismiss for failure to make a prima facie case. That motion was taken under advisement for resolution in this Recommended Order. Upon review of the applicable statutory and case law, I find that a prima facie case was made, but has been refuted.

    
    

26. Section 655.037, Florida Statutes, sets forth the grounds for which a bank officer of a state-chartered bank may be removed, as follows:

    
    

    1. The department may issue and serve upon any officer, director, committee member, or employee of a financial institution, and upon the financial institution involved, a complaint stating charges whenever the department has reason to believe that the officer, director, committee member, or employee is engaging or has engaged in conduct that is:

       1. An unsafe or unsound practice;

       2. A willful violation of any law relating to financial institutions; however, if such violation constitutes a misdemeanor, no complaint shall be served as provided in this section until the officer, director, committee member, or employee is notified in writing of the matter of such violation and has been afforded a reasonable period of time, as set forth in the notice, to correct such violation and has failed to do so;

       3. A violation of any other law involving fraud or moral turpitude which constitutes a felony;

       4. A willful violation of any rule of the department;

       5. A willful violation of any order of the department;

       6. A breach of any written agreement with the department; or

       7. An act of commission or omission or a practice which is a breach of trust or

          a breach of fiduciary duty.

          
          

          (7) Any officer, director, or committee moved from office pursuant to this section for reelection to such position or to any officer in any financial institution in this state for a to 3 years from the date of such removal by the department.

          
          

27. Section 655.005(1)(d), Florida Statutes, provides the following definition:

    
    

    1. As used in this chapter, unless the context otherwise requires:

       (d) 'Unsafe or unsound practice' means any practice or conduct contrary to generally accepted standards applicable to the specific financial institutions, which practice or conduct creates the likelihood of abnormal risk or loss, insolvency, or dissipation of assets or otherwise seriously prejudices the interest of the specific financial institution or its depositors or members.

       
       

28. The evidence does not support Petitioner's position that Respondent Pozo encouraged Guadalupe Prada to withdraw all or significant amounts of her deposits in Capital Bank while he was a financial officer there. Even if he had encouraged her in investments rather than in job-hunting as Ms. Prada contends, there is no evidence the businesses rejected by Ms. Prada from 1979 to 1980 were "high risk" or that her potential investments (which were never quantified or consummated) would have "dissipated" her assets or the bank's assets, or that they would have even proportionately affected either the bank or Prada, the bank's depositor. These are the tests provided by the case law cited by Petitioner's posthearing proposal.

    
    

29. With regard to the amount Ms. Prada actually invested in Hobby Market, Inc., this investment occurred after the time period charged in the Amended Administrative Complaint and therefore cannot be the subject of discipline.

    Even if it could be, this investment occurred during a time period Mr. Pozo had no fiduciary responsibility either to Capital Bank as his employer or to Ms.

    Prada as Capital Bank's depositor; the money Ms. Prada actually invested probably came from deposits other than those of Capital Bank, and even if the investment money came from Ms. Prada's Capital Bank deposits, its withdrawal was not sufficient to "dissipate" Capital Bank's or depositor Prada's respective assets. Pozo wads privy to Prada's financial situation in 1981, as a result of their friendship over and above any stale information he had learned with regard to the aborted 1979 corporate loan, but that knowledge hardly creates or continues a fiduciary relationship after he ceased to work at Prada's bank.

    
    

30. Section 517.301, Florida Statutes defines fraudulent transactions, falsification or concealment of facts with regard to securities transactions. Without quoting this multi-part statute at length, suffice to say that no fraud, falsification, or concealment was established. Neither was it shown that the facts of this case involve "security transactions" as understood in that Chapter. Additionally, upon the foregoing findings of fact, it must be

    concluded that all the parties were fully advised and fully aware of all the terms of their business venture in Hobby Market, Inc.

    
    

31. Petitioner proposes to remove Respondent from any elective or appointive position as that term is defined in Sections 658.12(1l) or (18), Florida Statutes, for 6 months. On the contrary, this cause should be dismissed.

RECOMMENDATION

Upon the foregoing findings of fact and conclusions of law it is recommended that the Comptroller enter a Final Order dismissing all charges against Respondent Rolando Pozo.

DONE and RECOMMENDED this 14th day of December, 1987, at Tallahassee, Florida.

ELLA JANE P. DAVIS, 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 14th day of December, 1987.

APPENDIX TO RECOMMENDED ORDER

The following constitute rulings pursuant to Section 120.59(2), Florida Statutes, upon the parties' respective posthearing proposed findings of fact (PFOF).

Petitioner's PFOF:

1-2 Except as subordinate and unnecessary covered in FOF 1-3.

1. Covered in FOF 5 and 7.

2. Covered in FOF 6-9.

3. Covered in FOF 23.

4. Except as unnecessary, covered in FOF 10.

5. Rejected as stated as not supported by the greater weight of the credible evidence as a whole, see FOF 4, 7, 11, 14, and 16.

8-11 Rejected as not supported by the greater weight of the credible evidence as a whole and as largely subordinate and unnecessary, see FOF 16-18.

1. Covered in FOF 20.

2. Rejected as covered in FOF 4.

3. Covered in FOF 21-23.

Respondent' PFOF:

16, 18, and 24 are of such an ultimate nature as to be conclusions of law and are addressed as such within the Recommended Order. To the extent they constitute PFOF, they are covered in FOF 14-16, and 18.

19-23 Covered in FOF 16.

1. Covered in FOF 20.

2. Covered in FOF 21.

3. Covered in FOF 22.

COPIES FURNISHED:

GERALD LEWIS, COMPTROLLER DEPARTMENT OF BANKING AND FINANCE THE CAPITOL

TALLAHASSEE, FLORIDA 32399-0350

MALCOLM S. GREENFIELD, ESQUIRE OFFICE OF COMPTROLLER

THE CAPITOL, SUITE 1302 TALLAHASSEE, FLORIDA 32399

MICHAEL S. PASANO, ESQUIRE 2100 PONCE DE LEON BOULEVARD SUITE 1100

CORAL GABLES, FLORIDA 33134

CHARLES L. STUTTS, ESQUIRE OFFICE OF COMPTROLLER

THE CAPITOL, SUITE 1302 TALLAHASSEE, FLORIDA 32399

Docket for Case No: 87-001648

Orders for Case No: 87-001648