STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, FLORIDA REAL )

ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 87-2871

)

WILLIAM S. BINDER, )

)

Respondent. )

)

RECOMMENDED ORDER

Final hearing in the above-styled action was held on September 3, 1987 in Orlando, Florida, before Mary Clark, Hearing Officer of the Division of Administrative Hearings.

The parties were represented as follows:

For Petitioner: Steven W. Johnson, Esquire

Contract Attorney

DPR-Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

For Respondent: Scott L. Sterling, Esquire

1214 East Robinson Street Orlando, Florida 32801

Background and Procedural Matters

On June 22, 1987, Petitioner filed its Administrative Complaint alleging that Respondent violated certain provisions of Chapter 475 F.S., related to the regulation of the real estate profession. Respondent filed a timely request for a formal hearing.

At the commencement of the hearing, counsel for Respondent made an ore tenus motion to dismiss the Administrative Complaint based on the argument that William Binder's mortgage broker's license was "voluntarily surrendered", rather than "disciplined", and the Florida Real Estate Commission, therefore, had no jurisdiction to issue a show cause notice pursuant to subsection 475.455(2) F.S.. The motion was taken under advisement and my recommended ruling is contained herein.

Petitioner presented the testimony of two witnesses and offered four exhibits, all of which were received into evidence. Respondent testified in his own behalf and did not offer any exhibits.

No transcript was prepared. After the hearing, Petitioner submitted a proposed recommended order and Respondent submitted a written closing argument. These submittals have been carefully considered in the preparation of this recommended order. While Petitioner's abbreviated findings of fact are substantially adopted, additional facts are found and Petitioner's conclusions of law and recommendation are rejected.

ISSUE

The issues for determination in this proceeding are whether Respondent is guilty of a) fraud, misrepresentation, concealment, false promises , and similar acts, in violation of subsection 475.25(1)(b) F.S. and b) having his mortgage broker's license suspended or revoked in violation of subsections 475.25(1)(e) and 475.455(2) F.S., as alleged in the Administrative Complaint.

FINDINGS OF FACT

1. At all times pertinent to the charges, William Binder was the holder of Florida real estate license number 0376980.

   
   

2. William Binder obtained his mortgage solicitor's license from the Department of Banking and Finance in June 1982. His first and only job as a mortgage solicitor was with State Capital Corporation.

   
   

3. He worked for that company for approximately three years. Potential investors contacted the company and he was directed to make home visits to discuss mortgage investment opportunities. The information he provided on these visits came from a manual, prepared by the company, which explained step by step what to say. The solicitors were expected to use the company's script. A prospectus and brochure, also prepared by the company, were provided to the prospective investors.

   
   

4. Sometime in early 1985, State Capitol Corporation went bankrupt. William Binder did not know of the bankruptcy in advance. On or about February 5, 1985, the Orlando office where he worked was closed; Binder was informed that same day. He held the title, Assistant Vice-President, in the Orlando office, but that title did not mean that he was actively involved in the affairs of the company.

   
   

5. He obtained a mortgage broker's license and began working for American Financial Consultants, Inc.. However, when an unfavorable newspaper article appeared regarding State Capitol Corporation, his new employer forced him to resign.

   
   

6. The Department of Banking and Finance filed Administrative Complaints against Binder and myriad other individuals who worked for State Capitol Corporation.

   
   

7. The Department of Banking and Finance complaint against William Binder dated December 6, 1985, alleged that he misled investors with regard to the mortgages handled by State Capitol Corporation.

   
   

8. Binder was told that if he did not contest the complaint his license would not be revoked. He defaulted by failing to request a hearing, and on January 28, 1986, a Final Order by Comptroller Gerald Lewis, suspended for two years all licenses issued to him under the provisions of Chapter 494 F.S.

9. Patricia Pickard was an investor in State Capitol Corporation. She is an 81-year old retired teacher. She taught both high school and college and has several academic degrees. She contacted State Capitol Corporation in early 1983 after a friend showed her a newspaper advertisement. She contacted the Chamber of Commerce and the Comptroller's office and felt she got good reports on the company. William Binder came to her home to explain the investment opportunities. The newspaper advertisements describe an 18 percent yield on "replacement mortgages" secured by Florida real estate, with a choice of six- month and twelve-month maturities.

   
   

10. Patricia Pickard initially invested $15,000.00 from funds she had in certificates of deposit. Over a period of two years she invested a total of

    $44,000.00. She called State Capitol each time she wanted to make an additional investment and each time William Binder was sent to her house. At one point she was concerned about newspaper articles about the company, but Binder assured her that everything was worked out in court. In fact, the company did make some changes in their forms as the result of a lawsuit by the Department of Banking and Finance.

    
    

11. Patricia Pickard drew interest on her investments, but when the company went bankrupt in February 1985, she lost all but $488.00 in principal.

    
    

12. Lawrence E. Mason, a 76-year old retired chiropractor, was also an investor in State Capital Corporation. He saw the newspaper advertisements in December 1983 and called the company. William Binder was sent to his house. At the time $40,000.00 was his entire savings. The promise of an 18 percent yield satisfied (as he characterized it) his "greedy nature". Even though he had intended to invest only $10,000.00, Binder convinced him to use his entire savings. He drew interest on the $40,000.00 throughout 1984. In late 1984 he bought a new home and intended to use the $40,000.00 from his State Capital Corporation investment when it reached maturity,. He began contacting the company office to initiate the paperwork but never got real answers. He received $600.00 in January 1985 and read about the bankruptcy in February. He eventually received $15,000.00 back from his $40,000.00 principal.

    
    

13. His only involvement with William Binder was the day he made the investment and one subsequent phone call when he had not received the deed and other papers. He got those items shortly thereafter.

    
    

14. William Binder thought the mortgages he sold were a good investment. No evidence was presented of fraudulent intent in his dealings with the potential investors.

    
    

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the subject matter and parties to this proceeding.

    
    

16. The Complaint alleges that William Binder committed the following violations of Chapter 475 F.S.:

    
    

    475.25 Discipline.--

    1. The commission may deny an application for licensure, registration,

       or permit, or renewal thereof, may suspend a license or permit for a period not exceeding 10 years; may revoke 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, permitee, or applicant:

       * * *

       (b) Has been guilty of fraud, misrepresentation, concealment, false promise, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction in this state or any other state, nation, or territory;...

       * * *

       (e) 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.

       * * *

       
       

17. The violation of Section 475.25(1)(e) is allegedly based on Section 475.455(2) F.S., which provides:

    
    

    475.455 Exchange of disciplinary information.

    1. If the commission finds that another state agency has suspended or

    revoked the license or registration of, or imposed a penalty against, a licensee, it shall issue a notice to the licensee to show cause why the commission should take no action, which notice shall provide for a hearing in accordance with chapter 120, upon request.

    
    

18. The revocation of a professional license is of sufficient gravity and magnitude to warrant a standard of proof greater than a mere preponderance of the evidence. The correct standard is that the evidence must be clear and convincing. Ferris v. Turlington, 510 So.2nd 292 (Fla. 1987).

    
    

19. The administrative complaint does not allege, nor was proof adduced at the hearing, that William Binder was even remotely responsible for the demise of State Capital Corporation or that he knew his inducements to investors were false. While he admitted that he had the title, Assistant Vice-President, no evidence was presented to rebut his assertion that this was a meaningless title and he had no real authority.

    
    

20. A violation of Section 475.25(1)(b) F.S. requires a finding of wrongful intent or Scienter. Morris v. Department of Professional Regulation 474 So.2nd 841 (5th DCA 1985)

    
    

    No evidence in this proceeding supports such a finding.

    
    

21. Binder's mortgage broker's license suspension after he failed to request a hearing does not establish, for purposes of this proceeding, the underlying allegation of the complaint.

22. Section 475.455(2) F.S. only requires the commission to issue a Show Cause Notice to a licensee, presumably because there may be cases where the reason another agency's license was suspended or revoked could also be proven a violation of Chapter 475 F.S. Unlike section 475.25(1)(f) F.S., where the conviction of certain crimes subjects a licensee to discipline, Section 475.455(2) F.S., does not create a ground for discipline, nor should it be interpreted to do so. Disciplinary statutes are penal in nature and must be strictly construed. Lester v. Department of Professional and Occupational Regulation, State Board of Medical Examiners, 348 So.2nd 923, (Fla 1st DCA 1977), Fleischman v. Department of Professional Regulation, 441 So.2nd 1121 (Fla. 3rd DCA 1983).

    
    

23. The findings and conclusions expressed here are by no means intended to deny the credibility of the complaining witnesses or to ignore the terrible tragedy of their losses. The issue is whether William Binder committed fraud. The evidence presented in this proceeding simply fails to establish that he did.

Recommendation

Based on the foregoing, it is hereby, RECOMMENDED:

That the Administrative Complaint be dismissed.

DONE and RECOMMENDED this 19th day of October, 1987 in Tallahassee, Florida.

MARY CLARK

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 19th day of October, 1987.

COPIES FURNISHED:

Steven W. Johnson, Esquire DPR-Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

Scott L. Sterling, Esquire 1214 East Robinson Street Orlando, Florida 32801

Harold Huff, Executive Director Florida Real Estate Commission Department of Professional Regulation

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

Tom Gallagher, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32399-0750

William O'Neil, Esquire General Counsel

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32399-0750

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA

DEPARTMENT OF PROFESSIONAL REGULATION FLORIDA REAL ESTATE COMMISSION

DEPARTMENT OF PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE,

Petitioner,

vs. CASE NO. 0152571

0152590

WILLIAM S. BINDER DOAH NO. 87-2871

Respondent.

/

FINAL ORDER

The Florida Real Estate Commission heard this case on March 15, 1988 to issue a Final Order.

Hearing Officer Mary Clark of the Division of Administrative Hearings presided over a formal hearing on September 3, 1987. On October 19, 1987, she issued a Recommended Order which is adopted by the Florida Real Estate Commission as to all Findings of Fact. However, after a complete review of the

record, the Commission adopts the Hearing Officer's Conclusions of Law, with the exception of Paragraph 4 thereof, which is hereby rejected.

Further, Petitioner's Exceptions to the Hearing Officer's Recommended Order are accepted, except for Paragraph 3 thereof which is hereby rejected. The Recommendation contained in the Hearing Officer's Recommended Order and the Recommendation within Petitioner's Exceptions are rejected.

A copy of the Recommended Order is attached hereto as Exhibit A and a copy of Petitioner's Exceptions to the Hearing Officer's Recommended Order is attached hereto as Exhibit B and both made a part hereof.

Therefore, after a complete review of the record, the facts as found by the Hearing Officer, and the Conclusions of Law, the Florida Real Estate Commission hereby ORDERS that the real estate license of the Respondent be suspended for a period of two (2) years.

This Order shall be effective 30 days from date of filing with the Clerk of the Department of Professional Regulation. This Order shall be appealable to the District Court of Appeal within 30 days from filing date.

DONE AND ORDERED this 15th day of March 1988 in Orlando, Florida.

Darlene F. Keller, Director Division of Real Estate

I HEREBY CERTIFY that a true copy of the foregoing was sent by U.S. Mail to: Scott L. Sterling, Esquire, 1214 East Robinson Street, Orlando, Fl 32801; to Hearing Officer Mary Clerk, Division of Administrative Hearings, 2009 Apalachee Parkway, Tallahassee, Fl 32399-1550; and to Steven Johnson, Esquire, DPR, P.O. Box 1900, Orlando, Fl 32802, this 23rd day of March 1988.

Director

LG:pep

Docket for Case No: 87-002871

Orders for Case No: 87-002871