STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 88-4039

) JOE O'HAYON and GOLD COAST ) PROPERTIES OF THE )

PALM BEACHES, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing in the above-styled matter was held on January 5, 1989, in West Palm Beach, Florida, before Joyous D. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings. The parties were represented at the hearing as follows:

APPEARANCES

For Petitioner: James H. Gillis, Senior Attorney

Department of Professional Regulation Division of Real Estate

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

For Respondent O'Hayon: No Appearance For Respondent Gold Coast: No Appearance

BACKGROUND AND PROCEDURAL MATTERS

This case began on June 27, 1988, when the Department of Professional Regulation, Division of Real Estate (Department) filed an administrative complaint against Respondents, Joe O'Hayon (O'Hayon) and Gold Coast Properties of the Palm Beaches, Inc. (Gold Coast). This complaint alleged Joe O'Hayon was guilty of the following: 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; failure to maintain trust funds in the real estate brokerage escrow bank account in violation of Section 475.25(1)(k), Florida Statutes; and the misappropriation of funds entrusted to him in violation of Section 475.25(1)(b), Florida Statutes. The administrative complaint alleged Gold Coast was guilty of the following offenses: culpable negligence and breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida Statutes; and failure to maintain trust funds in the real

estate brokerage escrow bank account in violation of Section 475.25(1)(k), Florida Statutes. On August 11, 1988, O'Hayon executed an Election of Rights which disputed the allegations of fact and requested a formal hearing pursuant to Section 120.57(1), Florida Statutes. The case was forwarded to the Division of Administrative Hearings for formal proceedings on August 18, 1988.

At the hearing, the Department presented the testimony of the following witnesses: J. Edward Lemon, Katherine Ann Tucker, Larry Edward Whitten, Lucille

1. Roupoli, and Loretta N. Statzer. The Department's exhibits numbered 1 through 10 were admitted into evidence. No evidence was presented on behalf of the Respondents. The transcript was filed on January 20, 1989. The Department filed a proposed recommended order which has been considered in the preparation of this order. Specific rulings on the proposed findings of fact are included in the attached appendix.

   
   

   ISSUE

   
   

   The central issues in this case are whether Respondents are guilty of the violations alleged in the administrative complaint; and, if so, what penalty should be imposed.

   
   

   FINDINGS OF FACT

   
   

   Based upon the testimony of the witnesses and the documentary evidence received at the hearing, I make the following findings of fact:

   
   

   1. The Department is the appropriate state agency charged with the responsibility of disciplining real estate licensees.

      
      

   2. At all times material to the allegations in the administrative complaint, Respondent, O'Hayon, was a licensed real estate broker, license no. 0236925.

      
      

   3. At all times material to the allegations in the administrative complaint, Respondent, Gold Coast, was a corporation registered as a brokerage entity, license no. 0231581.

      
      

   4. On June 2, 1986, O'Hayon registered with the Division of Real Estate as broker and an officer of Gold Coast. At that time, the business location for Gold Coast was 9121 North Military Trail, Palm Beach Gardens, Florida.

      
      

   5. On March 25, 1988, the business location of Gold Coast was changed to 3585 Northlake Boulevard, Palm Beach Gardens, Florida.

      
      

   6. On September 30, 1988, the broker's license held by O'Hayon became inactive due to the non-renewal of the corporate registration for Gold Coast.

      
      

   7. According to the Department's records and the Election of Rights filed by O'Hayon, O'Hayon's address is 12999 Calais Circle, Palm Beach Gardens, Florida 33410.

      
      

   8. On February 19, 1988, J. Edward Lemon as broker of record for Respondent, Gold Coast, wrote to the Department to notify it of "many short falls." Mr. Lemon expressed concerns that Respondent, O'Hayon, had misappropriated monies belonging to the company.

   9. On February 25, 1988, Larry E. Whitten, an investigator employed by the Department, performed an informal audit of Gold Coast bank accounts. Gold Coast's escrow account was overdrawn in the amount of $1459.66. According to Whitten's calculations, the account should have held approximately $37,285.

      
      

   10. In order to make up for the lost funds, Lemon deposited approximately

       $45,000 into a new escrow account to cover the missing funds. Mr. Lemon also attempted to locate records to determine how the funds had been expended.

       Unfortunately, O'Hayon had not maintained records to explain the expenditures.

       
       

   11. Respondent, O'Hayon, misappropriated Gold Coast escrow funds to pay his home mortgage payment and other personal expenses.

       
       

   12. O'Hayon was a trustee and signatory on a realty group trust account. This account was to be maintained in accordance with an agreement executed by a group of realtors who sought to pool their resources to create a fund to defend, compromise or satisfy claims which were not covered by their errors and omissions insurance. O'Hayon was never authorized to remove funds from this account. Nevertheless, O'Hayon did withdraw funds from the group trust account to pay personal expenses. These monies were never returned or repaid.

       
       

       CONCLUSIONS OF LAW

       
       

   13. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings.

       
       

   14. Section 475.25(1), Florida Statutes, provides, in part:

       
       

       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

          $1000 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:

          * * *

          (b) 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 ...

          * * *

          (k) Has failed, if a broker, 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;... The commission shall establish rules to provide for records to be maintained by the broker and the manner in which such deposits shall be made.

   15. In this case, the Department has proved by clear and convincing evidence, that the Respondent, O'Hayon, failed to maintain monies in the Gold Coast escrow account and that he misappropriated those monies for his own personal benefit. Further, O'Hayon withdrew funds from the group trust account without authorization. Those funds were also used for his personal benefit. Respondent, O'Hayon, is therefore guilty of having violated Sections 475.25(1)(b) and (1)(k), Florida Statutes.

       
       

   16. The Department has adopted guidelines for the penalties to be imposed in disciplinary proceedings. Rule 21V-24.001, Florida Administrative Code, provides, in part:

       
       

       The minimum penalty for all below listed sections is a reprimand and/or a fine up to

       $1,000.00 per count. The only exception is for discipline cases with payment from the recovery fund which, according to Section 475.484(7), Florida Statutes, requires the penalty of revocation. The Florida Real Estate Commission upon a specific finding of mitigating or aggravating circumstances shall impose a penalty other than is provided in this rule. The maximum penalties are as listed:

       * * *

       (8) 475.25(1)(b) -- Up to 5 years suspension or revocation

       * * *

       (17) 475.25(1)(k) -- Up to 2 years suspension

       
       

   17. In this case, the Department did not offer evidence regarding an appropriate penalty. Based upon the rule cited above, either a suspension or revocation would be in order. Inasmuch as Respondent, O'Hayon, misused the funds which had been entrusted to him, a severe penalty is required. However, the Department has not established the corporate Respondent violated the statutes. To the contrary, as soon as a corporate officer became aware of the problems, the Department was notified and steps were taken to protect the interests of the persons with funds on deposit.

RECOMMENDATION

Based on the foregoing, it is RECOMMENDED:

That the Florida Real Estate Commission enter a final order revoking the real estate broker's license held by Respondent, Joe O'Hayon.

DONE and RECOMMENDED this 9th day of March, 1989, in Tallahassee, Leon County, Florida.

JOYOUS D. PARRISH

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 9th day of March, 1989.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-4039 RULINGS ON PETITIONER'S PROPOSED FINDINGS OF FACT:

1. Paragraphs 1 through 7 are accepted.

2. With the correction of the amounts in dispute, paragraph 8 is accepted.

3. Paragraphs 9 through 13 are accepted.

COPIES FURNISHED:

James H. Gillis Senior Attorney

Department of Professional Regulation-Legal

Division of Real Estate

400 West Robinson Post Office Box 1900

Orlando, Florida 32802

Gold Coast Properties of the Palm Beaches, Inc.

355 Northlake Blvd.

Palm Beach Gardens, Florida 33410

Joe O'Hayon

12999 Calais Circle

Palm Beach Gardens, Florida 33410

Darlene F. Keller Executive Director

DPR, Division of Real Estate

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

Docket for Case No: 88-004039

Orders for Case No: 88-004039