STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 89-1231

)

DOUGLAS R. BESS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Claude B. Arrington, held a formal hearing in the above-styled case on May 25, 1989, in West Palm Beach, Florida.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

Department of Professional Regulation

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

For Respondent: Douglas R. Bess, pro se

4604 Waterview Circle

Palm Springs, Florida 33461 STATEMENT OF THE ISSUES

The issue is whether Respondent committed the offenses alleged by the Administrative Complaint, and, if he did, the penalty that should be imposed.

PRELIMINARY STATEMENT

Petitioner filed a four count Administrative Complaint against Respondent, a licensed real estate salesman, alleging that Respondent violated certain provisions of the real estate regulatory laws.

Count I of the Administrative Complaint charged Respondent with 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.

Count II of the Administrative Complaint charged Respondent with having failed to account for and deliver deposits to the persons entitled thereto in violation of Section 475.25(1)(d), Florida Statutes.

Count III of the Administrative Complaint charged Respondent with having operated as a broker in violation of Section 475.42(1)(b), Florida Statutes.

Count IV of the Administrative Complaint charged Respondent with having failed, as a real estate salesman, to immediately place with his registered employer any money, fund, deposit, check or draft entrusted to him by a person dealing with him as agent of his registered employer in violation of Section 475.25(1)(k), Florida Statutes.

Respondent disputed the factual allegations of the Administrative Complaint and timely requested a formal hearing of this matter. The formal hearing was held May 25, 1989, in West Palm Beach, Florida.

During the course of discovery, Respondent failed to timely respond to Petitioner's Request for Admissions. Consequently, Petitioner filed a motion asking that the Request for Admissions be deemed admitted. This motion was denied because the Request for Admissions tracked the allegations of the Administrative Complaint, which Respondent had previously denied, and because Respondent had attempted to respond to the Request for Admissions.

At the formal hearing, Petitioner offered the testimony of four witnesses, Ilene Houseman, Richard Fairchild, Michael Ford, and Larry Whitten, and introduced 7 documentary exhibits. Respondent testified on his own behalf and offered the testimony of one additional witness, Ilene Houseman. Respondent offered 6 documentary exhibits. All documentary exhibits offered by Petitioner were accepted into evidence. Only two of the documentary exhibits offered by Respondent, marked as Respondent's Exhibits 5 and 6, were accepted into evidence.

A transcript of the proceedings has been filed. At the request of the parties, the time for filing posthearing submissions was set for more than ten days following the filing of the transcript. Consequently, the parties waived the requirement that a recommended order be rendered within thirty days after the transcript is filed. Rule 22I-6.031, Florida Administrative Code.

Respondent filed no posthearing submission. The Petitioner's proposed findings have been addressed in the appendix to this recommended order.

FINDINGS OF FACT

1. Petitioner is a regulatory agency of the State of Florida charged with the responsibility of investigating and prosecuting complaints against real estate professionals, including licensed real estate salesmen.

   
   

2. At all times pertinent to this case, Respondent, Douglas R. Bess, was licensed by Petitioner as a real estate salesman. At the time of the hearing, however, Respondent's license was on inactive status.

   
   

3. From on or about April 1987 until the end of May 1988 Respondent managed the rental property of Donald and Ilene Houseman. This rental property, located in West Palm Beach, Florida, consists of six duplexes containing a total of twelve residential units. Respondent managed, for a fee, the Houseman's property under the fictitious name of Prime Real Estate Management. Prime Real Estate Management is an unincorporated entity which has not been registered with Petitioner and which has no qualifying broker.

   
   

4. During the course of his management of the Houseman property, Respondent advertised the units for rent with advertisements containing his

   telephone number. Respondent dealt with prospective tenants on the telephone and in person. Respondent collected security deposits and monthly rental payments from the tenants. Respondent paid certain expenses, including the Housemans' mortgage payment, from the funds he collected.

   
   

5. Upon receiving a security deposit from a new tenant, Respondent would sign receipts for the deposits which stated that Prime Real Estate Management was a "realtor" and that Respondent was acting as a " broker and agent".

   
   

6. The security deposits Respondent received from new tenants as well as monthly rental payments were placed by Respondent in his personal bank account and commingled with his personal funds.

   
   

7. Between April 1987 and December 1987, Respondent was employed by Prime Real Estate of the Palm Beaches, Inc. as a real estate salesman. Respondent's father was the qualifying broker for this corporation until it went out of business. In December 1987 Respondent placed his license with Worth Properties, Inc. where it remained until his services were terminated in June 1988. During these periods of time Respondent continued to manage the Houseman's property for a fee under the name of Prime Real Estate Property Management. At no time did Respondent place the funds he had received from tenants on behalf of the Housemans in the escrow account of his broker.

   
   

8. On June 7, 1988, the Housemans terminated Respondent's services and employed Michael Ford, broker for Bowen Property Management, to manage their properties.

   
   

9. After his services were terminated, Respondent was unable to account for the sum of $1,765.00 which he had received as rent or as security deposits. Respondent converted to his own use funds that he had received as deposits from the Housemans' tenants.

   
   

10. Respondent misrepresented to the Housemans that he had paid on their behalf garbage collection assessments and ad valorem taxes. Respondent attempted to cover up his misrepresentations by writing checks on a closed bank account and thereafter showing the bad checks to Mrs. Houseman with the further misrepresentation that the expenses would be paid with the checks.

    
    

11. The factual allegations of the Administrative Complaint filed by Petitioner to initiate this case were denied by Respondent. The request for a formal hearing was timely filed by Respondent.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

13. Section 475.25, Florida Statutes, provides, in pertinent part, as follows:

    
    

    1. The commission may deny an application for licensure, certification, registration, or permit, or renewal thereof; may place a licensee, certified appraiser, registrant, or permittee on probation; may suspend a license, certification, registration, or

       permit for a period not exceeding 10 years; may revoke a license, certification, registration, or permit; may impose an administrative fine not to exceed $1,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing, if it finds that the licensee, certified appraiser, registrant, 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 in this state or any other state, nation, or territory ...

       
       

       1. Has failed to account or deliver to any person ... upon demand of the person entitled to such accounting and delivery, any personal property such as money ... 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.

       
       

       ... [H]as failed, if a salesman, to immediately place with his registered employer any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as agent of his registered employer.

       ...

       
       

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

    
    

    (b) No person licensed as a salesman shall operate as a broker or operate as a salesman for any person not registered as his employer.

    
    

15. Petitioner has the burden of proving by clear and convincing evidence the allegations against Respondent. See Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

16. Petitioner has established by clear and convincing evidence the allegations of Count I of the Administrative Complaint that Respondent engaged in conduct proscribed by Section 475.25(1)(b), Florida Statutes. This violation was established by the misrepresentations he made to the Housemans and his efforts to cover up those misrepresentations. This violation was further established by his conversion of the Housemans' funds to his own use.

17. Petitioner has established by clear and convincing evidence the allegations of Count II of the Administrative Complaint that Respondent engaged in conduct proscribed by Section 475.25(1)(d), Florida Statutes. This violation was established by Respondent's failure to account for or deliver to the Housemans the deposits that he had received from their tenants.

    
    

18. Petitioner has established by clear and convincing evidence the allegations of Count III of the Administrative Complaint that Respondent engaged in conduct proscribed by Section 475.42(1)(b), Florida Statutes, and therefore in violation of Section 475.25(1)(e), Florida Statutes. This violation was established by Respondent's holding himself out as a broker while holding a license as a salesman.

    
    

19. Petitioner has not established by clear and convincing evidence the allegations of Count IV of the Administrative Complaint that Respondent engaged in conduct proscribed by Section 475.25(1)(k), Florida Statutes. Neither the Housemans nor the tenants were dealing with Respondent as an "agent of his registered employer" at the time Respondent was entrusted with the deposits. Such dealing is an essential element of Section 475.25(1)(k), Florida Statutes.

    
    

20. Rule 21V-24.001, Florida Administrative Code, sets forth the minimum and maximum penalties to be applied in a disciplinary case such as this and provides, in pertinent part, as follows:

    
    

    (3) The minimum penalty for all below listed sections is a reprimand and/or a fine up to $1,000.00 per count. ... The maximum penalties are as listed:

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

    1. 475.25(1)(d)--Up to 5 years suspension

    2. 475.25(1)(e)--Up to 8 years suspension or revocation

    (z) 475.42(1)(b)--Up to 3 years suspension to revocation

    
    

21. Rule 21V-24.001(4) permits Petitioner to deviate from the foregoing guidelines if aggravating or mitigating circumstance are demonstrated. There are no mitigating circumstances presented by this case.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is: RECOMMENDED that the Department of Professional Regulation, Florida Real

Estate Commission, enter a final order which finds that Respondent violated

Section 475.25(1)(b), Florida Statutes, as alleged in Count I of the Administrative Complaint, which finds that Respondent violated Section 475.25(1)(d), Florida Statutes, as alleged by Count II of the Administrative Complaint, and which further finds that Respondent violated Section 475.25(1)(e), Florida Statutes by violating Section 475.42(1)(b), Florida Statutes, as alleged by Count III of the Administrative Complaint. It is further recommended that the final order revoke the real estate salesman's license issued to Respondent, Douglas R. Bess.

DONE and ORDERED this 28th day of July, 1989, in Tallahassee, Florida.

CLAUDE B. ARRINGTON

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 28th day of July, 1989.

APPENDIX

The proposed findings submitted on behalf of Petitioner are addressed as follows:

1. Addressed in paragraph 1.

2. Addressed in paragraph 2.

3. Rejected as being unnecessary to the conclusions reached.

4. Addressed in paragraph 3.

5. Addressed in paragraph 7.

6. Addressed in paragraphs 6 and 7.

7. Addressed in paragraph 4.

8. Addressed in paragraph 8.

9. Addressed, in part, by paragraphs 7 and 9. Rejected, in part as being unestablished by the evidence or subordinate to the conclusions reached.

10. Addressed in paragraph 10.

11. Addressed in paragraph 9.

12. Rejected as being unnecessary to the result reached.

13. Rejected as being unnecessary to the result reached.

COPIES FURNISHED:

JAMES H. GILLIS, ESQUIRE

DEPARTMENT OF PROFESSIONAL REGULATION

400 WEST ROBINSON STREET POST OFFICE BOX 1900 ORLANDO, FLORIDA 32802

DOUGLAS R. BESS

4604 WATERVIEW CIRCLE

PALM SPRINGS, FLORIDA 33461

KENNETH E. EASLEY, GENERAL COUNSEL DEPARTMENT OF PROFESSIONAL REGULATION 1940 NORTH MONROE STREET, SUITE 60

TALLAHASSEE, FLORIDA 32399-0792

DARLENE KELLER, DIVISION DIRECTOR DEPARTMENT OF PROFESSIONAL REGULATION DIVISION OF REAL ESTATE

400 WEST ROBINSON STREET POST OFFICE BOX 1900 ORLANDO, FLORIDA 32802

Docket for Case No: 89-001231

Orders for Case No: 89-001231