STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 90-3006

)

ROBERT D. DONOVAN and ) ROBERT DONOVAN REALTY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, this matter came on for hearing in Fort Walton Beach, Florida, before the Division of Administrative Hearings by its duly designated Hearing Officer, Diane Cleavinger, on August 6, 1990.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

Department of Professional Regulation Division of Real Estate

Post Office Box 1900 Orlando, Florida 32802-1900

For Respondents: Robert Donovan, pro se

507 Mooney Road

Fort Walton Beach, Florida 32458 STATEMENT OF THE ISSUES

The issue in this proceeding is whether the Respondents' real estate brokers licenses should be suspended, revoked or otherwise disciplined.

On December 7, 1989, Petitioner, Department of Professional Regulation, Division of Real Estate, filed an Administrative Complaint against Respondents, Robert Donovan and Robert Donovan Realty, Inc. The Administrative Complaint alleged that Respondents' licenses should be disciplined for violating Section 475.25(1)(b), Florida Statutes, by dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction; for violating Section 475.25(1)(k), Florida Statutes, by failing to maintain trust funds in a real estate brokerage account until disbursement was authorized; and for violating Section 475.25 (1)(e), Florida Statutes, and Rule 21V-14.012, Florida Administrative Code, by failing to use good accounting practices resulting in shortages from Respondents' trust account. Respondent disputed the allegations of the Administrative Complaint and requested a formal administrative hearing.

The Administrative Complaint and Respondent's request were forwarded to the Division of Administrative Hearings.

At the hearing the Petitioner presented the testimony of two witnesses and offered eight exhibits into evidence. Respondent, Robert Donovan, testified in his own behalf and on behalf of the corporation and generally admitted the shortage in their trust account, their failure to reconcile, on a monthly basis, the individual ledger trust balances with the bank statement, and inadvertent improper disbursements from their trust account. Respondent denied any intent to defraud, trick, scheme, or breach of any clients trust.

Petitioner filed a Proposed Recommended Order on August 10, 1990.

Respondent did not file a Proposed Recommended Order. The Petitioner's proposed findings of fact have been considered and utilized in the preparation of this Recommended Order except where such proposals were not supported by the weight of the evidence or were immaterial, cumulative or subordinate. Specific rulings on the Petitioner's proposed findings of fact are contained in the appendix to this Recommended Order.

FINDINGS OF FACT

1. Respondent, Robert D. Donovan, is a licensed real estate broker in the State of Florida, holding license number 0169298. Mr. Donovan is the owner of and the qualifying broker for Respondent, Robert Donovan Realty, Inc. Respondent, Robert Donovan Realty, Inc., is a corporation registered as a real estate brokerage company in the State of Florida, holding license number 0195250. The last license issued to the realty company was voluntarily placed on inactive status by Mr. Donovan.

   
   

2. On July 24, 1989, the Petitioner's Investigator, Elaine M. Brantley, conducted an audit of Respondents' escrow/trust accounts. The audit included the time period of July, 1988, through June 30, 1989. The audit revealed that Respondents' rental escrow account #134740 maintained at First National Bank and Trust, Fort Walton Beach, Florida, had a current liability of $4,679.00 and a current bank balance of $3,113.51, resulting in an escrow shortage of $1,565.49.

   
   

3. The $1,565.49 in missing escrow funds were replaced the following day by Mr. Donovan.

   
   

4. The audit further revealed that the Respondents, through other agents, were inadvertently making improper disbursements from the rental escrow account #134740. The improper disbursements consisted of casual employee pay, postage and an improper security deposit refund. The agents responsible for the rental escrow accounts were experienced in the proper maintenance of such accounts. The disbursals were inadvertently made by these agents from the rental escrow account. Respondents were the brokers responsible for the maintenance of and disbursements from the rental escrow account.

   
   

5. In maintaining the rental escrow account, Respondents were, from July, 1988, through June 30, 1989, reconciling the rental escrow checking account

   with the bank statement on a monthly basis . However, the Respondents failed from July, 1988, through June 30, 1989, to reconcile either the individual owners' or a total of the individual owners' rental escrow ledger balance with the rental escrow checking account on a monthly basis . Had the individual reconciliation been made, they would have revealed the shortages and improper disbursements made by Respondent's employees. Such individual reconciliations are required by good accounting practice and Rule 21V-14.012, Florida Administrative Code. On these facts and since Respondents were the brokers responsible for the rental escrow account, Respondents failed to use good

   accounting practices in the maintenance of their rental escrow account and allowed improper disbursements to be made from their trust accounts. Therefore, Respondents have violated Sections 475.25 (1)(e) and 475.25(1)(k), Florida Statutes.

   
   

6. There was no substantial evidence which suggested that Respondent was guilty of fraud, misrepresentation, breach of trust or culpable negligence.

   
   

   CONCLUSIONS OF LAW

   
   

7. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of this proceeding. Section 120.57(1), Florida Statutes (1987).

   
   

8. Chapter 475, Florida Statutes regulates real estate salesman and brokers and provides for discipline of a real estate salesmen or broker's license for violations of the provisions of that Chapter and the rules promulgated pursuant to Chapter 475, Florida Statutes. Subsections 475.25(1)(b), (k), and (e), Florida Statutes, state in pertinent part:

   
   

   "(1) The Commission may ... suspend a license or permit for a period not exceeding ten years; may revoke a license or permit; may impose an administrative fine not to exceed

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

   
   

   (b) has been guilty of ... culpable negligence, or breach of trust in any business transaction in this state, ... ; has violated a duty imposed upon him by law or by the terms of listing contract ... . It is immaterial to the guilt of the licensee that the victim ... of the misconduct has sustained no damage or loss; that the damage has been settled and paid after discovery of the misconduct; or that such victim ... was a ... person in confidential relation with the licensee ... .

   
   

   (k) has failed, if a broker, to place,

   upon receipt, any money ... entrusted with him as a broker, in escrow ... , 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.

   
   

   (e) has violated any ... lawful ... rule made or issued under the provisions of this Chapter 455.

9. Rule 21 V-14.012, Florida Administrative Code requires:

   
   

   1. A broker who receives a deposit such as defined herein shall preserve and make available to the Department, or its authorized representative, all deposit slips and statements of account ... and shall support such accounts by such additional data as good accounting practice requires. ...

      
      

   2. A broker shall cause to made at least monthly a written statement comparing the broker's total liability with the reconciled bank balance(s) of all trust accounts. The

      broker shall review, sign and date the monthly statement reconciliation.

      
      

   3. When the trust liability and the bank balances do not agree the reconciliation shall contain a description or explanation for the difference(s) and any corrective action taken reference shortages or overages of funds in the account(s). ...

      
      

10. Petitioner has the burden of showing by clear and convincing evidence that Respondents are guilty of violating Chapter 475, Florida Statutes, and are subject to discipline for those violations. The Petitioner has shown by clear and convincing evidence that Respondents did not use good accounting practices in the maintenance of the rental escrow account in that the Respondents failed to properly reconcile the rental escrow account. This failure led to obvious shortages in the rental escrow account. Petitioner also established by clear and convincing evidence that Respondents allowed several inadvertent improper disbursements to be made from the rental escrow account. All of the money was immediately replaced by the Respondents. Since Petitioner has demonstrated two violations of Chapter 475, Florida Statutes, Respondents licenses are subject to discipline for those violations.

    
    

11. The Florida Real Estate Commission has adopted disciplinary guidelines for violations of Chapters 455 and 475, Florida Statutes. These guidelines are contained in Rule 21V-24.001, Florida Administrative Code, and state in part:

(2)(a) As provided in Section 475.25(1), Florida Statutes, the Commission may, in addition to other disciplinary penalties, place a licensee on probation ... for such a period time and subject to such conditions as the Commission may specify. Such conditions may include ... requiring the licensee to

attend post-licensure courses; to satisfact- orily complete a post-licensure course ... .

(b) Any licensee placed on probation shall, as part of the probationary conditions, appear before the Commission at the last meeting of the Commission preceding termination of probation.

(3) The minimum penalty for all below listed sections is 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.

. . .

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

. . .

(q) 475.25(1)(k) - Up to 2 years suspension.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Board enter a Final Order finding the Respondents guilty of violating Section 475.25(1)(e) and (k), Florida Statutes and imposing a fine of

$250.00 on each Respondent for the two violations.

It is further recommended that Respondents' real estate licenses be placed on probation until Respondent Robert D. Donovan complete and show evidence to the Petitioner of having successfully completed, sixty (60) hours of post licensure education for brokers of which at least thirty (30) hours shall concern real estate management and/or accounting methods, and that Respondents be ordered to comply with the provisions of Rule 21V-24.001(2)(b), Florida Administrative Code, by scheduling an attendance at and attending the first meeting of the Florida Real Estate Commission after completion of the required coursework in order to terminate the probation of his license.

RECOMMENDED this 1st day of October, 1990, in Tallahassee, Leon County, Florida.

DIANE CLEAVINGER

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 1st day of October, 1990.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-3006

1. The facts contained in paragraphs 2, 3, 4, 5, 6 and 7 of Petitioner's Proposed Findings of Fact are adopted in substance, in so far as material.

   
   

2. The facts contained in paragraph 1 of Petitioner's Proposed Findings of Fact are subordinate.

   
   

3. The facts contained in paragraph 8 of Petitioner's Proposed Findings of Fact are adopted except for the last sentence which was not shown by the evidence.

COPIES FURNISHED:

James H. Gillis, Esquire

Department of Professional Regulation Legal Section

Hurston Building - North Tower Suite N-308

Post Office Box 1900 Orlando, Florida 32802-1900

Kenneth E. Easley, Esquire Department of Professional

Regulation

1940 North Monroe Street Suite 60

Tallahassee, Florida 32399-0750

Darlene F. Keller Division Director

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801

Robert D. Donovan

Robert Donovan Realty, Inc.

507 Mooney Road

Fort Walton Beach, Florida 32458

Docket for Case No: 90-003006

Orders for Case No: 90-003006