STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BANKING AND FINANCE, ) DIVISION OF SECURITIES AND )

INVESTOR PROTECTION, )

)

Petitioner, )

)

vs. ) CASE NO. 90-6766

)

HAMPTON SECURITIES, INC., )

HAMPTON HOLDING GROUP, INC., ) HAMPTON GROUP, INC., KING JAMES, ) LTD., and MARCUS W. TURNER, )

)

Respondents. )

)

RECOMMENDED ORDER

This matter was heard by William R. Dorsey, Jr., the Hearing Officer designated by the Division of Administrative Hearings, on May 15, 1991, in West Palm Beach, Florida.

APPEARANCES

For Petitioner: Deborah Guller, Esquire

Office of Comptroller

111 Georgia Avenue, Suite 211 West Palm Beach, Florida 33401

For Respondent: The Respondent failed to appear.

STATEMENT OF THE ISSUE

Marcus W. Turner has been charged with two violations of Chapter 517, Florida Statutes, the Florida Securities and Investor Protection Act. The violations, described in an Administrative Complaint dated August 30, 1990, are as follows:

1. Section 517.12(1), Florida Statutes: Respondent sold or offered for sale securities in or from offices in this State when he was not registered with the Department as an associated person. (Administrative Complaint, paragraph 15F and Conclusion of Law G)

   
   

2. Section 517.301(1)(a) and (c), Florida Statutes: Mr. Turner engaged in transactions, practices, and courses of business which operated or would operate, as a fraud or deceit upon a person; and he knowingly and willfully falsified, concealed, and covered up by trick, scheme or device the material fact that he conducted customer trades while an unregistered person. (Administrative Complaint, paragraph 16 and Conclusion of Law H)

PRELIMINARY STATEMENT

On August 30, 1990, the Florida Department of Banking and Finance, Division of Securities and Investor Protection filed its Administrative Complaint, Notice of Intent to Enter Cease and Desist Order and Notice of Rights. The complaint charged that an examination of affairs of Hampton Securities Inc., and related companies revealed violations of Chapter 517, Florida Statutes, by those companies, and by their agents or employees, including Marcus Turner.

Respondent Turner requested a hearing, and after referral to the Division of Administrative Hearings, the hearing was scheduled for and held on May 15, 1991. Although duly noticed that the hearing was to be held on May 15, 1991, in West Palm Beach, Florida, Respondent failed to present himself at the hearing.

Claims against Hampton Securities, related companies, and other officers and individuals employed at Hampton were also heard at that time.

The Department presented the testimony of Tiffany M. Lynn, an Area Financial Manager with the Division of Securities and Investor Protection. The Department's exhibits were received in evidence. Exhibits 16 through 23 pertain to Turner. Petitioner ordered the transcript of the proceedings, which was filed on May 31, 1991. The Department filed its Proposed Recommended Order on September 18, 1991. Mr. Turner has made no filings, nor accounted for his failure to attend the hearing. The findings of fact in the proposed recommended order filed by the Department have been accepted, except for finding 7 concerning Joyce Ridenour.

FINDINGS OF FACT

1. Respondent Turner was registered with the Department as an associated person of Hampton Securities, Inc. from July 26, 1988 through August 7, 1989.

   
   

2. Respondent Turner was served with a Notice of Taking Deposition on January 31, 1991. The U.S. Postal Service return receipt indicates that Respondent Turner received the Notice of Taking Deposition on February 4, 1991. On February 12, 1991, at 10:00 a.m., the Department was prepared and ready to depose Respondent Turner. The court reporter had been called to the Office of the Comptroller, 111 Georgia Avenue, Suite 211, West Palm Beach, Florida 33401 in order to transcribe the deposition. Mr. Turner did not appear for deposition, nor did he communicate in any manner with counsel regarding the scheduled deposition. The court reporter filed a Certificate of Nonappearance and the Department was billed for the court reporter's appearance at the scheduled deposition. Consequently, the Department served a Motion to Compel Discovery and Motion for Attorneys Fees on March 4, 1991. On March 20, 1991, Hearing Officer Donald D. Conn entered an Order Granting Motion to Compel. The Respondent was ordered to make himself available for discovery or in the alternative to show cause why compliance was not possible. Turner did neither. On April 24, 1991, the Department filed a Motion to Impose Sanctions requesting that Respondent Turner's Petition for Formal Hearing be stricken from the record and that a judgement for default be entered. The Motion to Sanction was denied. Taken as a whole, the record shows that Mr. Turner has ignored this proceeding after filing his request for a hearing on October 3, 1990.

   
   

3. Ms. Tiffany Lynn testified for the Department regarding the allegations against Turner. She discussed the nature of the examinations of Hampton Securities and its officers and employees conducted by the Department. Ms. Lynn had gone to the offices of Hampton and requested to speak to a person of authority. The president of the firm, Delores Easthom, presented herself. Ms. Easthom provided documents to Ms. Lynn which were the records kept in the

   normal course of business at Hampton. Additionally, Andrew Greitz, Compliance Officer at Hampton Securities, Inc., assisted in providing records.

   
   

4. Composite Exhibit 18 is a compilation of order tickets and confirmations received from Easthom and Greitz which demonstrate that trading was conducted by Marcus Turner at Hampton Securties, Inc. prior to his registration with the Department. The top part of each page is the order, the bottom is the confirmation. The confirmations are documents generated at Southwest Securities, Inc., Hampton's clearing firm, from data regularly given to Southwest by Hampton Securities. The first document in exhibit 18 is for customer "William Dolfi." The trade was made on July 22, 1988, by a registered representative (stock broker) using Hampton's house account number 0844. However, on the order form the initials "M.T." are inserted by hand interlineation on the bottom of the page. This was done to record that Respondent Turner conducted the trade and should be paid the commission arising from the trade. The trade was made prior to Turner's registration date.

   
   

5. The next page of Exhibit 18 indicates that customer "Dr. Donald M. Snyder" was sold securities by a registered representative using Hampton house account number 0844. On the bottom of the first order form are printed the initials "MT" by hand. This trade was made on June 13, 1988, prior to the July 26, 1988, registration date of Respondent Turner. The next pages in Exhibit 18 show that Dr. Snyder also had been was sold securities on or about June 3, 1988, by a registered representative using Hampton's house account number 0844; the initials "MT" also are printed on the bottom of the order form, indicating the sale also was made by Marcus Turner.

   
   

6. The fourth through seventh pages of Exhibit 18 indicates Samuel and Bernard Smullin were sold securities on or about April 21, 1988, and May 11, 1988 before Turner's registration with Hampton Securities. On the bottom of the order forms are the initials "MT" indicating the sale were made by Marcus Turner.

   
   

7. Exhibit 18 indicates that customer Bob Robinson was sold securities on or about June 3, 1988, by a registered representative using the Hampton house account number. The order form has the initials "MT" printed by hand on the bottom of the page indicating that Respondent Turner made the trade, and did so prior to his date of registration with the Department.

   
   

8. Exhibit 18 also demonstrates that customer George A. LaMarca purchased securities from a registered representative using house account number 0844; the initials "MT" are printed by hand on the bottom of the order form, and show the date of sale as May 19, 1988. Similarly, other customers, namely Timothy

   Kowal, Sr., Betsy Elliott, Samuel S. Duffy, and Gary L. Donatello were also sold securities by Respondent Marcus Turner using house account number 0844. These trades were all conducted prior to Respondent Turner's registration date with Hampton Securities, Inc.

   
   

9. On August 2, 1988, approximately six days after Marcus Turner's registration became effective with the Department as a registered representative of Hampton, the customers noted in Exhibit 18, in addition to other customers, were transferred from house account number 0844 to the new registered representative number of Marcus Turner, 1686.The form used to do this, entitled "Salesman's Authorization and Release to Change Customer Account Executive" is signed by Turner.

10. The use of the number for the house account on trades by Mr. Turner before his registration is a material false statement on all those order forms and confirmations. The house account number was used to conceal the trades by Turner before he was registered.

    
    

11. Respondent Turner was paid $50,000.00 on July 1, 1988, ostensibly as a "sign on" bonus. On May 27, Respondent Turner was paid $1,500.00 by Hampton Securities, ostensibly as a "consulting fee." On May 18, 1988, Marcus Turner received a $2,500.00 check for "moving expenses." The moving expense check of

    $2,500.00 appears to be payment for moving a short distance within the City of Sarasota. These payments are disguised payments to Turner for conducting trades in securities before his registration with the Department as an associated person with Hampton Securities.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over this matter. Section 120.57(1), Florida Statutes.

    
    

13. In a license discipline cases such as this, the agency must prove the allegations of its complaint with evidence that is clear and convincing. Ferris

    v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

14. Under Section 517.221, Florida Statutes, the Department may issue and serve upon a person a cease and desist order, and may impose and collect an administrative fine in an amount not to exceed $5,000.00 for each violation of the Florida Securities and Investor Protection Act. Section 517.161 permits that any registration granted by the Department may be revoked, restricted or suspended by the Department if the Department determines that an individual has violated any provision of Chapter 517.

    
    

15. Turner is charged with violations of the following provisions of Chapter 517, Florida Statutes:

    
    

    517.12 - Registration of dealers, associated persons, investment advisors, and branches.

    
    

    (1) No dealer, associated person, or issuer of securities shall sell or offer for sale any securities in or from offices in this state, or sell securities to persons in this state from offices outside this state, by mail or otherwise, unless the persons have been registered with the Department pursuant to the provisions of this section.

    
    

    517.301 - Fraudulent transactions; falsifica- tion or concealment of facts.

    
    

    1. It is unlawful and a violation of the provisions of this Chapter for a person:

       
       

       1. In connection with the offer, sale or purchase of any investment or security, including any security exempted under the provisions of Section 517.051 and including

    any securities sold in a transaction exempted under the provisions of Section 517.061, directly or indirectly:

    
    

    1. To employ any device, scheme, or artifice to defraud;

       
       

    2. To obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or

       
       

    3. To engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon a person.

    * * *

    (c) In any matter within the jurisdiction of the Department, to knowingly and willfully falsify, conceal, or coverup, by any trick, scheme or device, a material fact, make any false, fictitious or fraudulent statement or representation, or make or use any false writing or document, knowing the same to contain any false, fictitious or fraudulent statement or entry.

    
    

16. The agency proved that Respondent Turner was registered with the Department as an associated person of Hampton on July 26, 1988. The Department further proved that numerous trades were made with customers prior to July 26, 1988, utilizing the Hampton house account, number 0844, which was a device to permit trades by Turner. These customers' accounts were later changed to registered representative number 1686, Marcus Turner. Marcus Turner was the payee on a least three checks written on the account of Hampton Securities, Inc., prior to his registration with the Division. These were a means used to pay Turner for brokerage activities before he had been registered with the Department. The foregoing activities are violations of Section 517.12(1) and 517.301(1)(a) and (c), Florida Statutes. They are especially serious violations because they reflect a purposeful scheme to falsify records to hide the trades done before Turner became registered.

RECOMMENDATION

The use of the house account to conceal unlicensed trading is serious misconduct, designed to mislead the public and the Department. Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered finding that Respondent Turner violated Sections 517.12(1) and 517.301(1)(a), (c), Florida Statutes, imposing an administrative fine of $5,000 on both counts, for a total fine of $10,000.00 and revoking any licenses or registration that Respondent Turner holds with the Department.

RECOMMENDED this 12th day of December, 1991, at Tallahassee, Florida.

WILLIAM R. DORSEY, JR.

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 12th day of December, 1991.

COPIES FURNISHED:

Deborah Guller, Esquire Office of Comptroller

111 Georgia Avenue, Suite 211 West Palm Beach, Florida 33401

Marcus Turner

6396 Midnight Cove Road #953

Sarasota, Florida 34242

Honorable Gerald Lewis, Comptroller Department of Banking and Finance The Capitol, Plaza Level Tallahassee, Florida 32399-0350

William G. Reeves, General Counsel Department of Banking and Finance Room 1302, The Capitol Tallahassee, Florida 32399-0350

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS:

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 90-006766

Orders for Case No: 90-006766