STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

In Re CHARLES POLK, )

)

Respondent, ) CASE NO. 91-3831EC

) COMPLAINT NO. 89-80

)

)

)

)

RECOMMENDED ORDER

Pursuant to written notice, a formal hearing was held in this case before Larry J. Sartin, a duly designated Hearing Officer of the Division of Administrative Hearings, on November 12, 1991, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Virlindia Doss

Assistant Attorney General Department of Legal Affairs The Capitol, Suite 1601

Tallahassee, Florida 32399-1050

For Respondent: David A. Monaco, Esquire

Monaco, Smith, Hood, Perkins, Orfinger & Stout

Post Office Box 15200

Daytona Beach, Florida 32115 STATEMENT OF THE ISSUES

Whether the Respondent, Charles Polk, violated Section 112.313(7), Florida Statutes, by having a contractual relationship with a real estate developer who was doing business with the Daytona Beach Community College?

PRELIMINARY STATEMENT

On or about August 3, 1989, a Complaint against the Respondent, Charles Polk, was filed with the Florida Commission on Ethics (hereinafter referred to as the "Commission"). Based upon a review of the Complaint, the Commission issued a Determination of Investigative Jurisdiction and Order to Investigate on October 20, 1989, ordering the staff of the Commission to conduct a preliminary investigation into whether Mr. Polk violated Sections 112.313(6), and 112.313(7), Florida Statutes.

Following the Commission's investigation of the allegations against Mr. Polk, a Report of Investigation was released on October 16, 1990. Based upon the Complaint and the Report of Investigation an Advocate for the Commission issued an Advocate's Recommendation on October 25, 1990. The Advocate determined that there was no probable cause to believe that Mr. Polk violated

Section 112.313(6), Florida Statutes, but that there was probable cause to believe that he had violated Section 112.313(7), Florida Statutes.

Based upon the Report of Investigation and the Advocate's Recommendation, the Commission issued an Order Finding Probable Cause on December 5, 1990. The Commission concluded there was no probable cause to believe that Mr. Polk violated Section 112.313(6), Florida Statutes, and dismissed the allegations concerning that alleged violation. The Commission concluded, however, that there was probable cause to believe that Mr. Polk violated Section 112.313(7), Florida Statutes, and ordered that a public hearing be conducted.

By letter dated June 20, 1991, the Commission referred the matter to the Division of Administrative Hearings and, in accordance with Rules 34-5.010 and 34-5.014, Florida Administrative Code, requested that the public hearing on the Complaint against Mr. Polk be conducted by the Division of Administrative Hearings. The hearing was scheduled for November 12 and 13, 1991.

Prior to the formal hearing the parties filed a pre-hearing statement containing stipulated findings of fact. Those facts have been accepted in this Recommended Order.

At the formal hearing the Advocate called no witnesses. The Advocate offered four exhibits for identification purposes. Advocate's exhibits 1-2 and 4, were accepted into evidence. Advocate's exhibit 3, was rejected. One of the exhibits accepted into evidence consisted of the deposition testimony of Anargyros N. Xepapas.

Mr. Polk testified on his own behalf. Mr. Polk also offered seven exhibits for identification purposes. All of the Respondent's exhibit's were accepted into evidence.

The parties have filed proposed recommended orders containing proposed findings of fact. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order or the proposed finding of fact has been accepted or rejected in the Appendix which is attached hereto.

FINDINGS OF FACT

1. The Respondent.

   
   

   1. The Respondent, Charles Polk, served as the President of Daytona Beach Community College from 1974 to 1990. [Stipulated Fact.]

      
      

   2. Mr. Polk resigned as President of Daytona Beach Community College in 1990.

      
      

2. Mr. Polk's Purchase of Real Estate from Anargyros

   N. Xepapas.

   
   

   1. In November, 1985, Mr. Polk and his wife purchased a life estate and one-half interest in a condominium unit from Anargyros N. Xepapas. Mr. Xepapas owned the other one-half interest in the condominium unit. [Stipulated Fact.]

      
      

   2. The purchase price of the life estate and one-half interest in the condominium unit was $150,000.00. [Stipulated Fact.] The weight of the evidence failed to prove that this price was not the fair market value or that the transaction was not an arms-length transaction.

   3. Under the terms of the agreement, Mr. Polk and his wife were required to pay $30,000.00 immediately. They subsequently executed and delivered to Mr. Xepapas a note and mortgage for the remaining $120,000.00. [Stipulated Fact.] Mr. Polk was a mortgagor and Mr. Xepapas was a mortgagee.

      
      

   4. Under the terms of the agreement, Mr. Polk was required to pay maintenance fees of approximately $5,000.00 per year, taxes, insurance and all other expenses of the unit, which totaled approximately $14,000.00 per year. [Stipulated Fact.]

      
      

   5. Mr. Xepapas agreed to maintain the payments on the first mortgage. [Stipulated Fact.]

      
      

   6. Following the closing, Mr. Polk paid Mr. Xepapas an additional

      $60,000.00 on the mortgage, reducing the principal balance to $60,000.00. [Stipulated Fact.]

      
      

   7. A warranty deed was provided to Mr. Polk for the purchase of the property. [Stipulated Fact.]

      
      

   8. Neither the deed nor the mortgage were recorded. [Stipulated Fact.]

      
      

   9. Mr. Polk and his wife used the condominium as their residence. [Stipulated Fact.]

      
      

   10. Mr. Xepapas action in selling the condominium to Mr. Polk and his wife was a business transaction.

       
       

3. Mr. Xepapas.

   
   

   1. Mr. Xepapas is an architect and developer who designs, builds, and sells property in the Daytona Beach area. [Stipulated Fact.]

      
      

   2. At the time Mr. Polk purchased the one-half interest in the condominium unit from Mr. Xepapas, Mr. Xepapas was the owner of the condominium building in which the unit was located. [Stipulated Fact.]

      
      

   3. In addition to being the owner of the condominium building at issue, Mr. Xepapas was the architect, developer and contractor for the condominium and for other condominium buildings in the areas.

      
      

   4. Mr. Xepapas was trying to sell the condominium units as part of his business because of cash-flow problems. [Stipulated Fact.] The condominium sales market was "soft" and Mr. Xepapas was trying to eliminate the carrying costs for unsold units.

      
      

   5. Mr. Xepapas sold a total of four condominium units pursuant to an arrangement similar to the arrangement by which he sold the condominium unit to Mr. Polk.

      
      

   6. Mr. Xepapas had made offers to sell one-half interests in condominium units to various other persons besides Mr. Polk. [Stipulated Fact.]

      
      

   7. Mr. Xepapas was a sole proprietor. He entered into his relationship with Mr. Polk in his capacity as a sole proprietor.

   8. Mr. Xepapas has known Mr. Polk for ten to fifteen years and considers himself a friend of Mr. Polk. [Stipulated Fact.]

      
      

4. Mr. Xepapas' Business with Daytona Beach Community College.

1. In 1987, the Board of Trustees of the Daytona Beach Community College decided to expand the College's educational facilities by obtaining a new center in the Deltona area. [Stipulated Fact.]

   
   

2. In September, 1987, the Board of Trustees instructed staff to develop a request for proposal for the design and construction of the facility which would be leased to the College. [Stipulated Fact.]

   
   

3. Mr. Polk was involved to some extent in the decision as to whether the new center should be purchased or constructed, and whether it should be acquired through a long-term lease/purchase agreement.

   
   

4. In response to the advertisement of the request for proposal in September, 1988, Mr. Xepapas submitted a proposal. [Stipulated Fact.] There were a total of nine persons or businesses that responded to the request for proposal for the Deltona facility.

   
   

5. Mr. Polk knew that Mr. Xepapas had picked up a bid proposal package and, therefore, believed that Mr. Xepapas would submit a proposal.

   
   

6. Mr. Polk appointed the committee which reviewed the proposals. This committee ultimately narrowed the acceptable proposals to two, including Mr. Xepapas, and directed that those two proposers submit final proposals.

   
   

7. In January, 1989, Mr. Xepapas, in his capacity as a sole proprietor, was the successful bidder on the contract; however, there is no evidence to indicate that Mr. Polk abused his position in order to ensure this result. [Stipulated Fact.]

   
   

8. Mr. Xepapas and Mr. and Mrs. Polk were co-owners of the condominium prior to and at the time that Mr. Xepapas was awarded the Daytona Beach Community College contract.

   
   

9. Ultimately, Mr. Xepapas was not able to fulfill his obligations under the contract with Daytona Beach Community College.

   
   

10. Although the evidence failed to prove that Mr. Polk asserted any influence over the decision to award the contract to Mr. Xepapas, Mr. Polk was involved to some small degree in the award of the contract to Mr. Xepapas.

    
    

11. The evidence failed to prove that Mr. Polk disclosed his co-ownership of the condominium with Mr. Xepapas to the Board of Trustees of the Daytona Beach Community College, that he refused to participate in any way in the bidding process or that he attempted to take the more drastic step of severing his relationship with Mr. Xepapas while the bidding process was going on.

    
    

12. In May, 1989, Mr. and Mrs. Polk ultimately quit claim deeded the property to Mr. Xepapas. The evidence failed to prove why. They, therefore, lost their investment in the property.

13. Mr. Polk also resigned as President of Daytona Beach Community College as a result of the allegations concerning his relationship with Mr. Xepapas.

    
    

    CONCLUSIONS OF LAW

    
    

    1. Jurisdiction and Burden of Proof.

       
       

14. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes (1989). Section 112.322, Florida Statutes, and Rule 34-5.0015, Florida Administrative Code, authorize the Commission to conduct investigations and make public reports on complaints concerning violations of Part III, Chapter 112, Florida Statutes (the "Code of Ethics for Public Officers and Employees").

    
    

15. The burden of proof, absent a statutory directive to the contrary, is on the party asserting the affirmative of the issue of the proceeding. Antel v. Department of Professional Regulation, 522 So.2d 1056 (Fla. 5th DCA 1988); Department of Transportation v. J.W.C. Co., Inc. 396 So.2d 778 (Fla. 1st DCA 1981); and Balino v. Department of Health and Rehabilitative Services, 348 So.2d

    249 (Fla. 1st DCA 1977). In this proceeding it is the Commission, through the Advocate, that is asserting the affirmative: that Mr. Polk violated Section 112.313(7), Florida Statutes. Therefore, the burden of proving the elements of Mr. Polk's alleged violations was on the Commission.

    
    

    1. Mr. Polk's Alleged Violation of Section 112.313(7), Florida Statutes.

    
    

16. Section 112.313(7), Florida Statutes, provides, in pertinent part:

    
    

    1. CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.--

       1. No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he is an officer or employee, excluding those organizations and their officers who, when acting in their official capacity, enter into or negotiate a collective bargaining contract with the state or any municipality, county, or other political subdivision of the state; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his private interest and the performance of his public duties or that would impede the full and faithful discharge of his public duties.

          . . . .

          
          

          A violation of Section 112.313(7), Florida Statutes, requires proof of the following elements:

          
          

          1. Mr. Polk must be either a public officer or public employee;

          2. Mr. Polk must have been employed by or must have had a contractual relationship with a business entity or agency; and

          3. The business entity or agency must have been subject to regulation by, or doing business with, the Daytona Beach Community College.

          
          

          1. The First Element: Public Officer or Public Employee.

          
          

          1. Section 112.313(1), Florida Statutes, defines the terms "public officer" to include "any person elected or appointed to hold office in any agency . . . ." An "agency" is defined in Section 112.312(2), Florida Statutes, to mean "any state, regional, county, local, or municipal government entity of this state, whether executive, judicial, or legislative "

             
             

          2. The evidence proved that Mr. Polk was the President of the Daytona Beach Community College. Therefore, Mr. Polk was a "public officer" for purposes of Section 112.313(7), Florida Statutes.

          
          

          2. The Second Element: Employment By or Contractual

          
          

          1. Relationship with a Business Entity or Agency.

             The second element of a violation of Section 112.313(7), Florida Statutes, has also been proved. The evidence proved that Mr. Polk had a contractual relationship with Mr. Xepapas. Mr. Polk and Mr. Xepapas had a contractual relationship as mortgagor and mortgagee. See Sobel v. Mutual Development, Inc., 313 So.2d 77 (Fla. 1st DCA 1975).

             
             

          2. The evidence also proved that Mr. Xepapas was a "business entity" for purposes of Section 112.313(7), Florida Statutes. The agreement and the resulting mortgage between Mr. Xepapas and Mr. Polk were entered into in an arms-length transaction. Mr. Xepapas sold Mr. Polk the interest in the condominium as part of his business as a real estate developer, which he operated as a sole proprietor. Mr. Xepapas engaged in his business arrangements, such as the one he entered into with Mr. Polk, in his individual capacity. Mr. Xepapas also entered into his business arrangement with Daytona Beach Community College in his individual capacity. Mr. Xepapas was acting in both instances as a sole proprietor.

          
          

          3. The Third Element: The Business Entity or Agency Must Have Been Subject to Regulation By, or Doing Business with, the Daytona Beach Community College.

          
          

          41. The evidence also proved that Mr. Xepapas was doing business with the Daytona Beach Community College. Although it is true that this business transaction took place approximately three years after Mr. Polk and Mr. Xepapas entered into their business arrangement, it is also true that the relationship between Mr. Polk and Mr. Xepapas still existed when Mr. Xepapas bid on, and was awarded, the contract with Daytona Beach Community College. Mr. Polk's reliance on Commission on Ethics Opinions 83-58 and 85-55 is misplaced. Both of those cases involved business relationships entered into between a public officer or employee and a business entity after the business entity had already done business with the public officer's or employee's employer. That is not what happened in this case.

          4. Conclusion.

          
          

          1. Based upon the foregoing, it is concluded that Mr. Polk violated Section 112.313(7), Florida Administrative Code.

             
             

          2. The conclusions of law reached in this Recommended Order have been made whether the "clear and convincing evidence" standard or the "preponderance of the evidence" standard is applied to the evidence. Compare Ferris v. Turlington, 510 So.2d 292 (Fla. 1987); and Smith v. Department of Health and Rehabilitative Services, 522 So.2d 956 (Fla. 1st DCA 1988); with In re: Blackburn, 13 FALR 1859 (Commission on Ethics 1989).

             
             

             D. Penalty.

             
             

          3. Section 112.317, Florida Statutes, provides penalties which may be imposed for a violation of the Code of Ethics for Public Officers and Employees. Section 112.317, Florida Statutes, provides, in pertinent part, the following:

             
             

             1. Violation of any provision of this part

                . . . shall, pursuant to applicable constitutional and statutory procedures, constitute grounds for, and may be punished by, one or more of the following:

                . . . .

       2. In the case of an employee or a person designated as a public officer by this part

who otherwise would be deemed to be an employee:

. . . .

1. A civil penalty not to exceed $5,000.00.

2. Restitution of any pecuniary benefits received because of the violation committed.

3. Public censure and reprimand.

. . . .

The Advocate has recommended that a penalty of $1,000.00 be imposed in this matter.

1. The Advocate has recognized that there was no evidence of willful or malicious intent on Mr. Polk's part in this matter. This fact mitigates against the type of penalty which should be imposed. Additionally, the fact that the violation was clearly more technical than substantive also mitigates the penalty which would be imposed. Finally, the fact that Mr. Polk did not apparently profit from his relationship with Mr. Xepapas, and, in fact, ended up losing his investment and his employment mitigates against the penalty to be imposed.

   
   

2. Mr. Polk's conduct was, however, a violation of the law. His suggestion that there was nothing he could do to prevent Mr. Xepapas from entering into the business relationship with Daytona Beach Community College is correct. His suggestion that he could do nothing at all, however, is not correct. Mr. Polk could have made full and public disclosure of his relationship with Mr. Xepapas to the Board of Trustees, he could have avoided any involvement whatsoever in the bidding process and, ultimately, he could have ended his relationship with Mr. Xepapas, which it is recognized could not have been done without difficulty. Mr. Polk, however, chose to do nothing until the relationship was disclosed.

3. Based upon a consideration of all of the evidence in this case, it is concluded that Mr. Polk should be publicly censured and reprimanded. No civil penalty is recommended because of the loss which Mr. Polk has already suffered.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission on Ethics enter a Final Order and Public

Report finding that the Respondent, Charles Polk, violated Section 112.313(7),

Florida Statutes, as alleged in Complaint No. 89-80. It is further RECOMMENDED that Mr. Polk be subjected to public censure and reprimand.

DONE and ENTERED this 13th day of December, 1991, in Tallahassee, Florida.

LARRY J. SARTIN

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 13th day of December, 1991.

APPENDIX TO RECOMMENDED ORDER

The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted.

The Advocate's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

1 1.

2 3-11.

3 13.

4 14-16.

5 16 and 18.

6 4, 12 and 19-20.

7 Hereby accepted.

8 3, 21, 27-28 and 30.

The Respondent's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

1 1-2.

2 13.

3 3, 11 and 14.

4 20.

5 16.

6 4 and 17-18.

7 5 and 8-9.

8 6-7.

9 21.

10 22.

11 24.

12 26 and hereby accepted. See 23, 27 and 30.

13 27 and 30.

COPIES FURNISHED:

Virlindia Doss

Assistant Attorney General Department of Legal Affairs The Capitol, Suite 101

Tallahassee, Florida 32399-1050

David A. Monaco, Esquire Post Office Box 15200

Daytona Beach, Florida 32015

Bonnie J. Williams Executive Director Commission on Ethics The Capitol, Room 2105 Post Office Box 6

Tallahassee, Florida 32302-0006

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: 91-003831EC

Orders for Case No: 91-003831EC