STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DAVID J. CAPLAN, )

)

Petitioner, )

)

vs. ) CASE NO. 91-4279

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William J. Kendrick, held a formal hearing in the above-styled case on February 20, 1992, in Miami, Florida.

APPEARANCES

For Petitioner: Anthony J. Scremin, Esquire

37 N.E. 26th Street Miami, Florida 33137

For Respondent: C. Lynne Chapman

Assistant Attorney General Department of Legal Affairs Tax Section, The Capitol

Tallahassee, Florida 32399-1050 STATEMENT OF THE ISSUES

At issue in this proceeding is whether petitioner owes respondent a tax, penalty and interest on account of an unlawful sale, use, consumption, distribution, manufacture, derivation, production, transportation or storage of a controlled substance, to wit: cocaine, as established by Section 212.0505, Florida Statutes.

PRELIMINARY STATEMENT

Respondent issued a Notice of Assessment and Jeopardy Findings against petitioner on February 21, 1990, which claimed petitioner owed a tax of $9,900 and a penalty of $7,425, together with interest thereon, for having engaged in the unlawful sale, use, consumption, distribution, manufacture, derivation, production, transportation, or storage of a controlled substance, to wit: cocaine. At petitioner's request, respondent reconsidered such assessment, and on May 7, 1991, issued a revised assessment against petitioner which claimed petitioner owed a tax of $9,900, a penalty of $2,475, and interest of $1,589.25, together with interest at the rate of $3.25 per day after February 21, 1990. On July 3, 1991, petitioner filed a timely petition for an administrative hearing to contest the respondent's assessment, and the matter was referred to the Division of Administrative Hearings for the assignment of a Hearing Officer to conduct a formal hearing pursuant to Section 120.57(1), Florida Statutes.

At hearing, petitioner testified on his own behalf, and his exhibits 1 and

2 were received into evidence. Respondent called William Keiser and Frank Mazzilli, as witnesses, and its exhibits 1-4 were received into evidence.

The transcript of hearing was filed March 4, 1992, and the parties were granted leave until March 16, 1992, to file proposed findings of fact. The parties' proposed findings are addressed in the appendix to this recommended order.

FINDINGS OF FACT

1. During the month of September 1988, petitioner, David J. Caplan, agreed with, unbeknownst to him, a special agent with the Drug Enforcement Administration to secure and deliver to the agent 12 kilograms of cocaine for

   $16,500 per kilogram (kilo).

   
   

2. On September 27, 1988, petitioner picked up one kilo of cocaine from his supplier and transported it in his vehicle to his residence. Within his residence, petitioner met with the agent and a confidential informant (CI), and delivered the one kilo of cocaine to the agent in exchange for $16,500.

   
   

3. On September 28, 1988, following negotiations regarding the purchase of the balance of the cocaine, petitioner picked up two kilos of cocaine from his supplier, transported it by truck to his residence, and hid it in a garbage can adjacent to his garage. Upon the arrival of the agent and CI, petitioner removed the cocaine from the garbage can, and displayed it to the agent inside his residence. After examining the cocaine, the agent and CI left the residence under the announced intention of going to get the money for the purchase of the two kilos, and once away from the residence the agent gave the signal to other agents for petitioner's arrest. Upon arrest, petitioner cooperated with the agents, and directed them to the two kilos of cocaine, which he had hidden in the rafters of his garage. 1/ Subsequently, petitioner was charged and pled guilty to trafficking in cocaine.

   
   

4. On February 21, 1990, respondent, Department of Revenue (Department), issued a Notice of Assessment and Jeopardy Findings which assessed a tax of

   $9,900, a penalty of $2,475, an additional penalty of $4,950, and interest of

   $1,589.25, together with interest thereon at the rate of $3.25 per day after February 21, 1990, against petitioner, pursuant to Section 212.0505, Florida Statutes. At petitioner's request, the Department reconsidered such assessment, and on May 7, 1991, issued a revised assessment against petitioner, assessing a tax of $9,900, a penalty of $2,475, and interest of $1,589.25, together with interest at the rate of $3.25 per day after February 21, 1990. The factual basis for the assessment was the petitioner's involvement in the cocaine transactions described in the foregoing findings of fact. Petitioner filed a timely petition seeking a formal hearing to contest the Department's assessment.

   
   

5. At hearing, petitioner contended that the cocaine in question was not his, that he merely acted as a go-between for the agent and his supplier, and that he was therefore not involved in any sale, use or distribution of the subject cocaine. Moreover, with regard to the second transaction, which involved the two kilos of cocaine, petitioner contended that no liability for any tax could attach because the sale was not consummated, i.e.: petitioner had not yet actually exchanged the cocaine with the agent for the agreed purchase price.

6. Petitioner's contentions regarding the limited nature of his involvement is contrary to the credible proof, and petitioner's contentions regarding the implications of that participation are contrary to the law, discussed infra. Succinctly, petitioner actively participated in the transportation, storage, distribution and sale of the cocaine, and he is subject to the implications of such activity under the provisions of Section 212.0505, Florida Statutes.

   
   

7. Notwithstanding his active participation in the sale of the cocaine, petitioner averred at hearing that such participation was not voluntary.

   Rather, petitioner contended that his participation resulted from pressure asserted by a friend of long standing (Lupo) who, unbeknown to him, had become a confidential informant. 2/ According to petitioner, Lupo pressured him into locating a supplier of cocaine for the agent and CI involved in the subject transactions, as a consequence of hounding him for an old $1,600 debt petitioner had incurred for purchasing cocaine at a time he was addicted to the drug, and by an oblique remark the confidential informant made that "he knew my kid played outside," which petitioner averred he interpreted to be a threat to do something to his son.

   
   

8. Petitioner's contention that his participation in the subject transactions was not voluntary or, stated differently, that he was entrapped, is rejected as contrary to the more credible proof. Here, the proof demonstrates that petitioner's motivation was financial and that he had a familiar relationship of long standing with Lupo and his ultimate supplier (Greenburg) which, coupled with the lack of sincerity and precision to his testimony, make his protestations of duress ring hollow. Regarding his financial motivation, the proof demonstrates that when approached by Lupo, petitioner was financially strapped, and stood to make $500 for each kilo he could deliver. Had the entire transaction been consummated for the agreed 12 kilos, petitioner stood to make a quick $6,000. Regarding the relationships that existed, the proof demonstrates that petitioner had been friends with Lupo and Greenberg for over twenty years, had actually lived with Greenberg for ten years, and that there was no apparent change in that relationship when he was approached by Lupo and introduced to the agent in this case. Considering the length of their relationship, and the lack of conviction in petitioner's testimony, it is concluded that petitioner's participation in this transaction was not compelled by any threat from Lupo, but by his own financial needs. In sum, the proof supports the conclusion that petitioner did engage in the unlawful sale, use, distribution, transportation or storage of cocaine as set forth in the Notice of Assessment and Jeopardy Findings, and that the Department's assessment of tax, penalty and interest set forth in its revised assessment was reasonable and appropriate.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings. Sections 72.011 and 120.57(1), Florida Statutes.

   
   

10. Pertinent to this case, Section 212.0505, Florida Statutes (1987), provides:

    
    

    1. Every person is exercising a taxable privilege who engages in this state in the unlawful sale, use, consumption, distribu-tion, manufacture, derivation, production, transportation, or storage of any medicinal drug, as defined in chapter 465, cannabis as defined in

       s. 893.02, or controlled substance enumerated in s.

       893.03. For the exercise of such privilege a tax is levied on each tax-able transaction or incident, including each occasional or isolated unlawful sale, use, consumption, distribution, manufacture, derivation, production, transportation, or storage, at the rate of 20 percent of the estimated retail price of the medicinal drug, cannabis, or controlled substance involved in the transaction or incident.

       
       

       Cocaine is a "controlled substance" enumerated in Section 893.03, Florida Statutes.

       
       

11. Section 212.02, Florida Statutes (1987), provides the following definitions for purposes of Chapter 212:

    
    

    (17) "Person" includes any individual, firm, copartnership, joint adventure, association, corporation, estate, trust, business trust, receiver, syndicate, or other group or combination acting as a unit and also includes any political subdivision, municipality, state agency, bureau, or department and includes the plural as well as the singular number.

    * * *

    (20) "Sale" means and includes:

    (a) Any transfer of title or possession, or both, exchange, barter, license, lease, or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property for a consideration.

    * * *

    (25) "Storage" means and includes any keeping or retention in this state of tangible personal property for use or consumption in this state or for any purpose other than sale at retail in the regular course of business.

    * * *

    (27) "Use" means and includes the exercise of any right or power over tangible personal property incident to the ownership thereof, or interest therein, except that it does not include the sale at retail of that property in the regular course of business....

    
    

12. The words "distribution" and "transportation" are not defined by Section 212.02, Florida Statutes, so they are to be given their plain and ordinary meaning. Lage v. Pan American Bank, 529 So.2d 1242 (Fla. 3d DCA 1988), and Simmons v. Schimmel, 476 So.2d 1342 (Fla. 3d DCA 1985), review denied, 486 So.2d 597 (Fla. 1986). The term "distribution" is defined as "the act or process of distributing, . . . the marketing or merchandising of commodities," and the term "transportation" is defined synonymously with "transport" as "to transfer or convey from one place to another." Webster's New Collegiate Dictionary (1974).

    
    

13. The activities that invoke the tax consequences of Section 212.0505, Florida Statutes, include "sale," "storage," "use," "distribution," and "transportation." Here, it cannot be gainsaid that petitioner undertook a myriad of such activities when he dealt with the cocaine that forms the basis of

the Department's assessment in this case and, therefore, engaged in a taxable privilege within the meaning of Section 212.0505, Florida Statutes.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department issue a final order concluding that

petitioner, David J. Caplan, is liable for taxes, penalties and interest

pursuant to Section 212.0505, Florida Statutes, and assessing the amount of such liability at $13,964.25, plus interest at the rate of $3.25 per day from February 22, 1990.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 30th day of March 1992.

WILLIAM J. KENDRICK

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 30th day of March 1992.

ENDNOTES

1/ Under the circumstances, the only known impediment to the consumation of this sale was petitioner's arrest.

2/ Lupo, the confidential informant that allegedly pressured petitioner, was not the same CI that operated with the agent in the subject transactions. He was, however, a long-term acquaintance of petitioner, and did introduce the CI that was active in this case to petitioner. Regarding the relationship that existed, the proof demonstrated that petitioner had been friends with Lupo and the supplier in this case (Greenberg), for over twenty years. Lupo had been petitioner's supplier when he used cocaine, and Lupo's supplier was apparently his own wife, who was a Colombian national. Apparently, unknown to petitioner, Lupo's wife was arrested and convicted of trafficking in cocaine, and to assist in securing favorable treatment for her Lupo became a confidential informant.

So acting, Lupo introduced the CI and agent in this case to petitioner, who Lupo, having good reason to know, knew persons trafficking in cocaine.

Petitioner first sought to set up a buy for the agent through one Toca, but for reasons not apparent from the record, that deal did not materialize. Petitioner than approached Greenberg, who eventually supplied the cocaine that formed the basis of the assessment. Following his arrest, petitioner cooperated with the authorities, and ultimately testified against Toca.

APPENDIX TO RECOMMENDED ORDER

Petitioner's proposed findings of fact are addressed as follows:

1. Rejected as contrary to the credible proof. See paragraphs 7 and 8.

Respondent's proposed findings of fact are addressed as follows:

1 & 2. Subordinate, but addressed in paragraph 8.

3-5. Addressed in paragraphs 1 and 2, otherwise subordinate. 6-9. Addressed in paragraph 3, otherwise subordinate.

10. Addressed in paragraph 7 and footnote 2.

11 & 12. Addressed in paragraph 4.

13-21. Addressed in paragraphs 7 and 8.

Copies furnished:

Anthony J. Scremin, Esquire

37 N.E. 26th Street Miami, Florida 33137

C. Lynne Chapman

Assistant Attorney General Department of Legal Affairs Tax Section, The Capitol

Tallahassee, Florida 32399-1050

J. Thomas Herndon Executive Director Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

Vicki Weber General Counsel

Department of Revenue

204 Carlton Building Tallahassee, Florida 32399-0100

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: 91-004279

Orders for Case No: 91-004279