STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOHN FILIPELLI, JR., )

)

Petitioner, )

)

vs. ) CASE NO. 93-1402

) DEPARTMENT OF BUSINESS REGULATION, ) DIVISION OF PARI-MUTUEL WAGERING, )

)

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 June 15, 1993, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Henry W. Johnson, Esquire

Hume and Johnson, P.A.

1401 University Drive, Suite 301 Coral Springs, Florida 33071

For Respondent: Joseph M. Helton, Jr., Esquire

Assistant General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399

STATEMENT OF THE ISSUES

Whether Petitioner's application for a pari-mutuel occupational license as a harness driver should be granted or denied.

PRELIMINARY STATEMENT

Petitioner's application for a pari-mutuel occupational license as a harness driver was rejected by Respondent. Following the denial, Petitioner requested a formal hearing, and this proceeding followed.

At the formal hearing, Petitioner testified on his own behalf and called Karl Pflanzer, an acquaintance of Petitioner, as his only other witness.

Petitioner offered no exhibits. Respondent called as its witnesses Caroline Allen, Ronald George Jelley, Jeff Mohamed, James A Foster, and Robert Fitzgerald. Ms. Allen is a representative of Millpond Equine Clinic.

Respondent's other witnesses were investors in one or more corporations started by Petitioner. Respondent offered two exhibits, both of which were accepted into evidence.

No transcript of the proceedings has been filed. Rulings on the parties' proposed findings of fact may be found in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Respondent is the state agency which is charged with the administration and regulation of the pari-mutuel wagering industry in the State of Florida.

   
   

2. On October 29, 1992, Petitioner applied to Respondent for a pari-mutuel occupational license as a harness driver.

   
   

3. On January 22, 1993, Respondent denied Petitioner's application. /1

   
   

4. Respondent relies on the provisions of Section 550.10(5), Florida Statutes, which provides, in pertinent part, as follows:

   
   

   (5) The division may deny, revoke, or suspend any occupational license when the applicant therefor or holder thereof shall accumulate unpaid obligations or default in obligations, or issue drafts or checks that are dishonored or for which payment is refused without reasonable cause, when such unpaid obligations, defaults, or dishonored or refused drafts or checks directly relate to the sport of jai-alai or racing being conducted at a pari-mutuel facility within this state.

   
   

5. Millpond Equine Clinic, a veterinary clinic, has two outstanding accounts that were opened by Petitioner. One of those two accounts was opened in Petitioner's individual name. For ease of reference, this account will be referred to as the first Millpond account. There has been no payment on that account since October 8, 1991, and there was, at the time of the formal hearing, an outstanding balance in that account in the amount of $104.00. The first Millpond account was for services directly related to the sport of racing being conducted at a pari-mutuel facility within the State of Florida.

   
   

6. The second Millpond account opened by Petitioner was opened in the name of Miracle Shoe in care of Petitioner. There was no evidence that Miracle Shoe was a corporation at any time this account was opened. For ease of reference, this account will be referred to as the second Millpond account. This account shows an outstanding balance in the amount of $300.00. There has been no payment on the second account since May 20, 1988. The second Millpond account was for services directly related to the sport of racing being conducted at a pari-mutuel facility within the State of Florida.

   
   

7. Miracle Shoe is a plastic horseshoe that Petitioner has attempted to develop for a number of years. Petitioner hopes to market this product to owners and trainers of horses, including race horses, in Florida and elsewhere.

   
   

8. Petitioner formed a series of companies ostensibly for the purpose of developing and marketing Miracle Shoe. Three of the corporations formed by Petitioner were Equine Concepts, Inc., Equine Technology, Inc., and Equine Innovations, Inc. At the time of the formal hearing, two of the three corporations, Equine Concepts, Inc. and Equine Innovations, Inc. had no assets and had been dissolved as corporations by the State of Florida.

9. Investors were attracted to these corporations through newspaper advertisements. Investors typically paid $10,000 for a 10 percent share of the corporate stock and were made officers or directors of the corporation. Petitioner thereafter treated corporate funds from the investors as his own and paid his personal expenses from these corporate funds. On at least one occasion, Petitioner formed a new corporation, which he referred to as a "clean" corporation to attract new investors. Petitioner wrote worthless bank checks on his various corporate accounts and accumulated unpaid bills in the name of these corporations. /2

   
   

10. Petitioner and several of the investors in Petitioner's companies attended horse shows in Germany and Kentucky to promote the Miracle Shoe. Part of the marketing strategy was for Petitioner to try to make a favorable impression on the owners and trainers of race horses. One of the reasons Petitioner sought licensure as a harness driver in the State of Florida was to gain access to pari-mutuel grounds to facilitate the marketing of the Miracle Shoe.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

12. Petitioner has the burden of proving by a preponderance of the evidence that he is entitled to licensure. Rule 28-6.08(3), Florida Administrative Code. See also, Florida Department of Transportation v. J.W.C., Co., 396 So.2d 778 (Fla. 1st DCA 1981) and Astral Liquors, Inc. v. Department of Business Regulation, 432 So.2d 93 (Fla. 3rd DCA 1983). Petitioner has failed to meet that burden. Respondent correctly denied his application because of Petitioner's debts to Millpond Clinic.

    
    

13. Respondent also determined that the application for licensure should be denied because of Petitioner's dealings with the corporations he formed to develop and market Miracle Shoe.

    
    

14. The undersigned is mindful of the deference to be given to an agency's interpretation of its statutes and rules. An agency's interpretation of its own rules and regulations will not be overturned even if such interpretation is not the sole possible interpretation, the most logical interpretation, or the most desirable interpretation. An agency's interpretation of its rules and governing statutes will not be overturned unless the interpretation is clearly erroneous. Health Quest Corporation, et al. v. Department of Health and Rehabilitative Services and Arbor Health Care Co., et al., 11 FALR 5427 (1989), ABC Liquors, Inc. v. Department of Business Regulation, 397 So.2d 696 (Fla. 1st DCA 1981); Department of Insurance v. Southeast Volusia Hospital District, 438 So.2d 815 (Fla. 1983).

    
    

15. The argument of counsel in support of Respondent's contention is directed more to the issue as to whether Petitioner possesses good moral character (see, Section 550.10(3)(b), Florida Statutes) than to the issue of whether those activities "directly relate to the sport of . . . racing being conducted at a pari-mutuel facility within this state". For example, in its post-hearing submittal, Respondent argues that the evidence established that Petitioner used his corporations ". . . as a means of defrauding investors and creditor[s] . . ." and that he ". . . conducted the affairs of Equine Technology, Inc. for personal, and, therefore, improper purpose. "

    Respondent's argument does not focus on the reasons that these activities should be found to be within the purview of Section 550.10(5), Florida Statutes. The distinction is important since the Respondent does not attempt to deny Petitioner's application on the grounds that he lacks good moral character.

    
    

16. Respondent failed to explicate its rationale for concluding that Petitioner's corporate activities "directly relate" to the sport of racing within the meaning of the statute. The fact that Petitioner wrote bad checks while attempting to develop a product that he hoped to market at pari-mutuel facilities in Florida, that activity does not "directly relate" to the sport of racing conducted at a Florida pari-mutuel facility because the product was still in the development stage and there was no evidence that the product was being sold to owners and trainers of race horses racing in the State of Florida. Likewise, there was no showing as to how Petitioner's dealings with his investors and his misapplication of corporate funds "directly relate" to the sport of racing conducted at a Florida pari-mutuel facility. Consequently, notwithstanding the deference to be accorded the agency in its interpretation of its governing statutes, it is concluded that Petitioner's corporate activities do not provide a basis to deny the application under the provisions of Section 550.10(5), Florida Statutes.

    
    

17. Petitioner's application should be denied because of his indebtedness to Millpond Equine Clinic.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Petitioner's application

for licensure as a harness driver.

DONE AND ORDERED this 26th day of July, 1993, in Tallahassee, Leon County, Florida.

CLAUDE B. ARRINGTON

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 26 day of July, 1993.

ENDNOTES

/1 The letter of denial correctly quoted the provision of the law relied upon by the Respondent, but, because of a scrivener's error, incorrectly cited the provision as being Section 550.105(6), Florida Statutes. The correct reference, as cited by Petitioner in his post-hearing submittal, is to Section 550.10(5), Florida Statutes.

/2 Petitioner does not dispute his dealings with these corporations, but he contends that these were business transactions that do not directly relate to the sport of pari-mutuel racing in the State of Florida. Consequently, Petitioner argues, these activities should not be grounds to deny his application pursuant to the provisions of Section 550.10(5), Florida Statutes. Petitioner's argument and Respondent's argument to the contrary will be resolved in the Conclusions of Law portion of this Recommended Order.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-1402

The proposed findings of fact submitted by Petitioner recite testimony from the various witnesses and are subordinate to the findings made or are rejected as being unnecessary to the conclusions reached.

The proposed findings of fact submitted by Respondent are adopted in material part by the Recommended Order except those which recite testimony and are subordinate to the findings made.

COPIES FURNISHED:

Joseph M. Helton, Jr., Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007

Mr. John Filipelli, Jr. 1280 South Powerline Road

Pompano Beach, Florida 33069

William E. Tabor, Director Division of Pari-Mutuel Wagering 725 South Bronough Street Tallahassee, Florida 32399-1035

Donald D. Conn, General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1035

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 ten 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: 93-001402

Orders for Case No: 93-001402