STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF STATE, DIVISION OF ) LICENSING, )

)

Petitioner, )

)

vs. ) CASE NO. 94-5026

)

API OF AMERICA, INCORPORATED, )

MICHAEL W. RELLAH, OWNER, )

)

Respondent. )

)

RECOMMENDED ORDER

The final hearing in this case was held before Larry J. Sartin, Hearing Officer, on April 1 and 2, 1996, in Jacksonville, Florida.

APPEARANCES

For Petitioner: Michele Guy

Assistant General Counsel

Department of State, Division of Licensing The Capitol, Mail Station Number 4 Tallahassee, Florida 32399-0250

For Respondent: Michael W. Rellah, pro se

API of America, Inc.

10415 Beach Boulevard, Suite 2

Jacksonville, Florida 32246 STATEMENT OF THE ISSUE

The issue in this case is whether Respondent, API of America, Incorporated, Michael W. Rellah, Owner, committed the violations of Chapter 493, Florida Statutes, alleged in an Administrative Complaint filed May 26, 1994.

PRELIMINARY STATEMENT

On May 26, 1994, Petitioner, the Division of Licensing, Department of State, filed a ten count Administrative Complaint against Respondent, API of America, Incorporated, Michael W. Rellah, Owner, alleging violations of Chapter 493, Florida Statutes. Respondent responded to the Administrative Complaint on or about September 2, 1994. Respondent requested a formal administrative hearing.

By letter dated September 9, 1994, Petitioner requested the assignment of a Hearing Officer of the Division of Administrative Hearings to conduct a formal administrative hearing. The matter was designated case number 94-5026 and was assigned to the undersigned.

At the formal hearing Petitioner presented the testimony of Travis James Downs, James Downs, Jacqueline Furzey, Ronald T. Cochran, Jr., Celeste Peterson, Robert Haydu and Eric Powers. Robert Griffith was called as a rebuttal witness by Petitioner. Petitioner offered thirty-four exhibits. All thirty-four exhibits were accepted into evidence. Petitioner's exhibits 1, 2 and 3 are the deposition testimony of Arthur E. Lyons, James O'Neill and Diann Logan, respectively

Petitioner dismissed Counts IV and X at hearing. Count II was amended at hearing to change the date referred to in Count II from August 24, 1993 to October 1, 1993.

Respondent presented the testimony of James P. Morgan, Jr., Ronald W. Morgan, Kevin Booth, Robert Iler, and Beth Zoller. Respondent offered fifty exhibits. All of Respondent's exhibits except exhibits 13, 15, 20, 23, 48 and

49 were accepted into evidence. Respondent's exhibit 1 is the deposition testimony of Robert E. Griffith.

Petitioner invoked the rule at the commencement of the formal hearing. During the hearing, Respondent raised a question concerning whether the rule have been violated by Mr. Powers and Mr. Haydu. Respondent was given an opportunity to present evidence concerning the alleged violation. The undersigned reserved a ruling Respondent's allegations. After consideration of the matter, it is concluded that the evidence failed to prove any prejudice to Respondent.

The transcript of the final hearing was mailed to the Division of Administrative Hearings by letter from the court reported dated on May 10, 1996. By agreement of the parties, proposed orders were, therefore, required to be filed on or before May 30, 1996.

Both parties filed proposed orders on May 30, 1996. 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 Parties.

   
   

   1. Petitioner, the Department of State, Division of Licensing (hereinafter referred to as the "Division"), is an agency of the State of Florida. The Division is responsible for the regulation of investigative agencies in the State of Florida pursuant to Chapter 493, Florida Statutes.

      
      

   2. At all times relevant to this matter, Respondent, Michael W. Rellah, held a Class "A" private investigative agency license, number A90-00056, issued in the name of API of America, Incorporated (hereinafter referred to as "API"), Michael W. Rellah, Owner.

      
      

   3. Mr. Rellah held a Class "C" private investigator license, number C90- 00138.

      
      

2. Owners, Directors and Officers of API and the Academy.

   
   

   1. Articles of Incorporation for API were filed with the Department of State, Division of Corporations, on May 26, 1993. According to the Articles of

      Incorporation, 51 percent of the stock of API was owned by The Academy of Private Investigation, Incorporated (hereinafter after referred to as "Academy"), and 49 percent by Eric Powers. The Academy held no licenses issued by the Division.

      
      

   2. It was reported to the Division of Corporations that Mr. Powers was the President of API and that Mr. Rellah and Tom Kidd were the directors. Mr. Powers did exercise duties on behalf of API. Mr. Powers, despite his title, worked for Mr. Rellah and Mr. Kidd.

      
      

   3. A Corporation Annual Report for the Academy dated April 29, 1993 and filed June 22, 1993 with the Division of Corporations, indicates that Mr. Kidd was the President/Treasurer of the Academy and that Mr. Rellah was the Vice President and Secretary of the Academy.

      
      

3. General Operation of API and the Academy.

   
   

   1. Although API and the Academy were separate legally-formed corporations, their operations were co-mingled in many ways.

      
      

   2. The offices of API and the Academy were located together. The officers, directors and owners were interrelated. Although Mr. Powers was the only officer of API, Mr. Rellah, in whose name API's Class A license was issued, and Mr. Kidd were primarily in charge of the activities of API and the Academy.

      
      

   3. On or near the door to the offices of the corporations there was a sign for the "Academy of Private Investigation, Inc." Below this sign was another sign with a relatively large "coat-of arms" with the letters "API" (hereinafter referred to as the "API Coat-of Arms"), followed by "Security & Investigative Services".

      
      

   4. Inside the offices, there was nothing that distinguished the offices of API from those of the Academy.

      
      

   5. A newsletter titled The Informant was available in the offices of API. The newsletter was dated June 30, 1993. The API Coat-of-Arms was prominently displayed at the top of the newsletter. Under the title and the API Coat-of- Arms, the newsletter is referred to as "The Newsletter of the API Organization." Throughout the newsletter there are references to "The Academy" and "API".

      There are also references to "The Academy of Private Investigation, Inc.", "API of America, Inc." and "Accredited Private Investigations". There are also references to the "API organization", "API", "API Investigators", "API members" and "Academy members".

      
      

   6. A listing of the "Academy Management and Staff" included in the newsletter includes a reference to "API Officers" and "API Office Management". While the "Academy Service Directory" includes a telephone number for "Academy Membership", it also includes a telephone number for "API Investigative Services".

      
      

   7. Under an API Coat-of-Arms on page 2 of the newsletter, the "Corporate Office" is listed as "4496 Southside Blvd., Suite 102, Jacksonville, Florida 32216". This was the location of the offices of the Academy and API. The "800" telephone number listed under the API Coat-of-Arms is the "800" number listed under the Academy Service Directory for "Academy Membership".

   8. Business cards prepared for Travis J. Downs and for Celeste Peterson, the "Branch Manager" of API's Deerfield Beach, Florida, office included the API Coat-of-Arms followed by "Investigation & Security Services." The "800" number listed on these business cards was the same number included under the "Academy Service Directory" of the newsletter for "Academy Membership".

      
      

   9. Business cards for Tom Kidd, President of the Academy, included most of the information and the API Coat-of-Arms included on the business cards of Mr. Downs and Ms. Peterson. The only difference was that "Academy of Private Investigation, Inc." was substituted for "Investigation & Security Services".

      
      

   10. Some checks for "training", which was purportedly provided by the Academy, were made out to "API". Some receipts for these checks indicated the payments were for "Course (API)".

       
       

   11. Letterhead for API and the Academy included the API Coat-of-Arms and a double-line border. When used for the Academy, "Academy of Private Investigations, Inc." was sometimes, but not always, displayed under the API Coat-of-Arms. Stationary with "Academy of Private Investigations, Inc." was also used at times, however, for matters relating to API.

       
       

   12. A packet of information available for general distribution to the public included a large API Coat-of-Arms on the cover. Letterhead used in the packet of information including the API Coat-of-Arms referred to the Academy.

       An introductory letter referred to the "API organization." References to "API", the "Academy", "The Academy of Private Investigations, Inc.", and "API of America, Inc." are included throughout the packet. There is a "Company Information" form included in the packet which accurately describes the separate corporate status of the API and the Academy.

       
       

   13. Respondent failed to keep the operations of API and the Academy separate. The symbols and operations of API and the Academy were so interrelated, it was impossible at times to distinguish between the two entities. Mr. Rellah knew or should have known of this situation.

       
       

4. Trainees.

   
   

   1. The following advertisement was included in a local newspaper in Duval County, Florida:

      
      

      INVESTIGATIVE AGENCY - looking for trainees call for appointment 645-3122

      
      

   2. The telephone number included in the advertisement was a telephone number listed for API and for the Academy. The telephone number was the number of the telephone at the offices of API and the Academy located at 4496 Southside Boulevard, Suite 103, Jacksonville, Florida.

      
      

   3. During the period between May of 1993 and December of 1993, Travis Downs, Jacqueline Furzey and Ronald Cochran responded to the foregoing advertisement by telephoning the telephone number listed. All three individuals responded to the advertisement because they were looking for employment and were interested in employment as private investigators.

      
      

   4. Mr. Downs, Ms. Furzey and Mr. Cochran were "interviewed" at the offices of API and the Academy. The interviews were conducted by persons

      associated with API. The initial interviews were conducted like an employment interview. They were asked to fill out employment applications.

      
      

   5. Instructions on how to interview persons responding to the advertisement and an interviewing outline provided to persons conducting interviews were on letterhead which included the API Coat-of-Arms and a double- lined border.

      
      

   6. Mr. Downs, Ms. Furzey and Mr. Cochran reasonably concluded that they were being interviewed for employment by an organization known as "API". They were led to believe that there would be work for them to perform as private investigators for API.

      
      

   7. Mr. Downs, Ms. Furzey and Mr. Cochran were told that they would be required to complete a training course as a prerequisite to beginning their employment with API. The cost of the training course was between $600.00 and

      $700.00. All three agreed and paid the required fee.

      
      

   8. Mr. Downs, Ms. Furzey and Mr. Cochran were also informed that they would be required to obtain a Class "CC" license upon the completion of their training and to comply with Chapter 493, Florida Statutes, in order to continue their employment with API.

      
      

   9. Mr. Downs and Ms. Furzey entered into an employment agreement with API. Mr. Cochran entered into an independent contractor agreement with API.

      Mr. Cochran was later provided with a copy of an employment agreement but he did not execute it.

      
      

   10. The employment agreement signed by Mr. Downs and Ms. Furzey provided, in part, the following:

       
       

       It is agreed and understood that Employee is compensated for services rendered on behalf of clients of Employer and further that Employer does not guarantee any minimum number of hours to Employee.

       
       

       It was reasonable for Mr. Downs and Ms. Furzey to conclude that, while the employment agreement did not guarantee any minimum number of hours, they would be provided with some amount of work by API.

       
       

   11. Mr. Downs, Ms. Furzey and Mr. Cochran all completed the training required by API. The training was provided by individuals associated with both API and the Academy.

       
       

   12. Upon completion of their training, Mr. Downs, Ms. Furzey and Mr. Cochran pursued employment with API. All three individuals pursued employment with API until they became frustrated with the lack of positive response from API.

       
       

       1. Mr. Downs was not given any work by API. Mr. Downs was referred to another company for temporary work, but he did not perform any services for API.

          
          

       2. Ms. Furzey was not given any work by API. Although she did not complete the application necessary to obtain her "CC" license, she believed that the proper paperwork had been provided to API and would be submitted on her behalf to obtain her "CC" license.

       3. Mr. Cochran was not given any work by API.

       
       

   13. Although Mr. Downs, Ms. Furzey and Mr. Cochran were led to believe that they would be given work by API if they signed up for, paid for and completed training required by API, there was little private investigative work available for API employees. Most of the effort at API was placed, not on investigative work, but on selling training, prepared legal insurance, Academy memberships and other services.

       
       

   14. Mr. Rellah knew or should have known that trainees were being misled about the availability of work with API.

       
       

   15. Mr. Downs, Ms. Furzey and Mr. Cochran, as a consequence of the misrepresentations concerning the availability of employment with API, paid for, and took, the training required by API to their detriment.

       
       

5. The Deerfield Beach Branch.

   
   

   1. On October 1, 1993, a Class "AA" private investigative branch agency license, number AA93-00020, was issued to API. This was the first Class "AA" private investigative branch agency license issued to API.

      
      

   2. The Class "AA" private investigative branch agency license issued to API was for a branch office located in Deerfield Beach, Broward County, Florida (hereinafter referred to as the "Deerfield Beach Branch"). At times the Deerfield Beach Branch was referred to as the "Ft. Lauderdale" branch office.

      
      

   3. The Deerfield Beach Branch was created by "Agreement, Branch Office Affiliate", entered into on June 18, 1993 between Celeste Peterson and API (hereinafter referred to as the "Branch Agreement"). Pursuant to the Branch Agreement, API agreed, among other things, to "[p]lace a qualified licensee (Class C & M) to manage the branch office prior to the commencement of operations . . . ." Ms. Peterson agreed, among other things, to "establish a physical office location in Broward County . . ." "[w]ithin 15 days of the date of this agreement "

      
      

   4. No licensed branch manager was ever provided by API for the Deerfield Beach Branch. Ms. Peterson actually ran the operations of the Deerfield Beach Branch. Ms. Peterson did not have a Class "MA" private investigative agency manager license, a Class "M" manager of an "AB" agency license or a Class "C" private investigator license.

      
      

   5. The API newsletter dated June 30, 1993, included a reference to the Deerfield Beach Branch (referred to as the "Ft. Lauderdale" branch office) as being managed by Celeste Peterson.

      
      

   6. The only manager of the Deerfield Beach Branch from approximately June 18, 1993 through October 25, 1993 was Ms. Peterson. Ms. Peterson left API on or about October 25, 1993. Although Ms. Peterson provided an application for a license necessary to act as a branch manager to Mr. Powers, the President of API, in July of 1993, that application was not received by the Division. Ms. Peterson was disciplined by the Division for managing the Deerfield Beach Branch without the necessary license to act as the manager.

   7. Ms. Peterson also acted as an instructor for the Academy. She was compensated for some of her services by the Academy. The same procedure of requiring "employees" to attend training employed by API in Jacksonville was employed at the Deerfield Beach Branch. Potential "employees" came to the office for interviews and were told that they would have to complete training. Pursuant to an Independent Contractor Agreement between Ms. Peterson and the Academy, Ms. Peterson acted as an instructor for the training.

      
      

   8. Ms. Peterson mailed out announcements during the second or third week of August, 1993, advertising the opening of the Deerfield Beach Branch as a full service investigative agency.

      
      

   9. Memos were provided to Mr. Powers in Jacksonville by Ms. Peterson indicating that the Deerfield Beach Branch was actively advertising and pursuing business. Those memos were dated August 2, 4, 9, 12, 16, 19, and 23, 1993.

      
      

   10. Investigative work was performed out of the Deerfield Beach Branch by individuals holding Class "C" private investigator licenses. One of those individuals, Jay Bell, filed "Confidential" reports of investigative work performed by him. Those reports were dated August 16, 1993 and August 20, 1993.

       
       

   11. Assignments for investigative work came from the Jacksonville office to Ms. Peterson. Ms. Peterson then made the assignments to individuals holding a Class "C" private investigator license.

       
       

   12. Space for the Deerfield Beach Branch was leased pursuant to a lease agreement entered into between New Horizon, the lessor, and the Academy on July 5, 1993. Ms. Peterson signed the lease on behalf of the Academy. The term of the lease was for the month of August of 1993. The space was used by Ms. Peterson for her activities on behalf of the Deerfield Beach Branch of API.

       
       

   13. Space was also provided for the Deerfield Beach Branch office used by Ms. Peterson for API in June and July of 1993. New Horizon confirmed in a letter dated July 5, 1993, that "you/API are requesting the use of said premises on a full time basis beginning 8.1.93 as a base of operations for the provision of investigative services." It was also confirmed in the letter that API was to be invoiced for rental payments.

       
       

6. Conducting or Advertising the Business of a Security Agency.

   
   

   1. Between June 18, 1993 and March of 1994, business cards used by persons associated with API and the sign on the front door of API's offices in Jacksonville included the API Coat-of-Arms and a reference to "Security & Investigative Services".

      
      

   2. The "Company Information" form included in the packet of information distributed by API and the Academy between June 18, 1993 and March of 1994 included the following description of API:

      
      

      API of America, Inc. is a subsidiary company of The Academy and is the Security and Investigative division of the Academy. . . .

      
      

   3. No Class "B" security agency license was held by API or Mr. Rellah between June 18, 1993 and March of 1994.

7. Liability Insurance.

   
   

   1. Liability insurance for API was obtained for the period June 28, 1993 through June 28, 1994. This insurance was cancelled by notice of cancellation mailed to API on September 17, 1993. The notice cancelled API's liability insurance effective 12:01 a.m., September 30, 1993, a Thursday.

      
      

   2. API did not notify the Division of the cancellation of its insurance.

      
      

   3. At some time after September 30, 1993, Mr. Rellah arranged for liability insurance for API. The new policy was issued with an effective date of October 12, 1993.

      
      

   4. From 12:01 a.m., September 30, 1993 until October 12, 1993, API had no liability insurance coverage.

      
      

   5. During the period from October 1, 1993, through October 11, 1993, API was conducting or advertising the business of private investigative agency.

      
      

   6. After May 26, 1994, the date the Administrative Complaint was issued in this case, Mr. Rellah attempted to get the date of insurance coverage obtained in October of 1993 back-dated. On August 31, 1994, Mr. Rellah contacted his insurance agent and requested that API's liability insurance be backed-dated to October 4, 1993.

      
      

   7. At Mr. Rellah's request, the insurance agent requested that the insurer issue an endorsement back-dating coverage for API to October 4, 1994. The request was made because Mr. Rellah had originally requested that this insurance be effective as of October 4, 1993. The original request that insurance be effective as of October 4, 1993, was not granted because the insurer did not receive the request from the agent until October 12, 1993.

      
      

   8. At the time that Mr. Rellah requested that the effective date of insurance be back-dated, Mr. Rellah represented in writing that there were no outstanding claims relating to the period from October 4, 1993 to October 12, 1993.

      
      

   9. On September 14, 1994, the insurer issued an endorsement back-dating coverage to October 4, 1993.

      
      

8. Investigative Work for Robert Haydu.

1. At some time prior to August 4, 1993, Robert Haydu telephoned the telephone number for API listed in the yellow pages. Mr. Haydu talked to Tom Kidd, who identified himself as the president of API. An appointment for Mr. Haydu to meet with Mr. Kidd was made.

   
   

2. On August 4, 1993, Mr. and Ms. Haydu went to the offices shared by API and the Academy. They were introduced to Mr. Rellah prior to meeting with Mr. Kidd in Mr. Kidd's office. Mr. Kidd discussed API and its ability to handle the investigation that Mr. Haydu was interested in. Mr. Rellah did not participate in this meeting.

   
   

3. Mr. Kidd gave Mr. Haydu a contract for services to be provided by API. Mr. Haydu paid a $1,000.00 retainer by check made payable to "Accredited Private Invest". "Accredited Private Investigations", Michael Rellah, Owner, was the

   name of API prior to June, 1993. On June 3, 1993, Mr. Rellah notified the Division of the change in name of the agency from Accredited Private Investigations to API.

   
   

4. At all times relevant to this proceeding, Mr. Kidd had a Class "CC" private investigator intern license from the Division. No other licenses were issued to Mr. Kidd by the Division.

   
   

5. During Mr. Haydu's discussion with Mr. Kidd, Mr. Haydu told Mr. Kidd that he expected detailed, written progress reports of the investigation to be submitted to him by the 10th of each month following the month the investigation to which the report related. Mr. Haydu also indicated that he expected sufficient details of what was found to be included in the reports so that he could turn over the results of the investigation to the appropriate governmental authorities.

   
   

6. Mr. Haydu only received two written reports from API. One report was received on or about September 30, 1993. The other report was received on or about October 15, 1993. Neither report contained the detail he had requested. The reports contained essentially no information that Mr. Haydu had not supplied to Mr. Kidd.

   
   

7. Mr. Haydu paid a total of $6,500.00 to API. The last payment was made by check dated October 19, 1993.

   
   

8. Mr. Haydu requested an invoice accounting for the investigative expenditures incurred by API. Mr. Haydu was provided with one invoice during the period of his association with API. After the termination of his association with API and after the Division's investigation of API began, a second invoice was provided to Mr. Haydu.

   
   

9. In addition to his involvement with Mr. Haydu, Mr. Kidd performed other duties on behalf of API. Memos dealing with API business were issued by Mr. Kidd on API letterhead on September 1 and 8, 1993.

   
   

   CONCLUSIONS OF LAW

   
   

   1. Jurisdiction.

      
      

10. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57, Florida Statutes (1995).

    
    

    1. Burden of Proof.

       
       

11. The burden of proof in this proceeding was on the Division to prove by clear and convincing evidence the violations alleged in the Administrative Complaint against Respondent. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987); and Pic n' Save Central Florida, Inc. v. Department of Business Regulation, Division of Alcoholic Beverages & Tobacco, 601 So.2d 245 (Fla. 1st DCA 1992).

    
    

    1. The Allegations of the Administrative Complaint.

       
       

12. Section 493.6118, Florida Statutes, sets out the grounds for disciplinary action which may be taken by the Division against "any licensee, agency, or applicant regulated by [Chapter 493, Florida Statutes]."

13. The Administrative Complaint against API in this case alleged ten separate violations of Section 493.6118, Florida Statutes. Counts IV and X were dismissed by the Division at the commencement of this proceeding.

    
    

14. The remaining counts allege violations of Sections 493.6118(1)(f) (Counts VII and VIII), (g) (Counts I and II), (h) (Count VI), (n) (Counts III and IX), and (s) (Count V), Florida Statutes.

    
    

    1. Count I.

       
       

15. In Count I it is alleged that API violated Section 493.6118(1)(g), Florida Statutes, and Rule 1C-3.122(1), Florida Administrative Code.

    
    

16. Section 493.6118(1)(g), Florida Statutes, provides that the following constitutes a disciplinable offense:

    
    

    (g) Conducting activities regulated under this chapter without a license or with a revoked or suspended license.

    
    

17. In particular, it is alleged that API, during the period June 18, 1993 through March, 1994, in Duval County, Florida, conducted or advertised the business of a security agency without a valid Class "B" Security Agency license.

    
    

18. Section 493.6301(1), Florida Statutes, requires that any person "which engages in business as a security agency shall have a Class "B" license. "

    
    

19. Rule 1C-3.122(1), Florida Administrative Code, provides, in part:

    
    

    . . . . No agency or individual so licensed and classified shall engage in regulated activities

    
    

20. The evidence established that API did not have a Class "B" Security Agency license during the alleged period.

    
    

21. A "security agency" is defined by Section 493.6101(18), Florida Statutes, as:

    
    

    (18) "Security agency" means any person who, for consideration, advertises as providing

    . . . security services . . . .

    
    

22. The term "advertising" is defined by Section 493.6101(6), Florida Statutes, as follows:

    
    

    (6) "Advertising" means the submission of bids, contracting, or [making known by any public notice or solicitation of business, directly or indirectly], that services regul- ated under this chapter are available for consideration. [Emphasis added].

    
    

23. Although the evidence failed to prove that API actually provided any security services, the evidence proved that API suggested that it would provide

    "Security & Investigative Services" by the sign on the door to its offices, brochures made available to the public, its newsletter and the business cards of persons providing services for API.

    
    

24. API did, therefore, "advertise" that it was a "security agency" when it did not possess a Class "B" license as required by Section 493.6301(1), Florida Statutes. API has, therefore, violated Section 493.6118(1)(g), Florida Statutes, and Rule 1C-3.122(1), Florida Administrative Code, as alleged in Count I of the Administrative Complaint.

    
    

    1. Count II.

       
       

25. In Count II it is alleged that, during the period from June 18, 1993 to August 24, 1993, API violated Section 493.6118(1)(g), Florida Statutes (quoted in paragraph 75), by conducting or advertising the business of a branch office in Broward County, Florida, without a valid Class "AA" private investigation agency branch license.

    
    

26. Section 493.6201(2), Florida Statutes, provides, in pertinent part, the following:

    
    

    (2) Each branch office of a Class "A" agency shall have a Class "AA" license. . . .

    
    

27. During the period of June 18, 1993 to August 24, 1993, a branch office of API was in operation in Deerfield Beach, Broward County, Florida. During this period of time no Class "AA" license was held by API.

    
    

28. Consequently, API violated Section 493.6118(1)(g), Florida Statutes, as alleged in Count II of the Administrative Complaint.

    
    

    1. Count III.

       
       

29. In Count III it is alleged that API violated Section 493.6118(1)(n), Florida Statutes, by conducting the business of a Class "AA" private investigative agency branch in Broward County, Florida during the period June 18, 1993 to October 22, 1993 without a properly licensed agency manager.

    
    

30. Section 493.6118(1)(n), Florida Statutes, provides that the following constitutes an offense for which the Division may impose discipline:

    
    

    (n) Employing or contracting with any unlicensed or improperly licensed person or agency to conduct activities regulated under this chapter, or performing any act that assists, aids, or abets a person or business entity in engaging in unlicensed activity, when the licensure status was known or could have been ascertained by reasonable inquiry.

    
    

31. Section 493.6203(1), Florida Statutes, requires that every "agency or branch office" must "designate a minimum of one appropriately licensed individual to act as manager, directing the activities of the Class "C" or Class "CC" employees.

32. Section 493.6201(3)(a), Florida Statutes, requires the following:

    
    

    1. Any individual who performs the services of a manager for a:

       
       

       1. Class "A" private investigative agency or Class "AA" branch office shall have a Class "MA" license. A Class "C" or Class "M" licen- see may be designated as the manager, in which case the Class "MA" license is not required.

          
          

33. During the period at issue, Celeste Peterson was the only person designated as the manager of the Deerfield Beach Branch. Ms. Peterson did not hold a Class "MA", Class "C" or Class "M" license while acting as manager.

    
    

34. Consequently, API violated Section 493.6118(1)(n), Florida Statutes, as alleged in Count III of the Administrative Complaint.

    
    

    1. Count V.

       
       

35. In Count V it is alleged that API violated Section 493.6118(1)(s), Florida Statutes, by failing to notify the Division on or about September 23, 1993, of the cancellation of its liability insurance coverage, in violation of Section 493.6110(2), Florida Statutes.

    
    

36. Section 493.6118(1)(s), Florida Statutes, provides that the following constitutes an offense for which the Division may impose discipline:

    
    

    (s) Violating any provision of this chapter.

    
    

37. Section 493.6110(2), Florida Statutes, provides:

    
    

    (2) The licensed agency shall notify the department immediately upon cancellation of the insurance policy, whether such cancella- tion was initiated by the insurance company or the insured agency.

    
    

38. Rule 1C-3.118(2), Florida Administrative Code, requires that the "licensee" provide notification of the cancellation of insurance to the Division.

    
    

39. The point in time when notice of cancellation of insurance is required is the point when the cancellation occurs. The evidence in this case proved that API's liability insurance was cancelled by notice mailed on or about September 17, 1993. The evidence also proved that API failed to notify the Division of the cancellation of its insurance.

    
    

40. Although the period of time during 1993 that API was without insurance was not extensive, the fact remains that API was without insurance from 12:01 a.m., September 30, 1993 until October 12, 1993. API's successful efforts in 1994, almost a year later, to modify the effective date of its insurance to October 4, 1993, does not eliminate its failure to report the cancellation of its policy in 1993.

41. Consequently, it is concluded that API violated Section 493.6118(1)(s), Florida Statutes, as alleged in Count V of the Administrative Complaint.

    
    

    1. Count VI.

    
    

42. In Count VI it is alleged that API violated Section 493.6118(1)(h), Florida Statutes, by conducting or advertising the business of a Class "A" private investigative agency in Duval County, Florida during the period October 1, 1993 to October 11, 1993 after its liability insurance had expired.

    
    

43. Section 493.6118(1)(h), Florida Statutes, provides that the following constitutes an offense for which the Division may impose discipline:

    
    

    (h) Failure of the licensee to maintain in full force and effect the general liability insurance coverage required by s. 493.6110.

    
    

44. Section 493.6110(3), Florida Statutes, requires that an agency license "shall be automatically suspended upon the date of cancellation unless evidence of insurance is provided to the department prior to the effective date of cancellation."

    
    

45. Rule 1C-3.118(3), Florida Administrative Code, provides that an agency license is "automatically . . . suspended" upon the cancellation of coverage and remains in effect until valid coverage has been obtained an a copy has been provided to the Division.

    
    

46. Rule 1C-3.118(4), Florida Administrative Code, provides that "[n]o agency shall engage in regulated activity while insurance coverage is not in effect."

    
    

47. As with County V, the point in time when cancellation of insurance occurs is the point when an agency's license is suspended and it regulated activities must stop. The evidence in this case proved that API's liability insurance was cancelled as of 12:01 a.m., September 30, 1993, and it had no valid liability insurance until October 12, 1993. Despite the lack of insurance, API continued to engage in regulated activities.

    
    

48. API's successful efforts in 1994, almost a year later, to modify the effective date of its insurance to October 4, 1993, does not change the conclusion that it did not have insurance when required.

    
    

49. Consequently, it is concluded that API violated Section 493.6118(1)(h), Florida Statutes, as alleged in Count V of the Administrative Complaint.

    
    

    1. Count VII.

       
       

50. In Count VII it is alleged that API violated Section 493.6118(1)(f), Florida Statutes, by conducting regulated activities in a fraudulent and deceitful manner during the period May, 1993 through January, 1994, in Duval County, Florida. In particular, it is alleged that API:

    
    

    . . . induced students/Class "CC" Private Investigator Interns to enroll in a private investigator course and enter into employ-

    ment contracts by stating that work would be available for the students/Class "CC" Private Investigator Interns when such statement were known to be false, or not known to be true and the students/Class "CC" Private Investi- gator Interns relied on these statements to their detriment.

    
    

51. Section 493.6118(1)(f), Florida Statutes, provides that the following constitutes an offense for which the Division may impose discipline:

    
    

    1. Proof that the applicant or licensee is guilty of fraud or deceit, or of negligence, incompetency, or misconduct, in the practice

       of the activities regulated under this chapter.

       
       

52. API advertised for trainees/employees in the local newspaper in Duval County, Florida. Persons who answered the ads were led to believe that they were being hired to perform investigative work for API and were induced to enter into employment agreements or independent contractor agreements. They were required to engage in training as a condition of their employment. API knew the statements concerning the availability of work were not true.

    
    

53. API's suggestion that the training was conducted by a separate corporate entity and not API is not supported by the weight of the evidence. While the evidence did prove that API and the Academy were separate corporate entities, their activities were so intertwined that it was reasonably possible for individuals induced into API's scheme to distinguish the two entities. The only persons that understood that there were two entities were persons who had been employed for some time by API and/or the Academy.

    
    

54. Consequently, it is concluded that API violated Section 493.6118(1)(f), Florida Statutes, as alleged in Count VII of the Administrative Complaint.

    
    

    1. Count VIII.

       
       

55. In Count VIII it is alleged that API violated Section 493.6118(1)(f), Florida Statutes (quoted in paragraph 110), by conducting regulated activities in a negligent manner during the period August 4, 1993 through January 21, 1994, in Duval County, Florida. In particular, it is alleged that API:

    
    

    . . . failed to provide his client Robert Haydu as agreed both verbally and contractu- ally written progress reports including invoices accounting for investigative expenditures.

    
    

56. The evidence proved that Mr. Haydu requested detailed progress reports to be provided at a certain time each month and that invoices accounting for investigative expenditures be provided. Mr. Haydu was told that API would comply with his request.

    
    

57. The evidence proved that Mr. Haydu, while being provided with some information, was not provided with the written progress reports and accountings he had requested and been promised.

58. Consequently, it is concluded that API violated Section 493.6118(1)(f), Florida Statutes, as alleged in Count VIII of the Administrative Complaint.

    
    

    1. Count IX.

       
       

59. In Count IX it is alleged that API violated Section 493.6118(1)(n), Florida Statutes (quoted in paragraph 89), and Rule 1C-3.124(5), Florida Administrative Code, by allowing an unlicensed or improperly licensed person, [Tom Kidd], to direct the activities of licensees or exercise operational control over API when Mr. Kidd was not licensed as a manager.

    
    

60. Rule 1C-3.124(5), Florida Administrative Code, provides:

    
    

    No person, firm or corporation possessing a valid agency license shall permit any other person, firm or corporation possessing any financial interest in such licensed business to exert or maintain operational control over such licensed business as to defeat the intent of chapter 493, Florida Statutes, that each licensed business shall be under the direct control and management of a duly licensed person, firm or corporation.

    
    

61. The evidence proved that Mr. Kidd was allowed to exercise operational control over, and to hold himself out as a manager of, API even though Mr. Kidd did not possess the necessary license to act as a manager of API.

    
    

62. Consequently, it is concluded that API violated Section 493.6118(1)(n), Florida Statutes, and Rule 1C-3.124(5), Florida Administrative Code, as alleged in Count IX of the Administrative Complaint.

    
    

    1. Penalty.

    
    

63. Section 493.6118(2), Florida Statutes, authorizes the Division to impose one or more sanctions against any licensee for a violation of Section 493.6118(1), Florida Statutes. Discipline may include a reprimand, imposition of an administrative fine, probation and/or suspension or revocation of a license.

    
    

64. Rule 1C-3.113(1), Florida Administrative Code, establishes guidelines for the imposition of discipline for violations of Chapter 493, Florida Statutes. The following disciplinary ranges are provided:

    
    

    1. Count I: $250 to $750 fine to revocation or denial of license.

    2. Count II: $200 to $$600 fine to probation.

    3. Count III: $200 to $400 fine to probation.

    4. Count V: $150 to $350 fine.

    5. Count VI: $200 to $700 fine to probation.

    6. Count IX: $200 to $400 fine to probation.

    
    

65. No guideline is provided in the Division's rules for Counts VII, the most serious offense, and VIII.

66. Rule 1C-3.113(5), Florida Administrative Code, provides for consideration of certain mitigating and aggravating factors. No evidence concerning factors (h), (k), (m), (n), or (p).

    
    

67. The Division has requested that an administrative fine be imposed and that Respondent's Class "A" license be revoked. The Division has also suggested that the following aggravating circumstances be found:

    
    

    * * *

    
    

    1. The number of of previous violations for the same type of offense, whether or not disciplinary action was taken.

    2. The length of time since the violation occurred.

    * * *

    (g) The amount of damage to persons or property caused by the violation.

    * * *

    (l) Whether the violation resulted from negligence or an intentional act.

    * * *

    (o) The number of other violations proven in the same proceeding.

    * * *

    (q) Any other aggravating or mitigating circumstances.

    
    

68. The evidence failed to prove whether Respondent has committed any "previous violations for the same type of offense." The evidence also failed to prove "other aggravating . . . circumstances."

    
    

69. The evidence did prove that it has been approximately 2 and 1/2 years since the offense occurred, the financial and emotional damage caused by Respondent was not insignificant, that many of the violations were intentional rather than negligence and that Respondent has been found to have committed all

    8 counts charged.

    
    

70. Administrative fines totalling $1,500.00 should be imposed for the violations of Counts I, II, III, V, VI, VIII and IX:

    
    

    1. Count I. $250. Although Respondent advertised the available of security work, the evidence failed to prove that actual security work was provided.

    2. Count II. $250. The evidence failed to prove that any harm came as a result of not having required licenses.

    3. Count III. $250. The evidence failed to prove any mismanagement. The evidence also proved that individuals with Class "C" licenses were working out of the Deerfield Beach Branch.

    4. Count V. $150. Respondent made efforts to acquire insurance and did so in a relatively short period of time.

    5. Count VI. $200. Respondent made efforts to acquire insurance and did so in a relatively short period of time.

    6. Count VIII. $200. The evidence failed to prove that work was not performed for Mr. Haydu. The evidence only proved that Mr. Haydu did not receive reports with as much detail as he had requested.

    7. Count IX. $200. The evidence failed to prove that any direct harm came from Mr. Kidd's operational control.

    
    

71. The most serious offense committed by Respondent is Count VII. Based upon the nature of this offense, it is concluded that Respondent's Class "A" private investigative agency license, Michael Rellah, Owner, number A90-00056 and Mr. Rellah's C lass "C" private investigator license, number C90-00138, should be revoked.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of State, Division of Licensing, enter a

Final Order dismissing Counts IV and X of the Administrative Complaint of May

26, 1994, entered against API of America, Incorporated, Michael W. Rellah, Owner. It is further

RECOMMENDED that the Department of State, Division of Licensing, find that API of America, Incorporated, Michael W. Rellah, Owner, has committed the offense alleged in Counts I, II, III, V, VI, VII, VIII and IX of the Administrative Complaint. It is further

RECOMMENDED that the Respondent be required to pay an administrative fine of $1,500.00 within thirty days after the Final Order becomes final, that Respondent's Class "A" private investigative agency license, Michael Rellah, Owner, number A be revoked and that Michael W. Rellah's Class "C" private investigator license, number C90-00138, be revoked.

DONE and ENTERED this 20th day of June, 1996, 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 20th day of June, 1996.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-5026

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 Department's Proposed Findings of Fact

difference between the two companies" was their separate corporate status is not supported by the weight of the evidence.

1. Accepted in 48-49.

2. Accepted in 50.

3. Accepted in 35-36.

4. Accepted in 37-38 and 40.

5. Accepted in 42.

6. Accepted in 43.

7. Accepted in 44.

8. Accepted in 39.

9. Accepted in 46.

10. Accepted in 38-47.

11. Accepted in 51-52.

12. Accepted in 54 and 56.

13. Accepted in 56-59.

14. Accepted in 55.

15. Accepted in 20-22.

16. Accepted in 2 and 4.

17. Accepted in 22.

18. Accepted in 23-24. Only two of the applicants filed out

    an employment application. See 28.

19. Accepted in 25-26 and 29.

20. Accepted in 25 and 32.

21. Accepted in 29-31.

22. Accepted in 34. 30-31 Not relevant.

1. Accepted in 61-62 and 64-65.

2. Accepted in 62 and 66-67.

3. Accepted in 63.

4. Accepted in 60 and 68. Mr. Kidd and Mr. Rellah were not

   the "only individuals exercising operational control over API." The last sentence is misleading and not supported by the weight of the evidence.

   
   

   Mr. Rellah's Proposed Findings of Fact

   
   

   1. The parties:

      
      

      1. Accepted in 1.

      2. Not supported by the weight of the evidence. The last

         sentence is hereby accepted.

      3. Not relevant and not supported by the weight of the

         evidence.

      4. Correct summary of some of the events at the final

      hearing.

   2. Count I:

      
      

      1. Not supported by the weight of the evidence.

      2. Although generally correct, see 48-49. 2a-d References to the record.

      
      

   3. Count II:

1 Not supported by the weight of the evidence. The last

sentence is hereby accepted. 2-3 Not supported by the weight of the evidence.

4 The first sentence is accepted in 42. The rest of this

proposed finding is not supported by the weight of the evidence.

5a-b, e-g and i References to the record.

5c Not supported by the weight of the evidence. 5d Not relevant.

5h See 41. Count III:

1-2 Not supported by the weight of the evidence.

1. Not relevant.

2. See 5 and 8.

5a-i References to the record.

Count IV:

1 Hereby accepted.

Count V:

1. Not supported by the weight of the evidence.

2. Not relevant.

3. See 51.

4-5 Not supported by the weight of the evidence. See 53-59. 6-10 Not supported by the weight of the evidence and/or not

relevant. 11a Reference to the record. 11b Not relevant and hearsay.

Count VI:

1 Not supported by the weight of the evidence. 2 See 51-59.

1. Not supported by the weight of the evidence and not

   relevant.

2. Reference to the record.

Count VII:

1. Not supported by the weight of the evidence. See 7-34.

2. See 27 and 29.

   2a See 31.

   2b-e References to the record.

3. Hereby accepted. The fact remains that other students

   were led to believe that work would be

   available when there was insufficient work for them.

   3a-h References to the record.

4. Hereby accepted.

5. The first two sentences are hereby accepted. 5a Reference to the record.

6. Not supported by the weight of the record. 6a-c References to the record.

7. Not relevant.

Count VIII:

1-2 Not supported by the weight of the evidence. 3 See 65.

4 Not supported by the weight of the evidence and not relevant. 5 See 65.

6a-i References to the record.

Count IX:

1. Not supported by the weight of the evidence.

2. See 5.

3. Accepted din 6.

4. Not supported by the weight of the evidence.

5. Not relevant.

6a-f References to the record.

Count X:

1 Hereby accepted.

Other Testimony or Evidence Not Directly Pertaining to a Particular Count: 1, 3, 4 and 6 Although generally correct, the weight of the

evidence failed to prove any prejudice to

Respondent.

2, 5, 7, 8 and 9 Not relevant.

COPIES FURNISHED:

Michele Guy

Assistant General Counsel Kristi Reid Bronson Assistant General Counsel

Department of State, Division of Licensing

The Capitol, Mail Station Number 4 Tallahassee, Florida 32399-0250

Michael W. Rellah API of America, Inc.

10415 Beach Boulevard, Suite 2

Jacksonville, Florida 32246

Honorable Sandra B. Mortham Secretary of State Department of State

The Capitol

Tallahassee, Florida 32399-0250

Don Bell, Esquire Department of State The Capitol, PL-02

Tallahassee, Florida 32399-0250

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: 94-005026

Orders for Case No: 94-005026