STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 94-5114

)

WILLIAM H. HUGHES MORTGAGE ) BROKER, INC., HUGHES, WILLIAM )

H. D/B/A WILLIAM H. HUGHES, A ) SOLE PROPRIETORSHIP, AND ) WILLIAM H. HUGHES, INDIVIDUALLY, )

)

Respondent. )

)

RECOMMENDED ORDER

Upon due notice, this cause came on for formal hearing on April 11, 1995, in Shalimar, Florida, before Ella Jane P. Davis, a duly assigned hearing officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Elise M. Greenbaum, Chief Counsel

Office of the Comptroller The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

and

Steven Godwin, Assistant General Counsel Office of the Comptroller

The Capitol, Suite 1302 Tallahassee, Florida 32399-0350

For Respondent: J. Ladon Dewrell, Esquire

Dewrell, Campbell & Shaw

207 Florida Place Southeast

Fort Walton Beach, Florida 32541 STATEMENT OF THE ISSUE

Whether the mortgage broker registration of Respondents William H. Hughes Mortgage Broker, Inc.; Hughes, William H. d/b/a William H. Hughes, a sole proprietorship; and William H. Hughes, individually, should be disciplined pursuant to Section 494.0041 F.S., and if so, what is the appropriate penalty.

PRELIMINARY STATEMENT

On July 22, 1994, the Department of Banking and Finance (DBF) filed an amended administrative complaint seeking to revoke the mortgage brokerage registration of William H. Hughes Mortgage Broker, Inc.; Hughes, William H. d/b/a William H. Hughes, a sole proprietorship; and William H. Hughes, individually, based on findings contained in an examination report and based on Respondent Hughes' conviction for perjury on November 23, 1993, in violation of

18 U.S.C. Section 1623.

On March 28, 1995, DBF filed a Notice of Voluntary Dismissal dismissing portions the amended administrative complaint based on the examination report findings, leaving only the circumstances surrounding Respondent Hughes' perjury conviction at issue in this case.

Formal hearing was convened on April 11, 1995.

Official recognition was taken of Chapter 494 F.S. and the administrative rules promulgated thereunder.

Petitioner stipulated that, regardless of similarity of name, the prosecution herein was not directed against the mortgage broker's license also known as "William H. Hughes Mortgage Broker, Inc." currently in effect for a corporation of the same name, the entire stock of which is owned solely by James Etheredge, and which lists its qualifying broker as Janeen Davis. (TR 19-21;

47-48; 50)

Petitioner DBF presented the oral testimony of Robert A. Tedcastle and Respondent Hughes, and had 12 exhibits admitted in evidence.

Respondent Hughes testified on his own behalf and presented the oral testimony of John M. McCrory, Jr., Dianne Pyburn-Jessup, Rise' Lamb, Mary Rebholz, William R. Touchstone, Jr., and J. T. Murphy. Respondent had no documentary exhibits admitted.

A transcript of proceedings was filed in due course, and all timely-filed proposed findings of fact have been ruled upon in the appendix to this recommended order, pursuant to Section 120.59(2) F.S.

FINDINGS OF FACT

1. Respondent William H. Hughes was adjudicated guilty of perjury and sentenced on November 11, 1993. This adjudication was at least peripherally related to a mortgage loan he brokered which had closed on June 21, 1989. Mr. Hughes was deposed concerning the loan on December 20, 1991, in which deposition he lied. He was indicted on May 27, 1993 and pled guilty to perjury on September 3, 1993.

   
   

2. At all times material, William H. Hughes held individual mortgage broker license number MB 262740745. He is a Respondent herein because he was convicted of perjury.

   
   

3. DBF was immediately notified concerning Mr. Hughes' perjury conviction. The agency did not file its amended disciplinary action until July 22, 1994. It may be inferred that there was an original complaint to amend, but its date is not of record.

4. The agency's chief witness testified that the agency did not do an immediate field audit of Mr. Hughes' business upon notification, did not file an immediate cease and desist order against his mortgage brokerage activities, and has at no time considered Mr. Hughes continuing to operate as a mortgage broker to be an imminent threat or danger to consumers. (TR 113-116)

   
   

5. Apparently, periodic DBF field audits since the amended administrative complaint was referred to DOAH also have not caused DBF to move to expedite the instant case or take any emergency action.

   
   

6. Mr. Hughes operated as a sole proprietorship, license number MBB 591623417, from 1968 until May 17, 1993. The loan at issue was closed June 21, 1989. The deposition that gave rise to the perjury occurred on December 20, 1991. The plea was September 3, 1993. The adjusdication of guilt was November 11, 1993. The sole proprietorship license was current until August 31, 1994. The sole proprietorship is a Respondent in this cause because its license was in effect at all times material.

   
   

7. On May 17, 1993, Respondent Hughes converted his sole proprietorship to a corporation in which he was sole stockholder, President, and qualifying broker with license number MB 262740745. Janeen Davis was Vice President. This corporate entity was known as, "William H. Hughes Mortgage Broker, Inc.," license number MBB 593113739. On May 27, 1993, Respondent Hughes was indicted. On September 3, 1993, he entered a guilty plea to perjury. The corporation of which he was sole principal continued to operate until September 23, 1993, when the stock was transferred to James Etheredge as sole stockholder, with Respondent Hughes as qualifying broker. Corporate mortgage brokerage license MBB 593113739, continued in effect until January 12, 1994. This corporation is a Respondent herein because its license was in effect at the time of Mr. Hughes' guilty plea and adjudication of guilt.

   
   

8. On November 17, 1993, James Etheredge applied for a corporate mortgage brokerage license in the name of the "new" corporation, "William H. Hughes Mortgage Broker, Inc.," owned exclusively by Etheredge, with Janeen Davis as qualifying broker instead of Respondent Hughes. On November 23, 1993, Respondent Hughes was adjudicated guilty of perjury and sentenced. On January 12, 1994, a new corporate mortgage broker license, number MBB 593113739-001, was issued to the new corporate entity. Respondent Hughes continued to work for the new firm as a mortgage broker. This corporate license, number MBB-593113739- 001, was renewed September 1, 1994 and is current through August 31, 1996. That licensed corporation is not a Respondent herein and DBF has stipulated that it has no charges or evidence against it. (TR 19-21; 47-48; 50).

   
   

9. In 1989, William Neufeld had come to Respondent Hughes seeking a mortgage loan for a condominium located at B-801 Grand Mariner, Destin, Florida. Sugar Sands Development Corporation was purportedly selling the condominium to Neufeld. The purported purchase price was approximately eight hundred thousand dollars ($800,000). Appraisals were provided to Respondent Hughes by the Seller to verify the value of the property.

   
   

10. Respondent Hughes forwarded Neufeld's mortgage loan application to Carteret Savings Bank, which then accepted the loan. During this period of time, Carteret regularly called for a review appraisal for every loan, regardless of who did the original appraisal. Carteret regularly ordered a review from a different appraisal company to make sure that property valuation was true and accurate. It is inferred that Carteret performed its own separate appraisal on the B-801 Grand Mariner condomimium as it did in every other case.

11. The parties to the loan brokered by Respondent Hughes were Sugar Sands Development Corporation as Seller, William Neufeld as Purchaser, and Carteret Savings Bank as Lender.

    
    

12. Carteret Savings Bank funded the mortgage for the condominium after its own investigation and upon agreed terms.

    
    

13. Respondent Hughes personally brokered the mortgage loan between William Neufeld and Sugar Sands Development Corporation, which was funded by Carteret Savings Bank. He received a $20,475 commission therefor. His commission amount was based upon points, which was in no way remarkable in the mortgage business.

    
    

14. William Neufeld subsequently defaulted on the loan.

    
    

15. At the time of the transaction, Respondent Hughes knew that the condominium was owned by an entity named Altus Bank prior to its transfer to Sugar Sands Development Corporation.

    
    

16. On December 20, 1991, Respondent Hughes was deposed in a civil action resulting from Neufeld's default, Case No. 91-30398-RV, Carteret Savings Bank, F.A., v. First American Title Insurance Co., Inc., et al., in the United States District Court for the Northern District of Florida, Pensacola Division.

    
    

17. In his deposition, Respondent Hughes testified as follows:

    
    

    Q: When, if ever, did you find out an entity by the name of Altus Bank was involved in these transactions?

    A: I don't know if -- to my knowledge, I did not know -- Altus wasn't involved in our transaction. We never dealt with Altus at all. So, to my knowledge, I don't know if I knew Altus was even involved in this unit until after this had already closed, because here again we were presented a contract of sale, we dealt directly with our customer, the buyer and really never had an occasion to even deal with the seller.

    * * *

    Q: You did not know, you had not heard any rumors, you had no indication whatsoever that Altus Bank had any interest in this unit at any

    time prior to the FBI coming to talk to you a year ago?

    A: No. I think that's the first time I knew that Altus was involved.

    
    

18. Respondent Hughes was subsequently indicted on May 27, 1993 in Case No. 93-03069-01/RV, United States v. William H. Hughes, in the United States District Court for the Northern District of Florida, Pensacola Division. The indictment contained nine felony counts relating to an alleged "flip transaction" on the subject condominium involving Altus Bank, Sugar Sands Development Corporation as "straw man", and William Neufeld, the purpose of

    which was to artificially inflate the condominium's real property value and obtain an inflated loan amount of approximately $800,000 in loan proceeds for property truly valued at only approximately $385,000.

    
    

19. The indictment alerted Carteret Savings Bank, which has since gone out of business, and other lending institutions to audit Respondent Hughes' transactions with them and to otherwise institute quality control reviews of loans he had placed with them. No discrepancies or dishonest dealings of any kind were uncovered by these institutions.

    
    

20. On September 3, 1993, Respondent Hughes pled guilty to one count of engaging in perjury in violation of 18 U.S.C. Section 1623, based exclusively upon his deposition testimony quoted supra.

    
    

21. The remaining eight felony counts were dismissed. These counts were the counts alleging that Mr. Hughes knew of the "flip transaction" aspects of the loan.

    
    

22. Exhibit P-9 shows the foregoing to have been a plea bargain which encompassed evidentiary factors. It was not merely a "plea of convenience."

    
    

23. At formal hearing herein, Respondent Hughes admitted that knowing the question in the deposition, he gave the wrong answer. He has accepted responsibility for that wrong answer. However, he credibly denied any knowledge that a flip transaction was intended. He explained that he had understood that the loan amount was determined upon independent evaluations and appraisals which included projected renovation costs to be expended to conform the condominium to the needs of the Purchaser, Mr. Neufeld.

    
    

24. On November 23, 1993, a federal judgment was entered against Respondent Hughes. Pursuant to that judgment, Respondent Hughes was adjudicated guilty of violating 18 U.S.C. Section 1623 by engaging in perjury. He was ordered to pay a special assessment of $50.00; to pay $1,724.50 in juror fees; was placed on probation for a term of three years; and was placed on home detention for a period of six months. Respondent Hughes' probation is not scheduled to end until November 1996.

    
    

25. Respondent Hughes has continued to practice as a mortgage broker without interruption during the eighteen months since his conviction and is currently employed as a mortgage broker by William H. Hughes Mortgage Broker, Inc., the firm reconstituted with Mr. Etheredge as the sole stockholder and Janeen Davis as its qualifying agent as of January 12, 1994. See, supra.

    
    

26. Respondent Hughes has practiced his profession since 1968 (27 years) with only this one bad incident on his record.

    
    

27. Respondent Hughes continues to enjoy a good reputation in his wider mortgage brokerage business community, although the reputation testimony herein is diminished by the fact that many of those who have dealt with him and who have expressed reputation opinions to the witnesses who testified were not aware of his perjury conviction or its circumstances.

    
    

28. Respondent Hughes' reputation for truth and veracity and for fair dealing in the mortgage brokerage community as it currently exists within the Florida Panhandle has remained "good" and "very good" since knowledge of his perjury conviction has become known in that community.

29. Two mortgage brokers, two employees of lending institutions, one attorney and one bank officer testified as fact witnesses that they were willing to deal with Mr. Hughes as a mortgage broker in the future, despite their knowledge of his perjury conviction. Two of these persons were formerly employed by Carteret Savings Bank and were fully aware of all circumstances of his criminal case.

    
    

30. DBF's only expressed reason for requesting license revocation instead of other permissible disciplinary penalties was its perception that the perjury in this case was directly related to the transaction of mortgage brokerage business.

    
    

    CONCLUSIONS OF LAW

    
    

31. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this cause, pursuant to Section 120.57(1), F.S.

    
    

32. The duty to go forward in this case is upon Petitioner DBF. Its burden of proof is that of clear and convincing evidence that the Respondents have engaged in the violation as set forth in DBF's amended administrative complaint. See, Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

33. Respondent is charged with violating Section 494.0041(2)(a) F.S. which provides:

    
    

    (2) Each of the following acts constitutes a ground for which the disciplinary actions specified in subsection (1) may be taken:

    (a) Being convicted or found guilty, regardless of adjudication, of a crime in any jurisdiction which involves fraud, dishonest dealing, or any other act of moral turpitude.

    
    

34. The range of permissable penalties for such license violation is set forth in Sections 494.0041(a - e) F.S. These penalties range from imposition of a fine in an amount not exceeding $5,000 for each count or separate offense through reprimand, probation, license suspension, or revocation of license, or any combination thereof. The disciplinary guidelines in Rule 3D-40.111 (2)

    F.A.C. specifically state that for a violation of Section 494.001 (2)(a) F.S. the same range of penalties may be utilized, with revocation of license as the maximum penalty. In this case, Petitioner seeks revocation.

    
    

35. Herein, Respondent Hughes does not dispute that a conviction for perjury occurred or that perjury is a crime of moral turpitude. (TR 40-41; 231). Respondent defends upon the sole theory that the perjury did not occur in the course of a mortgage brokerage transaction and therefore he should only receive a reprimand.

    
    

36. Section 494.0041(2)(a) F.S. does not require a finding that the crime is directly related to the Respondent's practice of business under his license. Honesty, truthfulness and integrity are attributes which the legislature has determined are required for individuals who deal with the public as mortgage brokers. The agency proved that Respondent was adjudged guilty of a federal crime involving moral turpitude. Respondent is not entitled to administrative relitigation of the prior judgment of guilt. See, McGraw v. Department of State, Division of Licensing, 491 So. 2d 1193 (Fla. 1st DCA 1986) and Department of Banking and Finance v. McCaffrey, DOAH Case No. 86-2718 (RO entered 10/23/86;

    FO entered 12/18/86). Respondent also is not entitled to an analysis of whether or not his perjury was directly, indirectly, or remotely related to the actual mortgage transaction which involved Neufeld, Carteret Savings Bank and Sugar Sands Development Corporation on the theory that truthfulness of a mortgage broker only becomes a disciplinary issue if related to a mortgage transaction.

    
    

37. The agency has cited Department of Banking and Finance v. Martin County Liquors, Inc., 574 So. 2d 170 (Fla. 1st DCA 1991), to the effect that an agency is entitled to discipline licenses no longer in effect so as to prohibit the surrendering of a license to avoid administrative action being taken against the licensee. The case cited does not stand for that premise. The case closest on point that the undersigned has located is Boedy v. Department of Professional Regulation, 433 So. 2d 544 (Fla. 1st DCA 1983), but that case deals with licenses unilaterally inactivated by the licensees and subject to reactivation by them. Herein, the sole proprietorship license expired August 31, 1994 and the corporation of which Respondent Hughes was sole equitable owner and qualifying broker ended January 12, 1994. Neither entity can ever be relicensed without Respondent Hughes as principal, so if his individual license is disciplined, discipline against either of his prior business entities is superfluous at best. At worst, disciplining these entities would confuse and damage the record and reputation of the new corporation which the agency stated it does not seek to discipline.

    
    

38. DBF appropriately cites Winkleman v. Department of Banking and Finance, 537 So. 2d. 951 (Fla. 3rd DCA 1989) to the effect that revocation may be appropriate in cases of criminal convictions for moral turpitude, but neither the statutory nor rule language applicable to this case mandates revocation. Rather, both the statute and the rules authorize the agency to exercise its discretion on a case by case basis within a range of penalites.

    
    

39. The case law holds that an applicant for licensure who has been convicted of a crime of moral turpitude may demonstrate rehabilitation by good works, lawful conduct, being self supporting, good associations, and the passage of time. See, Zaremba v. Division of Finance, DOAH Case No. 94-1229 (RO entered 8/3/94; FO entered 9/16/94) and Hillyer v. Office of Comptroller, Division of Finance, DOAH Case No. 86-4016 (RO entered 2/3/87; FO entered 2/16/87). Rule

    3D-40.111(3)(b)(1-5) F.A.C. permits consideration of mitigating circumstances when disciplining persons who are already licensed. Mitigating circumstances are listed as: the severity of the violation; the degree of harm to the consumer or public; the number of times the violations previously have been committed by the person; the disciplinary history of the person; and the status of the person at the time the violation was committed.

    
    

40. Herein, the undersigned has considered all the foregoing factors and has assigned particular weight and consideration to the following: Respondent has practiced a total of 27 years with only one violation, albeit a serious one. He has practiced without incident for six years since the mortgage transaction that gave rise to the criminal charges. Respondent has practiced without incident for four years since the perjury was committed. Respondent has practiced over a year without incident since his conviction for perjury. At no time has the agency considered him a sufficient danger to consumers to seek an emergency order against him. After the criminal indictment, Respondent was audited and reviewed by various institutions concerning all his loans in progress at the time. These quality controls have subjected Respondent to greater scrutiny than other mortgage brokers, and no fraud in mortgage brokerage has been assigned against him. Likewise, it appears that none of DBF's own periodic audits since then have turned up a problem. The agency witness regards

    him as a low level potential danger to consumers, not a high level imminent one. Respondent did not profit in the original mortgage transaction beyond a reasonable commission based on points, and while an inflated value would increase his commission, there is no clear evidence he knew the "flip transaction" was at work to inflate either the loan or his commission. No independent benefit was achieved by lying on his deposition. Respondent pled guilty and has cooperated in serving his sentence and paying his fines. This indicates Respondent's desire to rehabilitate himself. It is, however, of some concern that Respondent will not complete his sentence until November of 1996, more than a year after the date of formal hearing and entry of this recommended order.

    
    

41. While it is imperative that every case send a message that the disciplinary authority has zero tolerance for moral turpitude, that goal can be accomplished here and the public protected short of revocation. An appropriate penalty in this case would be an administrative fine of $3,000.00 and probation until the end of Respondent's federal sentence, such probation being conditioned upon Respondent practicing his profession under the supervision of a broker approved by DBF and being held subject to unannounced DBF audits and reviews of all of his transactions, with the additional caveat that any violation of the foregoing conditions, any significant discrepancy in his accounts, or any violations of Chapter 494 F.S. would subject him to immediate and summary revocation of his license. In the past, DBF itself has selected this type of discipline in cases of first or even second offenses, before imposing revocation. See, Department of Banking and Finance v. Ijames, DOAH Case No. 93- 0174 (RO entered 5/24/93; FO entered 6/9/93).

RECOMMENDATION

Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Banking and Finance enter a final order

that:

1. Finds Respondent Hughes individually, license MB 262740745, is guilty of the charged offense;

   
   

2. Assesses an administrative fine against Respondent Hughes individually for $3,000, payable within 10 days of entry of the final order; and

   
   

3. Places Respondent Hughes on probation until November 30, 1996, termination of probation to be conditioned upon his successful completion of his federal sentence; his practicing during probation under the supervision of a broker approved by DBF, and his being subject during this probation to unannounced DBF audit and review of all his transactions; and further providing that any violation of the final order, any discrepancy in his accounts, or any violation of Chapter 494 F.S. during his probationary period would subject him to immediate and summary revocation of his license.

RECOMMENDED this 29th day of June, 1995, at Tallahassee, Florida.

ELLA JANE P. DAVIS

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 29th day of June, 1995.

APPENDIX TO RO 94-5114

The following constitute specific rulings, pursuant to S120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF).

Petitioner's PFOF:

1-8, 24-26 are covered in FOF 1-8 as necessary. Otherwise accepted but not adopted.

9-20, 22-23 Accepted, except that unnecessary, subordinate and/or cumulative evidence has not been adopted.

21, 27-31 Rejected as conclusions of law or legal argument, not proposed findings of fact

Respondent's PFOF:

1-7 are introductory and labelled "Statement of the Case." They are covered within the "Preliminary Statement" of the Recommended Order.

8-17, 20-21, Accepted except that unnecessary, subordinate 23, 25-27 and/or cumulative evidence has not been adopted.

18, 24 Rejected as a conclusion of law, not a proposed finding of fact

19 Irrelevant

22 Accepted only as modified and covered in FOF 27-29

COPIES FURNISHED:

Elise M. Greenbaum Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

J. Ladon Dewrell, Esquire Post Office Box 1510

Fort Walton Beach, Florida 32541

Honorable Robert Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350

Harry Hooper General Counsel

Office of the Comptroller The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

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

================================================================= AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE, DIVISION OF FINANCE,

Petitioner,

vs. DBF CASE No. 3233-F-1/94

DOAH CASE No. 94-5114

WILLIAM H. HUGHES MORTGAGE BROKER INC., HUGHES, WILLIAM H. D/B/A WILLIAM H. HUGHES, A SOLE PROPRIETORSHIP, AND WILLIAM H. HUGHES, INDIVIDUALLY,

Respondent.

/

FINAL ORDER AND NOTICE OF RIGHTS

This cause came on before Robert F. Milligan, the undersigned, as Statutory Head of the Department of Banking and Finance, (the Department), for the purpose of issuing a Final Order. Pursuant to Notice, a Formal Hearing was conducted in this matter on April 11, 1995, in Shalimar, Florida, before Ella Jane P. Davis,

a duly designated Hearing Officer of the Division of Administrative Hearings. On June 29, 1995, Hearing Officer Davis submitted a Recommended Order to the Department, a copy of which is attached hereto as Exhibit A, and incorporated herein by reference as if set forth at length. On July 14, 1995, counsel for Petitioner timely filed Exceptions to the Recommended Order, a copy of which is attached hereto as Exhibit B. On July 28, 1995, Respondent filed responses to the Department's exceptions. The Department being authorized and directed to administer and enforce Chapter 494, Florida Statutes, hereby rules on the Exceptions and having reviewed the entire record of this proceeding enters this Final Order regarding William H. Hughes Mortgage Broker, Inc., Hughes, William

H. D/B/A William H. Hughes, A Sole Proprietorship, and William H. Hughes, Individually.

RULINGS ON EXCEPTIONS

First Exception: The Department takes exception to the Recommended Order's Finding of Fact, paragraph 4, in which the Hearing Officer found that the agency did not do an immediate field audit of Mr. Hughes' business upon notification, did not file an immediate cease and desist order against his mortgage brokerage activities...

The Department's exception is hereby denied on the following grounds.

Though testimony was presented at the hearing that the Department did perform a field exam of Hughes' mortgage brokerage business (TR 117, lines 1-5), the Department's witness, Mr. Robert Tedcastle, Bureau Chief of the Bureau of Financial Examinations for the Division of Finance, testified that no field examination was done on the perjury conviction in this case. Thus, there is competent evidence to support the Hearing Officer's finding that an immediate field audit was not done upon notification of the perjury conviction.

The Department concurs with the Hearing Officer's finding that the Department did not file an immediate cease and desist order against Hughes with respect to his mortgage brokerage activities. However, the Department takes exception to the inference that because the Department did not file an immediate cease and desist order against Hughes, revocation of his mortgage brokerage licenses is therefore inappropriate. The undersigned agrees if any such inference is drawn by the Hearing Officer, that the inference is unfounded and contrary to the statutorily permissible use of discretion by the Department in administering the statutes it governs. Therefore, the fact that the Department did not order an immediate cease and desist order can not be used as grounds for mitigating the severity of the penalty sought by the Department. Accordingly, if such an inference is implied, the Department's exceptions granted.

Second Exception: The Department take exception to the Recommended Order's Finding of Fact, paragraph 5, wherein the Hearing Officer found that periodic Department field audits had been performed on Hughes since the Amended Administrative Complaint was referred to the Division of Administrative Hearings and that those periodic field audits had not caused the Department to move to expedite this case or take any emergency action.

Upon complete review of the record of this proceeding the Department's exception is hereby denied on the following grounds. The Department's witness, Robert Tedcastle, testified at the hearing that no emergency action was taken. (TR 113-116). As there is competent, substantial evidence to support the Hearing Officer's Finding of Fact, paragraph 5, the finding must be upheld. See Clark v. Department of Professional Regulation, 463 So.2d 328 (Fla. 5th DCA 1985). However, if the Hearing Officer is inferring that the penalty ordered by

the Department should be mitigated due to the fact that no emergency action was taken in this case, such an inference is contrary to the statutorily permissible use of discretion the Department is entitled to exercise in imposing appropriate administrative sanctions. It is well to note that there is motion evidence that supports the fact that at least part of the delay in the expedition of this case is due to the actions of the Respondent.

Third Exception: The Department takes exception to the Recommended Order's Finding of Fact, paragraph 10, wherein the Hearing Officer found that "it is inferred that Carteret performed its own separate appraisal on the B-801 Grand Mariner Condominium it did in every other case." The Department claims no factual basis or competent, substantial evidence exists to support this inference. However, at the hearing the Respondent presented the testimony of Ms. Rice Lamb, who testified that she was employed by Carteret at the time of the subject transaction and that for every single appraisal that was done, I don't care who it was done by, we would have to order a review from a different appraisal company to make sure the value was there." She further testified that those intended controls were utilized on the subject loan stating that she knew for a fact that Carteret had done the review appraisal. (TR 179 lines 5-17).

Therefore, there is competent, substantial evidence in the record to support the Hearing Officer's Finding of

Fact, paragraph 10, accordingly the Department's exception is denied and the Hearing Officer's finding is adopted.

Fourth Exception: The Department takes exception to the Recommended Order's Finding of Fact, paragraph 29, wherein the Hearing Officer found that of these persons were formerly employed by Carteret Savings Bank and were fully aware of all circumstances of his criminal case.

The Department's exception is granted and the Hearing Officer's Finding of Fact, paragraph 29, is rejected on the following grounds. While two persons formerly employed by Carteret Savings Bank testified that they were aware of Hughes' conviction for perjury, there is no competent, substantial evidence to support the Hearing Officer's finding that these witnesses were "fully aware of all circumstances of his [Hughes'] criminal case."

Fifth Exception: The Department takes exception to the Recommended Order's Finding of Fact, paragraph 30, wherein the Hearing Officer found that DBF's only expressed reason for reguesting license revocation instead of other permissible disciplinary penalties was its perception that the perjury in this case was directly related to the transaction of mortgage brokerage business.

Upon review of the complete record of this proceeding, there is competent, substantial evidence that supports the Department's assertion that the Department did not seek to revoke Hughes' Mortgage Broker licenses solely on that basis. The Department presented the testimony of Robert Tedcastle, who testified that the Department also sought to revoke Hughes' license to protect the Florida consumer and to ensure that the mortgage broker who assists the Florida consumer in obtaining a mortgage loan, possesses integrity beyond reproach. Accordingly, the Department's exception is hereby adopted and the Hearing Officer's Finding of Fact, paragraph 30, is rejected as not supported by competent, substantial evidence in the record.

Sixth Exception: The Department takes exception to the Recommended Order's Conclusion of Law, paragraph 37, wherein the Hearing Officer concluded that if Hughes' individual license was disciplined, discipline against either of his

prior business entities is superfluous at best. At worst, disciplining these entities would confuse and damage the record and reputation of the new corporation

The Department's exception is rejected on the following grounds. The sole proprietorship license held by Hughes expired on August 31, 1994. Further, the Department has approved and issued a new license to the new owner of the mortgage broker corporation in question, thus the corporate license previously held by Hughes, is no longer is effect. As the sole proprietorship could not be relicensed without Hughes as the principal broker and as the mortgage broker corporation is currently licensed under the new owner, discipline against either of these prior business entities would serve no useful purpose. Under the particular facts of this case, the Hearing Officer's conclusion is adequate and hereby adopted.

Seventh Exception: The Department takes exception to the Recommended Order's Conclusion of Law, paragraph 38, wherein the Hearing Officer concluded that neither the statute nor the applicable rule mandates that the involved licenses be revoked. The Department concurs with this conclusion, as well as the Hearing Officer's conclusion that both the statute and the rule authorize the agency to exercise its discretion on a case by case basis within a range of penalties." The Department contends it is in furtherance of this authority that the Department exercised its discretion by seeking revocation of the involved mortgage broker's licenses. Accordingly, the Department's exception is granted.

Eighth Exception: The Department takes exception to the Recommended Order's Conclusion of Law, paragraph 39, with respect to the application of Rule 3D-40.111(3), Florida Administrative Code. The Hearing Officer states that Rule 3D-40.111(3)(a), F.A.C., provides that where aggravating or mitigating circumstances are supported by clear and convincing evidence, the Department shall be entitled to deviate from the sentencing guidelines provided in Rule 3D- 40.111(2), F.A.C., in imposing discipline upon any person. The Department agrees with the Hearing Officer's recitation of Rule 3D-40.111(3)(a), however, the Department argues that while the agency is entitled to deviate from imposing the penalty of revocation of Hughes' mortgage broker's licenses, it is not required to deviate from imposing this penalty. As the Department's exception further expounds on the undersigned's interpretation of Rule 3D-40.111(3)(a), F.A.C., the exception is granted.

Ninth Exception: The Department takes exception to the Recommended Order's Conclusion of Law, paragraph 40, wherein the Hearing Officer concluded that, as a mitigating factor, at no time has the agency considered him a sufficient danger to consumers to seek an emergency order against him." The Department's exception is granted on the following grounds. Both sections 494.0041(1) and (2)(a), Florida Statutes, and Rule 3D-40.111(3), F.A.C., authorize the agency to exercise its discretion on a case by case basis within a range of penalties when imposing appropriate administrative sanctions against a licensee for violations of Chapter 494, Florida Statutes, and the rules promulgated thereto. The Department previously exercised its discretion in this case by noticing its intent to impose the penalty of revocation of the involved mortgage broker's licenses. Florida Appellate Courts, as well as the Division of Administrative Hearings, have consistently held that an agency's interpretation of a statute it administers is accorded great deference due to the agency's expertise and experience in the application of the statute. In the Matter of Gary L. Waldron, 540 So.2d 247 (Fla. 4th DCA 1989).

The fact that the Department did not seek an immediate order to cease and desist against Hughes has no bearing on the relationship to the seriousness of the violation of Florida Law engaged in by Hughes with his conviction for perjury. The inference derived from the Hearing Officer's conclusion of law implicitly provides that revocation or suspension of a license is inappropriate unless the Department concurrently seeks an immediate cease and desist order against the licensee. Such an interpretation is contrary to the intent and language of the statutory and rule provisions in effect. See Perishing Industries v. Department of Banking and Finance 591 So.2d 991 (Fla. 1st DCA 1991). Motel 6 Operating L.P. v. Department of Business Regulation, 560 So.2d 1322 (Fla. 1st DCA 1990)(agency interpretation of statute must be upheld if not unreasonable or outside range of possible interpretations).

The Department also takes exception to the Hearing Officer's conclusion that because various institutions took certain measures to review all of Hughes' loans in process at the time of his perjury conviction, that these quality control measures have subjected Hughes to greater scrutiny than other mortgage brokers..." The Department's exception is granted and the Hearing Officer's conclusion is rejected based on the fact that there is no competent, substantial evidence in the record to support this conclusion. Clark.

The Department also takes exception to the Hearing Officer's conclusions that it appears that none of DBF's own periodic audits since then have turned up a problem, and that the agency witness regards him as a low level potential danger to consumers, not a high level imminent one." The Department's exception is granted and the Hearing Officer's conclusion is rejected on the following grounds. The Department's witness, Robert Tedcastle, testified that it would appear there was no eminent danger to the Florida consumers, however, he did not testify that he regarded Hughes as a "low level potential danger to consumers.

Thus, there is no competent, substantial evidence in the record to support such a conclusion by the Hearing Officer.

The Department also takes exception to the Hearing Officer's conclusion in paragraph 40, wherein the Hearing Officer concluded that as a mitigating factor, "Hughes did not derive an independent benefit from lying at his deposition, and that he did not profit beyond a reasonable commission in the mortgage brokerage transaction with respect to Sugar Sands Development Corporation. The Department argues that for a conviction of perjury to exist, it must "be proven, that an individual made particular statements in a court proceeding, that the individual knew the statements to be false when they were made and that the statements were material in the court proceeding." U.S. v. Joseph, 651 F. Supp. 1346, 1347 (S.D. Fl. 1987). Financial benefit or any other advantage, therefore, has no relevance as to whether an individual has committed perjury or to the seriousness of the offense. Accordingly, the Department's exception is granted and the Hearing Officer's conclusion is rejected.

Tenth Exception: The Department takes exception to paragraphs two and three of the Recommendation Section of the Recommended Order, wherein the Hearing Officer recommended that the Department enter a Final Order that:

"(2) assesses an administrative fine against Respondent Hughes, individually for $3,000" and that

(3) places Respondent Hughes on probation until November 30, 1996...

The Department initially sought to revoke the mortgage brokerage registrations of Respondent Hughes, individually, as well as those of William H. Hughes Mortgage Broker, Inc., and Hughes, William H. d/b/a William H. Hughes, A Sole Proprietorship. It is noted in light of the evidence now of record that the penalties recommended by the hearing officer should be increased to prevent a licensee from merely going about business as usual after payment of a fine in light of the serious criminal conviction involved herein. Suspension of this license is within the permissible statutory range of Section 494.0041(1), Florida Statutes, and Rule 3D-40.111(3), F.A.C. It is clearly within the Department's discretion to impose suspension in this particular case based on the facts and circumstances presented. Pershing Industries V. Department of Banking and Finance, 591 So.2d. 991 (Fla. 1st DCA 1991). Further, the Supreme Court of Florida has held that while deference to an agency's interpretation of a statute it is charged with administering may not be absolute, the agency's interpretation cannot be overturned unless clearly erroneous. Laborer's International Union of North America local 478 v. Borrougs, 541 So.2d. 1160 (Fla. 1989). In accordance with section 120.59(10), Florida Statutes, (1994 Supp.), the following citations to the record justify an increase in the penalty recommended by the Hearing Officer:

Hughes' conviction for perjury is less than two years old. (Dept. Exh. 8)

The serious nature of Hughes' conviction. (Dept. Exh. 8)

Hughes' conviction for perjury evinces a disregard for both Federal and Florida law. (Dept. Exh. 8)

Hughes' conviction for perjury constitutes an act of moral turpitude. (Dept. Exh. 8)

Hughes is currently on probation, and will continue to be so until November, 1996. (Dept. Exh. 8)

Hughes' perjury conviction is directly related to his actions as a licensed mortgage broker;

therefore some increase in penalty (i.e. suspension of his license) is appropriate. (TR 81, lines 23- 25, TR 82, TR 83, line 1; Dept. Exh. 1, Request for

Admissions, #7 and #12, responses thereto)

The Department is responsible for protecting Florida consumers, thus the Department must ensure that individuals licensed as mortgage brokers are of good moral character, reliable and possess integrity beyond reproach. As evidenced by the conduct that led to his conviction for perjury, Hughes' fails to meet this standard. (TR 83, lines 20-25, TR 84)

PRELIMINARY STATEMENT

The Department adopts and incorporates by reference the preliminary statement contained in Pages 2-3 of the Recommended Order entered in this proceeding as if set forth at length.

FINDINGS OF FACT

The Department adopts and incorporates by reference (except as modified in the Rulings on Exceptions), the Findings of Fact contained in Paragraphs 1-30 of the Recommended Order as if set forth at length.

CONCLUSIONS OF LAW

The Department adopts and incorporates by reference, (except as modified in the Rulings on Exceptions), the Conclusions of Law found in Paragraphs 31-41 of the Recommended Order as if set forth at length.

FINAL ORDER

Having ruled on the Exceptions filed by the Petitioner and based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that:

1. The Mortgage Brokerage license issued by the state of Florida to William H. Hughes is hereby suspended for a period of ninety (90) days from the date of entry of this Final Order;

   
   

2. A $3,000 administrative fine, payable within ten (10) days of entry of this Final Order, is assessed against William H. Hughes;

   
   

3. Upon completion of the suspension imposed by this Final Order, William H. Hughes will be placed on probation until November 30, 1996, termination of probation to be conditioned upon his successful completion of his federal sentence; his practicing during probation under the supervision of a broker approved by the Department of Banking and Finance, and his being subject during this probation to unannounced Department audits and review of all his transactions; and further providing that any violation of the Final Order, any discrepancy in his accounts, or any violation of Chapter 494, Florida Statutes, during his probationary period would subject him to immediate and summary revocation of his license.

DONE and ORDERED this 27th day of September, 1995, in Tallahassee, Leon County, Florida.

ROBERT F. MILLIGAN, As Comptroller and Head of the Department of

Banking and Finance

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ATE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

CERTIFICATE OF SERVICE

I hereby certify that a true copy of the foregoing Final Order with Notice of Rights has been furnished by U.S. regular mail to J. Ladon Dewrell, Esquire, Dewrell and Campbell, P.A., 207 Florida Place, S.E., Post Office Box 1510, Fort Walton Beach, Florida 32549-1510, this 27th day of September, 1995.

Ellen C. Marino

Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

(904) 488-9896

cc: Elise Greenbaum, Chief Counsel

Steve Godwin, Assistant General Counsel

Docket for Case No: 94-005114

Orders for Case No: 94-005114