STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 95-4947

)

ROBERT DARREN CARLSON, )

)

Respondent. )

)

RECOMMENDED ORDER

On February 8, 1996, a formal administrative hearing was held in this case in Clearwater, Florida, before Richard Hixson, Hearing Officer, Division of Administrative Hearings.

APPEARANCES

For Petitioner: James A. Bossart, Esquire

Department of Insurance and Treasurer

200 East Gaines Street Tallahassee, Florida 32399-0333

For Respondent: Robert D. Newell, Esquire

NEWELL & STAHL

817 North Gadsden Street Tallahassee, Florida 32303

STATEMENT OF THE ISSUE

The issue for determination in this case is whether Respondent's license as an insurance agent, and his eligibility for licensure as an insurance agent in Florida should be disciplined for violation of certain provisions of Chapter 626, Florida Statutes, and Rule 4-215.210, Florida Administrative Code, as set forth in the Administrative Complaint.

PRELIMINARY STATEMENT

On September 27, 1995, Petitioner, DEPARTMENT OF INSURANCE AND TREASURER,

filed a three-count Administrative Complaint against Respondent, ROBERT DARREN CARLSON, alleging that Respondent, a licensed Florida insurance agent, violated certain provisions of Chapter 626, Florida Statutes, and Rule 4-215.210, Florida Administrative Code. At hearing Petitioner dismissed Count I of the Administrative Complaint.

Count II of the Administrative Complaint alleged that Respondent had misappropriated and converted fiduciary funds and otherwise engaged in fraudulent practices in that Respondent converted assets of Leila G. Smith, an elderly woman, and without her knowledge or consent, used such assets for the

purchase of inappropriate and high risk investments in the Zuma Corporation. Count III of the Administrative Complaint alleged that Respondent misappropriated and converted funds and failed to remit funds of Ralph S. Cody, an elderly man, relating to the sale of a health insurance policy.

Specifically, the Administrative Complaint alleged the following statutory violations: Sections 626.561(1), 626.611(7), 626.611(9), 626.611(10),

626.611(13), 626.621(2), 626.621(3), 626.621(6) and 626.9541(1)(e)1., Florida

Statutes. The Administrative Complaint also alleged a violation of Rule 4- 215.210, Florida Administrative Code.

On October 5, 1995, Respondent filed an Election of Rights and requested a formal hearing pursuant to Section 120.57(1), Florida Statutes. On October 10, 1995, the case was referred to the Division of Administrative Hearings, and pursuant to notice, a formal hearing was held on February 8, 1996.

At hearing Petitioner presented the testimony of Ralph Cody, Mike Murphy, Brenda Blager, and Leila G. Smith. Petitioner also presented eleven exhibits which were received into evidence.

Respondent testified in his own behalf, and presented nineteen exhibits which were received into evidence.

A transcript of the hearing was filed on February 23, 1996. Petitioner filed a Recommended Proposed Order on March 8, 1996. Respondent filed a Recommended Proposed Order on March 11, 1996.

Explicit rulings on the proposed findings of fact contained in the parties' proposed recommended orders may be found in the attached Appendix to Recommended Order, Case No. 95-4947.

FINDINGS OF FACT

1. Petitioner, DEPARTMENT OF INSURANCE AND TREASURER, is the agency of the State of Florida vested with the statutory authority to administer the disciplinary provisions of Chapter 626, Florida Statutes.

   
   

2. Respondent, ROBERT DARREN CARLSON, at all times material hereto, was eligible for licensure and was licensed in Florida as a life insurance agent, life and health insurance agent, and variable annuity contracts salesman. Respondent was initially licensed in 1992. Respondent's license is currently under emergency suspension as a result of the actions alleged in the Administrative Complaint filed in this case. Respondent is thirty years old, married with one son, and resides in St. Petersburg, Florida.

   
   

3. In 1993 Respondent became a shareholder and vice-president of National Consultants International, Inc. (National), a Florida corporation operating as an insurance agency in Pinellas County, Florida.

   
   

4. National was incorporated on November 29, 1993, and dissolved on August 24, 1994.

   
   

5. The principal shareholder and president of National was Coreen McKeever. At National Coreen McKeever was also responsible for the administrative functions of the agency.

   
   

6. Respondent became an agent for National in March 1994. Respondent's duties were to contact potential customers, discuss the customer's insurance

   needs, explain products that might address the customer's needs, and write policies if purchased by the customer. Respondent collected the premiums, but as a usual practice at National, would turn the premium checks over to Coreen McKeever for administrative processing.

   
   

7. Respondent was also authorized to make deposits and withdrawals on National's premium trust account at Republic Bank in Seminole, Florida.

   
   

   Findings as to Count III - Ralph Cody

   
   

8. Ralph Cody is an eighty-nine year old retired school maintenance worker from Kentucky. Mr. Cody retired to Florida in 1980, and currently lives with his wife, Edna, in Pinellas County. Mr. Cody is in good health, but has difficulty with his eyesight and hearing. Mr. Cody no longer drives.

   
   

9. Mr. Cody first met the Respondent approximately two years ago. At that time Respondent sold Mr. Cody an insurance policy with a company called United American. Mr. Cody was satisfied with this insurance policy.

   
   

10. Subsequent to his initial contact with Respondent, Mr. Cody became interested in obtaining an insurance policy which would provide for in-home health care. Mr. Cody was particularly interested in such an insurance policy because of his concern for his wife's deteriorating health, and his desire that health care be provided at home for him and his wife, and not in a nursing home. Because of his interest in obtaining an in-home health care insurance policy, Mr. Cody met with Respondent. Respondent suggested, and Mr. Cody agreed, to the purchase of a policy called Fortis Long Term Security Home Health Care (Fortis), which was underwritten by Time Insurance Company (Time) of Milwaukee, Wisconsin. Respondent was an agent with Time. Mr. Cody believed the Time policy would meet his insurance needs.

    
    

11. On or about March 31, 1994, Respondent received from Mr. Cody a check for $3,164.40. This sum was intended by Mr. Cody to be the premium payment for the Fortis home health care insurance policy underwritten by Time. Pursuant to Respondent's directions, the check from Mr. Cody was made payable to Respondent's agency, National, not to Time Insurance Company. Respondent directed this procedure because at this time, National had limited experience with Time, and National did not have "netting" privileges. "Netting" privileges allow an insurance agency to deduct its commission prior to forwarding a premium check to the underwriting company. Because of National's limited experience with Time, and the lack of netting privileges, Respondent did not believe it was unusual to make the Cody check payable to National, or to deposit the Cody check into National's account. Time has a general policy requiring that premium checks be made payable directly to Time; however, Time, on occasion, will accept premium checks from agencies. Time also requires that an application and premium check be immediately sent to the company for processing.

    
    

12. Respondent deposited the Cody check into National's account at Republic Bank. Respondent took the Cody application back to National, entered the information into the computer and delivered the Cody application for the issuance of the Fortis policy to Coreen McKeever.

    
    

13. Neither the Cody check, nor the Cody application for issuance of the Fortis policy was received by Time.

    
    

14. Within three weeks of depositing the check and delivering the application, Respondent inquired of Coreen McKeever as to the status of the Cody

    application. Respondent was informed by Coreen McKeever that the application had been denied by Time because of Mrs. Cody's health problems. Contrary to Ms. McKeever's report, Time did not consider nor decline the application for issuance of the Fortis policy to the Codys because of Mrs. Cody's health or any other reason.

    
    

15. Respondent did not personally check on the Cody application, and did not contact Time regarding the issuance of the policy to the Codys. Respondent had no personal knowledge whether the Cody application had been declined and received no written notification regarding the Cody application. Respondent did not question the representations made by Coreen McKeever in this regard.

    
    

16. Shortly thereafter, Respondent informed Mr. Cody that the application to Time had been declined. Respondent met with Mr. Cody and suggested that Mr. Cody consider purchasing a product offered by a company called Secure Care Home Services, Inc. (Secure Care), which also provided home health care and was approximately the same purchase price as the Fortis policy underwritten by Time. Respondent at that time represented to Mr. Cody, and Mr. Cody was under the belief, that the Secure Care product was substantially equivalent to the Fortis policy underwritten by Time. Mr. Cody was aware that the Secure Care product was not insurance.

    
    

17. Secure Care is a corporation located in Seminole, Florida. Secure Care is not an insurance company, but offers "membership agreements" marketed primarily to elderly persons to contractually provide in-home health care services to its members. Coreen McKeever (a/k/a Coreen J. Morgan) is a director of Secure Care, and has an interest in Secure Care.

    
    

18. Secure Care is currently under a Cease and Desist Order suspending its business operations. The Cease and Desist order was entered by the Petitioner on March 13, 1995.

    
    

19. On or about May 18, 1994, Mr. and Mrs. Cody entered into a membership agreement with Secure Care. The initial cost of the membership for both of the Codys as reflected in the agreement was $3,027.00; however, the record reflects that the ultimate cost to the Codys for the Secure Care membership actually totalled $3098.40. Respondent signed the agreement as an authorized agent for Secure Care.

    
    

20. On May 26, 1994, Respondent met with the Codys at their home. At this time Respondent offered to refund to Mr. Cody the purchase price of the Time policy. To this end, Respondent tendered check number 1191 drawn on National's account in the amount of $3,164.40 to Mr. Cody; however, because the purchase price of the Codys' membership in Secure Care which Mr. Cody had already agreed to purchase was almost as much as the Time policy, Mr. Cody requested that Respondent apply the check for the Time policy to the Secure Care membership, and refund Mr. Cody the difference. Respondent accordingly on May 27, 1994, issued a check number 1189 drawn on National's account to Mr. Cody the amount of

    $65.70, which represented the difference in the cost of the two products.

    
    

21. Several months after his purchase of the Secure Care membership, Mr. Cody became aware that some of his neighbors were dissatisfied with the home health care provided by the company. Thereafter, Mr. Cody became concerned that the Secure Care membership would not meet his or his wife's needs. At this time Mr. Cody had no personal experience with Secure Care. Neither Mr. Cody nor his wife ever used, or sought to use their Secure Care membership. Mr. Cody

    complained to Petitioner regarding Secure Care. Mr. Cody also contacted Time and discovered that his application and check had not been received.

    
    

22. Respondent learned of Mr. Cody's concerns with Secure Care after Mr. Cody complained to Petitioner and a departmental investigation of this matter had been undertaken. Respondent then contacted Mr. Cody who told Respondent he wanted a refund of the purchase price of the Secure Care membership. Respondent contacted Secure Care, but learned that the company was not giving refunds at that time. Respondent suggested that Mr. Cody then attempt to deal with Secure Care directly. Mr. Cody was unable to obtain a refund of the cost of the Secure Care membership.

    
    

23. The Codys obtained no benefit from their Secure Care membership. The Secure Care membership was not substantially equivalent to the Fortis policy underwritten by Time. Secure Care was not an established company and did not have the resources or capability to provide the services offered by Time.

    
    

    Count II - Leila G. Smith

    
    

24. Leila G. Smith is a widowed ninety-one year old retired first grade school teacher, originally from Georgia. Mrs. Smith currently resides with her niece, Miriam Enright, in Seminole, Florida. Brenda Blager is Miriam Enright's daughter, and Mrs. Smith's great-niece. Ms. Blager currently resides in Champagne, Illinois. Mrs. Smith receives a monthly income from her teacher's pension and Social Security benefits. Mrs. Smith is in generally good health for a person of her age, but has experienced a significant loss of vision, is totally blind in her left eye, and cannot read without the aid of a magnifying glass. Mrs. Smith moved to Florida approximately three years ago.

    
    

25. Respondent was first introduced to Mrs. Smith by Mrs. Enright to whom Respondent had previously sold annuities. Respondent visited the Enright home and met with Mrs. Smith, Mrs. Enright, Ms. Blager, and also Mrs. Smith's nephew, Robert Smith, to discuss Mrs. Smith's insurance and investment needs. At that time Mrs. Smith purchased an annuity in the amount of $100,000 from Respondent. Approximately one month later Mrs. Smith purchased a second annuity in the amount of $100,000 from Respondent, and gave Robert Smith $60,000 for the purchase of an annuity. The interest payments from the second annuity purchased by Mrs. Smith were sent to Robert Smith.

    
    

26. Brenda Blager usually reviewed and consulted Mrs. Smith regarding Mrs. Smith's personal finances; however, after moving to Florida and meeting Respondent, Mrs. Smith also began to rely on and trust Respondent with regard to advising her in her personal financial matters.

    
    

27. Prior to moving to Florida, Mrs. Smith's investments consisted primarily of her home and certificates of deposit in banks and savings institutions in Georgia. Mrs. Smith was conservative in her investments, had never purchased stocks or bonds, and only wanted to place her savings in "safe" investments.

    
    

28. Subsequent to her purchase of annuities, Mrs. Smith and Mrs. Enright contacted Respondent to discuss other financial concerns. Specifically, Mrs. Smith had sold her home in Georgia and was interested in moving her certificates of deposit to Florida, achieving a higher rate of return, addressing tax problems associated with the payment of the annuity interest to her nephew, and purchasing a new Cadillac automobile.

29. Whenever Respondent met with Mrs. Smith to discuss her finances and investments, Mrs. Enright, or another member of Mrs. Smith's family was also present.

    
    

30. Respondent reviewed several financial documents relating to Mrs. Smith's Georgia certificates of deposit. Mrs. Smith's financial records were disorganized. Respondent advised Mrs. Smith that there would be substantial penalties if she prematurely removed her funds and invested in certificates of deposit. Despite the penalties and Respondent's advice to the contrary, Mrs. Smith decided to cash in her Georgia certificates of deposit and relocate her funds to Florida. Respondent assisted Mrs. Smith in cashing in the Georgia certificates of deposit.

    
    

31. Respondent also assisted Mrs. Smith in using some of these funds to purchase a Cadillac automobile. Mrs. Smith had initially been interested in leasing the automobile; however, Respondent reviewed the lease arrangement, and advised Mrs. Smith that a purchase was in her best interest. Mrs. Smith followed Respondent's advice in this regard. Mrs. Smith trusted Respondent.

    
    

32. To assist Mrs. Smith in relocating her funds to Florida, and also achieve a higher rate of return, Respondent presented Mrs. Smith with proposals to invest in promissory notes with two local firms, Zuma Engineering and Allstate Finance. (Allstate Finance is not associated with Allstate Insurance Company).

    
    

33. Zuma Engineering (Zuma), is a start-up company located in Largo, Florida, engaged in the business of recycling tires. The rubber in the tires is converted to crumb rubber to be resold and used in asphalt roads, playground resurfacing and other products.

    
    

34. Respondent first became aware of Zuma at a seminar in July of 1994 through another agent, Michael Mann, who was then raising funds for Zuma. Mr. Mann took Respondent to the Zuma facility and introduced Respondent to the president of the company. Thereafter, Respondent regularly toured the facility, inspected Zuma's existing and revised business plans, attended business meetings, and reviewed the company's monthly financial reports.

    
    

35. The Zuma physical facility consisting of a warehouse and processing plant appeared to be consistent with the business plan. Respondent also obtained documents from Zuma reflecting that the company had initiated a research and development program associated with the University of South Florida. Respondent observed independent auditors at the Zuma facility, and reviewed financial documents that indicated Zuma had made progress toward a private stock offering. Respondent took reasonable actions to examine the operational and fiscal soundness of Zuma.

    
    

36. When Respondent met with Mrs. Smith he presented her with documents including the Zuma business plan, and explained the investment opportunity in Zuma. Mrs. Smith does not recall Respondent explaining the Zuma investment proposal, nor does Mrs. Smith recall reading any documents or other material relating to Zuma. Given Mrs. Smith's extremely poor vision and the technical nature of the Zuma business plan, it is highly unlikely that Mrs. Smith read the business plan or any other documents pertaining to Zuma. Mrs. Smith did not comprehend the nature of the investment opportunity in Zuma.

    
    

37. Although Mrs. Smith did not comprehend the nature of the Zuma investment, between September 26, 1994 and May 31, 1995 she nonetheless made

    several purchases of promissory notes payable by Zuma. Specifically, Mrs. Smith signed checks payable to Zuma as follows: September 26, 1994, two checks, one in the amount of $10,000, and another in the amount of $20,000; December 6, 1994, in the amount of $70,000; March 10, 1995 in the amount of $10,000; March 29, 1995 in the amount of $10,000; and, May 31, 1995 in the amount of $90,000. Mrs. Smith did not actually write the checks. Because of her poor eyesight, Mrs.

    Smith signed the checks in blank, and Respondent filled in the date, payee, and amount.

    
    

38. Respondent remitted Mrs. Smith's checks to Zuma. In exchange, Zuma issued promissory notes to Mrs. Smith. The Zuma promissory notes were not insurance products. No interest has been paid on the Zuma promissory notes, and several of the notes are now in default. Mrs. Smith has not received any of the principal of the promissory notes back from Zuma.

    
    

39. The prospectus of Zuma states that securities in Zuma are speculative, carry a high degree of risk, and "...should not be purchased by anyone who cannot afford the loss of his or her entire investment." Mrs. Smith did not understand the high risk involved in purchasing securities in Zuma.

    
    

40. In addition to Mrs. Smith, Respondent sold promissory notes issued by Zuma to approximately thirty other investors.

    
    

41. Subsequent to selling the Zuma notes to Mrs. Smith, Respondent met with an investigator from the Florida Comptroller's Office, and was informed that due to fiscal irregularities at Zuma, Respondent should refrain from selling Zuma securities. Respondent was not aware of the problems with Zuma prior to his meeting with the Comptroller's investigator.

    
    

42. At the same time that Respondent presented Mrs. Smith with the Zuma proposal, Respondent also presented Mrs. Smith with information from Allstate Finance. Allstate, which is not related to the Allstate Insurance Company, is a company located in Tampa, Florida, in the business of automobile financing.

    
    

43. Mrs. Smith purchased at least one promissory note in the amount of

    $40,000 from Allstate. The Allstate promissory note purchased by Mrs. Smith was not an insurance product.

    
    

44. Mrs. Smith has received, and continues to receive, monthly interest payments from Allstate. In June of 1995, Mrs. Smith allowed the Allstate promissory note to renew for another year.

    
    

45. In July of 1995, Brenda Blager received a telephone call from her mother, Miriam Enright, requesting assistance in reviewing Mrs. Smith's investments. Ms. Blager has worked in a financial planning office, but is not a certified financial planner. Prior to that time Ms. Blager had no knowledge of Zuma. Ms. Blager obtained a Dunn & Bradstreet report on Zuma and became very concerned regarding Mrs. Smith's investment in Zuma. Ms. Blager then came to Florida from Illinois for the purpose of reviewing Mrs. Smith's investments. After reviewing the Zuma and Allstate promissory notes, Ms. Blager met with an attorney and attempted to recover Mrs. Smith's funds; however, Ms. Blager was unable to do so.

    
    

46. As a result of Respondent's actions, Mrs. Smith has cashed in all of her certificates of deposit to purchase the Zuma and Allstate promissory notes, and her Cadillac automobile. Mrs. Smith has no other savings or investments.

47. While Mrs. Smith did want to relocate her funds from Georgia, Respondent was aware that Mrs. Smith desired and intended to place her funds in safe, low risk, investments.

    
    

48. Respondent's advice and assistance, which resulted in placing Mrs. Smith's funds in a high risk security such as a Zuma promissory note, was not appropriate for an elderly woman in Mrs. Smith's circumstances.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

50. Licensure disciplinary proceedings are penal in nature. State ex rel. Vining v. Florida Real Estate Commission, 281 So.2d 487, 491 (Fla. 1973); Bach

    v. Florida State Board of Dentistry, 378 So.2d 34 (Fla. 1st DCA 1980). The standard of proof required in a licensure disciplinary proceeding is clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

51. "Clear and convincing evidence" requires that evidence must be found to be credible, facts to which witnesses testify must be distinctly remembered, testimony must be precise and explicit, and witnesses must be lacking in confusion as to facts in issue; evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established. Slomowitz v. Walker, 429 So.2d 797 (Fla. 4th DCA 1983).

    
    

52. The Administrative Complaint charges Respondent with various violations of the provisions of Chapter 626, Florida Statutes. Specifically, the Administrative Complaint alleges violations of the following sections:

    
    

    626.561 Reporting and accounting for funds. -

    (1) All premiums, return premiums, or other funds belonging to insurers or other received by an agent, solicitor, or adjuster in trans- actions under his license shall be trust funds so received by the licensee in a fiduciary capacity. An agent shall keep the funds belonging to each insurer for which he is

    not appointed, other than a surplus lines insurer, in a separate account so as to allow the department to properly audit such funds. The licensee in the applicable regular course of business shall account for and pay the same to the insurer, insured, or other person entitled thereto.

    * * *

    626.611 Investigator's license or appointment. - The department shall deny an application for, suspend, revoke or refuse to renew or continue the license or appointment of any applicant, agent, title agency, solicitor, adjustor, customer representative, service representative, managing general agent, or claims investigator, and it shall suspend or revoke the eligibility to hold a license or appointment of any such

    person, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist:

    * * *

    (7) Demonstrated lack of fitness or trust- worthiness to engage in the business of insurance.

    * * *

    1. Fraudulent or dishonest practices in the

       conduct of business under the license or appointment.

    2. Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license or appointment.

    * * *

    (13) Willful failure to comply with, or willful violation of, any proper order or rule of the department or willful violation of any provision of this code.

    * * *

    626.621 Grounds for discretionary refusal, suspension, or revocation of agent's, solicitor's, adjuster's, customer representative's, service representative's, managing general agent's, or claims investigator's license or appointment.-

    The department may, in its discretion, deny and application for, suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, agent, solicitor, adjuster, customer representative, service representative, managing general agent, or claims investigator, and it may suspend or revoke the eligibility to hold a license or appointment of any such person, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 626.611:

    * * *

    1. Violation of any provision of this code or of any other law applicable to the business of insurance in the course of dealing under the license or appointment.

    2. Violation of any lawful order or rule of the department.

    * * *

    (6) In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part X of this chapter, or having otherwise shown himself to

    be a source of injury or loss to the public or detrimental to the public interest.

    * * *

    626.9541 Unfair methods of competition and unfair or deceptive acts or practices defined.-

    (1) UNFAIR METHODS OF COMPETITION AND UNFAIR

    OR DECEPTIVE ACTS.- The following are defined as unfair methods of competition and unfair or deceptive acts or practices:

    * * *

    (e) False statements and entries.-

    1. Knowingly:

       1. Filing with any supervisory or other public official,

       2. Making, publishing, disseminating, circulating,

       3. Delivering to any person,

       4. Placing before the public,

       5. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public,

    any false statement.

    
    

53. The Administrative Complaint also charges Respondent with violating Rule 4-215.210, Florida Administrative Code, which provides:

    
    

    4-215.210 Scope. The Business of Life Insurance is hereby declared to be a public trust in which service all agents of all companies have a common obligation to work together in serving the best interests of the insuring public, by understanding and observing the laws governing Life Insurance in letter and

    in spirit by presenting accurately and completely every fact essential to a client's decision, and by being fair in all relations with colleagues and competitors always placing the policyholder's interests first.

    
    

54. Nothwithstanding Petitioner's proposed conclusion of law finding Respondent violated Section 626.611(4), (5), and (8), Florida Statutes, the Administrative Complaint does not specifically charge Respondent with violating Sections 626.611(4),(5), or (8), Florida Statutes, and accordingly, the evidence is not reviewed with regard to violations of those subsections.

    
    

55. Respondent owed a fiduciary duty to Ralph Cody and Leila G. Smith. In considering the evidence in an insurance license disciplinary case, it has been held that "(i)nsurance is a business greatly affected by the public trust, and the holder of an agent's license stands in a fiduciary relationship to both the client and the insurance company." Natelson v. Department of Insurance, 454 So.2d 31, 32 (Fla. 1st DCA 1984).

    
    

    Count III - Ralph Cody

    
    

56. The evidence is clear and convincing that Ralph Cody contacted Respondent for the purpose of buying an insurance product, and that Respondent was acting under his insurance license in his dealings with Ralph Cody. The evidence is clear and convincing that Respondent misinformed Ralph Cody regarding the Cody's application to Time Insurance Company, and the rejection of the Cody's application by Time. Respondent failed to act in a reasonable and diligent manner with respect to processing the Cody application, reviewing the status of the application with Time, and giving misinformation to Mr. Cody concerning this transaction. The evidence is also clear and convincing that

    Respondent did not forward the Cody's premium check to Time, but instead deposited the check in National's account.

    
    

57. In order to establish a violation of Section 626.611, Florida Statutes, the evidence must demonstrate that Respondent acted in a "willful" manner. Bowling v. Department of Insurance, 394 So.2d 165 (Fla. 1st DCA 1981).

    
    

58. For purposes of administrative proceedings, "willfulness is satisfied by a conscious intentional act see Dezell v. King, 91 So.2d 624, 626 (Fla. 1956) done without justifiable excuse." State Department of Highway and Motor Vehicles v. Taylor, 456 So.2d 550, 552 (Fla. 3d DCA 1984).

    
    

59. The evidence is clear and convincing that Respondent's acts with regard to Ralph Cody as alleged in Count III of the Administrative Complaint were conscious and intentional and done under his license. Respondent's testimony that he relied on instructions and representations made by Coreen McKeever does not constitute a justifiable excuse for his failure to take any personal action with regard to the Cody's application to Time, to remit the Cody's premium check to Time, and to review the status of the application with Time. Respondent conveyed false information regarding the Time investment to Mr. Cody. In this respect Respondent violated the provisions of Section 626.611(9),(10), and (13), Florida Statutes, and Section 626.621(2), Florida Statutes.

    
    

60. The evidence is clear and convincing that as a result of Respondent's acts and omissions under his license, Mr. Cody ultimately was solicited by Respondent to purchase the Secure Care membership, a product in which Coreen McKeever had an interest, and which was not substantially equivalent to the insurance product offered by Time. These acts and omissions on the part of Respondent resulted in a loss to Mr. Cody. In this respect Respondent violated Section 626.621(6), Florida Statutes.

    
    

61. The evidence is also clear and convincing that Respondent did not handle or remit the funds received from Mr. Cody for the purchase of the Time policy as trust funds in the manner required under Section 626.561(1), Florida Statutes, and is accordingly in violation of that section.

    
    

    Count II - Leila G. Smith

    
    

62. The evidence fails to establish that Respondent's acts with regard to the sale of investment securities in Zuma and Allstate to Leila G. Smith occurred under Respondent's insurance license, and accordingly fails to establish any violation of Sections 626.611(9); 626.611(10); 626.621(2); 626.621(3); 626.621(6); 626.9541(1)(e)1., Florida Statutes as alleged in the Administrative Complaint.

    
    

63. The evidence is clear and convincing, however, that Respondent was a trusted financial advisor to Leila Smith, and that Respondent in advising the placement of the bulk of Mrs. Smith's life savings in high risk securities violated that trust. Respondent's investment proposal to Mrs. Smith was not an appropriate investment proposal for an elderly woman in her circumstances, and resulted in a loss to Mrs. Smith. The evidence accordingly establishes that Respondent violated Sections 626.611(7), and (13), Florida Statutes.

    Penalty

    
    

64. Under Rule 4-231.040, Florida Administrative Code, the highest penalty established for each count constitutes the penalty per count. The highest penalty for Count II violations is six months' suspension. The highest penalty for Count III violations is nine months' suspension. The total penalty accordingly should be fifteen months' suspension.

    
    

65. Application of aggravating or mitigating factors under Rule 4-231.160, Florida Administrative Code, are not sufficiently compelling in this case to alter the Department's prescribed penalties as provided by rule.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Petitioner DEPARTMENT OF INSURANCE AND TREASURER enter a final order finding Respondent, ROBERT DARREN CARLSON, in violation of the provisions of Chapter 626, Florida Statutes, as set forth above, and that Respondent's licenses and eligibility for licensure be SUSPENDED for a period of fifteen (15) months.

DONE and ENTERED this 21st day of March, 1996, in Tallahassee, Florida.

RICHARD HIXSON, 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 21st day of March, 1996.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-4947

To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact:

Petitioner's Proposed Findings of Fact.

1.-4. Accepted and incorporated.

1. Accepted as to Zuma was a start-up company, recycling tires. Rejected as to Mrs. Smith's knowledge and consent. Accepted as to Mrs. Smith wanting safe investments.

2. Rejected as to Respondent being employed by Zuma. 7.-10. Accepted and incorporated.

11.-12. Accepted to the extent that Mrs. Smith desired safe investments.

13.-21. Accepted and incorporated.

Respondent's Proposed Findings of Fact.

1.-6. Accepted and incorporated. 7.-13. Accepted and incorporated.

14.-16. Rejected as to Respondent's reasonable basis for believing the representations of Coreen McKeever.

17. Accepted, except to the extent that Mr. Cody was led to believe Secure Care was equivalent to Time.

18.-25. Accepted and incorporated.

1. Rejected as not necessary.

2. Accepted and incorporated.

3. Rejected as not an accurate assessment of Mr. Cody's testimony. 29.-30. Accepted and incorporated.

31.-32. Accepted; Time's general policy allowed checks from agencies. 33.-35. Rejected as not supported by the weight of the evidence.

36.-43. Accepted and incorporated.

44. Accepted except to the extent that Zuma and Allstate promissory notes were not appropriate investments for Mrs. Smith.

45.-54. Accepted to the extent that Respondent investigated Zuma, reviewed fiscal reports, and believed Zuma to be a viable start-up company.

55.-57. Accepted and incorporated.

58. Accepted to the extent that Mrs. Smith had document relating to Zuma; rejected to the extent that Mrs. Smith understood the nature of the Zuma investment.

59.-63. Accepted and incorporated.

1. Accepted to the extent that Mrs. Smith allowed the Allstate not to renew.

2. Accepted to the extent that Mrs. Smith wanted her certificates of deposit moved from Georgia.

3. Rejected to the extent that Respondent knew, or should have known, the investments were high risk.

4. Accepted to the extent that Ms. Blager is not a certified financial planner.

5. Rejected to the extent that Zuma has defaulted on several of Mrs. Smith's notes, and not returned any interest or principal.

6. Rejected as not supported by the weight of the evidence.

COPIES FURNISHED:

James A. Bossart, Esquire Department of Insurance

200 East Gaines Street Tallahassee, Florida 32399-0333

Robert D. Newell, Jr., Esquire NEWELL & STAHL

817 North Gadsden Street Tallahassee, Florida 32303

Dan Sumner, Acting General Counsel Department of Insurance

The Capitol, PL-11

Tallahassee, Florida 32399-0300

Bill Nelson

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to the 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 consult with the agency that will issue the Final Order in this case concerning their 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: 95-004947

Orders for Case No: 95-004947