STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 96-0991

)

PETER GREGORY SANTISTEBAN, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to written notice, a formal hearing was held in this case on September 10, 1996, at Tallahassee, Florida, before Errol H. Powell, a duly designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Bob Prentiss, Esquire

Department of Insurance and Treasurer Division of Legal Services

612 Larson Building

Tallahassee, Florida 32399-0300 For Respondent: No Appearance

STATEMENT OF THE ISSUES

The issue for determination is whether Respondent committed the offenses set forth in the administrative complaint, and, if so, what action should be taken.

PRELIMINARY STATEMENT

On January 5, 1996, the Department of Insurance and Treasurer (Petitioner) filed a two-count administrative complaint against Peter Gregory Santisteban (Respondent) charging Respondent with violating: Count I--Subsections 626.561(1), 626.611(4), (7), (9), (10), and (13), 626.621(2), (4), and (6),

and 626.9541(1)(u)2, Florida Statutes; and Count II--Subsections 626.561(1), 626.611(4), (5), (7), (8), (9), (10), and (13),

626.621(2), (4), and (6), 626.9521, and 626.9541(1)(k) 1, Florida

Statutes. Respondent filed an answer to the administrative complaint and requested a formal hearing. On February 27, 1996, this matter was referred to the Division of Administrative Hearings for formal hearing.

At hearing, Petitioner moved to dismiss Count II of the administrative complaint, and the motion was granted. Additionally, Petitioner moved to amend paragraph numbered 11 of the administrative complaint, and the motion was granted. As amended, paragraph numbered 11 reads:

11. On or about March 25, 1994, and May 26, 1994, you, PETER GREGORY SANTISTEBAN, submitted to Appco two checks, drawn on the account of Southern Associates in the total amount of $3,921.87. These checks were the down payments on a number of premium finance contracts and represent down payments received by you, PETER GREGORY SANTISTEBAN, from Florida insurance consumers on financed insurance policies. Appco attempted to deposit and negotiate the checks, however, one check was returned by the bank for insufficient funds, and the other was returned, as the account was closed. You,

PETER GREGORY SANTISTEBAN, are currently obligated to Appco for the total sum of

$3,921.87.

Also, at hearing, Petitioner entered two exhibits into evidence: both deposition testimony, with one deposition being that of Respondent. Respondent failed to appear personally or through counsel, and no exhibits were entered into evidence on behalf of Respondent.

A transcript of the hearing was ordered. Petitioner filed proposed findings of fact which have been considered in this recommended order.

FINDINGS OF FACT

1. At all times material hereto, Peter Gregory Santisteban (Respondent) was licensed as a general lines agent by the State of Florida.

2. At all times material hereto, Southern Associates Insurance Agency (Southern Associates) was a licensed general lines insurance agency by the State of Florida. Southern Associates was incorporated.

3. At all times material hereto, Respondent was the owner, sole stockholder, president, and corporate director of Southern Associates.

4. At all times material hereto, Respondent had sole responsibility for the financial affairs of Southern Associates and had sole signatory authority on Southern Associates’ checking account.

5. AAPCO is a premium finance company. At all times material hereto, Respondent and AAPCO had an arrangement in which policies written by Respondent, which needed financing, would be financed by AAPCO.

6. The arrangement between Respondent and AAPCO was executed as follows:

   1. Respondent maintained AAPCO drafts and had signatory authority on APPCO drafts.

   2. If a client needed financing, Respondent would receive a down payment from the client on the insurance premium. The down payment was approximately thirty-three percent of the premium.

   3. Respondent would receive a commission of approximately fifteen percent. His commission would be taken from the down payment.

   4. Respondent would execute an APPCO draft payable to the insurance company for the total premium less his commission.

   5. Respondent would forward the down payment less his commission (net) to AAPCO, the premium finance company.

7. In or around 1990 or 1991, the execution of the arrangement changed in that, instead of writing a check to AAPCO for each insured’s net, Respondent would use transmittal forms which permitted Respondent to write one check for the net of multiple insureds.

8. On or about March 25, 1994, Respondent issued check

   number 1503 from the account of Southern Associates payable to AAPCO in the amount of $1,215.14 for payment of multiple nets due to AAPCO. The check was deposited in the account of AAPCO but was returned for insufficient funds.

9. On or about May 26, 1994, Respondent issued check number 1517 from the account of Southern Associates payable to AAPCO in the amount of $2,706.73 for payment of multiple nets due to AAPCO. The check was deposited in the account of AAPCO but was returned due to the account being closed.

10. On or about July 13, 1994, AAPCO made demand for Respondent to pay the moneys due it.

11. Respondent did not and has not paid AAPCO the moneys

    
    

    due.

    
    

12. The total amount owed by Respondent to AAPCO is

    
    

    $3,921.87.

    
    

13. Respondent attempted to reach an agreement with AAPCO wherein he would make monthly payments until the moneys due had been paid in full. AAPCO rejected Respondent’s offer and instead requested that Respondent make a lump sum payment of $2,000 and pay the remainder in monthly installments. Due to financial difficulty, Respondent was unable to agree to AAPCO’s payment option.

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the

    parties thereto pursuant to Subsection 120.57(1), Florida Statutes.

15. License revocation proceedings are penal in nature. The burden of proof is on the Petitioner to establish the truth- fulness of the allegations of the administrative complaint, as amended, by clear and convincing evidence. Ferris v. Turlington,

    510 So. 2d 292 (Fla. 1987); Balino v. Department of Health and Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 1977).

16. Section 626.561, Florida Statutes (1993) provides in pertinent part:

    (1) All premiums, return premiums, or other funds belonging to insurers or others received by an agent, solicitor, or adjuster in transactions 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.

    Respondent failed to pay AAPCO the funds belonging to and due it, i.e., down payments less Respondent’s commissions. Petitioner demonstrated that Respondent violated his fiduciary duty by misappropriating the trust funds due AAPCO.

17. Section 626.611, Florida Statutes (1993), provides grounds for mandatory disciplinary action against a license or appointment and provides in pertinent part:

    The department shall ... suspend, revoke ...

    the license or appointment of any applicant, agent, title agency, solicitor, ... managing general agent ... if it finds that as to the

    ... licensee ... any one or more of the following applicable grounds exist:

    * * *

    (4) If the license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this code.

    * * *

    (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 unlaw-ful 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.

    
    

    Petitioner demonstrated that Respondent violated Subsections 626.611(4), (7), (9), (10), and (13).

18. Section 626.621, Florida Statutes (1993), provides grounds for discretionary discipline against a license or appointment and provides in pertinent part:

    The department may, in its discretion, ... suspend, revoke ... the license or appoint- ment of any applicant, agent, solicitor, ... managing general agent ... 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 ... suspension, revocation,

    ... is not mandatory under 626.611:

    * * *

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

    * * *

    (4) Failure or refusal, upon demand, to pay over to any insurer he represents or has represented any money coming into his hands belonging to the insurer.

    * * *

    (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.

    Petitioner demonstrated that Respondent violated Subsection 626.621(2), but failed to demonstrate that Respondent violated Subsections 626.621(4) and (6). Moreover, Petitioner did not argue that Respondent violated Subsections 626.621(4) and (6), and it is, therefore, presumed that Petitioner has abandoned the prosecution of these violations.

19. Subsection 626.9541(1), Florida Statutes (1993), defines unfair methods of competition and unfair or deceptive acts or practices and provides in pertinent part:

    (u) False claims; obtaining or retaining money dishonestly.

    * * *

    2. Any agent, solicitor, collector, or other person who represents any insurer or collects or does business without the authority of the insurer, secures cash advances by false statements, or fails to turn over when required, or satisfactory account for, all collections of such insurer,

    
    

    Petitioner failed to demonstrate that Respondent violated

    Subsection 626.9541(1)(u)2. Moreover, Petitioner did not argue that Respondent violated Subsection 626.9541(1)(u)2, and it is, therefore, presumed that Petitioner has abandoned the prosecution of this violation.

20. Regarding penalty in this case, the highest stated penalty is considered. Rule 4-231.040, Florida Administrative Code. The highest penalty for the violations committed is a nine-month suspension. Rules 4-231.030(6) and (7), 4-231.040(1) and (2), 4-231.080, and 4-231.100, Florida Administrative Code.

21. Aggravating or mitigating factors, if any, are considered in reaching a final penalty. Rule 4-231.040(3), Florida Administrative Code. For this case, aggravating and mitigating factors are provided in Rule 4-231.160(1), Florida Administrative Code. As to aggravating factors, Petitioner has shown that Respondent’s conduct was willful; that Respondent has not made restitution after more than two years since AAPCO made a demand for the moneys; that Respondent gained $3,921.87; and that Respondent had personal responsibility for the incident since he had sole control of the agency’s finances.

22. Section 626.641, Florida Statutes (1993), provides in pertinent part:

    (1) [A] license ... which has been suspended shall not be reinstated except upon request for such reinstatement; but the department shall not grant such reinstatement if it finds that the circumstance or circumstances for which the license ... was suspended still exist or are likely to recur.

23. Petitioner suggests a final penalty of a nine-month suspension of Respondent’s license, with the condition that, at the expiration of the suspension, Respondent’s license be restored only upon his payment of the $3,921.87 to AAPCO. No evidence has been presented to warrant a deviation from Petitioner’s suggested penalty.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Insurance and Treasurer enter a final order

1. Suspending the license of Peter Gregory Santisteban, as

   
   

   a general lines agent, for nine months; and

   
   

2. Conditioning the reinstatement of his license after the expiration of the suspension upon his payment of $3,921.87 to AAPCO.

DONE AND ENTERED this 28th day of February, 1997, in Tallahassee, Florida.

ERROL H. POWELL

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 28th day of February, 1997.

COPIES FURNISHED:

Bob Prentiss, Esquire Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0300

Miguel San Pedro, Esquire 825 Southeast Bayshore Drive Suite 1541

Miami, Florida 33131

Bill Nelson

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Daniel Y. Sumner General Counsel The Capitol, LL-26

Tallahassee, Florida 32399-3100

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of 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: 96-000991

Orders for Case No: 96-000991