STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BANKING AND ) FINANCE, )

)

Petitioner, )

)

vs. ) Case No. 96-5607

) SEA PRIDE INDUSTRIES, INC. ) and JOHN D. ERICSSON, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, this matter was heard on May 13 and 14, 1997, in Pensacola, Florida, by Donald R. Alexander, the assigned Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Clyde C. Caillouet, Jr., Esquire

4900 Bayou Boulevard, Suite 103

Pensacola, Florida 32503

For Respondents: Donald A. Rett, Esquire

Carol A. Forthman, Esquire

131 North Gadsden Street Tallahassee, Florida 32301-1507

STATEMENT OF THE ISSUE

The issue is whether respondents sold securities in violation of Sections 517.07, 517.12, and 517.301, Florida Statutes, as alleged in the administrative complaint.

PRELIMINARY STATEMENT

This matter began on October 29, 1996, when petitioner,

Department of Banking and Finance, issued an Administrative Complaint for Imposition of Administrative Penalties and Notice of Intent to Issue Cease and Desist Order against respondents, Sea Pride Industries, Inc. and John Drew Ericsson. The charging document generally alleged that although respondents are not registered with the State to sell securities, they "sold (unregistered) Sea Pride Industries, Inc. stock to investors including Florida residents." The complaint goes on to allege that respondents "employed a scheme to defraud investors, obtained money by means of untrue statements and omissions of material fact, engaged in transactions which operated as a fraud upon persons, and knowingly and willfully made false or fraudulent statements." For this conduct, the agency proposes to impose an administrative fine and issue a cease and desist order against respondents. Respondents disputed these allegations and requested a formal hearing to contest the agency's proposed action. The matter was referred by petitioner to the Division of Administrative Hearings on December 2, 1996, with a request that an Administrative Law Judge be assigned to conduct a formal hearing. By Notice of Hearing dated January 29, 1997, a final hearing was scheduled on March 11, 1997, in Pensacola, Florida.

At respondents' request, the matter was continued to April 8, 1997, and then again to May 13 and 14, 1997, at the same location. On May 8, 1997, the case was transferred from Administrative Law Judge P. Michael Ruff to the undersigned.

At final hearing, petitioner presented the testimony of Mryl Sorrells Eisinger, an investor; Yvonne Rochelle Higgins, a former bookkeeper for respondents; Peter Arnold Baker, a former

vice-president of marketing for respondents; and Florence G. Segesser, an investor. Also, it offered petitioner's exhibits 1-11. All exhibits were received in evidence. Respondent John

Ericsson testified on his own behalf. Both respondents presented the testimony of Carmine Jannievee Salter, a Department financial investigator; and John Wayne Hawk, a former vice-president of marketing. Also, they offered respondents' exhibits 1-3, 5, 7- 12, and 18-22. Exhibit 22 is the deposition of Robert L. Pappas, the Department's regional director. All exhibits were received in evidence. By agreement of the parties, petitioner late-filed the deposition of Cassandra Cherry, an investor, on June 2, 1997, and respondents late-filed the deposition of Pat Meadows, a former vice-president of marketing, on June 16, 1997. Finally, the undersigned has granted the parties' motions for official recognition of certain administrative rules, state and federal statutes, federal regulations, and documents pertaining to the legislative history of Chapter 517, Florida Statutes.

The transcript of hearing (three volumes) was filed on June 2, 1997. Proposed findings of fact and conclusions of law were filed by the parties on June 16, 1997, and they have been considered in the preparation of this Recommended Order.

FINDINGS OF FACT

Based upon all of the evidence, the following findings of fact are determined:

1. Background

   
   

   1. Respondent, Sea Pride Industries, Inc. (Sea Pride), is a corporation incorporated in Delaware and registered to do business in the State of Florida. It conducts business at 1198 Gulf Breeze Parkway, Gulf Breeze, Florida. Sea Pride is developing and implementing new methods for the open water mariculture of both shellfish and finfish. Respondent, John D. Ericsson, is one of the founders and the chief operating officer of Sea Pride. Petitioner, Department of Banking and Finance (Department), is a state agency authorized to carry out the provisions of Chapter 517, Florida Statutes, also known as the Securities and Investor Protection Act.

   2. As part of its development, Sea Pride made the decision to raise initial development capital by selling shares of stock in Sea Pride Industries, Inc. In doing so, Sea Pride developed a Private Placement Memorandum (Memorandum) which was designed to qualify for an exemption from the requirements of registration with the Securities and Exchange Commission (SEC) and with the Department. Under Florida law, this exemption is contained in Section 517.061(11), Florida Statutes. The exemption has several provisions that Sea Pride included in its Memorandum.

   3. In designing its Memorandum, respondents relied upon the advice of counsel to ensure that the language met all requirements for exemption. The Memorandum was issued in November 1993, and among other things, stated several times that this was an offering of a company that should be considered to be a high-risk investment and was available only to accredited investors. It also disclosed the nature of the company, the names of the principals involved, and the rights of the investor to rescission under Florida law. Although not required by law, copies of Sea Pride's financial statements were provided with the Memorandum. All investors signed a statement saying that they were familiar with the investment and had the opportunity to review the Memorandum. The sales were made in person, and each investor had the opportunity to ask for additional information.

   4. In 1994, the Department began an investigation of Sea Pride. The basis for the investigation is not of record. In any event, the investigation continued until the spring of 1996, when a staff recommendation was made that a disciplinary action be initiated. On October 29, 1996, the Department issued an administrative complaint charging that respondents violated Sections 517.07, 517.12, and 517.301(1)(a)1.,2.,3. and (c), Florida Statutes, by selling unregistered securities, selling securities without being registered to do so, and employing a scheme to defraud, obtaining money by untrue statements of material fact and omissions of material fact, engaging in

      transactions which operated as a fraud on persons, and knowingly and willfully making false and fraudulent statements in connection with the sale of stock to Florida residents. While acknowledging that they are not registered dealers in Florida, respondents contend that under the terms of Section 517.061(11), Florida Statutes, they are exempt from registration. They deny all allegations of fraudulent activities.

2. Do Respondents Qualify for an Exemption?

   
   

   1. Respondents claim that they qualify for an exemption from registration under Section 517.061(11), Florida Statutes. To qualify, the number of purchasers (non-accredited investors) within the state must be "no more than 35" during any twelve- month period, and sales cannot be by "general solicitation or general advertising." Also, prior to each sale, each purchaser

      must be provided with a "full and fair disclosure of all material information," and no person defined as a dealer may be paid a commission or compensation unless registered as a dealer.

      Finally, after sales are made to five persons in this state, any sale must be voidable by the purchaser within a specified period of time.

      1. Number of investors

         
         

   2. Sea Pride had a total of 31 Florida investors who have purchased stock, all of whom are accredited investors. Two contractors also received stock in lieu of payment for services and could be considered purchasers. In addition, there are five

      or six employees and former employees, some of whom are Florida residents, who have received stock. Because they did not pay for their stock with either money or specific services, the employees are not purchasers. Therefore, Sea Pride demonstrated that it did not exceed the limit of 35 non-accredited investors during any twelve-month period.

      1. Solicitations and advertising

         
         

   3. The majority of Sea Pride investors reside in Alabama and Mississippi. As to Florida residents, no general solicitations or general advertising were made by Sea Pride to secure investors. Rather, limited mailings were made to specific areas in Pensacola and Gulf Breeze in an attempt to target affluent residents who were accredited investors and owned waterfront property. Therefore, the second part of the exemption test was satisfied.

      1. Disclosure of material information

         
         

   4. To satisfy the third part of the exemption test, prior to the sale, the issuer must make "full and fair disclosure of all material information." As to this requirement, the Department contends that respondents failed to disclose to investors the fact that Ericsson had been convicted of a misdemeanor in Nevada in 1988; Sea Pride's secretary-treasurer, Yvonne R. Higgins, had been convicted of passing worthless bank checks and fraud; and another employee, Lawrence B. Ackland, had been convicted of a felony. Based on the following

      circumstances, however, it is found that respondents made a full and fair disclosure of all material information.

   5. On December 15, 1987, Ericsson pled guilty to one count of conspiracy to obtain money by false pretenses, a gross misdemeanor, in Washoe County, Nevada. The conviction arose out of acts while Ericsson served as president of Nevada Energy Corporation in 1984. The misdemeanor conviction was not disclosed in the Memorandum, nor did respondents disclose this fact to potential investors. In not doing so, respondents properly relied upon SEC regulations relating to standard instructions for filing registration statements and advice of counsel. Those regulations provide that only "legal proceedings" occurring during the five years immediately preceding the sale of stock be disclosed. Here, Ericsson's misdemeanor conviction occurred more than five years before November 1993.

   6. Only two existing investors, Segasser and Cherry, and one former investor, Eisiger, presented testimony regarding their lack of knowledge about Ericsson's background. Cherry stated it would have made a difference had she known about the conviction, while Segasser stated it would not. In June 1995, Eisiger read about the conviction in a local newspaper and promptly requested a refund of her $10,000.00 investment. Sea Pride complied with her request.

   7. Yvonne R. Higgins was hired by Sea Pride in June 1994 at a salary of around $12,000 per year. At the time of her

      hiring, Higgins had previously been convicted of grand theft and worthless checks and was on probation.

   8. Higgins was interviewed and hired to fill a "secretarial position" by Patrick Meadows, a former vice- president. Meadows could not recall Higgins disclosing her background to him, and Higgins did not indicate her criminal background on her application form. One of Higgins' recent employers was the Executive Club in Pensacola. At the time she was hired, Ericsson telephoned the Executive Club and was not told of her background.

   9. Without knowledge of her criminal history, Higgins was installed as secretary-treasurer of Sea Pride. Her duties, however, were primarily secretarial, and the corporate title was given solely for the purpose of facilitating company correspondence and the signing of certain documents.

   10. Higgins was never an executive officer of the company, made no corporate decisions, did not participate in policy discussions of the Board, and had limited check-writing authority.

   11. In June 1995, Higgins' background was revealed to respondents by a shareholder. Higgins was immediately removed from the office of secretary-treasurer although she continued to work for Sea Pride as a secretary for a short time thereafter. Because respondents were unaware of Higgins' background until June 1995, and she performed primarily secretarial duties, they

       had no duty to disclose her background in the Memorandum or to investors.

   12. The Department also contends that respondents failed to disclose the fact that Lawrence B. Ackland, a former employee, had a criminal background. When Ackland was hired by Sea Pride on April 28, 1995, he was on parole for a felony conviction "involving something to do with telephones or some sort of telephone device."

   13. Ericsson was aware of Ackland's criminal background when he was hired in April 1995. However, Ackland served solely in the capacity of an independent contractor, and his duties were limited to providing public relations services. Contrary to petitioner's assertion, he did not sell stocks. Although the record is not altogether clear as to how long Ackland remained at Sea Pride, it appears he worked there for some two months. Because Ackland was an independent contractor, and not an employee, there was no requirement that respondents disclose his criminal background in the Memorandum and to investors.

       1. Payment of compensation or commission for sale of stock

          
          

   14. Respondents assert that no person defined as a dealer was paid a commission or compensation for the sale of Sea Pride's stock. In response, petitioner contends that two unregistered employees, John Hawk and Peter Baker, were paid a commission for the sale of stock.

   15. Hawk and Baker both held the title of vice-president of

       marketing. They were paid a regular salary, which did not vary based on sales of stock, and they had minor duties in addition to stock sales. For example, they attended meetings with permitting agencies, prepared a newsletter, placed articles in magazines, and arranged for meetings with potential investors. In addition, Baker was involved with the development of a piece of equipment known as the aqua-fence.

   16. When Hawk and Baker were initially employed by Sea Pride, stock sales were a substantial part of their responsibilities. They understood, however, that if they remained with Sea Pride after the sale of the initial offering, they would have additional substantial duties with the continuing company.

   17. There was no evidence regarding the payment of a bonus or other incentive to Baker in conjunction with stock sales. As to Hawk, who left Sea Pride under adverse circumstances, he "felt" he had worked in a "commission based system." Although he could not remember the amount of the "bonus" or the date he received the money, Hawk claimed that he was paid a single bonus by check for a non-Florida sale early in the program. However, no documentary evidence was offered to support this claim, and respondents denied that it occurred. Given these considerations, Hawk's testimony is not accepted as being credible on this issue.

       1. Right of recission

       
       

   18. On page 6 of the Memorandum is found a lengthy "Notice

       to Florida Residents" which explains their right to rescission. Among other things, it states that:

       The availability of the privilege to void sales pursuant to Section 517.061(12) is hereby communicated to each Florida offeree.

       
       

       In view of this, it is found that this portion of the statute has been satisfied.

3. Allegations of Fraud and Misrepresentations

1. Besides the allegations that respondents failed to disclose material information in conjunction with the sale of stock, which have been discussed above, the complaint alleges that respondents falsely represented to investors that they had obtained a $20 million federal loan guarantee from the United States Department of Agriculture. In support of this allegation, petitioner established that even though respondents prepared an application, it was never filed with the lender.

2. Respondents did not represent to investors, or place a representation in the Memorandum, that they had actually obtained a loan guarantee from the federal government. Rather, the Memorandum represented that Sea Pride was eligible for the loan guarantee. This is confirmed by language found on page 10 of the Memorandum which states that Sea Pride was seeking to "establish project eligibility for . . . Federal loan guarantees." In addition, correspondence from the Rural Development Administration to Sea Pride on August 17, 1994, states that Sea Pride "is eligible for a Business and Industry (B&I) loan

   guarantee under current program guidelines." Therefore, respondents did not falsely represent that they had obtained a federal loan guarantee, as charged in the complaint.

   CONCLUSIONS OF LAW

   
   

3. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to Section 120.57(1), Florida Statutes.

4. Because respondents are subject to penal sanctions, petitioner bears the burden of proving the allegations in the complaint by clear and convincing evidence. Dep't of Banking and Finance v. Osborne Stern & Co., 670 So. 2d 932, 933 (Fla. 1996). As to the issue of whether respondents qualify for an exemption, however, respondents bear the burden of showing their entitlement. Section 517.171, Florida Statutes.

5. The administrative complaint alleges that respondents

   
   

   (a) violated Section 517.07, Florida Statutes, "by selling unregistered securities"; (b) violated Section 517.12, Florida Statutes, "by selling securities without being registered to do so"; and (c) violated Section 517.301(1)(a)1., 2., 3., and (c), Florida Statutes, by "employ(ing) a scheme to defraud, obtain(ing) money by untrue statements of material fact and omissions of material fact, engag(ing) in transactions which operated as a fraud upon persons, and knowingly and willingly (making) false and fraudulent statements in connection with sales of stock to Florida residents."

6. As a defense to the first two charges, respondents contend that they qualify for an exemption under Section 517.061(11)(a), Florida Statutes. That provision exempts from the registration requirements of chapter 517 the following transactions:

   (11)(a) The offer or sale, by or on behalf of an issuer, of its own securities, which offer or sale is part of an offering made in accordance with all of the following conditions:

   
   

   1. There are no more than 35 purchasers, or the issuer reasonably believes that there are no more than 35 purchasers, of the securities of the issuer in this state during an offering made in reliance upon this subsection or, if such offering continues for a period in excess of 12 months, in any consecutive 12-month period.

      
      

   2. Neither the issuer nor any person acting on behalf of the issuer offers or sells securities pursuant to this subsection by means of any form of general solicitation or general advertising in this state.

      
      

   3. Prior to the sale, each purchaser or his representative, if any, is provided with, or given reasonable access to, full and fair disclosure of all material information.

      
      

   4. No person defined as a "dealer" in this chapter is paid a commission or compensation for the sale of the issuer's securities unless such person is registered as a dealer under this chapter.

      
      

   5. When sales are made to five or more persons in this state, any sale in this state made pursuant to this subsection is voidable by the purchaser in such sale either within 3 days after the first tender or consideration is made by such purchaser to the issuer, an agent of the issuer, or an escrow agent or within 3 days after the availability of that

      privilege is communicated to such purchaser, whichever occurs later.

      
      

7. As to the first element of the statute, which requires that there be no more than 35 purchasers in any twelve month period, the evidence shows that Sea Pride limited the total number of purchasers to less than 35 Florida residents in a twelve-month period. In addition, each of the 31 Florida purchasers were accredited investors and thus were excluded from the calculation of the number of purchasers. Section 517.061(11)(b)5., Florida Statutes; 17 C.F.R. 230.501.

8. The second element of the exemption requires that Sea Pride not use "any form of general solicitation or general advertising" during the sale of the securities. As to this element, Rule 3E-500.007(3), Florida Administrative Code, provides that a pre-investment letter or "other written communication" is not "general solicitation or general advertising" where the issuer has reasonable grounds to believe that persons receiving such communication have "such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the prospective investment" and "are able to bear the economic risk to the prospective investment."

9. The evidence shows that respondents satisfied this portion of the exemption by limiting their solicitations in Florida to persons they reasonably believed to be accredited investors, and directing their mailing to specific affluent

   neighborhoods in Pensacola and Gulf Breeze. Petitioner's contention that respondents "sent out thousands of letters" and used other methods which constituted general solicitation or advertising within the meaning of Rule 3E-500.007(2)(a) and (b), Florida Administrative Code, has been rejected.

10. The third element requires that prior to the sale, each purchaser be "provided with, or given reasonable access to, full and fair disclosure of all material information." In other words, an investor must be given access to information, and the information to which the investor has access must be "full" and complete.

11. Sea Pride provided each investor with a copy of the Memorandum. As noted in earlier findings, besides including audited financial statements, the Memorandum fully and fairly disclosed the nature of the company, the principals involved, the risks involved, and the right of the investor to rescission under Florida law. Further, all sales were made in person, and the investors had the opportunity to ask for additional information. Finally, all investors signed a statement saying they were familiar with the investment and had the opportuntity to review the Memorandum.

12. The statutory exemption requires that respondents "provide, or give access to, full and fair disclosure of all material information." Rule 3E-500.005(5), Florida Administrative Code, gives respondents two ways in which to

    satisfy this requirement. First, paragraph (5)(a) provides that the required provision of material information

    shall be deemed to have been satisfied if prior to the sale a purchaser is given access to the following information:

    
    

    1. All material books and records of the issuer; and

       
       

    2. All material contracts and documents relating to the proposed transaction; and

       
       

    3. An opportunity to question the appropriate executive officers or partners.

       
       

13. Alternatively, Rule 3E-500.005(5)(b) provides that, at the issuer's election, an offering circular "may be provided to the purchaser," but it is not mandated. If provided, such offering circular should contain "all material risks involved in the offering."

14. Therefore, under the terms of the foregoing rule, "full and fair disclosure of all material facts" occurs when "access" is provided regardless of whether or not "material risks" are specifically discussed.

15. The second part of the exemption test is whether full disclosure was made of "all material information." As noted above, the provision may be conclusively met by "reasonable access" to the information. Rule 3E-500.005(5)(a), Florida Administrative Code. For the following reasons, however, the information pertaining to Ericsson's misdemeanor conviction is determined to be immaterial, and it is unnecessary to reach the

    question of whether the materials or access provided were available outside the Memorandum.

16. The Department contends that the misdemeanor conviction of Ericsson in January 1988 was not disclosed, and therefore respondents cannot qualify for an exemption. Neither party has cited any agency decision or Florida judicial precedent on the issue of what information is material. However, the issue has been the subject of both federal case law and SEC rulemaking. Because the Florida statute is modeled after the federal securities law on the same subject, the Florida statute will take on the same construction as placed on its federal prototype, insofar as such interpretation is harmonious with the spirit and policy of the Florida legislation. See, e. g., Pasco County Sch. Bd. v. Fla. Pub. Employees Relations Comm'n, 353 So. 2d 108, 116 (Fla. 1st DCA 1977); E. F. Hutton & Co., Inc. v. Rousseff, 537 So. 2d 978 (Fla. 1989).

17. The federal private placement regulation, Regulation D, lists information that should be provided to non-accredited investors, with a recommendation that the same information be given to accredited investors. More specifically, 17 C.F.R. 230.502(b)(2)(A) reads as follows:

    (A) Non-financial statement information. If the issuer is eligible to use Regulation A

    (s 230.251-263), the same kind of information as would be required in Part II of Form 1-A (s 239.90 of this chapter). If the issuer is not eligible to use Regulation A, the same kind of information as required in part I of a registration statement filed under the

    Securities Act on the form the issuer would be entitled to use.

    
    

18. Therefore, the federal securities regulations contemplate that the information in a private placement follow the requirements for Part I of a registration statement. Standard instructions for filing forms under the securities acts are published at 17 C.F.R. 229.400 et seq. As to prior convictions, Item 401(f) provides in relevant part as follows:

    401(f) Involvement in certain legal proceedings. Describe any of the following events that occurred during the past five years and that are material to an evaluation of the ability or integrity of any director, person nominated to become a director or executive officer of the registrant:

    * * *

    (2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

    * * *

    Instructions to Paragraph (f) of item 401.

    
    

    1. For purposes of computing the five year period, referred to in this paragraph, the date of a reportable event shall be deemed the date on which the final order, judgment or decree was entered, or the date on which any rights of appeal from preliminary orders, judgments, or decrees have lapsed.

    * * * (Emphasis added)

    Thus, an offeror need only disclose legal proceedings "that occurred during the past five years."

19. Ericsson's conviction was for a misdemeanor which occurred nearly ten years prior to the issuance of the Memorandum, and for which he was convicted more than five years

    prior to the issuance of the Memorandum. Without any guidance or interpretation from the Legislature, Department or courts which conflicts with this interpretation, respondents were reasonable in relying on the standards stated in the federal requirements.

    Indeed, other than citing the statute itself, which contains no instructive language, petitioner has given no authority or argument to the contrary. Therefore, the federal interpretation is found to be persuasive, and it is hereby accepted. Pasco Cty. School Bd., supra. Accordingly, respondents were not required to disclose a misdemeanor conviction which occurred more than five years before the offering.

20. As to Yvonne Rochelle Higgins' background, the established facts show that despite her corporate title, Higgins was not an executive officer of the corporation. Indeed, she made no corporate decisions, had no corporate voting authority, and had no control over the direction and operation of the company. Also, there was no evidence that Ericsson knew of her criminal history when she was hired, and that once he learned of her background, she was immediately removed from any official status. Given these circumstances, it is concluded that disclosure of Higgins' background was not required.

21. The Department also contends that respondents were required to disclose the criminal background of Lawrence B. Ackland. The record shows, however, that Ackland was an independent contractor, and not an employee, who worked for Sea

    Pride for a limited period of time and had no influence over or control of the firm at any time. Therefore, disclosure was not required.

22. Based on the analysis in paragraphs 33-44, it is concluded that prior to the sale of the stock, each purchaser was provided with, or given reasonable access to, full and fair disclosure of all material information.

23. Section 517.06(11)4., Florida Statutes, requires that no person defined as a "dealer" be paid a commission or compensation. As to this requirement, it is noted that Sea Pride used only its own employees for sale of stock. Under Section 517.021(6)(b), Florida Statutes, a "dealer" does not include:

    . . . any person associated with an issuer of securities if such person is a bona fide employee of the issuer who has not participated in the distribution or sale of any securities wihtin the previous 12 months and who primarily performs, or is intended to perform at the end of the distribution, substantial duties for, or on behalf of, the issuer other than in connection with transactions in securities.

    The evidence shows that after the distribution of stock was completed, both Hawk and Baker were to be assigned "substantial" duties other than in sales. Although the Department contends otherwise, the more persuasive evidence shows that neither individual received a commission for the sale of stock.

    Therefore, respondents fully complied with this provision.

    
    

24. The final element is a requirement in Section 517.061(11)5. that when sales are made to five or more persons in

    this state, such sales are voidable within three days after the first tender of consideration is made. The evidence shows that the Memorandum contained a notice of this rescission right on page 6. Therefore, this provision of the exemption has been satisfied.

25. Petitioner's allegations that respondents made fraudulent misrepresentations fall into two categories: those allegations relating to material information that was omitted in the Memorandum and the allegation that respondent represented that it had obtained a federal loan guarantee for which it was only eligible. The former allegations have been previously resolved in respondents' favor. As to the allegation regarding the federal loan guarantee, there was no evidence that Sea Pride or any employee ever represented any fact other than the fact that Sea Pride had been determined to be eligible for the loan guarantee. Although petitioner argued that Sea Pride could not be eligible for a loan guarantee without submitting an application, this assertion is contradicted by a letter from a federal agency received in evidence as respondents' exhibit 10. This being so, the contention that respondents violated Sections 517.301(1)(a)1., 2., 3., and (c), Florida Statutes, must fail.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that the Department of Banking and Finance enter a final order dismissing the administrative complaint with prejudice.

DONE AND ENTERED this 21st day of July, 1997, in Tallahassee, Leon County, Florida.

COPIES FURNISHED:

DONALD R. ALEXANDER

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 21st day of July, 1997.

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

Harry L. Hooper, III, Esquire Department of Banking and Finance Room 1302, The Capitol Tallahassee, Florida 32399-0350

Clyde C. Caillouet, Jr., Esquire 4900 Bayou Boulevard, Suite 103

Pensacola, Florida 32503

Donald A. Rett, Esquire Carol A. Forthman, Esquire

131 North Gadsden Street Tallahassee, Florida 32301-1507

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within fifteen days from the date of this recommended order. Any exceptions to this recommended order should be filed with the Department of Banking and Finance.

Docket for Case No: 96-005607

Orders for Case No: 96-005607