THE TREASURER OF THE STATE OF FLORIDA DEPARTMENT OF INSURANCE BILL NELSON ° . coe IN THE MATTER OF: CASE NO.: 34683-00-A%G ALLAN BURTON CARMEL xe C. 7 . | COMBS ADMINISTRATIVE COMPLAINT TO: ALLAN BURTON CARMEL 1599 MARINER WAY HOLLYWOOD, FL 33019-5017 ALLAN BURTON CARMEL KING CARMEL INSURANCE, INC. 11601 NORTHWEST 7™ AVENUE MIAMI, FL 33168-2507 ALLAN BURTON CARMEL BEST BUDGET PLAN, INC. 11601 NORTHWES 7™ AVENUE MIAMI, FL 33168-2507 You, ALLAN BURTON CARMEL, are hereby notified that the Insurance Commissioner of the State of Florida has caused to be made an investigation of your activities while licensed as an insurance agent in this state, as a result of which it is alleged: GENERAL ALLEGATIONS 1. Pursuant to Chapter 626,-Florida Statutes, you, ALLAN BURTON CARMEL, are currently licensed in this state as a life, life and health. general lines and health insurance agent. 2. At all times pursuant to the dates and occurrences referred to herein, you, ALLAN BURTON CARMEL, were licensed in this state as an insurance agent. 3. At all times pursuant to the dates and occurrences referenced to herein, you, ALLAN BURTON CARMEL, were and are the Vice-President of Best Budget Plan, Inc., a domestic premium finance company licensed by the Department. You, ALLAN BURTON CARMEL, were and are President of King Carmel Insurance, Inc., an insurance agency doing business in the State of Florida. 4. Pursuant to Chapter 626, Florida Statutes, the Insurance Commissioner and the Florida Department of Insurance has jurisdiction over your insurance licenses and your eligibility for licensure and appointment. COUNT I 5. The above general allegations one through four are hereby realleged and incorporated by reference herein. 6. During the time period between January 1, 1996 through September 30, 1999, you, ALLAN BURTON CARMEL, deposited insurance cancellation and/or overpayment refund checks made payable to insureds into bank accounts belonging to Best Budget Plan, Inc., King Carmel Insurance, Inc., King Exchange, and Country Club Cleaners, by signing the insureds’ name, without their knowledge, and endorsing the checks for your personal benefit. 7. The Department determined that over 1,200 refund checks were misappropriated by you, ALLAN BURTON CARMEL, during that time period, in an amount totaling approximately $68,000.00. 8. The refund checks were deposited into the following bank accounts by you, ALLAN BURTON CARMEL, in the following manner: Approximately 140 checks were deposited into Best Budget Plan, Inc.’s account totaling approximately $4,100.00; approximately 500 checks were deposited into King Carmel Insurance, Inc.’s account totaling approximately $44,000.00; approximately 440 checks were deposited into King Exchange’s account totaling approximately $12,750.00; and approximately 200 checks were deposited into Country Club Cleaners’ account totaling approximately $7,500.00. 9. Best Budget Plan, Inc. is wholly owned by William Carmel, President, but managed by you, ALLAN BURTON CARMEL. 10. King Carmel Insurance, Inc. is also owned by William Carmel, but managed by you, ALLAN BURTON CARMEL. 11. You, ALLAN BURTON CARMEL, admitted to having signed and endorsed the aforementioned refund checks, then depositing them for your own benefit. 12. There is no evidence to establish that complete restitution has been made to the insureds, IT IS THEREFORE CHARGED that you, ALLAN BURTON CARMEL, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Insurance which constitute grounds for the suspension or revocation of your licenses and appointments as an insurance agent. (a) All premiums, return premiums, or other funds belonging to insurers or others received by an agent. . .in transaction under his or her license are trust funds received by the licensee in a fiduciary capacity. An agent shall keep the funds belonging to each insurer for which he or she 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. [Section 626.561(1), Florida Statutes]; (b) Lack of one or more of the qualifications for the license or appointment as specified in this code. [Section 626.611(1), Florida Statutes]; (c) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. [Section 626.61 1(7), Florida Statutes]; (d) Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.611(9), Florida Statutes] (e) 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. [Section 626.611(10), Florida Statutes]; () 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. [Section 626.61 1(13), Florida Statutes]; (g) 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. [Section 626.621(2), Florida Statutes]; (h) Violation of any lawful order or rule of the department. [Section 626.621(3), Florida Statutes]; (i) In the conduct of business under the license or appointment, engaging in unfair methods of competition or deceptive acts or practices, as prohibited under part X of this chapter, or having otherwise shown himself or herself to be a source of injury or loss to the public or detrimental to the public interest. [Section 626.621(6), Florida Statutes]. COUNT II 13. The above general allegations one through four and Count I five through twelve are hereby realleged and incorporated by reference herein. 14, . You, ALLAN BURTON CARMEL, are the Vice-President of Best Budget Plan, Inc., a domestic premium finance company licensed by the Department. As such you, ALLAN BURTON CARMEL, managed the affairs of Best Budget Plan, Inc. You, ALLAN BURTON CARMEL, are President of King Carmel Insurance, Inc., an insurance agency doing business in the State of Florida through Department licensees. 15. Atall times during which the alleged actions occurred, you ALLAN BURTON CARMEL, were and now are, a director, officer, employee, trustee, committee member, controlling stockholder or agent of Best Budget Plan, Inc., a premium finance company authorized to do business in this state pursuant to a certificate of authority under the Florida Insurance Code and which is a “licensee” as defined in section 624.310(1)(b), Florida Statutes. 16. At all times during which the alleged actions occurred you, ALLAN BURTON CARMEL, were and now are, a director, officer, employee, trustee, committee member, controlling stockholder, or agent of King Carmel Insurance, Inc., an insurance agency doing business in the State of Florida. 17. You, ALLAN BURTON CARMEL, were, at the time the actions alleged occurred, and are now, an affiliated party as defined in section 624.310, Florida Statutes, because you were a director, officer, employee, trustee, committee member, controlling stockholder or agent of the above-mentioned companies, and because you directed or participated in the conduct of the affairs of certain licensees of the Department, including Best Budget Plan, Inc., and the insurers that you represent and do business with through Best Budget Plan, Inc. and King Carmel Insurance, Inc., in your capacity as an insurance agent. 19. You, ALLAN BURTON CARMEL, were, at the time the actions alleged occurred, and are now, an affiliated party as defined in section 624.310, Florida Statutes, in that you had Department licensees under your direct control and management, as insurance agents under your employ, in your capacity as Vice-President of Best Budget Plan, Inc. and King Carmel Insurance, Inc. 20. Atall times during which the alleged actions occurred, you, ALLAN BURTON CARMEL, were licensed as a Life (2-16), Life and Health (2-18), General Lines (2-20), and Health (2-40) insurance agent, in the State of Florida. You, ALLAN BURTON CARMEL, are currently licensed as a Life (2-16), Life and Health (2-18), General Lines (2-20), and Health (2- 40) insurance agent, in the State of Florida. 21. Atal times during which the alleged actions occurred, you ALLAN BURTON CARMEL, as an licensed Florida agent, held an appointment from the following insurers, each a “licensee” as defined in section 624.310(1)(b), Florida Statutes: Florida Residential P & C-Joint Underwriters, LifeUSA Insurance Company, Lincoln Benefit Life Company, American Equity Investment Life Insurance, Transamerica Occidental Life Insurance Company, Unum Life Insurance Company of America, Transamerica Life Insurance and Annuity Company, Senior American Life Insurance Company, Southland Life Insurance Company, Golden Rule Insurance Company, Surety Life Insurance Company, Alta Health & Life Insurance Company, Fortune Life Insurance Company, Conseco Life Insurance Company, Travelers Insurance Company, Ameritas Life Insurance Corp., Pan-American Life Insurance Company, Lone Star Life Insurance Company, Fortis Insurance Company, Fortis Benefits Insurance Company, American 6 Pioneer Life Insurance Company, PFL Life Insurance Company, Bankers United Life Assurance Company, Fortune Insurance Company, Integon National Insurance Company, Merchants and Business Men’s Mutual Insurance, Transport Insurance Company, Progressive Home Insurance Company, PCA Property & Casualty Insurance Company, Integon Indemnity Corporation, Integon General Insurance Corporation, TIG Premier Insurance Company, Associated Industries Insurance Company, Integon Preferred Insurance Company, Union American Insurance Company, MGA Insurance Company, Inc., Legion Insurance Company, Universal Property & Casualty Insurance, Explorer Insurance Company, Humana Health Insurance Company of Florida, Humana Medical Plan, Inc., and American Dental Plan Inc. 22. You, ALLAN BURTON CARMEL, currently remain appointed with each of those insurers except the following: Transamerica Occidental Life Insurance Company, Unum Life Insurance Company of America, Transamerica Life Insurance & Annuity Co., Senior American Life Insurance Company, Ameritas Life Insurance Corp., Pan-American Life Insurance Company, Lone Star Life Insurance Company, Fortune Insurance Company, Transport Insurance Company, Progressive Home Insurance Company, PCA Property & Casualty Insurance Company, Integon Indemnity Corporation, Integon General Insurance Corporation, Associated Industries Insurance Company, and Integon Preferred Insurance Company. 23. | You, ALLAN BURTON CARMEL, have added appointments, which are current, with each of the following insurers: Great American Life Insurance Company, Midland Life Insurance Company, and Granada Insurance Company. 24. Based on its review of documents during its investigation, the Department has determined that during the time period between January 1, 1996, through September 30, 1999, you, ALLAN BURTON CARMEL, withheld from insureds, fiduciary funds entrusted to you by the insurers in the form of refund checks which were to be disbursed to the insureds, by endorsing those checks, and depositing said checks into bank accounts belonging to Best Budget Plan. Inc., King Carmel Insurance, Inc., King Exchange, and Country Club Cleaners for your personal gain, thus depriving the insureds of their money. 25. The Department determined that over 1,200 refund checks were misappropriated by you, ALLAN BURTON CARMEL, during that time period, in an amount totaling approximately $68,000.00. 26. The refund checks were deposited into the following bank accounts by you, ALLAN BURTON CARMEL, in the following manner: Approximately 140 checks were deposited into Best Budget Plan, Inc.’s account totaling approximately $4,100.00: approximately 500 checks were deposited into King Carmel Insurance, Inc.’s account totaling approximately $44,000.00; approximately 440 checks were deposited into King Exchange’s account totaling approximately $12,750.00; and approximately 200 checks were deposited into Country Club Cleaners’ account totaling approximately $7,500.00. 27. The misappropriation and depositing of insureds’ refunds into the above- referenced accounts is a violation of the Insurance Code and a breach of fiduciary duty involving personal dishonesty on the part of you, ALLAN BURTON CARMEL, the affiliated party, which caused you, ALLAN BURTON CARMEL, to receive financial gain by reason of the violation, act, or breach of fiduciary duty. Additionally, by depriving the policyholders of their refunds, the interests of the policyholders and/or public were seriously prejudiced by reason of the violation or act or breach of fiduciary duty. 28. Any agent who either temporarily or permanently diverts or misappropriates funds or any portion thereof or deprives a person of a benefit from those funds can be charged with a felony of the second degree pursuant to section 626.561, Florida Statutes, and is punishable as provided in sections 775.082, 775.083, and 775.084, Florida Statutes. 29. The severity of the conduct and the potential penalty are strong indicia of the serious threat to the public health, safety, and welfare that would result from ALLAN BURTON CARMEL ’s continued unrestricted participation in the affairs of licensees under the Florida Insurance Code. The danger is magnified when one is in the extremely powerful position of officer/director of a premium finance company and an insurance agency, as ALLAN BURTON CARMEL is Vice-President of Best Budget Plan, Inc., and President of King Carmel Insurance, Inc., which allows the individual to direct the actions of company employees or provides the individual with the ability to control or directly control company funds. 30. Pursuant to section 624.310, Florida Statutes, the Florida Department of Insurance has jurisdiction over any affiliated party who directs or participates in the conduct of the affairs of a licensee, and therefore, this Department has jurisdiction to issue this Complaint. Resignation or termination of an affiliated party does not affect the Department’s jurisdiction to proceed under this section. IT IS THEREFORE CHARGED that you, ALLAN BURTON CARMEL, have violated or are accountable under Sections 626.561, 626.611, and 626.621 as more fully set out in Count I above, and in addition, the following provisions of the Florida Insurance Code and Rules of the Department of Insurance which constitute grounds for your removal from office as an affiliated party of any current or future licensee in this state: (a) An act that demonstrates a lack of fitness or trustworthiness to engage in the business of insurance through engaging in illegal activity or mismanagement of business activities. [Section 624.310(4)(a)1., Florida Statutes]; (b) A willful violation of any law relating to the business of insurance. (Section 624.310(4)(a)2., Florida Statutes. ] (c) A violation of any other law involving fraud or moral turpitude that constitutes a felony. [Section 624.310(4)(a)3., Florida Statutes]; (d) A willful violation of any rule of the department. [Section 624.3 10(4)(a)4., Florida Statutes]; (e) A material mistepresentation of fact, made knowingly and willfully or made with reckless disregard for the truth of the matter. [Section 624.310(4)(a)6., Florida Statutes]; (f) An act of commission or omission or a practice which is a breach of trust or a breach of fiduciary duty. [Section 624.310(4)(a)7., Florida Statutes; WHEREFORE, you, ALLAN BURTON CARMEL, are hereby notified that the Treasurer and Insurance Commissioner intends to enter an Order revoking your licenses and appointments as an insurance agent and to remove you as an affiliated party from any current or future licensees in the State of Florida and to impose such penalties as may be provided under the provisions of sections 624.310, 626.611, and 626.621, Florida Statutes, and under the other referenced sections of the Florida Statutes as set out in this Administrative Complaint or other applicable law. You are further notified that any order entered in this case revoking or suspending any license or eligibility for licensure held by you shall also apply to all other licenses and eligibility held by you under the Florida Insurance Code and that any order entered in this case removing you as an affiliated party of any licensee in this state shall render you ineligible for reelection or appointment to the position or to any other official position in any licensee in this state. NOTICE OF RIGHTS Pursuant to sections 120.569 and 120.57, Florida Statutes and Rule Chapter 28-106, Florida Administrative Code (F.A.C.), you have the right to request a proceeding to contest this action by the Department. You may elect a proceeding by completing the attached Election of Rights form or filing a Petition. Your Petition or Election of a proceeding must be in writing and must be filed with the General Counsel acting as the Agency Clerk, Department of Insurance. If served by U.S. Mail the Petition or Election should be addressed to the Florida Department of Insurance at 612 Larson Building, Tallahassee, Florida 32399-0333. If Express Mail or hand- delivery is utilized, the Petition or Election should be delivered to 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399-0333. The Petition or Election must be received by, and filed in the Department within twenty-one (21) days of the date of your receipt of this notice. YOUR FAILURE TO RESPOND TO THIS ADMINISTRATIVE COMPLAINT WITHIN TWENTY-ONE (21) DAYS WILL CONSTITUTE A WAIVER OF YOUR RIGHT TO REQUEST A PROCEEDING ON THE MATTERS ALLEGED HEREIN, AND WILL RESULT IN AN ORDER OF REVOCATION BEING ENTERED AGAINST YOU, AND WILL RESULT IN THE ENTRY OF AN ORDER PERMANENTLY PROHIBITING YOUR PARTICIPATION IN THE AFFAIRS OF THE ABOVE- NAMED LICENSEES OR ANY OTHER LICENSEES OF THIS DEPARTMENT, AND PERMANENTLY PROHIBITING YOU FROM ENGAGING IN THE BUSINESS OF INSURANCE. If'a proceeding is requested and there is no dispute of fact the provisions of section 120.57(2), Florida Statutes would apply. In this regard you may submit oral or written evidence in opposition to the action taken by this agency or a written statement challenging the grounds upon which the agency has relied. While a hearing is normally not required in the absence of a dispute of fact, if you feel that a hearing is necessary one will be conducted in Tallahassee, Florida or by telephonic conference call upon your request. 11 If you dispute material facts which are the basis for this agency’s action you may request a proceeding pursuant to sections 120.569 and 120.57(1), Florida Statutes. If you request this type of proceeding, the request must comply with all of the requirements of Rule Chapter 28- 106, F.A.C. and contain a) A statement identifying with particularity the allegations of the Department which you dispute and the nature of the dispute; b) An explanation of what relief you are seeking and believe you are entitled to; c) Any other information which you contend is material. These proceedings are held before the State administrative law judge of the Division of Administrative Hearings. Unless the majority of witnesses are located elsewhere the Department will request that the hearing be conducted in Tallahassee. If you request a hearing, you have the right to be represented by counsel, or other qualified representative, to take testimony, to call and cross-examine witnesses, and to have subpoena and subpoena duces tecum issued on your behalf. You are hereby notified that mediation under section 120.573, Florida Statutes, is not available. Failure to follow the procedure outlined with regard to your response to this notice may result in the request being denied. All prior correspondence in this matter shall be considered freeform agency action, and no such correspondence shall operate as a valid request for an administrative proceeding. Any request for administrative proceeding received prior to the date of this notice shall be deemed abandoned unless timely renewed in compliance with the guidelines as set out above. DATED and SIGNED this of9M day of Syphinhen. 2000. B ILL NELSON Treasurer and Insurance Commissioner

Docket for Case No: 00-004544PL