vs.
Respondent.
) Case No. 01-2573
Pursuant to notice, a formal hearing was conducted in this case on September 7, 2001, in Fort Myers, Florida, before
Jeff B. Clark, an Administrative Law Judge with the Division of Administrative Hearings.
Mark Herron, P.A.
For Respondent: Eric M. Lipman, Esquire
The issues presented for determination are whether Respondent violated Subsections 106.11(3) and 106.19(1)(d), Florida Statutes, as alleged in the Order of Probable Cause
dated May 22, 2001, and the Statement of Findings dated April 3, 2001.
On May 9 and 10, 2001, the Florida Elections Commission (Commission) entered an Order of Probable Cause dated May 22, 2001, alleging that Bruce Grady (Petitioner), as a candidate for Mayor, City of Fort Myers, Florida, willfully violated portions of Chapter 106, Florida Statutes, "Florida's Campaign Financing Law," on two occasions. The Order of Probable Cause advised Respondent of his entitlement to a formal hearing before the Division of Administrative Hearings. On June 19, 2001, Respondent, through counsel, requested a formal administrative hearing.
By letter of June 28, 2001, the Chairman of the Commission transmitted the case to the Division of Administrative Hearings and requested that the case be assigned to an Administrative Law Judge for formal hearing. On July 9, 2001, this case was set for final hearing on September 7, 2001, in Fort Myers, Florida.
At the hearing, the Commission called three witnesses, Keith Smith, Mary Carbone and Jim Thomas, and offered eleven exhibits (Commission's Exhibits 1-11), which were received in evidence. Petitioner called two witnesses, John Grady, Petitioner's father who served as his campaign treasurer, and
himself. Petitioner offered two exhibits (Petitioner's Exhibits 1-2), which were received in evidence.
A Transcript of the proceedings was filed on October 9, 2001. Both parties timely filed Proposed Recommended Orders.
Based on the testimony, the documentary evidence, the entire record of this proceeding, and the facts admitted in the Joint Pre-Hearing Stipulation, the following Findings of Fact are made:
Respondent was a candidate for re-election for the office of Mayor of Fort Myers, Florida, at the election held on October 3, 2000.
Petitioner had previously entered into a Consent Order with the Commission which resolved Florida Elections Commission Cases 96-288 and 97-141.
One of the allegations resolved in the Consent Order was that, during his 1996 mayoral campaign, Petitioner violated Subsection 106.11(3), Florida Statutes, while Petitioner served as his own deputy campaign treasurer and had control of the campaign checking account. This is the same section alleged to have been violated in this case.
In an attempt to avoid the same difficulties that had occurred in the 1996 campaign, Petitioner assigned his father,
John Grady, the responsibility of campaign treasurer for the 2000 campaign.
John Grady actively controlled the campaign account and used Quicken, a bookkeeping computer software program, to provide day-to-day campaign account activity reports. Petitioner was given updated reports reflecting the status of the campaign account every two or three days. He was, however, aware of every major campaign expenditure.
Sometime prior to September 22, 2000, Petitioner met with Tom Chapman, a representative of National Media Services, Inc., to discuss a "media buy" for campaign advertising. National Media Services, Inc., is an audio/video production and consulting company which produces television commercials and does media planning and placement. As a result of his meeting with Mr. Chapman, Petitioner was aware of the cost of his potential "media buy."
On September 22, 2000, at approximately 10:00 a.m., John Grady, the campaign treasurer, made a $1,150 deposit into the campaign account. Later that same day, at approximately 1:30-2:00 p.m., John Grady received a check from Petitioner for
$10,000 (a campaign loan) and became aware that Petitioner anticipated making the "media buy" later that day.
On the same day, at approximately 4:00 p.m.; John Grady made a second deposit into the campaign account. This deposit was for $15,650 and included Petitioner's $10,000 campaign loan.
After John Grady made the second bank deposit on September 22, 2000, his Quicken bookkeeping program showed
$18,626.49 in the campaign account. After he made the second deposit, John Grady gave Petitioner a campaign check payable to National Media Services, Inc., in the amount of $15,850.
At about 5:30-6:00 p.m., Petitioner met, once again, with Tom Chapman, National Media Services, Inc., and instructed him to make the "media buy" and tendered the campaign check. The campaign check payable to National Media Services, Inc., was deposited in its account on Monday, September 25, 2000.
When Petitioner tendered the $15,850 campaign check to National Media Services, Inc., he knew that sufficient funds had been deposited in the campaign account and that the check would be honored.
The campaign account was at the Fifth Third Bank, Fort Myers, Florida. Rules and Regulations Applicable to all Fifth Third Accounts and Cards provides that "[t]he date of deposit will vary at certain affiliate banks. Funds received after certain cut-off times may be credited as of the next business day." The deposit cut-off for Fifth Third branches in Florida is 2:00 p.m.; any deposit received after that time is
credited the next business day. The effect of this rule is that any deposit made before 2:00 p.m. will post ten hours later to a customer's account at midnight of the same day. Any deposit made after 2:00 p.m. will post, at least, 34 hours later to a customer's account, at midnight the next business day.
In addition to the posting rules, the Fifth Third Bank has specific rules on the availability of funds. Regarding the deposit of local checks, "[t]he first $100 from a deposit of a local check will be available on the first business day after your deposit. The remaining funds will be available no later than the second business day after your deposit." Regarding nonlocal checks, "[t]he first $100 from a deposit of a nonlocal check will be available on the first business day after your deposit. The remaining funds will be available no later than the third business day after the day of your deposit." Under the funds availability policies of Fifth Third Bank, funds would not have been available for the campaign to write a check to National Media Services, Inc., had both deposits been made prior to 2:00 p.m. on the afternoon of September 22, 2000.
The September statement for the campaign account shows the first deposit on September 22, 2000, in the amount of $1,150 as having been "posted" to the account on September 22, 2000, and the second deposit of September 22, 2000, in the amount of
$15,650 as having been "posted" to the account on September 25,
2000. The check from the campaign to National Media Services, Inc., was honored by Fifth Third Bank on September 26, 2000.
The records of the Fifth Third Bank reflect that all campaign account checks were honored and the campaign account was never overdrawn.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this cause, pursuant to Subsections 106.25(5) and 120.57(1), Florida Statutes.
The burden of proof in this administrative proceeding is on the Commission, as the party asserting the affirmative of the issue. Department of Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern & Company, 670 So. 2d 932, 934 (Fla. 1996); Department of Transportation v. J. W. C. Company, Inc., 396 So. 2d 778 (Fla. 1st DCA 1981).
The Commission, in its Order of Probable Cause, made the following findings:
Probable cause to believe that Petitioner violated Section 106.11(3), Florida Statutes, prohibiting a candidate from incurring an expense for the purchase of goods or services without sufficient funds on deposit in the primary campaign depository to pay the full amount of the incurred expenses, to honor all outstanding checks, and to pay all previously authorized but unpaid expenses, on one occasion; and
Probable cause to believe that Petitioner violated Section 106.19(1)(d), Florida Statutes, prohibiting a person or organization from making or authorizing any expenditure prohibited by this chapter on one occasion;
Pursuant to Section 106.265, Florida Statutes, the Commission seeks to impose a civil penalty on Petitioner in the form of a fine not to exceed $1,000 per count. Pursuant to Subsection 106.19(2), Florida Statutes, any candidate who knowingly and willfully violates paragraph (1)(d) of
Section 106.19 shall be subject to a civil penalty equal to three times the amount involved in the illegal act.
Chapter 106.37, Florida Statutes, defines "willful violations" as follows:
A person willfully violates a provision of this chapter if the person commits an act while knowing that, or showing reckless disregard for whether, the act is prohibited under this chapter, or does not commit an act while knowing that, or showing reckless disregard for whether, the act is required under this chapter. A person knows that an act is prohibited or required if the person is aware of the provision of this chapter which prohibits or requires the act, understands the meaning of that provision, and performs the act that is prohibited or fails to perform the act that is required.
A person shows reckless disregard for whether an act is prohibited or required under this chapter if the person wholly disregards the law without making any reasonable effort to determine whether the act would constitute a violation of this chapter.
The Commission suggests that the importance of protecting the integrity of the election process, as opposed to merely punishing wrongdoers, makes administrative enforcement actions enforcing Chapter 106, Florida Statutes, "remedial" in nature, and suggests a lesser "preponderance of evidence" standard. Of equal importance is the right of citizens to seek public office; the ruinous effect a determination that the candidate has violated Chapter 106, Florida Statutes, has on an individual's reputation for personal integrity, and the potential of a fine (Commission suggests an appropriate fine in this case is $48,550) makes administrative enforcement actions of Chapter 106, Florida Statutes, essentially penal in nature and warrants a greater standard of proof, "clear and convincing evidence." Banking & Finance v. Osborne Stern, supra; Latham v.
Florida Commission on Ethics, 694 So. 2d 83 (Fla. 1st DCA 1997).
Subsection 120.57(1)(j), Florida Statutes, provides:
Findings of fact shall be based upon a preponderance of the evidence, except in penal or licensure disciplinary proceedings or except as otherwise provided by statute, and shall be based exclusively on the evidence of record and on matters officially recognized.
Florida law mandates application of the clear and convincing standard of proof in proceedings which are penal in nature, which correctly characterizes this proceeding. Chapter 106, Florida Statutes, does not specify a different burden of proof.
Therefore, the clear and convincing standard applies to administrative proceedings attempting to prove a willful violation of Chapter 106, Florida Statutes.
The "clear and convincing" standard requires:
[T]hat the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The 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.
In Re: Davey, 645 So. 2d 398, 404 (Fla. 1994), quoting Slomowitz
v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983).
Subsection 106.11(3), Florida Statutes, provides as follows:
(3) No candidate, campaign manager, treasurer, deputy treasurer, or political committee or any officer or agent thereof, or any person acting on behalf of any of the foregoing, shall authorize any expenses, nor shall any campaign treasurer or deputy treasurer sign a check drawn on the primary campaign account for any purpose, unless there are sufficient funds on deposit in the primary depository account of the candidate or political committee to pay the full amount of the authorized expense, to honor all other checks drawn on such account, which checks are outstanding, and to meet all expenses previously authorized but not yet paid. However, an expense may be incurred for the purchase of goods or services if there are sufficient funds on deposit in the primary depository account to
pay the full amount of the incurred expense, to honor all checks drawn on such account, which checks are outstanding, and to meet all other expenses previously authorized but not yet paid, provided that payment for such goods or services is made upon final delivery and acceptance of the goods or services; and an expenditure from petty cash pursuant to the provisions of s. 106.12 may be authorized, if there is a sufficient amount of money in the petty cash fund to pay for such expenditure. Payment for credit card purchases shall be made pursuant to s. 106.125. Any expense incurred or authorized in excess of such funds on deposit shall, in addition to other penalties provided by law, constitute a violation of this chapter.
The facts in this case demonstrate that Petitioner, having violated Chapter 106.11(3), Florida Statutes, in a previous campaign, made an effort to ensure that sufficient funds had been deposited in the campaign account so that the campaign check he tendered to National Media Services, Inc., would be honored when presented for payment. To that end he loaned his campaign $10,000, and being aware that his campaign treasurer had deposited $16,800 into the campaign account that day, accepted the check from his campaign treasurer. He reasonably believed that the campaign check would be honored when presented, and, in fact, it was.
Statutes that authorized the imposition of a penal sanctions must be strictly construed and any ambiguity must be
construed in favor of Petitioner. Elmariah v. Department of Business and Professional Regulation, 574 So. 2d 164, 165 (Fla. 1st DCA 1990). The Florida lenity statute, Subsection
775.021(1), Florida Statutes, provides that: "offenses" defined by any Florida Statutes must be construed most favorably to the offender if the language is susceptible to different meanings.
Pasquale v. Florida Elections Commission, 759 So. 2d 23, 26 (Fla. 4th DCA 2000).
"Honor," we are advised by The American Heritage Dictionary of the English Language: Fourth Edition 2000, is a transitive verb that means, "3. To accept or pay as valid: honor a check"; the same dictionary advises that "deposit" is a
transitive verb that is defined as, "3a. To give over or entrust for safekeeping. b. To put (money) in a bank or financial account."
Utilizing the clear language and plain meaning of the statute, the facts fail to prove that Petitioner acted with knowing indifference or reckless disregard of the provisions of Chapter 106. Willfulness involves an intentional, conscious, knowing act on the part of Petitioner. In Sanders v. Florida Elections Commission, 407 So. 2d 1069 (Fla. 4th DCA 1981) the Fourth District Court of Appeals quoted approvingly from County
Canvassing Board v. Lester, 118 So. 201, 202-203 (Fla. 1928):
Every voluntary act of a person is intentional, and therefore in a sense willful, but generally speaking, and usually when considering statutes of the character mentioned, a voluntary act becomes "willful" in law only when it involves some degree of conscious wrong on the part of the actor, or at least culpable carelessness on his part, something more than a mere omission to perform a previously imposed duty.
Sanders, 118 So. at 1070.
Petitioner signed a statement that he had received, read, and understood the provisions of Chapter 106, Florida Statutes. This fact, standing alone, is not dispositive of the issue of willfulness. It is one thing to beware of and understand what a provision says, and quite another to beware of and understand what the same provision means. In re: Sandra B. Mortham, Case No. FEC 94-98 (1994). As the Supreme Court explained in TWA v. Thurston, 469 U.S. 111, 126, 105 S.Ct. 613, 624 (1985), a person acts willfully when he "wholly disregards the law without making any reasonable effort to determine whether the plan he is following would constitute a violation of law." The evidence does not prove that Petitioner acted with the required willfulness.
The Commission has failed to prove by any quantum of proof that Petitioner violated Subsection 106.11(3), Florida Statutes, and, inferentially, Subsection 106.19(1)(d), Florida Statutes.
It is recommended that the Florida Elections Commission enter a final order dismissing all charges against Petitioner, Bruce Grady.
DONE AND ENTERED this 26th day of November, 2001, in Tallahassee, Leon County, Florida.
JEFF B. CLARK
Filed with the Clerk of the Division of Administrative Hearings this 26th day of November, 2001.
Mark Herron, Esquire Mark Herron, P.A.
Eric M. Lipman, Esquire Florida Elections Commission The Capitol, Room 2002
Barbara M. Linthicum, Executive Director Florida Elections Commission
Florida Elections Commission The Capitol, Room 2002 Tallahassee, Florida 32399-1050
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.
