STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA DEPARTMENT OF ) BUSINESS AND PROFESSIONAL ) REGULATION, DIVISION OF REAL ) ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 02-2836

) MARIA L. NUEVO and REALCO ) REALTY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division of Administrative Hearings, conducted the final hearing in Miami, Florida, on March 6, 2003.

APPEARANCES

For Petitioner: Christopher J. DeCosta

Senior Attorney Division of Real Estate

Department of Business and Professional Regulation

400 West Robinson Street, Suite N-809 Orlando, Florida 32801

For Respondents: Michael H. Wolf

Michael H. Wolf & Associates, LLC. 3832 North University Drive Sunrise, Florida 33322

STATEMENT OF THE ISSUES

The issues are whether Respondents committed fraud, in violation of Section 475.25(1)(b), Florida Statutes; failed to prepare monthly trust account reconciliations, in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code; failed to account for or deliver funds, in violation of Section 475.25(1)(d)1, Florida Statutes; and failed to preserve books and accounts, in violation of Rule 61J2-14.012(1), Florida Administrative Code.

PRELIMINARY STATEMENT

By Administrative Complaint dated November 14, 2001, Petitioner alleged that Respondent Nuevo was a licensed real estate broker acting as a qualifying broker with registered corporate real estate broker, Respondent Realco Realty.

The Administrative Complaint alleges that, on September 4, 2000, Respondent Nuevo "facilitated" a purchase and sale contract between Omar Canizares, as buyer, and Lorraine Lambo, as seller, for property known as 10620 Southwest 139th Street, Miami. The contract allegedly states the purchase price as

$260,000 and the escrow deposit as $1000, which was to be held by Respondent Realco Realty. The contract allegedly provides that the buyer was to deposit an additional $4000 with Respondent Realco Realty within three business days. The

Administrative Complaint alleges that "Respondent" never received any of the deposits.

The Administrative Complaint alleges that the contract called for the closing to take place on or before September 30, 2000, and the parties selected Trust Title Insurance, Inc., to serve as closing agent. The Administrative Complaint alleges that, on September 18 and October 3, 2000, employees of Pedro Realty, which was the seller's agent, asked Respondent Nuevo to provide copies of the escrow letter, pre-qualification letter, and seller's disclosure letter. However, the Administrative Complaint alleges that Respondent never provided the requested information.

Count I of the Administrative Complaint alleges that Respondent Nuevo is guilty of fraud, misrepresentation, concealment, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction, in violation of Section 475.25(1)(b), Florida Statutes.

Count II of the Administrative Complaint alleges that Respondent Realco Realty is guilty of fraud, misrepresentation, concealment, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction, in violation of Section 475.25(1)(b), Florida Statutes.

The Administrative Complaint alleges that, on September 22, 2000, pursuant to the above-described contract, Respondent Nuevo requested an appraisal for the subject property. The Administrative Complaint alleges that, on the same day, Respondent Nuevo faxed an Appraisal Request Form to Appraisal Services of South Florida. The Administrative Complaint alleges that the Appraisal Request Form, prepared by Respondent Nuevo, lists the sales price of the subject property as $325,000. The Administrative Complaint alleges that, on September 27, 2000, Respondent Nuevo faxed an altered copy of the contract listing the sales price as $310,000.

Count III of the Administrative Complaint alleges that Respondent Nuevo is guilty of fraud, misrepresentation, concealment, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction, in violation of Section 475.25(1)(b), Florida Statutes.

Count IV of the Administrative Complaint alleges that Respondent Realco Realty is guilty of fraud, misrepresentation, concealment, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction, in violation of Section 475.25(1)(b), Florida Statutes.

The Administrative Complaint alleges that the above- described contract contains a closing date, but the parties failed to close by that date. The Administrative Complaint alleges that, on October 9, 2000, the seller's agent mailed a demand for the deposit to Respondents, but they failed to respond to the demand or notify Petitioner.

Count V of the Administrative Complaint alleges that Respondent Nuevo is guilty of failing promptly to provide written notification to the Florida Real Estate Commission, after the last demand, to resolve the escrow fund dispute and to institute one of the settlement procedures identified in Section 475.25(1)(d)1, Florida Statutes.

The Administrative Complaint alleges that, on February 21, 2001, Petitioner's investigator, pursuant to an investigation, conducted an audit of Respondents' business records. The audit allegedly revealed that Respondents opened a sales deposit escrow account in September 2000 and that they had never reconciled the account. Also, during the audit, Respondent Nuevo was allegedly unable to provide copies of offers, counter offers, and disclosures.

Count VI of the Administrative Complaint alleges that Respondent Nuevo is guilty of failing to properly prepare the required written monthly escrow statement reconciliations, in violation of Rule 61J2-14.012(2) and (3), Florida Administrative

Code, and is thus in violation of Section 475.25(1)(e), Florida Statutes.

Count VII of the Administrative Complaint alleges that Respondent Nuevo is guilty of failing to account or deliver funds, in violation of Section 475.25(1)(d)1, Florida Statutes.

Count VIII of the Administrative Complaint alleges that Respondent Nuevo is guilty of failing to preserve and make available to Petitioner and preserve at least one legible copy of all books, records, and supporting documents and failing to keep an accurate account of all trust fund transactions, in violation of Section 475.5015, Florida Statutes

Count IX of the Administrative Complaint alleges that Respondent Nuevo is guilty of failing to preserve and make available to Petitioner all books, records, supporting documents and failing to keep an accurate account of all trust fund transactions, in violation of Rule 61J2-14.012(1), Florida Administrative Code, and is thus in violation of Section 475.25(1)(e), Florida Statutes.

Count X of the Administrative Complaint alleges that Respondent Realco Realty is guilty of failing to properly prepare the required written monthly escrow statement reconciliations, in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code, and is thus in violation of Section 475.25(1)(e), Florida Statutes.

Count XI of the Administrative Complaint alleges that Respondent Realco Realty is guilty of failing to account or deliver funds, in violation of Section 475.25(1)(d)1, Florida Statutes.

Count XII of the Administrative Complaint alleges that Respondent Realco Realty is guilty of failing to preserve and make available to Petitioner all books, records, and supporting documents and failing to keep an accurate account of all trust fund transactions, in violation of Rule 61J2-14.012(1), Florida Administrative Code, and is thus in violation of Section 475.25(1)(e), Florida Statutes.

Count XIII of the Administrative Complaint alleges that Respondent Realco Realty is guilty of failing to preserve and make available to Petitioner at least one legible copy of all books, records, and supporting documents and failing to keep an accurate account of all trust fund transactions, in violation of Rule 61J2-14.012(1), Florida Administrative Code, and Section 475.5015, Florida Statutes, and is thus in violation of Section 475.25(1)(e), Florida Statutes.

The Administrative Complaint seeks revocation, among other penalties. However, as noted in its proposed recommended order, Petitioner concedes Counts V, VII, VIII, XI, and XII.

At the hearing, Petitioner called two witnesses and offered into evidence 13 exhibits: Petitioner Exhibits 1-13.

Respondents called one witness and offered into evidence two exhibits: Respondents Exhibits 2 and 3. All exhibits were admitted. However, the Administrative Law Judge gave Respondents ten days to file Respondents Exhibit 3, but they did not file the exhibit, so it is deemed withdrawn.

The court reporter filed the transcript on April 7, 2003. The parties filed their proposed recommended orders by May 22, 2003.

FINDINGS OF FACT

1. At all material times, Respondent Maria L. Nuevo (Respondent) was a licensed real estate broker, holding license number 3006548. Respondent was first licensed, as a real estate salesperson, in Florida in 1984 and became a broker in 1986.

2. Respondent is president of, and qualifying broker for, Respondent Realco Realty, Inc. (Realco Realty), which is a corporation registered as a real estate broker, holding license number 1011738.

3. In late August or early September 2000, Respondent prepared a Residential Sales and Purchase Contract (Contract) on behalf of Omar Canizares, as buyer, to purchase a residence at 10620 Southwest 139th Street in Miami (Property). The Contract provided for a purchase price of $260,000 and a deposit of $1000 to be held by Realco Realty.

4. Respondent presented the Contract to Zoila de Castro, a real estate broker who was representing Antonio and Lorraine Lambo, and Mrs. Lambo. The record is poorly developed on these points, but it appears that Mr. and Mrs. Lambo jointly owned the Property and that both of them never signed the Contract.

5. Respondent left the Contract with Mrs. Lambo because Mr. Lambo was out of town. A few days later, Ms. de Castro returned the Contract to Respondent, intending to convey a counteroffer that raised the purchase price to $265,000 and the deposit to $5000--to be paid within three days after the inspection. However, the Contract delivered by Ms. de Castro to Respondent is notable for two omissions--a signature of one of the Lambos and a deadline for Canizares' acceptance of the counteroffer.

6. Ms. de Castro's testimony that she delivered to Respondent the only original contract with signatures of both Lambos is discredited for two reasons. First, Respondent would likely use the better version of the Contract--i.e., the one with both sellers' signatures--when providing a copy to the appraiser. Second, Ms. de Castro appears to have maintained, at best, an imperfect grasp of all that was transpiring in this attempted transaction and may be claiming to have delivered a fully signed contract--though still without a deadline for

   Mr. Canizares' acceptance--in order to place herself in a better light.

7. At this point in the transaction, the lack of an enforceable agreement between Mr. Canizares and the Lambos should have been obvious to the Lambos' real estate broker, but it was not. The testimony depicts a series of unanswered letters and unsatisfied demands, as the Lambos initially tried to get the deal to close and eventually tried only to get the deposits, which they believed now totalled $5000.

8. In fact, neither Respondent held any deposit. Although relieved from the obligation to collect another $4000 in deposit, due to the failure of the parties to come to an agreement, Respondents had misrepresented to the Lambos and

   Ms. de Castro that they held the initial $1000 deposit.

   
   

9. Although Petitioner has failed to prove other fraudulent acts by either Respondent toward the Lambos or

   Ms. de Castro, Petitioner has proved another fraudulent act by Respondents in connection with this transaction. Exploiting Ms. de Castro's lack of diligence, Respondents appear to have shopped the Contract. On September 22, 2000, Respondent ordered an appraisal on a form showing the purchase price as $325,880.

   At the request of the appraiser, Respondent sent to the appraisal a copy of an altered Contract, which provided for a

   purchase price of $310,100 and reflected total deposits of

   
   

   $5000.

   
   

10. The Lambos-Canizares sale never closed, and the Lambos never received any money representing the deposit that they claimed to be owed.

11. Respondents opened an escrow account in September 2000, but had never performed written monthly escrow reconciliation for their trust account through the date of the audit in February 2001. Additionally, at the time of the audit, Respondents were unable to produce any documentation pertaining to their real estate practice. However, Respondents later produced banking records and reconciliations for January and February 2001, which were undoubtedly prepared after the February 2001 audit.

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the subject matter. Section 120.57(1), Florida Statutes. (All references to Sections are to Florida Statutes. All references to Rules are to the Florida Administrative Code.)

13. Section 475.25 provides, in relevant part:

    
    

    1. The commission may deny an application for licensure, registration, or permit, or renewal thereof; may place a licensee, registrant, or permittee on probation; may suspend a license, registration, or permit

       for a period not exceeding 10 years; may revoke a license, registration, or permit; may impose an administrative fine not to exceed $1,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing, if it finds that the licensee, registrant, permittee, or applicant:

       
       

       (b) Has been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction in this state or any other state, nation, or territory; has violated a duty imposed upon her or him by law or by the terms of a listing contract, written, oral, express, or implied, in a real estate transaction; has aided, assisted, or conspired with any other person engaged in any such misconduct and in furtherance thereof; or has formed an intent, design, or scheme to engage in any such misconduct and committed an overt act in furtherance of such intent, design, or scheme. It is immaterial to the guilt of the licensee that the victim or intended victim of the misconduct has sustained no damage or loss; that the damage or loss has been settled and paid after discovery of the misconduct; or that such victim or intended victim was a customer or a person in confidential relation with the licensee or was an identified member of the general public.

       
       

       1. 1. Has failed to account or deliver to any person, including a licensee under this chapter, at the time which has been agreed upon or is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery, any personal property such as money, fund, deposit, check, draft, abstract of title, mortgage, conveyance, lease, or other document or thing of value, including a share of a real estate commission if a civil

          judgment relating to the practice of the licensee's profession has been obtained against the licensee and said judgment has not been satisfied in accordance with the terms of the judgment within a reasonable time, or any secret or illegal profit, or any divisible share or portion thereof, which has come into the licensee's hands and which is not the licensee's property or which the licensee is not in law or equity entitled to retain under the circumstances. However, if the licensee, in good faith, entertains doubt as to what person is entitled to the accounting and delivery of the escrowed property, or if conflicting demands have been made upon the licensee for the escrowed property, which property she or he still maintains in her or his escrow or trust account, the licensee shall promptly notify the commission of such doubts or conflicting demands and shall promptly:

          1. Request that the commission issue an escrow disbursement order determining who is entitled to the escrowed property;

          2. With the consent of all parties, submit the matter to arbitration;

          3. By interpleader or otherwise, seek adjudication of the matter by a court; or

          4. With the written consent of all parties, submit the matter to mediation. The department may conduct mediation or may contract with public or private entities for mediation services. However, the mediation process must be successfully completed within

          90 days following the last demand or the licensee shall promptly employ one of the other escape procedures contained in this section. Payment for mediation will be as agreed to in writing by the parties. The department may adopt rules to implement this section.

          
          

          If the licensee promptly employs one of the escape procedures contained herein, and if she or he abides by the order or judgment resulting therefrom, no administrative complaint may be filed against the licensee

          for failure to account for, deliver, or maintain the escrowed property. If the buyer of a residential condominium unit delivers to a licensee written notice of the buyer's intent to cancel the contract for sale and purchase, as authorized by s. 718.503, or if the buyer of real property in good faith fails to satisfy the terms in the financing clause of a contract for sale and purchase, the licensee may return the escrowed property to the purchaser without notifying the commission or initiating any of the procedures listed in sub-subparagraphs a.-d.

          
          

       2. Has violated any of the provisions of this chapter or any lawful order or rule made or issued under the provisions of this chapter or chapter 455.

       
       

14. Section 475.5015 provides:

    
    

    Each broker shall keep and make available to the department such books, accounts, and records as will enable the department to determine whether such broker is in compliance with the provisions of this chapter. Each broker shall preserve at least one legible copy of all books, accounts, and records pertaining to her or his real estate brokerage business for at least 5 years from the date of receipt of any money, fund, deposit, check, or draft entrusted to the broker or, in the event no funds are entrusted to the broker, for at least 5 years from the date of execution by any party of any listing agreement, offer to purchase, rental property management agreement, rental or lease agreement, or any other written or verbal agreement which engages the services of the broker. If any brokerage record has been the subject of or has served as evidence for litigation, relevant books, accounts, and records must be retained for at least 2 years after the conclusion of the civil action or the conclusion of any appellate proceeding, whichever is later, but in no case less than

    a total of 5 years as set above. Disclosure documents required under ss. 475.2755 and

    475.278 shall be retained by the real estate licensee in all transactions that result in a written contract to purchase and sell real property.

    
    

15. Rule 61J2-14.012 provides:

    
    

    1. A broker who receives a deposit as previously defined shall preserve and make available to the BPR, or its authorized representative, all deposit slips and statements of account rendered by the depository in which said deposit is placed, together with all agreements between the parties to the transaction. In addition, the broker shall keep an accurate account of each deposit transaction and each separate bank account wherein such funds have been deposited. All such books and accounts shall be subject to inspection by the BPR or its authorized representatives at all reasonable times during regular business hours.

       
       

    2. Once monthly, a broker shall cause to be made a written statement comparing the broker's total liability with the reconciled bank balance(s) of all trust accounts. The broker's trust liability is defined as the sum total of all deposits received, pending and being held by the broker at any point in time. The minimum information to be included in the monthly statement- reconciliation shall be the date the reconciliation was undertaken, the date used to reconcile the balances, the name of the bank(s), the name(s) of the account(s), the account number(s), the account balance(s) and date(s), deposits in transit, outstanding checks identified by date

       and check number, an itemized list of the broker's trust liability, and any other items necessary to reconcile the bank account balance(s) with the balance per the broker's checkbook(s) and other trust

       account books and records disclosing the date of receipt and the source of the funds. The broker shall review, sign and date the monthly statement-reconciliation.

       
       

    3. Whenever the trust liability and the bank balances do not agree, the reconciliation shall contain a description or explanation for the difference(s) and any corrective action taken in reference to shortages or overages of funds in the account(s). Whenever a trust bank account record reflects a service charge or fee for a non-sufficient check being returned or whenever an account has a negative balance, the reconciliation shall disclose the cause(s) of the returned check or negative balance and the corrective action

       taken.

       
       

16. Petitioner must prove the material allegations by clear and convincing evidence. Department of Banking and Finance v. Osborne Stern and Company, Inc., 670 So. 2d 932 (Fla. 1996) and Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

17. As to Counts I and II, Petitioner has proved that Respondents are guilty of fraud, misrepresentation, concealment, dishonest dealing by trick, scheme, or device, or breach of trust in any business transaction by presenting the Contract, which reflects that they held a $1000 deposit, when they did not hold any such deposit.

18. As to Counts III and IV, Petitioner has proved that Respondents are guilty of fraud, misrepresentation, concealment, dishonest dealing by trick, scheme, or device, or breach of trust in any business transaction by increasing the purchase

    price shown on the Contract when presenting the Property for an appraisal.

19. As to Counts VI and X, Petitioner has proved that Respondents are guilty of failing to perform written monthly reconciliations on their escrow account.

20. As to Count XI, Petitioner has failed to prove that Realco Realty failed to account for or deliver funds. The parties never entered into an enforceable agreement, so Realco Realty did not have any obligation to account for or deliver the deposit to the Lambos.

21. As to Count XIII, Petitioner has failed to prove that Realco Realty failed to preserve and make available a copy of all books, records, and supporting documents. Realco Realty eventually produced copies of its bank records, and Petitioner failed to prove that Realco Realty had other documents that it failed to produce.

22. Rule 61J2-24.001(3)(c) provides that the usual penalty for "fraud, misrepresentation, and dishonest dealing" is revocation, but the usual penalty for "concealment" is only a suspension of three to five years and a $1000 fine. Although Respondents' handling of the deposit could be characterized as concealment, it is also an active misrepresentation to represent that they are holding a deposit when they are not. Providing an

    altered contract and misinformation to the appraiser is clearly fraud and misrepresentation.

23. It is unnecessary to consider the penalties for the other violations. Each Respondent is guilty of two fraudulent acts, either of which justifies revocation. These fraudulent acts are aggravated by the apparent scheme of Respondents to enable their client to try to obtain a higher appraisal probably to sell the Contract, but possibly to obtain excessive financing when purchasing the Property. Except for the absence of a disciplinary history, there are no mitigating factors.

RECOMMENDATION

It is

RECOMMENDED that the Florida Real Estate Commission enter a final order revoking the real estate broker licenses of Maria L. Nuevo and Realco Realty, Inc.

DONE AND ENTERED this 29th day of May, 2003, in Tallahassee, Leon County, Florida.

S

ROBERT E. MEALE

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 29th day of May, 2003.

COPIES FURNISHED:

Nancy P. Campiglia, Acting Director Division of Real Estate

Department of Business and Professional Regulation

400 West Robinson Street, Suite 802, North Orlando, Florida 32801

Hardy L. Roberts, III, General Counsel Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-2202

Christopher J. DeCosta Senior Attorney Division of Real Estate

Department of Business and Professional Regulation

400 West Robinson Street, Suite N-809 Orlando, Florida 32801

Michael H. Wolf

Michael H. Wolf & Associates, LLC. 3832 North University Drive Sunrise, Florida 33322

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 must be filed with the agency that will issue the final order in this case.

Docket for Case No: 02-002836

Orders for Case No: 02-002836