FLORIDA DEPARTMENT OF FINANCIAL SERVICES TOM GALLAGHER ms y CHIEF FINANCIAL OFFICER _. ¥ STATE OF FLORIDA F [ LL iE if AUG 5 204 IN THE MATTER OF: Oooksted by: - CASE NO.: 70072-04-AG DAVID S. APPLEBY / CY 144 PL ADMINISTRATIVE COMPLAINT David S. Appleby High Mark Securities, Inc. 500 S. Florida Avenue Lakeland, Florida 33801 David S. Appleby 804 Orlando Avenue Bradenton, Florida 34207 You, DAVID S. APPLEBY, are hereby notified that the Chief Financial Officer 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, DAVID S. APPLEBY, are currently licensed in this state as a Life & Variable Annuity Agent (2-14), Life, Health and Variable Annuity Agent (2-15), Life Agent (2-16), Life & Health Agent (2-18), Variable Annuity Agent (2-19), General Lines Agent (Property & Casualty Insurance) (2-20), Health Agent (2-40), and Legal Expense Agent (2-56), having license 1.D. #A007520. 2. At all times pertinent to the dates and occurrences referred to herein, you, DAVID S. APPLEBY, were licensed in this state as an insurance agent. 3. Pursuant to Chapter 626, Florida Statutes, the Florida Department of Financial Services has jurisdiction over your insurance licenses and appointments. 4. At all times material to the dates and occurrences herein, TRG was the acronym or pseudonym for a multitude of entities that engaged in the business of insurance, including, but not limited to: (a) T.R.G. Marketing, LLC (b) T.R.G. Administration, LLC (c) The Redwood Group, LLC 5. At all times material herein, TRG was not authorized to conduct insurance business in the state of Florida. 6. At all times material to the dates and occurrences herein, EOS Health LLC -— BOA (“EOS”) was not authorized to conduct insurance business in the state of Florida. COUNT 1 7. The above general allegations are hereby realleged and fully incorporated herein by reference. 8. On or about August 1, 2001, you, DAVID S. APPLEBY, contacted T.C. of Sarasota, Florida, and sold her a health insurance plan with TRG to cover her and her employees. The insurance policy was to become effective September 1, 2001. 9. T.C. paid the first premium for said health insurance with a company check for THREE HUNDRED SEVENTY AND 00/100 ($370.00) DOLLARS. 10. Beginning in October, 2001, and continuing until around November, 2001, T.C. paid TRG health insurance premiums. The premiums for the months of October and November, 2001, were each THREE HUNDRED SEVENTY AND 00/100 ($370.00) DOLLARS. 11. Commencing on or after October 1, 2001, TC. incurred covered medical claims of approximately ONE THOUSAND AND 00/100 ($1000.00) DOLLARS that were presented to TRG for payment. TRG failed to pay such claims. IT IS THEREFORE CHARGED that you, DAVID S. APPLEBY, hzve violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Financial Services which constitute grounds for the suspensicn or revocation of your licenses and appointments: (a) No person shall transact insurance in this state, or relative to a subject of insurance resident, located, or to be performed in this state, without complying with the applicable provisions of this Code. Section 624.11(1), Florida Statutes. (b) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. Section 626.611(7), Florida Statutes. (c) Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment. Section 626.611(8), Florida Statutes. (d) Violation of any provision of this Code or any other law applicable to the business of insurance in the course of dealing under the license or appointment. Section 626.621(2), Florida Statutes. (e) In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under Part IX 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. (f) No person shall, from offices or by personnel or facilities located in this state . . . directly or indirectly act as an agent for, or otherwise represent or aid on behalf of another, any insurer not then authorized to transact such insurance in this state. Section 626.901(1), Florida Statutes. COUNT II 12. The above general allegations are hereby realleged and fully incorporated herein by reference. 13. On or about September 1, 2001, you, DAVID S. APPLEBY, contacted S.C. and D.C. of Sarasota, Florida, and sold them a health insurance plan with TRG to cover them and their employees. The policy was to become effective October 1, 2001. 14. S.C. paid the October 2001 premium for said health insurance with a company check for THREE HUNDRED SEVENTY-FIVE AND 00/100 ($375.00) DOLLARS. The November 2001 premium for the TRG health insurance was paid by a company check for THREE HUNDRED SEVENTY-FIVE AND 00/100 ($375.00) DOLLARS. 15. Commencing on or after October 1, 2001, S.C. and D.C. incurred medical claims of approximately FOUR THOUSAND AND 00/100 ($4000.00) DOLLARS, which should have been covered by TRG, but to date have not been paid. IT IS THEREFORE CHARGED that you, DAVID S. APPLEBY, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Financial Services which constitute grounds for the suspension or revocation of your licenses and appointments: (a) No person shall transact insurance in this state, or relative to a subject of insurance resident, located, or to be performed in this state, without complying with the applicable provisions of this Code. Section 624.11(1), Florida Statutes. (b) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. Section 626.611(7), Florida Statutes. (c) Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment. Section 626.61 1(8), Florida Statutes. (d) Violation of any provision of this Code or any other law applicable to the business of insurance in the course of dealing under the license or appointment. Section 626.621(2), Florida Statutes. (e) In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under Part IX of this chapter, or having otherwise shown himself or herself to be a source of irjury or loss to the public or detrimental to the public interest. Section 626.621(6), Florida Statutes. (63) No person shall, from offices or by personnel or facilities located in this state... directly or indirectly act as an agent for, or otherwise represent or aid on behalf of another, any insurer not then authorized to transact such insurance in this state. Section 626.901(1), Florida Statutes. COUNT It 16. The above general allegations are hereby realleged and fully incorporated herein by reference. 17. On or about August 1, 2001, you, DAVID S. APPLEBY, contacted B.C. and K.C. of Bradenton, Florida, and sold them a joint health insurance plan with TRG. The policy was to become effective September 1, 2001. 18. B.C. made the down payment for said health insurance policy with a personal check for THREE HUNDRED THIRTY-FOUR AND 00/100 ($334.00) DOLLARS. The November 2001 premium for the TRG health insurance was paid by a company check for THREE HUNDRED SEVENTY-FIVE AND 00/100 ($375.00) DOLLARS. 19. Commencing on or after November 1, 2001, S.C. and D.C. incurred covered medical claims and presented them to TRG for payment. TRG has failed to pay such claims. IT IS THEREFORE CHARGED that you, DAVID S. APPLEBY, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Financial Services which constitute grounds for the suspension or revocation of your licenses and appointments: (a) No person shall transact insurance in this state, or relative to a subject of insurance resident, located, or to be performed in this state, without complying with the applicable provisions of this Code. Section 624.11(1), Florida Statutes. (b) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. Section 626.611(7), Florida Statutes. (c) Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment. Section 626.611(8), Florida Statutes. (d) Violation of any provision of this Code or any other law applicaisle to the business of insurance in the course of dealing under the license or appointment. Section 626.621(2), Florida Statutes. (e) In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under Part IX of this chapter, or having otherwise shown himself or herself to be a source of irjury or loss to the public or detrimental to the public interest. Section 626.621(6), Florida Statutes. (f) No person shall, from offices or by personnel or facilities located in this state... directly or indirectly act as an agent for, or otherwise represent or aid on behalf of another, any insurer not then authorized to transact such insurance in this state. Section 626.901(1), Florida Statutes. COUNT IV 20. The above general allegations are hereby realleged and fully incorporated herein by reference. 21. On or about November 30, 2001, you, DAVID S. APPLEBY, informed T.C. (see Count I above) that her TRG policy was no longer in effect, and sold T.C. a health insurance plan with EOS. 22. T.C. paid the December 2001 and January 2002 premiums for the EOS insurance policy with separate checks, each for FOUR HUNDRED NINETY-SEVEN AND 00/100 ($497.00) DOLLARS. 23. Commencing on or after December 1, 2001, T.C. incurred covered medical claims and presented them to EOS for payment. EOS has failed to pay such claims. IT IS THEREFORE CHARGED that you, DAVID S. APPLEBY, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Financial Services which constitute grounds for the suspension or revocation of your licenses and appointments: (a) No person shall transact insurance in this state, or relative to a subject of insurance resident, located, or to be performed in this state, without complying with the applicable provisions of this Code. Section 624.11(1), Florida Statutes. (b) | Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. Section 626.611(7), Florida Statutes. (c) Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment. Section 626.611(8), Florida Statutes. (d) Violation of any provision of this Code or any other law applicable to the business of insurance in the course of dealing under the license or appointment. Section 626.621(2), Florida Statutes. (e) In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under Part IX 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. (6 No person shall, from offices or by personnel or facilities located in this state. . . directly or indirectly act as an agent for, or otherwise represent or aid on behalf of another, any insurer not then authorized to transact such insurance in this state. Section 626.901(1), Florida Statutes. COUNT V 24. The above general allegations are hereby realleged and fully incorporated herein by reference. 25. On or about November 28, 2001, you, DAVID S. APPLEBY, informed S.C. (see Count II above) that TRG was not licensed in Florida, and then sold S.C. and D.C. a health insurance plan with EOS. 26. S.C. paid the December 2001 premium for the EOS insurance policy with a check for FIVE HUNDRED FIFTY-TWO AND 00/100 ($552.00) DOLLARS. 27. Commencing on or after December 1, 2001, S.C. and D.C. incurred covered medical claims and presented them to EOS for payment. EOS has failed to pay such claims. IT IS THEREFORE CHARGED that you, DAVID S. APPLEBY, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Financial Services which constitute grounds for the suspension or revocation of your licenses and appointments: (a) No person shall transact insurance in this state, or relative to a subject of insurance resident, located, or to be performed in this state, without complying with the applicable provisions of this Code. Section 624.11(1), Florida Statutes. (b) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. Section 626.611(7), Florida Statutes. (c) Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment. Section 626.611(8), Florida Statutes. (d) Violation of any provision of this Code or any other law applicable to the business of insurance in the course of dealing under the license or appointment. Section 626.621(2), Florida Statutes. (e) In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under Part IX 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. (f) No person shall, from offices or by personnel or facilities located in this state. . . directly or indirectly act as an agent for, or otherwise represent or aid on behalf of another, any insurer not then authorized to transact such insurance in this state. Section 626.901(1), Florida Statutes. WHEREFORE, you, DAVID S. APPLEBY, are hereby notified that the Chief Financial Officer intends to enter an Order suspending or revoking your licenses and appointments as an insurance agent or to impose such penalties as may be provided under the provisions of Sections 626.611, 626.621, 626.681, 626.691, 626.692, 626.901, and 626.9521, Florida Statutes, and under the other referenced sections of the Florida Statutes as set out in this Administrative Complaint NOTICE OF RIGHTS You have the right to request a proceeding to contest this action by the Department pursuant to Sections 120.569 and 120.57, Florida Statutes, and Rule 28-107, F.orida Administrative Code. The proceeding request must be in writing, signed by you, and must be filed with the Department within twenty-one (21) days of your receipt of this notice. Completion of the attached Election of Proceeding form and/or a petition for administrative hearing will suffice as a written request. The request must be filed with the General Counsel as acting Agency Clerk, at the Florida Department of Financial Services, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399-0333. Your written response must be received by the Department no later than 5:00 p.m. on the twenty-first day after your receipt of this notice. Mailing the response on the twenty-first day will not preserve your right to a hearing. YOUR FAILURE TO RESPOND IN WRITING WITHIN TWENTY-ONE (21) DAYS OF YOUR RECEIPT OF THIS NOTICE WILL CONSTITUTE A WAIVER OF YOUR RIGHT TO REQUEST A PROCEEDING ON THE MATTERS ALLEGED HEREIN AND AN ORDER OF REVOCATION WILL BE ENTERED AGAINST YOU. If you request a proceeding, you must provide information that complies with the requirements of Rule 28-107.004, Florida Administrative Code. As noted above, completicn of the attached Election of Proceeding form conforms to these requirements. Specifically, your response must contain: (a) The name and address of the party making the request, for purpose of service; (b) A statement that the party is requesting a hearing involving disputed issues of material fact, or a hearing not involving disputed issues of material fact; and (c) A reference to the notice, order to show cause, administrative complaint, or other communication that the party has received from the agency. If a hearing of any type is requested, you have the right to be represented by counsel or other qualified representative at your expense, to present evidence and argument, to call and cross-examine witnesses, and to compel the attendance of witnesses and the production of documents by subpoena. If a proceeding is requested and there is no dispute of material fact, the provisions of Section 120.57(2), Florida Statutes, apply. In this regard, you may submit oral or written evidence in opposition to the action taken by the Department or a written statement challenging the grounds upon which the Department 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. However, if you dispute material facts, which are the basis for the Department’s action, you must request an adversarial proceeding pursuant to Sections 120.569 and 120.57(1), Florida Statutes. These proceedings are held before a 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, Florida. Failure to follow the procedure outlined with regard to your response to this notice may result in the request being denied. All prior oral communication or correspondence in this matter shall be considered freeform agency action, and no such oral communication or correspondence shall operate as a valid request for an administrative proceeding. Any request for an 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. Mediation of this matter pursuant to Section 120.573, Florida Statutes, is not available. No Department attorney will discuss this matter with you until the response has Seen received by the Department of Financial Services. DATED and SIGNED this_5** _ day of Kugqust 2004. DOESN Ny re. at Ls NS i . A “ 3N CHANDLER Deputy Chief Financial Officer CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing ADMINISTRATIVE COMPLAINT and ELECTION OF PROCEEDING has been furnished to: David S. Appleby, High Mark Securities, Inc., 500 S. Florida Avenue, Lakeland, Florida 33801, and David S. Appleby, 804 Orlando Avenue, Bradenton, Florida 34207, by Certified Mail this Bh day of iN yarss , 2004. ; ? CN Q renee 2. ( . NN C3 ste \ \tst < David J. Busch Florida Bar Number 140945 Division of Legal Services 200 East Gaines St. 612 Larson Building Tallahassee, Florida 32399-9333 Phone: (850) 413-4146 Fax: (850) 487-4907 Attorney for Department 12

Docket for Case No: 04-003199PL