“a, 7: DEPARTMENT OF FINANCIAL SERVICES, ‘ i : es “D FILED PH 4: 3 8, JUL 29 ames Ue ue ‘ : ToM GALLAGHER > pocketed by: =U UL _ CHIEF FINANCIAL OFFICER IN THE MATTER OF: CASE NO.: 63670-03-AG 7 OY abs TPl ADMINISTRATIVE COMPLAINT JOHN PAUL DAVIS, JR. TO: JOHN PAUL DAVIS, OR. 939 Page Lane Mount Dora, FL 32757-3749 JOHN PAUL DAVIS, JR. 851 North Donnelly Street Mount Dora, FL 32757 You, JOHN PAUL DAVIS, JR., license 1.D. #A062291, 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, JOHN PAUL DAVIS, JR., are currently licensed in this state as a General Lines Agent (2-20), Health Agent (2-40), Life and Health Agent (2-18), Surplus Lines Agent (1-20). 2. At all times pertinent to the dates and occurences referred to herein, you, JOHN PAUL DAVIS, JR., 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 licenses and appointments. 4. Queensway Casualty Insurance Company (hereinafter “Queensway”) was a Florida corporation with a principal address of 851 North Donnelly Street, Mount Dora, Florida 32757, that was chartered as Biscayne Insurance Company, but later changed its name to Queensway Casualty Insurance Company. It was dissolved pursuant to a court order on January 24, 2001. 5. Queensway was a Florida domestic stock insurer pursuant to F.S. 624.401 and was subject to the jurisdiction of the Department of Insurance (now the Department of Financial Services). 6. Records at the Division of Corporate Licensing, including the articles of incorporation and the bylaws for Queensway list you, JOHN PAUL DAVIS, JR., as president, director of operations and/or chairman of the board of directors at Queensway. 7. During the period when you sold the policies described under each of the counts listed below, you knew or should have known that Queensway was insolvent. COUNT I 8. The above general allegations are hereby realleged and fully incorporated herein by reference. 9. On or about January 2000, you, JOHN PAUL DAVIS, JR., sold a Queensway insurance policy to Mr. Jose Medina, owner and operator of Barefoot Towing. This policy was to cover Mr. Medina from January 2000 to January 2001, 10. Under 624.408, Florida Statutes, Queensway Casualty was responsible for maintaining a policyholder surplus of $2,500,000 at all times in which insurance was being transacted. 11. According to the balance sheet for the period beginning January 1, 2000 and ending on January 31, 2000 included in the company’s internal account journals discloses policyholder surplus of $2,493,403.12 that was below the minimum statutory requirement of $2,500,000. COUNT II 12. The above general allegations are hereby realleged’ and fully incorporated herein by reference. 13. On or about April 2000, you, JOHN PAUL DAVIS, JR., sold a Queensway insurance policy to Mr. Dan Cuebas, owner and operator of Alternative Leasing, Inc. This policy was to cover Mr. Cuebas from April 2000 to April 2001. 14. Under 624.408, Florida Statutes, Queensway Casualty was responsible for maintaining a policyholder surplus of $2,500,000 at all times in which insurance was being transacted. 15. According to the balance sheet for the period beginning April 1, 2000 and ending on April 30, 2000 included in the company’s internal account journals discloses policyholder surplus of $2,266,047.75 that was below the minimum statutory requirement of $2,500,000. COUNT IIT 16. The above general allegations are hereby realleged and fully incorporated herein by reference. 17. On or about April 1, 2000, A.J. Trucking of Central Florida, Inc. purchsed an insurance policy which was to cover them through April 1, 2001. This policy was purchased from Queensway Casualty Insurance Company (herein referred to as Queensway Casualty), of which you, JOHN PAUL DAVIS, JR., were the president and chairman of the board of directozs. 18. Under 624.408, Florida Statutes, Queensway Casualty was responsible for maintaining a policyholder surplus of $2,500,000 at all times in which insurance was being transacted. 19. According to the balance sheet for the period beginning April 1, 2000 and ending on April 30, 2000 included in the company’s internal account journals discloses policyholder surplus of $2,266,047.75 that was below the minimum statutory requirement of $2,500,000. COUNT IV 20. The above general allegations are hereby realleged and fully incorporated herein by reference. 21. Records of communications between you, JOHN PAUL DAVIS, JR., and Don Morris and Jim Hoffman for the period May and June, 2000, indicate that Queensway was paying expenses on behalf of other affiliated entities that were not the financial responsibility of Queensway. 22. Monies belonging to Queensway were improperly disbursed and recorded as the company’s expenses, thus distorting the actual financial condition of the company. 23. Delay in posting one or more claims caused an understatement of the actual liability for loss reserves that, if accurately and timely posted, would have shown Queensway to be below the statutorily required minimum policyholder surplus as of June 30, 2000. 24. You, JOHN PAUL DAVIS, JR., willfully filed or supervised the filing of these false and misleading financial statements or documents to the Department of Financial Services, with the intent to deceive and defraud and with the knowledge that the statements contained therein were materially false or misleading. IT IS THEREFORE CHARGED that you, JOHN PAUL DAVIS, JUR., have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Deoartment of Financial Services which constitute grounds for the suspension or revocation of your licenses and appointments: (a) Soliciting or accepting new or renewal insurance by insolvent insurer. [Section 626.9541, Florida Statutes] (b) Willfully filing false or misleading financial statements or documents to the Department of Financial Services, with the intent to deceive and with the knowledge that the statement is materially false or misleading. (624.3101, Florida Statutes] (c) Making a false entry in the books of a corporation, with intent to defraud, or omitting to make a true record or entry thereof, with intent to defraud. [817.15, Florida Statues] WHEREFORE, you, JOHN PAUL DAVIS, JR., 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, 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, Florida 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, completion 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; (bo) 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 chat 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 rerewed 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 been received by the Department of Financial Services. DATED and SIGNED this _ z0¢n day of Iuly. , 2003. Korat Lan eller KAREN 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: JOHN PAUL DAVIS, JR., 939 Page Lane, Mount Dora, FL 32757-3749; JOHN PAUL DAVIS, JR., 851 North Donnelly Street, Mount Dora, FL 32757 by Certified Mail this 29th day of In1y 2003 Division of Legal Services 200 East Gaines St. 612 Larson Building Tallahassee, Florida 32399-0033 Florida Bar Number 0140945 10

Docket for Case No: 04-003837PL