me FIORIDA FINANCIAL SERVICES TOM GALLAGHER CHIEF FINANCIAL OFFICER IN THE MATTER OF: FRANZ CAVILLE WALLACE, ill } ADMINISTRATIVE COMPLAINT TO: FRANZ CAVILLE WALLACE, III 2140 Deer Run Trail >! . <3 = Ren OS yall Jacksonville, Florida 32246-1066 FRANZ CAVILLE WALLACE, Ul Clo Wallace & Associates, Inc. 3947 Boulevard Center Drive, Suite 114 Jacksonville, Florida 32207-2832 You, FRANZ CAVILLE WALLACE, III, 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 and as a result of which it is alleged JENERAL ALLEGATIONS 1. Pursuant to Chapter 626, Florida Statutes, you, FRANZ CAVILLE WALLACE, III. currently are licensed in this state as a life (2-16), life & health (2-18), health (2-40), and legal expense (2- ense (2-56) agent, and were so licensed at all times relevant to the dates and occurrences referenced herein. Your license identification number is A276421 2. Pursuant to Chapter 626, Fiorida Statutes, the Florida Department of ncial Services (hereinafter referred to as the “Department”) has jurisdiction over your licenses and appointments. 3. At all times relevant fo the dates and occurrences referenced hercin you, FRANZ CAVILLE WALLACE, II, were employed or affiliated with Franz C. Wallace III, Inc., doing business as Wallace & Associates of Florida, 3947 Boulevard Center Drive, Suite 114, Jacksonville, Florida 32207-2832 (hereinafter “Wailace & Associates”). 4, At all times relevant to the dates and occurrences referenced herein you, FRANZ CAVILLE WALLACE, II, were an officer, director, or stockholder of Wallace & Associates. COUNT] 5. The above General Allegations are hereby realleged and fully incorporated herein by reference. 6 On or about December 2, 2002, you, FRANZ CAVILLE WALLACE, III, took an application for insurance from Laticia Williams as the owner of a whole life policy with increasing term and annuity riders, with the insured being her son, Everick, who was fifteen years of age at the time. 7, You, FRANZ CAVILLE WALLACE, II], misrepresented to Williams that the product you were selling her was designed to provide a significant source of funds to pay for Everick’s college education. 3. You, FRANZ CAVILLE WALLACE, Ill, failed to explain to Williams that this policy would provide less than $1,000 in guaranteed loan or surrender value by the time Everick was eighteen years of age. 9. You, FRANZ CAVILLE WALLACE, III, knew or should have known that the insurance product you sold Williams was not suitable for the purpose for which it was represented. IT IS THEREFORE CHARGED that you, FRANZ CAVILLE WALLACE, Ill, have violated of are accountable under one or more of the following provisions of the Florida Insurance Code. which constitutes grounds for the suspension or revocation of your licenses as an insurance agent in this state: (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) If the license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this code. [Section 626.611(4), Florida Statutes]. (©) Wiilfid misrepresentation of any insurance policy or annuity contract or 5) ful deception with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising. [Section 626.6) 1(5), Florida Statutes]. (ad) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. {Section 626.611(7), Florida Statutes}. (¢) Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the ansactions authorized by the license or appointment. [Section 626.611(8), Florida Statutes]. (f) Fraudulent or dishonest practices in the conduct of business under the license or appointment. (Section 626.61 1(9), Florida Statutes}. (2) Willful failure to comply with, or willful violation of, any proper order or rule of the departinent, commission, or office or willful violation of any provision of this code. [Section 626.611(1 3), Florida Statutes]. (hj “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 Jicense or appointment. [Section 626.621(2), Florida Statutes}. (i) Violation of any lawful order or rule of the department, comunissian, or office. {Section 626.62 1(3), Florida Statutes}. @) 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). (k) Misrepresents the benefits, advantages, conditions, or terms of any insurance policy. {Section 626.9541(1)(a)1., Florida Statutes}. @d Ifa life agent, violation of the code of ethics. [Section 626.621(9), Florida Statutes}. (m) No person shall make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a Notice, circular, pamphlet. letter or poster, or over any radio or television station, or in any other way, any advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading. [Rule 69B-215.230(2), Florida Administrative Code). COUNT It 10. The above General Allegations are hereby realleged and fully incorporated herein by reference. Li. On or about November 2, 2000, you, FRANZ CAVILLE WALLACE. HI, took an and annuity riders, with the insured being his daughter, Katherine, who was fourteen years of age at the time. 12. You, FRANZ CAVILLE WALLACE, II, represented to Enzor that the product you were selling him was designed to provide a significant source of funds to pay for Katherine's college education. 13 You, FRANZ CAVILLE WALLACE, IH], failed to explain te Enzor that this policy would provide only approximately $1,600 in guaranteed loan or surrender valuc by the time Katherine was eighteen years of age. 14. You, FRANZ CAVILLE WALLACE, III, knew or should have known that the insurance product you sold Enzor was not suitable for the purpose for which it was represented. IT iS THEREFORE CHARGED that you, FRANZ CAVILLE WALLACE, III, have violated or are accountable under one or more of the following provisions of the Florida Insurance Code, which constitutes grounds for the suspension or revocation of your licenses as an insurance agent in this state: (a) Sections 624.11(1), 626.61 1(4), 626.61 1(5), 626.61 1(7), 626.61 1(8), 626.611(9), Statutes, and Rule 69B-215.230(2), Florida Administrative Code, as set forth more fully in Count I above and incorporated herein by refcrence. COUNTID 15. ‘The above General Allegations are hereby realleged and fully incorporated herein by reference, 16. On or about January 12, 1999, you, FRANZ CAVILLE WALLACE, I, took an application for insurance from Elizabeth Swim as the owner of 2 whole life policy with increasing term and annuity nders, with the insured being her daughter, Michelle, who was fifteen years of age at the time. 17, You, FRANZ CAVILLE WALLACE, III, represented to Swim that the product you were selling her was designed to provide a significant source of funds to pay for Michclle’s college education. 18. You, FRANZ CAVILLE WALLACE, II], failed to explain to Swim that this policy wouid provide less than $1,000 in guaranteed Joan or surrender value by the time Elizabeth was eighteen vears of age. 19. You, FRANZ CAVILLE WALLACE, II, knew or should have known that the insurance product you sold Enzor was not suitable for the purpose for which it was represented. IT iS THEREFORE CHARGED that you, FRANZ CAVILLE WALLACE, III, have violated or are accountable under one or more of the following provisions of the Florida Insurance Code > which constitutes grounds for the suspension or revocation of your licenses as an insurance agent in ihis state: {a} Sections 624.11(1), 626.611(4), 626.611(5), 626.611(7), 626.61 1(8), 626.611 (9), 626.63 1(13), 626,621(2), 626.621 (3), 626.621(6), 626.9541(3 )(a)1., and 626.621(9), Florida Statutes, and Rule 69B-215.230(2), Florida Administrative Code, as set forth more fully in Count I above and incorporated herein by reference. 20. The above General Allegations are hereby realleged and fully incorporated herein by reference. 21. On or about July 29, 2000, you, FRANZ CAVILLE WALLACE, IIT, took an application for insurance from James Durbin as the owner of a whole life policy with increasing term and annuity riders, with the insured being his son, Dustin, who was fourteen years of age at the time. 22. You, FRANZ CAVILLE WALLACE. III, represented to Durbin that the product you were selling him was designed to provide a significant source of funds to pay for Dustin’s college education. 23. You, FRANZ CAVILLE WALLACE, IN, failed to explain to Durbin that this policy would provide less than $1,000 in guaranteed loan or surrender value by the time Dustin was eighteen years of age. a4. You, FRANZ CAVILLE WALLACE, III, knew or should have known that the insurance product you sold Durbin was not suitable for the purpose for which it was represented. IT IS THEREFORE CHARGED that you, FRANZ CAVILLE WALLACE, Ill, have violated of are accountable under one or more of the following provisions of the Florida Insurance Code, which constitutes grounds for the suspension or revocation of your licenses as an insurance agent in this statc: (a) Sections 624.11(1), 626.61 1(4), 626.611(5), 626.61 )(7). 626.61(8), 626.611(9), 626.611(13), 626.62){2), 626.621(3). 626.621(6), 626.9541(1)}{a)1., and 626.621(9), Florida Statutes, and Rule 69B-21 5.230(2), Florida Administrative Code, as set forth more fully in Count I above and incorporated herein by reference. COUNT V 28, The above General Allegations are hereby realleged and fully incorporated herein by 26. On or about June 6, 2000, you. FRANZ CAVILLE WALLACE, II, took an application for insurance from Emmanuel Williams as the owner of a whole life policy with increasing term and annuity riders, with the insured being his son, Marquis, who was fifteen years of age at the time. 27. You, FRANZ CAVILLE WALLACE, II, represented to Williams that the product you Were selling him was designed to provide a significant source of funds to pay for Marquis’ college education. 28. You, FRANZ CAVILLE WALLACE, II, failed to explain to Williams that this policy would provide jess than $1,600 in guaranteed loan or surrender value by the time Marquis was cighteen years of age, 29. You, FRANZ CAVILLE WALLACE, II], knew or should have known that the insurance product you sold Williams was not suitable for the purpose for which it was represented. IT 1S THEREFORE CHARGED that you, FRANZ CAVILLE WALLACE, II, have violated or aré accountable under one or more of the following provisions of the Florida Insurance Code, which constitutes grounds for the suspension or revocation of your licenses as an insurance agent in this state: (a) Sections 624.11(1), 626.61 1(4), 626.61 1(5), 626.61 1(7), 626.61 1(8), 626.611(9), 526.61:(13}, 626.621(2), 626.621(3), 626.621(6), 626.9541(1)(a)1., and 626.621(9), Florida Statutes, and Rule 69B-2)5.230(2), Florida Administrative Code, as set forth more fully in Count I above aud incorporated hercin by reference. COUNT VI 3%. “The above General Alicgations are hereby realleged and fully incorporated herein by reference 31. Onor about July 17. 2001, you, FRANZ CAVILLE WALLACE. If, teok an application for insurance from Katherine Briscoe as the owner of a whole life policy with increasing term and anmuity riders, with the insured being her daughter, Alicia, who was seventeen years of age 32. You, FRANZ CAVILLE WALLACE, Ill, represented to Briscoe that the product you were scliing her was designed to provide a significant source of funds to pay for Alicia’s college education. 33. You, FRANZ CAVILLE WALLACE, IIL, failed to explain to Briscoe that this policy would provide zero in guaranteed loan or sucrender value by the time Alicia was eighteen years of age. 34. You, FRANZ CAVILLE WALLACE, Ili, knew or should have known that the insurance product you sold Williams was not suitable for the purpose for which it was represented. IT 1S THEREFORE CHARGED that you, FRANZ CAVILLE WALLACE, HI, have violated of are accountable under one or more of the following provisions of the Florida Insurance Code, which constitutes grounds for the suspension or revocation of your licenses as an insurance agent in this State: (a) Sections 624.11(1), 626.611(4). 626.611(5), 626.61 1(7), 626.6118), 626.61 1(9), 626.61 1(1 3), 626.621(2), 626.621 (3), 626.621(6), 626.9541(1 fa)1., and 626.621(9). Florida Statutes, and Rule 69B-215.230(2), Florida Administrative Code, as set forth more fully in Count I above and incorporated herein by reference. The above General Ailegations are hereby realleged and fuily incorporated herein by reference. 36, Official records of the Department indicate that there is no designated primary agent for Wallace & Associates. IT 1S THEREFORE CHARGED that you, FRANZ CAVILLE WALLACE, III, have violated or are accountable under one or more of the following provisions of the Florida Insurance Code, which constitutes grounds for the suspension or revocation of your licenses as an insurance agent in this state: fa) Sections 624.11(1), 626.61 1(4), 626.61 1(13), 626.621(2), and 626.62 143), Florida Statutes, as more fully set forth in Count I above and incorporated herein by reference. {b) Each person operating an insurance agency and each location of a multiple location agency shall designate a primary agent for each insurance agency location and shall file the name of the person 3o designated, and the address of the insurance agency Jocation where he or she is primary agent, with the department, on a form approved by the department. [Section 626.592(1), Florida Staiutes]. WHEREFORE, you, FRANZ CAVILLE WALLACE, III, are hereby notified that the Chief Financiai Officer intends to enter an Order suspending or revoking your licenses and appointments as an insurance agent or to impose such penaltics as may be provided under the provisions of Sections 624.15, 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 and under the provisions of Rule 69B-231. Florida Administrative Code. You are further notified that any order entered in this case revoking or suspending any license or cligibility for licensure held by 19 you shal} also apply to all other licenses and eligibility held by you under the Florida Insurance Code. 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 Stamtes, 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 pf 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 nght 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 complics 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 fa) The name and address of the party making the request, for purpose of service; (2) A statement that the party is requesting a hearing involving disputed issucs of material fact, or a hearing not involving disputed issues of material fact; and, (c) A reference te the notice. order to show cause, administrative complaint, or other urication that the party has received from the agency. Ifa hearing of any type is requested, you have the right to be represented by counsel of other qualitied 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. lf 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 ora] 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 ofa 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 arc held before a State administrative law judge of the Division of Administrative Hearings. Unless the majority of witnesses are located elsewhere, the Department wil} 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 pnor oral communication or correspondence in this matter shall be considered freeform agency action, and no such oral communication or correspondence shall Operate as 2 valid request for an administrative Proceeding. Any request for an administrative proceeding reccived 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 420.573, Florida Statutes, is not available. No Department atiomey will discuss this matter with you until the response has been received by the Department of Financial Services. DATED and SIGNED this EES day of March, 2005. IN CHANDLER Deputy Chief Financial Officer CERTIFICATE OF SERVICE THEREBY CERTIFY that a true and correct copy of the foregoing ADMINISTRATIVE COMPLAINT and the following ELECTION OF PROCEEDING has been fumished to: Paul P. Sanford, Paul P. Sanford & Associates, P_A.. 106 So Monroe Street, Tallahassee, Florida 32301, Pol Attomey for Respondent, by Certified Mail this, day of March, 2005. Florida Department of Financial Services Division of Legal Services 200 East Gaines St. 612 Larson Building Tallahassee, Florida 32399-0333 (850) 413-4380 Florida Bar Number 131369 Attomey for the Department

Docket for Case No: 05-001489PL