Sep 2 2008 13:47 SEP-@2-2008 13:42 From: 6585210521 Pase:4-17 STATE OF FLORIDA FLORIDA BOARD OF PROFESSIONAL ENGINEERS FLORIDA BOARD OF PROFESSIONAL ENGINEERS, Petitioner, v. FEMC Case Nos. 2007051700, 2007051717 KEMP DANIEL SHALLOWAY, P.E., and SHALLOWAY ENGINEERS INC. FLED Flora Enginoora Management Gorpartion / DATE . ADMINISTRATIVE COMPLAINT Respondents, COMES NOW the Florida Engineers Management Corporation (FEMC) on behalf of Petitioner, Florida Board of Professional Engineers, hereinafter referred to as “Petitioner,” and files this Administrative Complaint against KEMP DANIEL SHALLOWAY, P.E., (Shalloway) and SHALLOWAY ENGINEERS INC., (SED) hereinafter referred to as “Respondents”, This Administrative Complaint is issued pursuant to Sections 120,60 and 471.038, Florida Statutes. Any proceeding concerning this complaint shall be conducted pursuant to Section 120.57, Florida Statutes. In support of this complaint, Petitioner alleges the following: 1, Petitioner, Florida Board of Professional Engineers, is charged with regulating the practice of engineering pursuant to Chapter 455, Florida Statutes. This complaint is filed by the Florida Engineers Management Corporation (FEMC) on behalf of Petitioner. FEMC is charged with providing administrative, investigative, and prosecutorial services to the Florida Board of Professional Engineers pursuant to Section 471.038, Florida Statutes (1997). Sep 2 2008 13:48 SEP-Be-286S 13:42 From: 6585218321 Page:S717T 2, Respondent, KEMP DAVID SHALLOWAY, is, and has been at all times material hereto, a licensed professional engineer in the State of Florida, having been issued license number PE 8146. Respondent’s last known address is 121 Claremont Lane, Palm Beach Shores, FL 33404. Respondent, SHALLOWAY ENGINEERS INC., is an engineering business tegistered with the Board of Professional Engineers and the holder of Certificate of Authorization # 9796. SEI’s last known address is 505 $, Flagler Dr., #1330, West Palm Beach, FL 33401 3. From September 1991 until 2003, Shalloway was District Engineer for Indian Trail Improvement District (ITI), a Special Taxing District located in Palm Beach County, Florida, ITID provides services related to reclaiming the lands within its boundaries for water control, water supply, and to protecting the land within its boundaries from the effects of water by using the construction and maintenance of canals, ditches, levees, dikes, pumping plants, and other works and improvements, 4, While Shalloway personally was ITID’s District Engineer, certain services relevant hereto were also performed for South Florida Water Management District (SF WMD) between 2002 and 2006 through SFRN, Inc., an engineering business registered with the Board and holding Certificate of Authority # 7095. Shalloway was, however, at all times the professional engineer in responsible charge of all relevant engineering services provided to [TID and SFWMD. 5. In the late 1990s, the State of Florida and various governmental units thereof, including Paim Beach County, South Florida Water Management District (SFWMD), the City of West Palm Beach, and ITID began exploring the possibility of purchasing certain rock pits FBPE v. Kemp Daniel Shalloway, P.E., & SEI, Case Nos, 2007051700 & 2007051717 Sep 2 2008 13:48 SEP-Be-286S 13:43 From: 6585218321 Pagse:6°17T existing in Palm Beach County. These rock pits were owned by Palm Beach Aggregates (PBA), a Florida corporation. The purpose of the rock pit purchase was to provide additional water storage capacity for the public served by the governmental entities involved. 6. In February 2003 and again in January 2004, the governmental entities referenced in Paragraph 5 purchased various rock pit properties from PBA for a total purchase price of approximately $217,581,000.00, The decision to purchase such properties was materially based upon the engineering analysis and advice provided to ITID, SFWMD and the other governmental entities by Shalloway. 6. While he was performing the engineering services for ITID, SFWMD and the other governmental entities related to the efficacy of the PBA rock pits for water storage, Shalloway entered into a “success fee” arrangement with the president of FBA, Enrique Tomeau. This arrangement provided in material part that Shalloway would receive a fee based upon the purchase price of the PBA rock pits by the abovementioned governmental entities, The “success fee” was not related to any engineering services performed for PBA but was contingent solely upon the final sale of the rock pits by PBA to the various governmental entities. 7. Shalloway ultimately created an engineering business (SEI), of which he was the sole owner, to which the “success fee” was to be paid. Upon the closure of the rock pit purchase transaction, monies in the amount of approximately $2.4 million were paid to Shalloway by PBA through disbursements to SEI over a period of time from July 2003 to July 2007. 8. Shalloway never disclosed in any fashion to ITID, SFWMD or any of his governmental employers that he was due to be paid a “success fee” based upon the purchase of the PBA rock pits. This failure to disclose is particularly troubling insofar as throughout the period of time during which ITID, SFWMD and the other governmental entities were doing their FBPE v. Kemp Daniel Shalloway, P.E., & SEI, Case Nos. 2007051700 & 2007051717 Sep 2 2008 13:48 SEP-Be-286S 13:43 From: 6585218321 Page: T7717 due diligence prior to purchasing the rock pits, Shalloway was an ardent advocate of the purchase and, as a result of his favorable engineering opinions, was a prime mover in facilitating the ultimate purchase. 9%. Not only did Shalloway fail to disclose his special interest in the favorable outcome of the proposed rock pit purchase but also he actually denied any existence of such an interest. For example, in a March 2001 letter from Shalloway, to Frank Finch, then-Executive Director of SFWMD, Shalloway stated, “Please let me clarify that neither my firm nor I works for Palm Beach Aggregates. We were merely pointing out water available to the public as good citizens.” 10, Section 471.033(1)(g), Florida Statutes, provides in material part: “The following acts constitute grounds for which the disciplinary actions in subsection (3) may be taken: (g) [e]ngaging in ... misconduct, in the practice of engineering,” Pursuant to the provisions of Section 471.033(2), Florida Statutes, the Board has adopted Rule 61G15-19.001(6) which provides in material part that “[a] professional engineer shall not commit misconduct in the practice of engineering. Misconduct in the practice of engineering as set forth in Section 471.033(1)(g), F.S., shall include, but not be limited to: (f) Becoming involved in a conflict of interest with an employer or client, without the knowledge and approval of the client or employer, but if unavoidable, a professional engineer shall immediately take the following actions: 1. Disclose in writing to his employer or client the full circumstances as to a possible conflict of interest: and 2. Assure in writing that the conflict will in no manner influcnce the professional engineer's judgment or the quality of his services to his employer or client; and FBPE v. Kemp Danie! Shalloway, P.E., & SEE, Case Nos. 2007051700 & 2007051717 Sep 2 2008 13:49 SEP-Be-286S 13:43 From: 6585218321 Page: 8717 3. Promptly inform his client or employer in writing of any business association, interest of circumstances which may be influencing his judgment or the quality of his services to his client or employer[.]” 11. Additionally, the Board has adopted Rule 61G15-19.001(6)(h) which provides that an engineer commits misconduct as set forth in Section 471.033(1\g) and Rule 61G15- 19.001(6) by “Soliciting or accepting gratuities directly or indirectly from contractors, their agents or other parties dealing with the professional engineer's client or employer in connection with work for which the professional engineer is responsible without the written consent of the engineer's employer or client[.}” 12. Shalloway, by agreeing to accept the “success fee” from PBA contingent upon the sale of the rock pits at the same time that he was providing engineering services which directly contributed to his governmental clients’ decision to purchase the PBA owned rock pits, had placed himself in an obvious conflict of interest with the interests of his clients. As such, Shailoway was required to follow the disclosure requirements set forth in Paragraph 10. By not doing so, and indeed, by actively denying any conflict, Shalloway committed misconduct in the practice of engineering. 13. In addition, when Shalloway, through the vehicle of SEI, solicited and then accepted over $2.4 million from PBA in fulfillment of the “success fee” arrangement with PBA, he accepted a gratuity from a party directly dealing with Shalloway’s governmental clients. This payment was not for any engineering services performed by Shalloway for PBA but was solely made as a payment for providing material input and advice, which led to the purchase of the PBA tock pits. By not obtaining the written consent of his clients before accepting the “success fee” gratuity, Shalloway committed misconduct in the practice of engineering. FPBPE v, Kemp Danie! Shalloway, P.E., & SEI, Case Nos, 2007051700 & 2007051717 Sep 2 2008 13:49 SEP-Be-286S 13:44 From: 6585218321 Page: 9°17 14, SEI, a corporation wholly owned by Shalloway, was instrumental in facilitating the misconduct of Shalloway as set forth herein. By using SEI as a conduit through which the PBA payments were made, Shalloway actively concealed these payments from his clients and compounded the lack of disclosure to and failure to obtain the written consent required from his clients. 15. Section 471.023(5), Florida Statutes, permits the Board to take action against a Certificate of Authority holder such as SEI in the same manner and based upon the same grounds as may be addressed to a Professional Engineer. Insofar as SEI was utilized by Shalloway as a material aid in the misconduct described herein, it too, committed misconduct in the practice of engineering. 16. Based on the foregoing, Respondents, Shalloway and SEI, are charged with violating Section 471.033(1) (g), Florida Statutes, and Rules 61G15-19,001(6) (f) and (h) by engaging in misconduct in the practice of engineering. WHEREFORE, the Petitioner respectfully requests the Board of Professional Engineers to enter an order imposing one or more of the following penalties: permanent revocation or suspension of the Respondent’s license, restriction of the Respondent’s practice, imposition of an administrative fine, issuance of a reprimand, placement of the Respondent on probation, the assessment of costs related to the investigation and prosecution of this case, other than costs associated with an attorney’s time, as provided for in Section 455.227(3), Florida Statutes, and/or any other relief that the Board deems appropriate, 2008. a ae _ SIGNED this 27 day of 14 Carrie Flynn Executive Director FBPE v. Kemp Daniel Shalloway, P.6., & SEI, Case Nos. 2007051700 & 2007051717 SEP-Be-286S 13:44 From: 6565218521 COUNSEL FOR FEMC: John Rimes Prosecuting Attorney Florida Engineers Management Corporation 2507 Callaway Road, Suite 200 Tallahassee, Florida 32303 Florida Bar No. 212008 IRiit PCP DATE: July 15, 2008 PCP Members: Rebane, Seckinger Sep 2 2008 13:49 eee / ! j Hy ae Page: 18°17 S BY: John Rimes Prosecutitig Attomey CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing was furnished to SHALLOWAY ENGINEERS, INC & KEMP DANIELS SHALLOWAY, P.E., c/o ALBERT T, GIMBEL, ESQ., MESSER, CAPARELLO & SELF, P.A,, 2618 CENTENNIAL PL, TALLAHASSEE, FL 32308, by certified mail, on the of , 2008. FBP y. Kemp Daniel Shallowny, P-E., & SEI, Case Nos. 2007051700 & 2007051717

Docket for Case No: 08-004343