The Issue The issues posed for decision herein are whether or not the Respondent, Loretta Woloszyk, failed to account for or deliver a security deposit received by her, in violation of Section 475.25(1)(c), Florida Statutes, and whether or not Respondent derivatively violated Subsection 475.25(1)(a), Florida Statutes, in that she is guilty of a breach of trust in a business transaction and, therefore, violated Subsection 475.25(1)(a), Florida Statutes.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the following relevant facts are found. Loretta Woloszyk, Respondent herein, is presently registered with the Board of Real Estate as a broker/salesperson. On or about April 15, 1977, Respondent Woloszyk entered into a deposit receipt contract executed with John F. and Jeannine M. Chrest as purchasers of a house owned by Respondent Woloszyk located at 210 North G Street, Lake Worth, Florida. Pursuant to the terms of said deposit receipt contract, John E. Knowles signed as broker for receipt of a $300 cash deposit from the Chrests as purchasers. On or about April 22, 1977, the $300 deposit was placed in the escrow account of Sunshine Estates, Inc., the corporate broker by which the Respondent was employed. The deposit receipt contract was contingent upon the buyer qualifying for a Veterans Administration (VA) mortgage loan in the amount of $26,900. The relevant portion of the contract provided as follows: VA Appraisal: It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise be obligated to complete the purchase of the property described herein, if the contract price or cost exceeds the reasonable value of the property established by the Veterans Administration. The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Veterans Administration. By letter dated May 25, 1977, the Chrests were notified that the subject property was appraised at $18,750, and thus was not acceptable under the minimum property appraisal standards of the Veterans Administration. With this notification, John Chrest went to the offices of Sunshine Estates, Inc., and demanded a return of his $300 earnest money deposit. John E. Knowles, as broker in receipt of the Chrests' $300 deposit, returned the $300 deposit check to Respondent Woloszyk, who deducted $200 from the Chrests' $300 deposit based on a separate rental transaction with the Chrests on the same subject property. During the hearing, John Chrest testified that he contacted Respondent for purchase of her residence situated in Lake Worth Farms. Mr. Chrest agreed during cross-examination that he initially contacted Respondent to "buy or rent Respondent's residence". He also testified that upon receipt of the VA appraisal at an amount below the agreed upon purchase price of $26,900, he agreed to pay to Respondent rent in the amount of $150 plus a $50 security deposit, which amount was deducted from the Chrests' security deposit. The FHA-VA deposit receipt contract contains a special condition entered by and between the parties (Woloszyk and the Chrests) indicating that "Buyer will pay rental of $225 per month until closing, beginning on or before May 1, 1977. Buyer will honor rental agreement for Kenneth Johnson, tenant, from April 1, 1977, to March 31, 1978, or $80 per month rent." Based thereon, and on John F. Chrest' s admission that be agreed to the rental fee which was deducted from his deposit received by Respondent Woloszyk, the administrative charges alleged are without basis. I shall so recommend.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby, RECOMMEND: That the Administrative Complaint filed herein be DISMISSED in its entirety. RECOMMEND this 6th day of August, 1979, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of August, 1979 COPIES FURNISHED: John Namey, Esquire Department of Professional Regulation Board of Real Estate Post Office Box 1900 Orlando, Florida 32802 Ms. Loretta Woloszyk 733 Husiingbird Way, Apt. #3 North Palm Beach, Florida 33408
The Issue Whether or not the Respondent, Vista Realty, Inc., by and through its president, an active firm member, Respondent, Raymond S. Hurley, failed to maintain funds in its escrow or trust bank account until disbursement thereof is properly authorized; by receiving earnest money deposits from Edward Sheredy and Sharon Sheredy, his wife, and a separate earnest money deposit of Joseph Federico, both of which deposits were placed in the escrow bank account of Respondent, Vista Realty, Inc., and were allegedly unavailable for withdrawal from the escrow account at the time of any alleged real estate transaction closing in the two transactions, set for November 27, 1974, and by reason of the foregoing the Respondent, Vista Realty Inc., by and through its president, an active firm member, Respondent, Raymond S. Hurley, failed to maintain funds in an escrow or trust bank account until disbursement thereof was properly authorized, in violation of Subsection 475.25(1)(i), F.S. Whether or not Arthur Sinett and Sylvia Sinett, his wife, as purchasers, and Vista Community Builders, Inc. by and through its president, Raymond S. Hurley, as seller, and Vista Realty, Inc., by and through its president an active firm member, Raymond S. Hurley, as real estate broker, entered into a contract to purchase and sell certain real property in Palm Beach County, Florida which called for deposits by the buyer to be held in escrow account until the sale is closed; and whether or not the $50,000.00 sum placed with Vista Community Builders, Inc. was an earnest money deposit made pursuant to the terms of the contract; and whether or not Vista Community Builders, Inc. by and through its president, Respondent, Raymond S. Hurley, failed to deposit and maintain the said funds in an escrow account until the sale closed; thereby showing the Respondent, Raymond S. Hurley, to be guilty of misrepresentation, false promises, false pretenses, dishonest dealing, trick, scheme or device in a business transaction, in violation of Subsection 475.25(1)(a), F.S. Whether or not Richard J. Fenick and Agina J. Fennick, his wife, as purchasers, and Vista Community Builders, Inc. by and through its president, Raymond S. Hurley, as seller, and Vista Realty, Inc., by and through its president, as an active firm member, Raymond S. Hurley, as real estate broker, entered into a contract to purchase and sell certain real property in Palm Beach County, Florida which called for deposits by the buyer to be held in escrow account until the sale is closed; and whether or not the $10,000.00 sum placed with the Vista Community Builders, Inc. was an earnest money deposit made pursuant to the terms of the contract; and whether or not Vista Community Builders, Inc. by and through its president, Respondent, Raymond S. Hurley, failed to deposit and maintain the said funds in an escrow account until the sale closed; thereby showing the Respondent, Raymond S. Hurley, to be guilty of misrepresentation, false policies, false pretenses, dishonest dealing, trick, scheme or device in a business transaction, in violation of Subsection 475.25(1)(a), F.S.
Findings Of Fact The Respondent, Raymond S. Hurley, is the holder of license no. 0042412, held with the Florida Real Estate Commission, at all times pertinent to this administrative complaint. The Respondent, Vista Realty, Inc., is the holder of license no. 0091754, held with the Florida Real Estate Commission, at all times pertinent to this administrative complaint. The Respondent, Raymond S. Hurley, is now and was at all times alleged in the complaint, the President and active firm member of the Respondent, Vista Realty, Inc., a registered corporate broker. On or about November 8 & 26, 1973, Edward Sheredy and Sharon Sheredy, his wife, entrusted the sums of $100.00 and $3,050.00 respectively, to the Respondent, Vista Realty, Inc. as a real estate broker. A secretary of the Respondent corporation, one Marie Tolton, received the aforesaid sums, which represented an earnest money deposit on the purchase of real estate in Palm Beach County, Florida, by Edward Sheredy and Sharon Sheredy. On or about November 8 & 27, 1973, the Respondent, Vista Realty, Inc., by and through its President and active firm member, Respondent, Raymond S. Hurley, deposited the sums of $100.00 aid $3,050.00, respectively, into its escrow or trust bank account, to wit, the account of Vista Realty, Inc., escrow account with the American National Bank and Trust Company, Ft. Lauderdale, Florida. This deposit was made by an employee of the Respondent, Vista Realty, Inc., and was made to the account no. 2191-639-3. The balance in the escrow or bank account subsequent to the above deposits was $9,562.98, effective November 27, 1973. On or about February 19, 1974, Joseph Federico entrusted the sum of $5,637.50 to the Respondent, Vista Realty, Inc. as a real estate broker. The aforementioned sum represented part of an earnest money deposit of $5737.50 on the purchase of real estate in Palm Beach County, Florida, being made by Joseph Federico. The remainder of the earnest money deposit was made by voiding a prior real estate contract and transferring the $100.00 earnest money deposit therein to the new transaction. On or about March 1, 1974, the Respondent, Vista Realty, Inc., by and through its President and active firm member, Respondent, Raymond S. Hurley, deposited $5637.50 escrow money into its escrow or trust bank account, to wit, the account of Vista Realty, Inc. placed with the American National Bank and Trust Company, Ft. Lauderdale, Florida. This deposit of escrow was made by an employee of the Respondent, Vista Realty, Inc. into account no. 2191-63-3 after being received by the employee Marie Tolton, a secretary in the Respondent corporation. The balance in the escrow or trust bank account on March 4, 1974, which was present subsequent to the aforementioned deposit was $22,545.48. On November 27, 1974, the escrow bank account of the Respondent, Vista Realty, Inc. in the American National Bank and Trust Company, Ft. Lauderdale, Florida, reflected the balance of $4,700.48. On November 27, 1974, the aforementioned real estate transactions did not close, and any withdrawal of the earnest money deposit placed by the parties, Sheredy and Federico was not authorized to be made by the Respondents. The total obligation of the Respondents for the payment of the earnest money deposits for the Sheredy and Federico contracts, was $8,887.50. Other escrow funds which the Respondents had on deposit included $91.80 shown on account and $4,050.90 as a cashier's check on the same account, which was an escrow account with the First Community Bank of Boca Raton, Florida. The account no. in the Boca Raton bank was account no. 7145831. The amounts mentioned in the escrow account in the First Community Bank of Boca Raton were those amounts effective on November 27, 1974. Taking the totals of the escrow deposits in both banks, the total amount available on November 27, 1974, was $8,843.18, leaving a $44.32 deficit in honoring the refund of the Federico and Sheredy earnest money deposits. In addition, there was other real estate deposit in the Boca Raton bank, earnest money deposits on two contracts. Those amounts were $2,564.10 for Kathleen G. and Carl F. Monturo, and $2,500.00 for Hogeland Barcalow. Taking the total of the Monturo and Barcalow contracts this would an additional $5,064.10, debit against the available funds in two escrow accounts, which would be in addition to the $44.32 deficit already mentioned. The $5,064.10 could not have been used to satisfy the obligation on the Federico and Sheredy contracts. On or about August 30, 1974, Arthur Sinett and Silvia Sinett, his wife, as purchasers, went to the offices of Vista Realty, Inc. 2 North Federal Highway, Boca Raton, Florida, to enter into a contract to purchase real estate. The Respondent, Raymond S. Hurley was representing the corporation know as Vista Community Builders, Inc. and received $50,000.00 deposit as earnest money deposit on the purchase of the real estate in two separate installments, one of $45,000.00 and one of $5,000.00. The deposit receipt contracts signed was on a form prepared for Vista Realty, Inc. and listed Vista Realty, Inc. as real estate broker in the transaction. A copy of that is Petitioner's Exhibit number 5, admitted into evidence. The contract called for the $5600000 earnest money deposit to be placed in an escrow account until the sale was closed, and Raymond S. Hurley entered into this contract as President of Vista Community Builders, Inc. listing Vista Realty, Inc. as real estate broker. The money was never placed in an escrow account until closing, as stated in the contract, and this failure to place the money in an escrow account was without the permission of the Sinetts. On or about July 16, 1974, Richard J. Fenick and Aginia J. Fenick, his wife, entered into a contract for the purchase of real estate. This negotiation of the contract was entered into at the offices of Vista Realty, Inc. at 2 North Federal Highway, Boca Raton, Florida. Raymond S. Hurley signed, in his own name, as the party receiving the earnest money deposit, which was in the amount of $10,000.00. He signed as a contracting party in the name of Raymond S. Hurley, President, Vista Community Builders, Inc. The contract did not show the name of any broker, and in fact, indicated the word none in the space provided for such designation. The contract entered into between the Fenicks and Hurley is petitioner's Exhibit number 19, admitted into evidence. The contract form was a form prepared for Vista Realty, Inc., and contained a statement that deposits by the buyer should be placed in an escrow account until the sale was closed. The Fenicks paid the $10,000.00 to Raymond S. Hurley and the earnest money deposit was never placed in an escrow account, and the failure to place the earnest money deposit in an escrow account was without the permission of the Fenicks.
Recommendation It is recommended that the license no. 0042142, held by Raymond S. Hurley, be suspended for one year. It is recommended that the license no. 0091754, held by Vista Realty, Inc. be suspended for one year. DONE AND ENTERED this 28th day of February, 1977, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Louis B. Guttmann, III, Esquire Florida Real Estate Commission 2699 Lee Road Winter Park, Florida 32789 Ronald Sales, Esquire Sales & Christiansen 247 Royal Palm Way Palm Beach, Florida 33480 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DIVISION OF OCCUPATIONS DEPARTMENT OF PROFESSIONAL AND OCCUPATIONAL REGULATION FLORIDA REAL ESTATE COMMISSION FLORIDA REAL ESTATE COMMISSION, An Agency of the State of Florida, Plaintiff, PROGRESS DOCKET NO. 2759 PALM BEACH COUNTY vs. DOAH CASE NO. 76-0243 RAYMOND S. HURLEY and VISTA REALTY, INC., Defendants. /
The Issue Whether Respondent's license under Chapter 509, Florida Statutes, should be suspended or revoked, or a civil penalty imposed for alleged violation of Section 83.49(2) and (3) , Florida Statutes, as set forth in Notice to Show Cause. Respondent Glyn G. Dean appeared at the hearing unaccompanied by legal counsel and he was thereafter advised of his rights as a respondent in an administrative proceeding. He indicated that he understood such rights and desired to represent himself at the hearing.
Findings Of Fact Respondent Glyn G. Dean owns and operates the Elegante Apartments, a five-unit apartment building located at 1040 NE 78th Road, Miami, Florida. Respondent holds a license issued by Petitioner to operate a public lodging establishment pursuant to the provisions of Chapter 509, Florida Statutes. (Testimony of Dean, Teller) On January 28, 1978, Respondent rented Apartment 2 to George Tulloch and his wife on a weekly basis. Thereafter on April 1, 1978, Respondent and Tulloch entered into a lease of the apartment for a period of one year at a rental of $275 per month, including $25 a month as a "damage deposit." The lease provided that the lessee would pay for the cost of repairing all damage to the apartment caused by himself or his family and the cost of removing foreign substances from toilets and sinks. At no time did Respondent inform the lessee as to the manner in which he would hold the payments representing security deposits. Payments in the amount of $275 were made by Tulloch each month from April through October 1978. Thereafter, Tulloch paid as follows: November 30, 1978 - $250.00 December 8, 1978 - 80.00 December 24, 1978 - 50.00 January 23, 1979 - 170.00 February 19, 1979 - 75.00 March 10, 1979 - 100.00 (Testimony of B. Tulloch, Respondent, Respondent's Exhibits 1-2, Petitioner's Exhibit 1) In October 1978, there was a ceiling leak in the apartment which caused a bedroom and kitchen to sustain water damage. A section of the kitchen ceiling also fell and struck Mr. Tulloch who later instituted a claim against Respondent under the latter's insurance policy. (Testimony of Tulloch, Dean, supplemented by Respondent's Exhibit 4) The lessee vacated the apartment at the expiration of the lease on March 31, 1979. At that time, he did not provide Respondent with a forwarding address and it was not until late May that Respondent learned of the same. He thereafter sent a certified letter of his intention to make claim against the security deposit which was received by the lessee on May 28, 1979. He sent a further letter of June 22, 1979, which listed various costs for cleaning and damage to the apartment and reflected that after application of a total of $175 representing deposit payments made during the course of the year, Respondent was due $153 from Tulloch. After termination of the lease, she tenant paid Respondent $650 representing back rent due under the lease. Mrs. Tulloch denied at the hearing that she and her husband had caused any damage to the apartment. (Testimony of Dean, B. Tulloch, Petitioner's Exhibits 3-4, Respondent's Exhibit 3)
Recommendation That Petitioner impose an administrative fine of $100 against Respondent Glyn G. Dean pursuant to Sections 83.49(7) and 509.261(2), Florida Statutes, for violation of Section 83.49(2), Florida Statutes. DONE and ENTERED this 13th day of November, 1979, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Dan Brown, Esquire Staff Attorney Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Glyn G. Dean 1040 NE 78th Road Miami, Florida 33138 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF BUSINESS REGULATIONS DIVISIONS OF HOTELS AND RESTAURANTS DIVISION OF HOTELS & RESTAURANTS, DEPARTMENT OF BUSINESS REGULATION, Petitioner, vs. CASE NO. 79-1625 H & R No. 23-1935H-3778 GLYN G. DEAN AND GRADY WILSON t/a ELEGANTE APARTMENTS, Respondent. /
Findings Of Fact All parties submitted proposed findings of fact. The Applicant's proposed findings 1-5 and 7-14 are hereby accepted except where they might specifically conflict with the findings stated in this Final Order or where they constitute conclusions of law. The Applicant's proposed finding 6 is accepted, with the exception of fourth sentence which is not supported by competent substantial evidence in the record. Proposed findings 1-6 of the Protestant, First Federal, are accepted except where they might specifically conflict with the findings stated in this Final Order or where they constitute conclusions of law. Proposed findings 7 through 9 of Protestant, First Federal, are rejected in that they constitute conclusions of law. Proposed findings 1, 2, 4, and 5 of the Protestant, United, are accepted except where they might specifically conflict with the findings stated in this Final Order. Its proposed finding 3 is accepted with the exception that the record showed that the primary market area is served by four savings and loan association offices. Its proposed finding 6 and 7 are rejected as not supported by competent substantial evidence in the record adduced at the hearing. The Department's proposed findings 1 through 9 and 11 through 13 are accepted except where they might specifically conflict with the findings stated in this Final Order. The Department's proposed finding 10 is accepted except for the finding as to net income which is not supported by competent substantial evidence in the record and conflicts with the findings stated in finding 11.
The Issue The issue to be resolved in this proceeding concerns whether the Respondent has violated Subsection 475.25(1)(b), Florida Statutes; Subsection 475.25(1)(d)1, Florida Statutes; Subsection 475.25(1)(k), Florida Statutes; Subsection 475.42(1)(a), Florida Statutes; Subsection 475.25(1)(e), Florida Statutes; by being guilty of culpable negligence or breach of trust; by allegedly failing to promptly deliver a deposit; by allegedly failing to maintain trust funds in a proper escrow account; by allegedly depositing or intermingling personal funds with trust funds or escrow funds; by operating as a broker without holding a valid, current license; and by failing to preserve and make available to the agency all books, records, and supporting documents and by allegedly failing to keep an accurate account of all trust-fund transactions.
Findings Of Fact The Petitioner is an agency of the State of Florida charged with licensing and regulating the practice of real estate brokers and salespersons licensed in the State of Florida. It has the duty to prosecute with Administrative Complaints any alleged violations of Chapter 475, Florida Statutes, and related laws and rules, involved in the licensure and regulation of real estate brokers and salespersons. The Respondent, Richard Irwin Ray, is now and was, at all times pertinent to this case, a licensed real estate broker in the State of Florida. He was issued license number 0423296, in accordance with Chapter 475, Florida Statutes. The last license issued to him was as a non-active broker, bearing an address of 10013 Calle de Celestino, Navarre, Florida 32566. The Respondent, at times pertinent hereto, was the licensed and qualifying broker for the now-defunct Navarre Shores Realty, Inc. for the period from October 31, 1985 to approximately November 6, 1989. The Respondent and Navarre Shores Realty, Inc. failed to renew their licenses on March 31, 1989, the expiration date. Instead, the licenses were renewed effective April 5, 1989; and the Respondent continued to do business as a real estate brokerage and broker for several months thereafter through and including the time in which the transaction at issue was entered into. On or about July 27, 1989, Richard Walker, a salesman working for the Respondent's brokerage firm, solicited and obtained an executed contract for the sale and purchase of certain real property owned by Myra Lee Philips, the seller, and Charles W. and Pamela S. Brannon, the proposed buyers. The buyers gave the salesman, Mr. Walker, a $500.00 earnest money deposit called for by the terms of the contract, which terms also provided that the earnest money deposit was to be held in escrow by Navarre Shores Realty, Inc., the Respondent's real estate brokerage firm. Mr. Walker maintains that he turned in the check or submitted it to the broker or to one of his representatives or to someone who was "running the office at the time". He does not recall to whom he actually tendered the check when he received it; however, he recalls making a copy of the check and then making a copy of the check and the front page of the contract, with the check copy overlaid on it, which was the procedure in the office required by the Respondent in order that he could keep a record of sales transactions. In addition to Mr. Walker, the salesman, having no recollection of who, if anyone, he might have given the check to with the Respondent's brokerage firm, the Respondent has no recollection of receiving the check, ever seeing the check nor the manner or means by which the check was handled, as, for instance, whether it was deposited in his firm's escrow account or not. Mr. Charles Brannon, the proposed buyer in the subject transaction, testified that he executed a $500.00 earnest money deposit check in accordance with the terms of the contract referenced above and that the $500.00 check did clear his bank account; that is, it was paid upon being tendered to his bank. The Respondent maintains that he does not know the location of any records he might have, if any, related to this transaction and the subject earnest money deposit check. During the time in question immediately following the transaction date of July 27, 1989 and the time in November of 1989 when the Respondent closed his real estate office, the Respondent apparently had some disagreements with salespersons, including Mr. Walker. During this time period, the Respondent and his secretary, Ms. Galfano, learned that some client and sales transactions files were removed from the Respondent's brokerage office by Mr. Walker and others. Apparently, Ms. Galfano was able to retrieve some of the files; however, the Respondent was unable to, or in any event, failed to provide the Department's investigator, Mr. Bratton, with any records related to the subject transaction, including the escrow account records, which might have revealed whether the earnest money deposit check was deposited in the Respondent's escrow account or not, although the Respondent did advise Mr. Bratton by telephone on two occasions that he was endeavoring to have the bank prepare his escrow account records. The escrow account had been closed by Emerald Coast State Bank because service charges had been applied to it which resulted in its having a negative balance. This may mean that no $500.00 earnest money deposit check had been deposited in that account, and the Respondent does not know what happened to the check once the Brannons executed it and presumably gave it to Mr. Walker. He does not feel that it was ever placed in his escrow account, nor that he ever had any possession of it because the account was closed for having a negative balance due to the debiting of monthly service charges. In any event, the Respondent did not obtain and provide to the Petitioner the escrow account records. The Respondent stated in his testimony that if the buyers, the Brannons, could provide their bank records and produce the cancelled check involved, that would show how the check was cashed and, therefore, whether it was processed through his escrow account. The cancelled check was not produced and admitted into evidence at the hearing. Mr. Brannon, one of the buyers, merely testified that the check had cleared his bank and had been debited from his account upon which the check was written. Check number 3642 in evidence is the $500.00 check drawn on the account of Richard I. or Maryanne Ray, which is the check by which the Respondent paid the seller, Ms. Philips, the earnest money deposit funds which she was due because the transaction failed to close. A receipt for that check was issued to the Respondent by witness, Richard Walker, the Respondent's former salesman. The receipt indicates that the funds in question were received from R. Ray Construction, a/k/a Navarre Shores Realty, Inc. Mr. Walker did not adequately explain why he issued a receipt to the Respondent for the check drawn on his personal account and represented it as being from R. Ray Construction, a/k/a Navarre Shores Realty, Inc. He merely testified that he went to Mr. Ray, who "...was operating out of his personal account with his construction company. I did it because that's what he was known as at the time. OK. I did it in good faith." Mr. Walker does not have any knowledge concerning where the earnest money deposit check from the buyer, the Brannons, was actually deposited, nor whether the Respondent ever received it. Ms. Galfano was the secretary for Navarre Shores Realty, Inc., the Respondent's firm, at the time of the transaction in question and thereafter. Ms. Galfano established that Mr. Walker took some files from the office which contained sales contracts when the Respondent closed the office. She went to his home on a Sunday and persuaded him to give her back the records and took them back to the office. Ms. Galfano opined that certain files had been removed from the office by Mr. Walker because Mr. Walker was in a dispute at the time with one of the sales associates in the office. Navarre Shores Realty, Inc. had been experiencing internal problems with the associates disputing among themselves. In fact, the Respondent lost several associates from his firm due to internal dissension, presumably about credit for clients and contracts. It was because of this that the Respondent decided to close his office. At the time of the transaction between the Philips and the Brannons, Navarre Shores Realty, Inc., through Mr. Walker, had the listing on the property. Prior to that time, the Philips' property had been listed with Mr. Lou Jakes, also a sales associate with Navarre Shores Realty, Inc. The seller, Ms. Philips, later turned the listing over to Mr. Walker because she was upset with Mr. Jakes over upkeep not being properly done on the beach house in question. She called the off ice concerning this and happened to talk to Richard Walker, who persuaded her to change the listing from Lou Jakes over to him. Thus, the subject listing and transaction caused a dispute between Mr. Jakes and Mr. Walker, and Mr. Jakes left the firm as, later, did Mr. Walker. One of them apparently removed the subject records from the brokerage office. Since the transaction in question and the internal dissension in his office involving Mr. Walker and the other associate, the Respondent has had difficulty conversing with Mr. Walker because they are not on good terms. In summary, the evidence establishes at most that Mr. Walker received the earnest money deposit check from the buyers, the Brannons. It was not established that the Respondent ever received or became aware of the delivery of the earnest money deposit check to Mr. Walker. It was not established that it was ever deposited in any of the Respondent's or his corporation's accounts. It was established that the Respondent, partly out of a desire to avoid accusation of any illegality by the Petitioner, voluntarily paid the $500.00 to the seller out of his personal account, although he does not know or has no recollection that the money was ever received by him nor deposited in any of his accounts. The earnest money deposit check was not produced and placed into evidence, which could have shown in whose bank and account the check might have been deposited. Mr. Brannon only testified that the $500.00 check cleared and was debited from his account. It was established that the Respondent either has no records of his escrow account transactions with regard to this real estate transaction or is unaware of their location. It was likewise established, however, that upon request by Mr. Bratton, Petitioner's investigator, for copies of those records, the Respondent did not produce them. The Respondent maintains that he had requested that his banks provide a copy of his account records; however, as of the time of the hearing, he had not provided those to Mr. Bratton. It was also established that the Respondent and his brokerage firm were duly licensed at the time the transaction in question occurred and that some months later, in November of 1989, he closed his office and ceased doing business. It was established that his licensure expired on March 31, 1989 and that there was a six-day lapse of his licensure, with it being renewed on April 5, 1989. In November of 1990, on approximately November 6th, the buyers, the seller, and the Respondent signed a release of deposit agreement whereby the Respondent was to disburse $500.00 to the seller with regard to the subject transaction. See Exhibit 2 in evidence. On or about April 18, 1991, the Respondent made and delivered check number 3642, in the amount of $500.00, drawn on his personal checking account number 1322650, maintained at First National Bank of Santa Rosa, Milton, Florida, payable to Myra Lee Philips, who had been the seller in the subject transaction. Thus, in excess of five months elapsed between the time the Respondent agreed to disburse the $500.00 to Ms. Philips and the time he actually paid Ms. Philips the $500.00.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, and the candor and demeanor of the witnesses, it is therefore, RECOMMENDED that a Final Order be entered by the Department of Professional Regulation, Division of Real Estate, finding that the Respondent, Richard Irwin Ray, has violated Subsection 475.25(1)(d)1, Florida Statutes, by failing to promptly deliver a deposit; finding that he is guilty of having failed to preserve and make available to the Petitioner all books, records and supporting documents concerning trust-fund transactions in violation of Rule 21V-14.012(1), Florida Administrative Code, as well as Subsection 475.25(1)(e), Florida Statutes, and that he be accorded the penalty for these violations of a written reprimand and a $250.00 fine. Concerning his violation of Subsection 475.42(1)(a), Florida Statutes, and the consequent derivative violation of Subsection 475.25(1)(e), Florida Statutes, by operating for six days without a license, it is recommended that due to this inadvertent, technical licensure lapse that no penalty be imposed. DONE AND ENTERED this 1st day of July, 1992, in Tallahassee, Leon County, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of July, 1992. COPIES FURNISHED: Darlene F. Keller, Division Director Division of Real Estate P.O. Box 1900 Orlando, FL 32802-1900 Jack McRay, Esq. General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792 James Gillis, Esq. Department of Professional Regulation Division of Real Estate 400 West Robinson Street P.O. Box 1900 Orlando, FL 32802-1900 Richard Irwin Ray 10013 Calle de Celestino Navarre, FL 32566
The Issue The issue is whether Respondents' real estate licenses should be disciplined on the ground that Respondents allegedly violated a rule and various provisions within Chapter 475, Florida Statutes, as charged in the Administrative Complaint.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: When the events herein occurred, Respondents, Edward D. Armbruster and Colleen Michele Armbruster, were licensed real estate brokers having been issued license numbers 0002159 and 0362890, respectively, by Petitioner, Department of Business and Professional Regulation, Division of Real Estate (Division). Respondents served as qualifying brokers and officers of Respondent, Armbruster Realty, Inc., a corporation registered as a real estate broker and located at 1031 West Nelson Avenue, DeFuniak Springs, Florida. The corporation holds license number 0211855, also issued by the Division. On July 10, 1996, Gerald and Joyce Singleton, who had just relocated to California, entered into a contract with James B. and Joyce Patten to sell their single-family residence located on Madison Street in the City of Freeport, Florida, for a price of $78,000.00. The contract called for the Pattens to pay $1,000.00 as an earnest money deposit, to be held in escrow by Respondents. The contract further provided that "[c]losing shall be within 30 days (more or less) after acceptance of this contract," and that "[i]n the event that buyer defaults and deposit is forfeited, it is agreed said deposit shall be divided equally between seller and broker." The transaction was handled by Geraldine Dillon (Dillon), a salesperson in Respondents' office, who is now retired. Because the Pattens had recently moved to Walton County from Washington State, and they were temporarily living with a relative in a mobile home, the time for closing was of the essence. Accordingly, the Pattens inserted into the contract a provision requiring that a closing be held within "30 days (more or less)." This meant that a closing should be held on or about August 10, 1996, give or take a few days. The parties acknowledge that property boundary problems were somewhat common in certain areas of Freeport, including the area where the subject property was located. To satisfy the bank and title company, a surveyor was engaged to prepare a survey of the property. However, the parties agree that the surveyor noted problems with the boundaries of the lot. When a second surveyor would not undertake the survey because of similar boundary problems, Joyce Patten, who was the principal negotiator for the couple, notified Dillon that they did not wish to close because of potential title problems and wanted a refund of their deposit. Notwithstanding this concern, Dillon advised Joyce Patten that a third surveyor would be hired, at the seller's expense, and he could "certify" the property. Although Joyce Patten expressed concern that the bank might not accept a third survey after two earlier ones had failed, and she did not want to pay for another survey, she did not instruct Dillon to stop the process. Accordingly, Dillon engaged the services of Tommy Jenkins, a local surveyor, to perform another survey. After a certified survey was obtained by Jenkins on August 12, 1996, which Respondents represent without contradiction satisfied the lender and title company, a closing was scheduled within the next few days. This closing date generally conformed to the requirement that a closing be held by August 10, 1996, "more or less." The seller, who by now had relocated to California, flew to Florida for the closing, and the title company prepared a closing statement and package. Just before the closing, however, Respondents learned through a representative of the title company that the Pattens were "cancelling the closing," apparently in violation of the contract. Shortly after the aborted closing, Joyce Patten requested that Dillon return their deposit. By this time, the Pattens had already entered into a second contract to buy another home in the same area and closed on that property before the end of August. Respondents were never informed of this fact by the Pattens. On August 21, 1996, Colleen Armbruster prepared a rather lengthy letter to the Pattens (with a copy to the sellers) in which she acknowledged that they had orally requested from Dillon that their escrow deposit be returned. The letter has been received in evidence as Petitioner's Exhibit 4. Armbruster stated that she was "perplexed" that they were demanding a refund of their earnest money deposit, given the fact that the seller had "met the terms and conditions of the sale." Armbruster outlined the three reasons in the contract which would allow the Pattens to withdraw without forfeiting their deposit, but noted that none were applicable here. Accordingly, she advised them that the seller would be consulted as to his wishes regarding the deposit, and that the Pattens should contact her if they had any questions. Through oversight, however, she did not include a notice to the Pattens that they must respond to her letter within a stated period of time reaffirming their demand for the trust funds, or the deposit thereafter would be disbursed pursuant to the contract. By failing to include this specific language, and sending the letter by regular rather than certified mail, return receipt requested, Respondents committed a technical, albeit minor, violation of an agency rule. Even so, the Pattens acknowledged receiving the letter, and there is no reason to believe that they did not understand its import, especially the requirement that they contact the broker if they disagreed with the proposed disbursement of the money. It can be reasonably inferred that the Pattens did not respond because they "figured [they weren't] going to be able to get [their] money back" due to their failure to perform. On September 13, 1996, the seller's attorney advised the Pattens by letter that the seller considered the deposit forfeited pursuant to paragraph 15(a) of the contract, which pertains to the "Default" provisions. The Pattens never responded to either letter, and they also failed to respond to telephone calls made by Respondents or their agents regarding this matter. In view of the Pattens' lack of response or reaffirmance of their demand, and the fact that they had already closed on another property, Respondents logically and fairly assumed that the Pattens were in agreement with the disbursement procedures outlined in Coleen Armbruster's letter of August 21. Accordingly, on September 17, 1996, Edward Armbruster, who had not been involved in this transaction to date, in good faith signed two disbursement checks giving $697.50 to the seller and retaining the balance for his firm. This division was consistent with the terms of the contract. In making this disbursement, there was no intent on the part of Respondents to trick, deceive, breach their trust, or in any way unlawfully deprive the Pattens of their deposit. Respondents did not notify the Florida Real Estate Commission (Commission) that they had received conflicting demands for a deposit, nor institute any other procedures regarding the deposit, since they no longer had any good faith doubt as to whom was entitled to their trust funds. This was because the Pattens had failed to respond to letters and telephone calls regarding the sellers' claim to the deposit. There is no evidence that Respondents have ever been the subject of prior disciplinary action during their lengthy tenure as licensees. At the same time, it is noted that Respondents acted in good faith throughout the process and genuinely believed that there was no dispute. It should also be recognized that, for at least part of the time, the Pattens were working two contracts simultaneously without advising the realtors.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a Final Order finding Respondents guilty of a technical violation of Rule 61J2-10.032(1), Florida Administrative Code, and Section 475.25(1)(e), Florida Statutes, and that they be given a reprimand. All other charges should be dismissed. DONE AND ENTERED this 28th day of July, 1998, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 Filed with the Clerk of the Division of Administrative Hearings this 28th day of July, 1998. COPIES FURNISHED: Henry M. Solares, Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802-1900 Christine M. Ryall, Esquire 400 West Robinson Street Suite N-308 Orlando, Florida 32801-1772 Edward D. Armbruster Colleen M. Armbruster Post Office Box 635 DeFuniak Springs, Florida 32433 Lynda L. Goodgame, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue Whether the Respondent, Alvin I. Siegel, should be suspended or otherwise disciplined for failure to properly disburse funds or to retain said funds in an escrow account.
Findings Of Fact Respondent Alvin I. Siegel is a registered real estate broker with License #0080637, trading under the registered trade name of Cambridge Realty in South Miami, Florida. An administrative complaint dated February 7, 1979, was filed by the Petitioner Commission, alleged that the Respondent has been guilty of failure to account for or deliver monies which had come into his hands and which were not his own property. Respondent Siegel requested an administrative hearing. On or about February 16, 1973, Sylvia M. Ramirez executed a purchase and sale contract and receipt for deposit for a house located in Dade County, Florida. The house was owned by Deanna P. Cooper. Ms. Ramirez had deposited $1,325.00 as earnest money deposit in the escrow account of broker Respondent Siegel. The contract provided that if the purchaser could not obtain a mortgage, the deposit would be refunded: that if the purchaser breached the contract, the deposit would be forfeited and divided equally by the seller and the broker; and that if the seller defaulted, the brokerage commission would be paid only upon a successful suit for specific performance by the purchaser. Respondent Siegel was notified of the date of closing the same day of the closing, July 20, 1973, but did not attend because of prior commitments. Later that day, the seller, Ms. Cooper, presented a closing statement to the Respondent stating that the transaction had closed and that she wanted the excess of the deposit over the commission owed to broker Siegel. He disbursed to her $235.00, which was the excess of the deposit over and above the commission. Respondent Siegel learned later that the checks issued at the closing were cancelled. Demands were made upon Respondent Siegel by both the seller, Ms. Cooper, and the purchaser, Ms. Ramirez, for the deposit money. The seller, Ms. Cooper, demanded one-half of the deposit as a forfeiture, and the purchaser, Ms. Ramirez, demanded that the money should be refunded to her. No suit for specific performance was instituted. Respondent Siegel refused to pay the seller, Ms. Cooper, the difference between the amount he had disbursed at the time she submitted the closing statement to him and one-half the deposit (i.e. $427.50). A lawsuit was filed by Sylvia Ramirez on December 4, 1973, demanding return of the deposit. The would-be seller, Ms. Cooper, was joined as a party Respondent, so that the rights of all parties could finally be determined. Respondent Siegel was advised by his attorney not to disburse monies to any of the parties, and he followed his attorney's advice. The lawsuit ended in dismissal in January of 1977, and no demand has been made upon Respondent Siegel since that date by either Ms. Cooper or Ms. Ramirez. Respondent Siegel has agreed to rely on the advise of the Petitioner Commission, and has stated that he is ready to disburse the necessary funds but is in doubt as to his duty. Both parties submitted memoranda of law and recommendations. These instruments were considered in the writing of this Order.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer recommends that this complaint be dismissed without prejudice. DONE AND ORDERED this 29th day of June 1979 in Tallahassee, Florida. COPIES FURNISHED: Kenneth M. Meer, Esquire Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings ROOM 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 Lawrence C. Rice, Esquire 6075 Sunset Drive, Suite 203 Miami, Florida 33143 Mr. Alvin I. Siegel c/o Cambridge Realty 6313 Sunset Drive South Miami, Florida 33143
The Issue Whether or not Petitioner's application for registration as an associated person of Brauer & Associates, Inc., and as an investment adviser of G.G. Brauer & Associates, Inc. should be approved.
Findings Of Fact Respondent, Department of Banking and Finance, is the state agency charged with the administration and enforcement of Chapter 517, Florida Statutes, The Florida Securities and Investor Protection Act and the administrative rules promulgated thereunder. On or about October 30, 1990, Petitioner submitted a Form U-4, Uniform Application for Securities Industry Registration or Transfer, seeking transfer as an associated person of Brauer & Associates, Inc., and as an investment adviser of G.G. Brauer, Inc. On or about January 25, 1991, Respondent denied Petitioner's application for registration based upon its determination that Petitioner had filed a form U-4, which contained material misstatements and had demonstrated prima facie evidence of unworthiness by engaging in prohibited business practices. Petitioner was previously registered as an associated person with the St. Petersburg, Florida branch office of Smith Barney from March 1987 until July 25, 1990, when he was permitted to resign from the firm for ordering securities from the "over the counter" desk without prior client orders. Petitioner was also registered with the NASD and is charged with knowledge of their Rules of Fair Practice. On or about May 9 1990, Ronald Padgett filed a written complaint with Respondent alleging that Petitioner was engaging in unauthorized trading in his account and that the account was trading on margin without a signed margin agreement. Mr. Padgett also alleged that the signed margin agreement on file with Smith Barney was a forgery. After receiving Mr. Padgett's complaint, Respondent commenced its investigation in Petitioner's activities and requested that Smith Barney provide it with information regarding Padgett's complaint. Respondent also requested and was provided with copies of all other customer complaints that had been filed against Petitioner with Smith Barney. Smith Barney provided Respondent with copies of customer complaints that had been filed against Petitioner by Dorothy Juranko, Wayne Schmidt, Mark Madison, Michael Russo, Gloria Fallon, Patricia Schoenberg and William & Verna Bankhead. All of these individuals were investor clients of Petitioner. Prior to his employment with Smith Barney, Petitioner had not been the subject of a customer complaint or industry disciplinary proceeding or licensure revocation, suspension, or denial. Wayne Schmidt Sr. the owner of Suncoast Chrysler-Plymouth (Suncoast) opened his account at Smith Barney in 1985. Initially, the account executive assigned to Schmidt's account at Smith Barney was Steve Ellis. Schmidt maintained two accounts with Smith Barney and Steve Ellis, namely, a profit- sharing account for Suncoast Chrysler-Plymouth and a joint account with his wife. Schmidt exercised no control of the Suncoast account, but rather allowed his associate, Gloria Fallon to initially monitor the transactions in that account. Afterwards, Schmidt started overseeing the trading activities in the Suncoast account. Schmidt had no knowledge of any unauthorized transactions in the Suncoast account after he began monitoring it. Gloria Fallon did not testify at the proceeding. In connection with the maintenance of his joint account at Smith Barney, Schmidt executed a "Securities Account Agreement." During the time Schmidt maintained his account at Smith Barney, the Securities Account Agreement was utilized by Smith Barney as a margin contract. The Securities Account Agreement qualifies as a margin account agreement/margin contract as to form, and is consistent with industry standards, custom and usage. Although Florida Statutes proscribes certain procedures relative to margin agreements, neither the Florida Securities Act nor the rules promulgated thereunder require a broker/dealer to characterize a margin contract as a "margin agreement." The gravamen of Schmidt's complaint against Petitioner was that certain shares of stock were not liquidated from the joint account maintained by him in contravention of his directions to Petitioner. There was no proof submitted to support any conclusion that Petitioner failed to place an order for the liquidation of such securities for Schmidt's account. Likewise, there was no evidence of any unauthorized trading in the Schmidt's joint account. While Petitioner was assigned as account executive to the Schmidts joint account, a profit of approximately $10,000.00 was generated for that account in 1988 and in 1989, a net gain of approximately $15,000.00 was generated. Schmidt conceded at hearing that Petitioner probably did a better job handling his account than his prior broker, Steve Ellis. During the year 1988, Smith Barney generated and sent to Schmidt, monthly statements and confirmation statements regarding every transaction in his joint account. The monthly statements sent to Schmidt for the joint account contained entries regarding margin interest being charged to the account. For the year 1989, Smith Barney also generated and sent to Schmidt, monthly statements and confirms regarding every transaction in his joint account. The 1989 monthly statements sent to Schmidt also showed margin interest. For the years 1988 and 1989, Schmidt deducted from his individual tax returns, the margin interest charged to his account. Also, during 1988 and 1989, Schmidt did not complain to Petitioner or Smith Barney that the use of margin account was unauthorized. During his tenure at Smith Barney, Petitioner was the account executive assigned to the account of Michael Russo (Russo). Petitioner was assigned to the Russo account in approximately May of 1990, an account which was formerly serviced by an account executive whose last name is Dudenhaver. Michael Russo matriculated at City College of New York where he received a Bachelor of Business Administration degree and was a certified public accountant for approximately 30 years. Russo has been in the accounting business for approximately 40 years and during this time period, he operated his own accounting practice. Russo maintained three (3) accounts at Smith Barney which included an account with his wife, an individual account and an IRA account. Russo opened his first brokerage account in the early 1980s with Merrill Lynch, Pierce, Fenner & Smith. Russo has a history is investing in real estate and by mid 1990, he had accumulated a net worth of approximately $750,000.00. On or about July 13, 1990, Russo presented Petitioner a check in the amount of $26,000.00 which was to be deposited into Russo's accounts. The $26,000.00 check was deposited by Petitioner into Russo's accounts but were returned for non-sufficient funds (NSF). Russo then replaced the NSF check with a $22,000.00 check. The funds derived from the $26,000.00 of Russo originated from an interest-bearing money market account from the Fidelity- Spartan Mutual Funds Family. During the period July 13-20, 1990, Russo was on vacation and was away from his home visiting relatives in the Melbourne, Florida area. During that week, Russo spoke by telephone with Petitioner regarding his account on more than one occasion. Russo specifically recalls speaking with Petitioner on July 15, 1990, regarding his account. During that week, Russo spoke with Respondent about selling certain shares of stock in his account and his specific recall is that one of those conversations occurred on July 15, 1990. The shares were to be sold "at market." Russo again spoke with Petitioner on July 21, 1990, regarding transactions in his account. On July 24, 1990, Russo told Larry Youhn, the branch manager at Smith Barney, that he was very happy with Petitioner as his broker. The July 1990 month-end statement for the Russo account indicate that funds were deposited into the Russo accounts in an amount sufficient to satisfy security purchases made in his account during July 1990. Although these transactions appear at month-end in a type-2 margin account, a review of such statements indicate that the transactions initially occurred in a cash account and were mistakenly journaled to the margin account by Smith Barney as a result of an NSF check presented by Russo as payment for the purchase transactions. The individual account of Russo reflects the purchase of 500 shares of Wiley Laboratories on July 16, 1990, for $7,702.00. On that same day, $10,500.00 from the $26,000.00 NSF check was received into the account. The July 1990 monthly statement for Russo's individual account reflected that there would have been a $2,800.00 net credit in the account if Russo had not presented the NSF check. During his tenure at Smith Barney, Petitioner also served as the registered representative for an account maintained by Nicholas and Dorothy Juranko (Juranko). The Jurankos have a substantial history of business experience, having currently owned a service station in the Ohio area and Mrs. Juranko currently owns her own drapery shop and manages eight (8) apartment/rental units that they jointly own. The Jurankos opened their first securities brokerage account in approximately 1962. They have held accounts at several brokerage firms including Merrill Lynch, Blinder-Robinson and First Jersey Securities prior to opening their account at Smith Barney. At Blinder-Robinson, the Jurankos engaged in the purchase of several "Penny" stocks and fully realized that they were speculating. The Blinder- Robinson account was opened by the Jurankos so that Mr. Juranko would "have something to do." The Jurankos maintained a securities brokerage account at First Jersey Securities prior to Petitioner's employment with First Jersey. Petitioner was assigned as account executive for the Juranko account at First Jersey in approximately 1985. When the Jurankos opened their account at Smith Barney, their net worth was approximately $220,250.00. Although Mrs. Juranko maintains that unauthorized trades occurred in her account during the month of December 1987, when asked to identify which trade which unauthorized, she could not do so. This was so, despite an effort to refresh her recollection by presenting her the December 1987 monthly account statement which depicted all securities holdings and transactions generated in their account. Mrs. Juranko also alleged that she was losing money and did not want to deposit any additional funds into her account. However, Mrs. Juranko wanted to have profits generated from the funds that were then existing into her account as of year-end December, 1987. Respecting the December 1987 trades, the Jurankos received confirms for every transaction that occurred during the month. Through December 1987, while Petitioner was assigned to manage the Juranko account, the account generated a net profit. Also, continuing through January 1988, Petitioner had effected trades which produced a net profit for the Juranko account. As testified by Mrs. Juranko, "All I could see...greed, all I could see was $14,200.00 some dollars and $9,900.00 some dollars, and I thought, wow... I thought "wow", he's making me money." Although Mrs. Juranko complained that she was losing money, an analysis of the account revealed that during the two years that Petitioner was assigned her account, it made a net profit. Notwithstanding the documentary evidence to the contrary, Mrs. Juranko admitted that she was upset and complained to Smith Barney's compliance officer, a Mr. Singer, because of her unfounded belief that she had lost money. Mrs. Juranko identified anger as the basis for her inability to understand a letter which was sent by Larry Youhn, Smith Barney's branch manager, which show the activity that had been generated into her account. Notwithstanding the clear language of that letter, Mrs. Juranko maintained that she did not understand it. This is so, despite the fact that Mrs. Juranko did not telephone Smith Barney to complain because she "didn't want to get [Petitioner] in trouble." 1/ The use of margin in the Jurankos account was discussed because Mrs. Juranko believed the account was losing money; she wanted to do whatever was necessary over a period of time to make up for the losses and she refused to deposit additional funds into the account to generate profits in trading the account. In connection with the maintenance of the Juranko account at Smith Barney, Petitioner instructed his sales assistant to send a margin agreement to Mr. and Mrs. Juranko for execution. The use of margin was discussed with the Jurankos in approximately November 1987. Petitioner relied upon the Smith Barney infrastructure to maintain the necessary paperwork for margin accounts, including the Jurankos. This is a customary practice in the securities industry and is utilized by most large brokerage houses. Juranko first complained to Petitioner about the use of margin in January 1988, when she received her monthly account statement which contained an entry for margin interest. Mrs. Juranko explained that she thought the margin charges were too much and that she wanted to reduce the margin charges by liquidating securities from the account. Mrs. Juranko thereafter became uncooperative and it became difficult for Petitioner to transact business in the account consistent with Mrs. Juranko's desired objectives. As a result, in March 1988, Petitioner determined that the only thing he could do for the account was to liquidate positions at or near break-even points. Thereafter, Petitioner never made any other purchase recommendations to the Jurankos. Petitioner also serviced the account of Mark D. Madison while employed at Smith Barney. Madison is a marketing, advertising and management consultant who owns his own business. Madison maintained two (2) accounts at Smith Barney's St. Petersburg branch office, including an individual account and an account in the name of his mother, Mary Jean Madison. Mark Madison was a fiduciary for and conducted all transactions in his mother's account. Prior to Petitioner's assignment as broker to Madison's fiduciary account, it was assigned to broker Steve Ellis. The fiduciary account was maintained as a margin account since its opening in 1984. Commencing on February 13, 1986, broker Ellis and Madison executed several margin transactions in the fiduciary account. Through the period ending October 31, 1987, roughly 95% of the transactions in the fiduciary account were executed on margin. As of year-end 1987, the Madison fiduciary account and Mark Madison's personal account historically traded over-the-counter securities. During this period while Ellis was the broker, margin transactions were executed in both Madison accounts. During this period, broker Ellis actively traded both accounts and generated both profits and losses in the accounts. Mark Madison was familiar with the active trading in both accounts as well as the profit/loss picture. Madison estimated losses in the fiduciary account to be over $20,000.00 while the account was handled by Ellis. These losses all occurred while he was the fiduciary on the account and was in charge of approving trading in the account. When the fiduciary account was transferred from Ellis to Petitioner, Madison expressed his concern about the losses that his mother's fiduciary account had sustained as well as his responsibility for such losses. During his initial conversations with Petitioner, Madison explained his mother's displeasure at the approximately $30,000.00 in losses that had been generated while Ellis was assigned as broker. Madison also explained to Petitioner that his brother had made references to conversations with his mother about suing him as the fiduciary because of the losses generated. During the time that the fiduciary account was handled by Ellis, there were differences in the execution prices of transactions in the same securities which occurred in both the fiduciary account and his (Mark Madison's) personal account. When Petitioner was assigned the account, it became apparent to him that Madison consistently obtained higher prices on liquidating transactions than his mother was obtaining in the fiduciary account for the same securities. Petitioner was concerned with the type of trading in which Madison wanted to engage in for the fiduciary account and brought this trading strategy to the attention of branch manager, Youhn, who explained to Petitioner that it was the fiduciary who had ultimate responsibility for trading the account. In addition to discussing the trading strategy with Youhn, a review of the account history was conducted by Petitioner. Petitioner's review revealed that the account had lost approximately 40% in equity during the time it was handled by account executive Ellis and Mark Madison as fiduciary. As a result of the losses generated, Madison expressed his desire to Petitioner to recoup losses in the account by taking advantage of 2-3 point swings in certain over-the-counter securities. During the months of January through March 1988, Madison, despite his allegations to the contrary, authorized the purchase of a specified number of shares of certain securities and later maintained that certain additional shares of those securities were purchased without his authorization. Throughout this period, Madison maintained continuous telephone conversations with Petitioner regarding such securities. Throughout the period, Madison did not instruct Petitioner to cancel the trades, but rather instructed him that he wanted out of those positions as near as possible to "break even." The Department conducted an investigation of the allegations made by Petitioner's former clients in connection with the denial of his registrations as an associated person an investment advisor. In connection with the investigation, the Department, through its investigative employee, Carol Irizarry (Irizarry), spoke with individuals who had submitted written complaints against Petitioner. In furtherance of her investigation, Irizarry visited the office of William Lyman, Esquire, who represented several of the former customer/complainants, and reviewed the information that Lyman had relative to such complaints. Ms. Irizarry did not testify during the formal hearing herein. Dennis Farrar (Farrar), area financial manager, Division of Securities, Department of Banking and Finance, supervised the writing of the report completed by Irizarry. Farrar's first direct contact with the investors/complainants in this case occurred approximately one (1) week prior to the commencement of the hearing herein. Following Ellis' separation from employment with Smith Barney, several Smith Barney brokers and clients of Petitioner advised him that broker Ellis was out to get him and urged them to file complaints against Petitioner. Specifically, Petitioner received a telephone call from Gloria Fallon, an associate of Wayne Schmidt, who warned Petitioner that Ellis was "trying to stir up trouble for him." In connection with the initial customer complaint received by the Department, a request for information responsive to the complaint was sent to Smith Barney. Among the documents received by the Department was a securities account agreement which contained language normally contained in a margin contract. The securities account agreement is the document utilized by Smith Barney as its margin contract at all time material hereto. A Form U-4, Uniform Application for Securities Industry Registration for Transfer, is a document generated by the National Association of Securities Dealers (NASD) and the North American Securities Administrators Association (NASAA). The Form U-5, Uniform Termination Notice, also is generated by the above entities. The disclosure section of a Form U-4 requires an applicant to respond to the best of his ability. An intentional falsification of information on a Form U-4 will give rise to a violation of Section 517.161, Florida Statutes. It is customary in the securities industry for a registered representative to rely upon his current broker/dealer employer to determine which complaints, if any, are disclosable on the Form U-4. It is customary in the industry for a representative to rely on the Form U-5, termination notice for completion of his U-4 and usually the information on both forms track each other. Also, the prospective applicant filling out his U-4 usually consults with the firm that he separated from to ensure that both Forms U-4 and U-5 are consistent. Petitioner's completion of the Form U-4 on August 30, 1990 in connection with his employment at Brauer & Associates contained a disclosure of customer complaints consistent with the disclosures made by Smith Barney on its amended Form U-5 Termination Notice dated August 17, 1990. Petitioner's reliance on the information contained in his files and that provided by his employers was reasonable and there was no evidence that Petitioner intentionally falsified his Form U-4 application.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that Respondent enter a Final Order granting Petitioner's application for registrations as an associated person or broker/dealer of Brauer & Associates, Inc. and investment adviser to G.G. Brauer, Inc. RECOMMENDED this 13TH day of August, 1991, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of August, 1991.
Findings Of Fact At all times material here to, Respondent has been a licensed real estate broker under the laws of the State of Florida, having been issued license number 0044295. On or about June 4, 1981, Respondent, representing himself to Doris Colon as the duly appointed, qualified and acting broker for Alvin Katz if, and representing that Alvin Katzif was the owner of certain real property located at 636-638 Southwest Eighth Avenue, Miami, Florida, accepted from Colon a written offer to purchase said property. Colon's offer was accompanied by a deposit of $5,000, receipt of which was acknowledged by Respondent on or about June 6, 1981. That deposit was delivered to the Respondent, as broker, to be held by him in escrow under the terms of the Deposit Receipt. The vendor named in the Deposit Receipt Agreement Alvin Katzif, was unable to sell the property in accordance with the terms expressed in that Deposit Receipt Agreement. Therefore, the sale was never consummated. Approximately one month after signing the Deposit Receipt Agreement, Alvin Katzif advised Respondent that he did not hold title to the property and that there were numerous and diverse claims to the property. Respondent never placed Colon's $5,000 deposit in an escrow account but rather placed the deposit in a personal account. Colon, through counsel, made a demand for the $5,000 earnest money deposit. Respondent failed to provide Colon with an accounting or delivery of her deposit until such time as she obtained a civil judgment against him. At no time did Respondent request an escrow disbursement order or submit the matter to arbitration or seek interpleader. Respondent converted Colon's $5,000 earnest money deposit to his own use. On or about the same day that Colon gave Respondent her $5,000 deposit made payable to him, Respondent gave Colon a check for $10,000 made payable to her. The $10,000 paid to Colon was not a loan to her and had no relation to the Katzif/Colon transaction. Rather, the $10,000 was a deposit toward the purchase of a duplex owned by Colon in which Respondent was then living as a tenant and which he desired to purchase from Colon. That transaction was completed, and the closing took place on August 12, 1981. The closing statement reflects credit given to Respondent of $10,000 toward the purchase price of the duplex he bought from Colon. The duplex Colon sold to Respondent is located at 2931-41 Southwest Sixth Street, Miami, Florida. When Respondent gave Colon his $10,000 deposit toward the purchase price of the duplex which he bought from her, he took her to friends of his at Intercontinental Bank, where she opened an account. She then wrote the $5,000 check out of that account, which check was the deposit which accompanied her offer on the property she wished to purchase from Katzif. In other words, the only relationship between the $10,000 check given to Colon by Respondent and the $5,000 check given to Respondent by Colon is that the fact that Respondent gave Colon a $10,000 down payment on the duplex he was purchasing from her gave Colon the opportunity to make an offer on the Katzif property using $5,000 of the $10,000 as a deposit on the offer to Katzif.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondent guilty of the allegations contained in the Administrative Complaint and revoking his real estate broker license number 0044295. DONE and RECOMMENDED this 10th day of August, 1983, in Tallahassee, Leon County, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of August, 1983. COPIES FURNISHED: Bruce D. Lamb, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Martin I. Carlin, Esquire 3000 Biscayne Boulevard, Suite 402 Miami, Florida 33137 Frederick Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Harold Huff, Executive Director Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 William M. Furlow, Esquire Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
Findings Of Fact Kenneth M. Olson, Jr., is a registered real estate broker with the FREC and Active Firm Member of Olson and Associates Real Estate, Inc., a corporate broker registered with the FREC. A copy of the Administrative Complaint was forwarded to the last address of Defendants registered with the FREC by certified mail numbers 4747 and 4748 and the notice of hearing was forwarded to the same address by certified mail numbers 4613 and 4614. Accordingly the Hearing Officer had jurisdiction over the Defendants and the offenses. By contract dated September 17, 1975 (Exhibit 6) Joseph J. Pillucere contracted to purchase real property from Paul L. Nave. The contract provided, inter alia, for a $500 earnest money deposit, $9500 down payment at closing with purchaser to assume existing first mortgage of approximately $28,000; and the seller taking back a purchase money second mortgage in the amount of $17,000. Thereafter, at the time scheduled for closing, the purchaser failed to produce the additional down payment required, execute the second mortgage and assume the existing first mortgage. After receiving conflicting demands from buyer and seller for the return of the earnest money deposit Defendant requested an advisory opinion from the FREC in accordance with Section 475.25(1)(c) FS. On May 13, 1976 an advisory opinion (Exhibit 5) was given by FREC to the Defendant, with copies to both parties to the contract, advising Defendant that the earnest money deposit should-be disbursed to the seller. The deposit has been disbursed to neither party to the contract.
