The Issue The issue in this case is whether the Petitioner’s application for licensure as a mortgage broker should be approved.
Findings Of Fact Petitioner resides in Riverwoods, Illinois. He has four children, and is married to Sharon Wheat-Hester. Petitioner received his undergraduate degree from Wake Forest University in North Carolina. Petitioner also received a master’s degree and doctorate degree in theology from Share-A- Prayer and Word Theological School in Whitewater, Wisconsin. Petitioner is currently employed as the director of a ministry called Marketplace Movement Network. The ministry provides advice to businesses on Chritian business ethics. In that regard, Petitioner has published one book on the subject of Christian ethics in business. Petitioner is also the President and shareholder of Hester International, Inc., a Florida Corporation that since 1995, provides mortgage brokerage services in the State of Illinois and several other states. The corporation’s principal office is located in Illinois. The business has an established client list and referral list. Additionally, Petitioner is currently licensed as a mortgage broker in the Illinois, California, North Carolina and Hawaii. He has not had any disciplinary action taken against him in those states. On January 25, 1996, prior to the present license application at issue here, Petitioner sought licensure as a mortgage broker in Florida with the Florida Department of Banking and Finance, Respondent’s predecessor agency. On the 1996 application Petitioner answered “no” to a question that asked whether he had ever had a license revoked. Petitioner’s 1996 application was denied for a material misrepresentation or omission. Petitioner did not challenge the 1996 denial. On February 16, 2004, also prior to the present application, Petitioner again applied for a mortgage broker license. On this application, question number six asked: Have you had a license, or the equivalent, to practice any profession or occupation denied, revoked, suspended, or otherwise acted against which involved fraud, dishonest dealing, or any other act of moral turpitude? Yes No A “Yes” answer to question six required the applicant to attach details, provide a copy of allegations, and also supply documentation of the final disposition of the case. In response to question number six, Petitioner appeared to have marked both the answers “yes” and “no”, but then circled “yes.” On the second page of the application, Petitioner explained his answer to question number six, stating that he had had a real estate license ten years ago and that he had been involved with a dispute for $2,500 and lost the case. The explanation further stated that Petitioner was moving to Illinois at the time, so he voluntarily surrendered his license. On April 1, 2004, without investigating the facts to refresh his memory, Petitioner provided the requested signed letter of explanation. Subsequently, he withdrew his February application because he did not have time to deal with the ongoing questions the agency had regarding his application. Around July 13, 2004, after discussing the February 2004 application with Respondent, Petitioner submitted a revised Application for Licensure as a Mortgage Broker in the State of Florida. In response to question six, Petitioner marked “no” based on his memory that his real estate agent’s license had been “voluntarily surrendered.” Petitioner also submitted character reference letters. Additionally, Petitioner discussed with Respondent any proof of rehabilitation since the “voluntary surrender” of his real estate license. On page two of the July application, Petitioner wrote that his “only blemish” was a voluntary surrender of a real estate license in 1992. Petitioner stated, “[t]his was ‘not’ an act of moral turpitude or fraud.” In a deficiency letter dated July 28, 2004, the Office requested additional information from the Petitioner, including a signed statement explaining his side of the occurrence. On September 30, 2004, the Office received the same statement the Petitioner had previously forwarded to the Office for his February 2004 application. Petitioner again did not avail himself of the opportunity to discover the true facts surrounding the claimed surrender of his license. In the second paragraph of this explanatory letter Petitioner stated that the disciplinary action that led to surrender of his real estate license arose out of a transaction involving one of his customers who rented property to a third- party renter. Petitioner stated that the rental transaction between his customer and the third-party renter occurred in the lobby of Petitioner’s office without his knowledge or help. According to Petitioner’s, somewhat confusing, explanatory letter, the customer did not have the right to rent the house, but collected $2,500 from the renter and then left the state. Later, Petitioner discovered that the customer had closed in escrow and gained temporary occupancy of the home, thereby enabling the customer to ostensibly rent the home. Petitioner further explained that the renter sued him for the $2,500 and prevailed because the transaction took place in Petitioner’s lobby. Petitioner stated he lost the case because his attorney, Scott Hester (also his brother), was unavailable to make the closing argument and Petitioner had to do his own summation. In fact, Petitioner’s brother never represented Petitioner in the renter’s case because he did not have time to undertake the case. Petitioner did not supply the names of the people referenced in the letter because he did not remember them. As will be seen, at the time of the explanatory letter, Petitioner’s memory of the facts surrounding his license surrender is, at best, faulty. On April 19, 2005, the Office issued its Denial Letter, denying Petitioner’s application for licensure as a mortgage broker. As grounds for denial under Section 494.041(2)(c), (g), (i) and (q), Florida Statutes, the letter stated in relevant part: The Office’s background investigation and information you provided revealed the following: You answered Question #6 on your application as “no”, when it asks if you have had a license, or the equivalent, to practice any profession or occupation denied, revoked, suspended, or otherwise acted against which involved fraud, dishonest dealing, or any other act of moral turpitude. On or about May 7, 1996, the Florida Department of Banking and Finance, Division of Finance, denied your application for a license as a mortgage broker for making a material misstatement of fact on their application. On or about December 8, 1992, after the State of Florida, Department of Professional Regulation, Division of Real Estate conducted an investigation, you surrendered your license with that agency and entered into a written agreement stating that you agreed to have your license revoked. Accordingly, the Real Estate Commission did revoke your license in their meeting of January 19, 1993 effective December 8, 1992. The Investigative Report attached to the Final Order to revoke reveals that you were sued for dishonest conduct and subsequently, on March 25, 1992, ordered to pay Johannes Fruhwirt $7,800 plus post- judgment interest. This order was by the County Court of Broward County as a result of a Final Judgment, Case #9103333 CC53 and a Writ of Execution. The investigation revealed that Hester left the State of Florida without leaving word of his whereabouts. Apparently, that judgment was never satisfied. On May 14, 1991 you promised to pay $3000 to Leonard Schoenfeld when closing occurred on a home Mr. Schoenfeld was purchasing. Closing occurred shortly afterward, and you have never made that payment. On or about July 17, 1995, the State of Illinois received an Application Form to Operate as a Residential Mortgage Licensee in the name of Hester International, Inc. on which you were listed as 50% owner. You signed the “Verification” portion of that form and your signature was notarized on June 20, 1995 indicating that you verified as being true all data entered onto that form. However, you responded “N/A” to Part III, Question #10 which asks that you list all licenses which you or your firm have applied for and been denied and/or any and all licenses issued to you or your firm which were subsequently suspended or revoked. You therefore failed to disclose the revocation of your license with the Florida Division of Real Estate that occurred in 1992. On the same application filed with the State of Illinois, in response to Part III, question 19(m), you did not disclose that a judgment had been entered against you on grounds of fraud, misrepresentation, or deceit. The renewal for Hester International Inc., with the State of Illinois, states under the section labeled, “Averment of License” in item “s” that the licensee will advise the Commissioner in writing of any changes to the information submitted on the most recent application for license within 30 days of said change. The State of Illinois reports that you never disclosed the denial of a mortgage broker license in 1996 with the State of Florida . (i) On November 18, 2004 in an electronic filing for corporation reinstatement for Hester International, Inc., you certified that as Registered Agent you maintained an office at 6278 N. Federal Highway, Suite #305 in Ft. Lauderdale, Florida. In fact, that address is a mail drop leased to one Carl Thames, CPA. The signage required by Section 48.091(2), Florida Statutes, does not appear, and you and Hester International, Inc. are unknown at this location. In pre-hearing interrogatories, the Office asked Petitioner to provide more information about the transaction involving the transaction that had led to the revocation of his real estate license, including the identity of those individuals. Even though the importance of accuracy was apparent since Petitioner was now in litigation, Petitioner, again, without investigating the facts and relying solely on his improving memory answered the interrogatories posed to him. In his answers, Petitioner identified the “customer” who had collected the money as Leonard Schoenfeld and the “renter” as Johannes Fruhwirt. Petitioner went on, in his answers, to describe the transaction with Mr. Schoenfeld and Mr. Fruhwirt. This description is similar to the explanation offered in the explanatory letters supplied for his earlier applications. In his response to Requests for Admissions, Petitioner denied that in May of 1991 he acted as a real estate broker in the auction of a home located at 14884 Equestrian Way in Wellington, Palm Beach County, Florida, and that he had been unable to deliver a mortgage at an agreed interest rate. Petitioner also denied that he had agreed to pay $3,000 for closing costs as deferred interest payments. Despite these denials, Petitioner admitted that he had signed an agreement to pay $3,000 to Mr. Schoenfeld. Petitioner explained these denials by claiming that these funds were never due because the agreement to pay $3,000 was contingent on closing. Since the real estate deal never closed, the $3,000 was never due. At his July 15, 2005, deposition, Petitioner essentially reaffirmed the inaccurate account of events in his interrogatory answers. At the deposition, Petitioner was asked to review documents related to the Schoenfeld transaction. Those documents included: (1) a copy of the May 14, 1991, agreement wherein he agreed to pay Mr. Schoenfeld $3,000, (2) a handwritten letter wherein he agreed to pay Mr. Schoenfeld the money that he owed him, and (3) a warranty deed on property purchased by Mr. Schoenfeld. When he was shown the May 14, 1991, agreement, Respondent testified that he did not know why he would have agreed to pay Mr. Schoenfeld $3,000. Even when he was shown the deed on the property and even though he had notarized the signatures on that deed, Petitioner maintained that the deal never closed and he never owed the $3000. At hearing, Petitioner’s various and growing explanations during discovery significantly differ from his testimony. Petitioner testified that throughout his various explanations he had confused and combined several individuals into one transaction. Even though he knew that the true facts of these transactions were important to consideration of his application and in answering discovery in this case, Petitioner did not make any real attempt to refresh his memory of these transactions until shortly before the hearing. In fact, the Schoenfeld and Fruhwirt transactions involved different real estate deals and had nothing to do with each other. The Schoenfeld transaction occurred in 1991 and involved the sale of real property located at 14884 Equestrian Way in Wellington, Florida. Mr. Schoenfeld was Petitioner’s customer. As part of the transaction, Petitioner guaranteed he could get a mortgage at a certain rate. After failing to get Mr. Schoenfeld a mortgage at a certain rate, Petitioner agreed to pay Mr. Schoenfeld $3,000 upon closing. When Petitioner failed to pay Mr. Schoenfeld the $3,000 on closing, he asked Mr. Schoenfeld if he could make payments of $200 a month. In a letter to Mr.Schoenfeld, Petitioner confirmed that he would pay Mr. Schoenfeld the amount that was owed. Petitioner made two payments and then stopped making payments. In a letter dated July 1, 1991, Mr. Schoenfeld complained about his dealings with Petitioner to the Division of Real Estate. A few days before Mr. Schoenfeld’s deposition on July 25, 2005, Petitioner paid Mr. Schoenfeld $2,600. Mr. Schoenfeld accepted the payment since the money was still owed to him. However, the payment had been delayed for 14 years and did not include interest for those years. Petitioner testified that he made the payment because, once he remembered the details of the transaction, he felt morally obligated to pay Mr. Schoenfeld what he had promised. However, fulfillment of this obligation also occurred with this litigation pending and after denials that any money was due Mr. Schoenfeld. In short, Petitioner did not pay Mr. Schoenfeld the money that was due him for 14 years until Petitioner was forced to acknowledge the true facts of the Schoenfeld transaction in this litigation. The Fruhwirt transaction involved a man named Mark Ritter who was a client of Petitioner. Mr. Fruhwirt met with Mark Ritter at a house he wanted to rent. Eventually, Mr. Ritter sent him to Petitioner to complete a lease agreement. Mr. Ritter did not know about leases and said Petitioner was a friend whose real estate office could set up the lease contract. Mr. Fruhwirt met Petitioner at his real estate office. Since it was lunchtime, they went to a nearby Burger King to finalize the lease. While at Burger King, Mr. Fruhwirt paid Petitioner $2,850 on the lease. Petitioner’s testified that he did not receive any money from Mr. Fruhwirt and did not accompany Mr. Fruhwirt to Burger King. Petitioner testified that Mr. Ritter and Mr. Fruhwirt met in his lobby and both went to Burger King to finalize the lease arrangement. However, given Petitioner’s past faulty memory, Petitioner’s testimony is not credible. At some point, Mr. Fruhwirt moved into the house. Subsequently, Mr. Fruhwirt received a letter from an attorney representing the real owner demanding that he vacate the premises. Mr. Fruhwirt then discovered that Mr. Ritter was not the owner and had to hire an attorney to sort out his continued occupancy of the property. Eventually Mr. Fruwhirt bought this property. Mr. Fruhwirt sued Petitioner and the real estate office for the recovery of the $2,850 he had paid to rent the house. Petitioner was found liable, but the real estate office was found not liable because the transaction happened off its premises at Burger King. On March 25, 1992, the Broward County Court entered a judgment of $7,800 against Petitioner, finding that Petitioner had “breached his duty to disclose that Mark Ritter was not the owner of the involved property.” After Mr. Fruhwirt obtained the judgment, Petitioner declared bankruptcy. Mr. Fruhwirt pursued an adversary action in Petitioner’s bankruptcy proceedings. Subsequently, the Bankruptcy Court cited “11 U.S.C. 523 A(2) and 11 U.S.C. 523 A(4)” and refused to discharge the judgment debt. The Bankruptcy Court’s Order refusing to discharge the debt clearly conflicts with Dr. Hester’s repeated implications and statements that this debt was discharged in bankruptcy. Unable to collect from Petitioner, Mr. Fruhwirt filed with the Florida Real Estate Recovery Fund. The fund paid $2,850 to Mr. Fruhwirt and suspended Petitioner’s license. Mr. Fruhwirt used the money to defray some of his legal expenses. To date, Petitioner has not paid Mr. Fruhwirt any money on the judgment. The Fruwhirt transaction led to the revocation of Petitioner’s real estate license and, on January 19, 1993, the Florida Real Estate Commission entered a final order revoking Petitioner’s real estate license. Despite Petitioner’s testimony that he never received a copy of the documents, the certificate of service for the final order indicates it was sent to Petitioner at 1101 Hidden Cove, Salem, SC 29676, which was the address where Petitioner was living at that time. Again, Petitioner’s testimony is not credible. The Final Order referenced a December 8, 1992, agreement in which Petitioner agreed that his license would be revoked. In the December 8, 1992 agreement, entitled “Affidavit for the Voluntary Surrender of License, Registration, Certificate/Permit for Revocation,” signed by Petitioner, he agreed to the revocation of his license and to not apply for a new real estate license for ten years from the effective date of revocation. In particular, the December 8, 1992 agreement stated, “[t]he effective date of the revocation shall be upon signing this document.” Notwithstanding the clear language revoking the license, at the hearing, Petitioner maintained that because he had voluntarily surrendered his license, he did not believe his license had been revoked. In referring to the agreement he had signed, he testified that the agreement said, “that my license will be inactive, not revoked” and denied ever seeing the other documents revoking his license. This testimony is simply not credible and demonstrates Petitioner’s propensity to see or remember things in a way that is more flattering to him, irrespective of reality. The affidavit signed by Petitioner clearly stated that Petitioner’s license would be and was revoked upon signing. In 1995, Hester International applied to operate as a residential mortgage licensee in Illinois. The application identified Petitioner as the vice president and Sharon Hester as the president. Page one of the application indicated the application had to be executed “by two officers or all directors if the applicant/licensee is a corporation.” The application was signed by Petitioner and his wife. Petitioner did not disclose to Illinois that a judgment had been entered against him in Florida or that his real estate license had been revoked or suspended. Question 10 in Part III of the Application asked: “LIST ALL LICENSES WHICH YOU OR YOUR FIRM HAVE APPLIED FOR AND BEEN DENIED AND/OR ANY AND ALL LICENSES ISSUED TO YOU OR YOUR FIRM WHICH WERE SUBSEQUENTLY SUSPENDED OR REVOKED.” Petitioner responded “N/A.” (Id.). Question 19(m) in Part III of the Application asked: UNDER PENALTY OF PERJURY, I(WE) STATE THAT ALL OF THE FOREGOING IS TRUE AND CORRECT TO THE BEST OF MY (OUR) KNOWLEDGE AND FURTHER STATE THAT AS THE APPLICANT/LICENSEE: . . . (m) Has not committed a crime against the law of this State, any other state or the United States, involving moral turpitude, fraudulent or dishonest dealing, and that no final judgment has been entered against it in a civil action upon grounds of fraud, misrepresentation or deceit which has not previously been reported to the Commissioner. The evidence did not demonstrate that the emphasized clauses in question 10 or the “I(WE)” in 19(m) direct such questions to individuals signing the application. One reasonable interpretation of the language is that the questions are directed to the business entity applying for the license. In short, the I(WE) language is simply language in a form meant to cover multiple types of business entities ranging from sale proprietorships to corporations. Therefore, Petitioner was not required by Illinois to disclose matters which involved him personally. To date, Illinois has not filed any disciplinary action against Petitioner or Hester International. Thus, the failure to disclose personal judgments or license actions to Illinois in a corporate application for licensure does not support a finding of dishonesty or denial of Respondent’s application at issue here. At some point, Hester International’s corporate status had to be reinstated in Florida. Petitioner reinstated the company’s corporate status in November of 2004. Petitioner filed as registered agent at 6278 North Federal Highway #305, Fort Lauderdale, Florida. Petitioner had not lived at this address for some 15 years, but had lived there for seven years with his girlfriend. The evidence showed that Petitioner simply forgot to change the registered agent’s address and was not acting dishonestly. Once he discovered his mistake, Petitioner amended his filing to reflect the appropriate address. Again, these facts do not form a basis to deny Petitioner’s license application. Finally, Petitioner testified that until Spring 2005, he and his wife were 50/50 owners of Hester International, Inc., as reflected on the application and license renewals in Illinois. In September 2004, Ms. Hester submitted Hester International, Inc.’s application for Florida licensure as a mortgage broker business. The Hester International business application was submitted after the Office had denied Petitioner’s license application in 1996 and was scrutinizing his July 2004 application. In the application, Ms. Hester identified herself as 100 percent owner of the Hester International. Petitioner did review this application, but he intentionally did not take part in its filing. The purported change in ownership was not adequately explained at hearing and appears to have been done in order to forestall any problems with licensure of the corporation due to Petitioner’s participation in the corporation. While the change of ownership is troubling, given Petitioner’s history, and also adds to the evidence that Petitioner is less than forthright in his memory and past business dealings, the change of ownership for the corporation’s licensure application does not, by itself, support a denial of Petitioner’s application. On the other hand, too many inconsistencies exist between Petitioner’s hearing testimony and his earlier accounts to conclude that Respondent can be trusted to hold a mortgage brokerage license. At worst, the evidence shows that Petitioner is not truthful or acts with integrity. At best, the evidence shows that Respondent has the ability to convince himself of facts that do not quite fit the truth, but are more flattering to him. Under either scenario, Petitioner’s appreciation of honesty, truthfulness and integrity are suspect. Neither Petitioner’s letters supporting his good character, nor his success in his ministry demonstrates sufficient rehabilitation to overcome what appears to be long-time evasive behavior. Therefore, Petitioner’s application for licensure as a mortgage broker should be denied.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED: A Final Order be entered denying Petitioner’s application for licensure as a mortgage broker. DONE AND ENTERED this 4th day of November, 2005, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER 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 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of November, 2005. COPIES FURNISHED: C. Scott Hester, Esquire 13843 Longs Landing Road East Jacksonville, Florida 32225 Robert H. Schott, Esquire Gregg Morton, Esquire Department of Financial Services 200 East Gaines Street Fletcher Building, Suite 526 Tallahassee, Florida 32399-0376 Carlos G. Muniz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue in the proceeding was whether the Respondents violated various provisions of Florida Statutes regulating the real estate profession by failing to return a $2,000.00 deposit, failing to notify the Florida Real Estate Commission of a deposit dispute, and failing to maintain the deposit in a trust account or other proper depository.
Findings Of Fact The following findings are facts stipulated by the parties in their Prehearing Stipulation filed on March 31, 1986 That Petitioner is a state government licensing and regulatory agency charged [w]ith the responsibility and duty to prosecute Administrative Complaints pursuant to the laws of the State of Florida, in particular Section 20.30, Florida Statutes, Chapters 120, 455 and 475, Florida Statutes, and the rules promulgated thereto. That Respondent C.P. O'Sullivan is now, and was at all times material hereto, a licensed real estate broker in the State of Florida having been issued license number 0144214 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker, % Preferred Properties of Lee County, Inc., 311 Homestead Road, Lehigh Acres, Florida 33936. That Respondent, Preferred Properties of Lee County, Inc., is now and was at all times material hereto, a corporation licensed as a real estate broker in the State of Florida having been issued license number 0169117 in accordance with Chapter 475, Florida Statutes. The last license issued was at the business address of 311 Homestead Road, Lehigh Acres, Florida 33936. At all times alleged herein, Respondent C.P. O'Sullivan was licensed as a real estate broker and sole qualifying broker and officer of Respondent Preferred Properties of Lee County, Inc. That on or about September 25, 1984, the Respondents solicited and obtained a sales contract entered into by Claretha Pinkney, as purchaser, and Elsie Barning, as seller, of certain residential property. That in connection therewith, the Respondents received in trust from Claretha Pinkney, a $2,000.00 earnest money deposit. The contract was contingent upon Claretha Pinkney obtaining a new mortgage loan. Claretha Andrews Pinkney is a school teacher for the Lee County Board of Education. In July 1984, she moved to the Lee County area from Georgia where she had also been a school teacher. (T. 20, 35). She contacted Respondent, Preferred Properties about her desire to purchase a house and began working with Kay Alcantara, a sales associate with Preferred Properties. (T-21, 85). Ray Alcantara introduced Mrs. Pinkney to C. P. O'Sullivan, who did a pre-qualification in his office. That is, he determined, through a series of questions, what price range to look for. During the pre-qualification, Ms. Pinkney gave her profession and her income, said she was from Georgia and said she owned a house in Georgia, which she rented out. She also said she had minimal liabilities. (T-99-100, 107-108). A house was found at 13 Apache Street in Lehigh Acres, and on September 25, 1984, a contract to purchase the house for $39,900.00 was executed. Mrs. Pinkney made deposits of $500.00 and $1500.00 in accordance with the contract. The contract required that she " make immediate application for a mortgage loan, or loans at a local lending institution at the prevailing rate of interest, in the amount of $35,900.00." The remaining $2,000.00 was to be due at the time of closing. (Petitioner's Exhibit #2). Claretha Pinkney applied for mortgage financing, through Columbus Mortgage Company, a Ft. Lauderdale based mortgage broker. She has relatives on the east coast who in the past had dealt with that company. (T-24-25, Respondent's composite Exhibit 2) The company did not maintain an office in Ft. Myers, but conducted business there through advertising WATTS Telephone number. (Deposition of James Gordon, P. 16). A representative of the company came over for the closings which took place in the office of Tri-County Title Company in Lee County, but the level of business never warranted opening a branch office in Ft. Myers. (Deposition of James Gordon, pp. 15-16, 20). In early November, Nancy Leclair, an employee of Columbus Mortgage Company, told Mrs. Pinkney that the company could not go forward with her application until they had verification that she had funds to close on the sale. (T. 43- 44). Mrs. Pinkney planned on using money from the Retirement System of the Georgia Board of Education but the retirement check had been sent to her prior address and was routed back to the Board of Education before it finally reached her in Florida. (T-23, 27) Mrs. Pinkney asked to have the loan application stay open while she was trying to get the funds from the Georgia Retirement System (T-45). Mrs. Pinkney told Kay Alcantara about the problem with getting the loan approved and the lost retirement check (T-27). Kay Alcantara stayed in touch with both Nancy Leclair and Mrs. Pinkney regarding the status of the loan and the retirement check. (T-89). Before November 20, Mrs. Pinkney called Kay Alcantara to say that she received a letter from the Georgia School System that her money was forthcoming but that she was eligible to leave the money in the fund and later receive benefits. If she cashed the check, she would lose her benefits. (T-86-87). The funds from the retirement system amounted to approximately $13,000.00 (T-52, 53, Respondent's Exhibit 43). On November 19, 1984, at Kay Alcantara's Suggestion, Mrs. Pinkney met with Kay, Lynn Aspinwall (the office manager) and C. P. O'Sullivan in Mr. O'Sullivan's office. Mrs. Pinkney informed the realtors that she did not wish to go through with the deal, that she didn't want to lose her retirement benefits and did not want to take the money out of the Georgia Retirement System. Mr. O'Sullivan told her that if she didn't want the house she would lose the $2,000.00 deposit and she should think about it overnight. If she still felt the same way, she could come in the next day and sign a release of the deposit. (T-87, 104-105). On November 20, 1984, Mrs. Pinkney returned to the office and signed the agreement forfeiting her binder deposit of $2,000.00. (T-33, Petitioner's Exhibit #4). At no time prior to, or including that date, did she ask to have her deposit returned. (T-105). On the same date, November 20, 1984, Mrs. Pinkney sent a letter to Nancy Leclair at Columbus Mortgage Company enclosing a copy of another contract for sale for an entirely different property and a different realtor. (T-57, 58, Respondents' composite Exhibit #2). This contract is dated November 4, 1984, and is for a single family residence for a total sales price of $34,900.00. Mrs. Pinkney received her Georgia Retirement fund check and on December 3, 1984, deposited it in Sun Bank/Southwest. (Respondent's Exhibit #3). She later returned the money to the retirement fund and her admitted purpose in making the deposit was to show she had sufficient funds to close and to "fake out" the lender, while waiting for some other funds to materialize. (T-62, 65). Two statements of credit denial were eventually issued by Columbus Mortgage Company. The first, dated January 15, 1985, was clearly for the Apache Street property. The second, dated January 20, 1985, describes the transaction as "First Mortgage financing for a purchase of a home." (Respondent's composite Exhibit #2, Petitioner's Exhibit #3). Neither C. P. O'Sullivan nor Preferred Properties were informed by Columbus Mortgage Company that Mrs. Pinkney's loan was turned down. (T-107, 119). Considered as a whole, the evidence in this proceeding strongly supports the inference that Claretha Pinkney reneged on her contract to purchase the Apache Street property not because she was turned down for the loan, but because she found another house that she preferred. That is why she freely signed the release for the $2,000.00. Respondents didn't know this at the time that the release was discussed and prepared; however, they knew of a different, highly credible basis for Mrs. Pinkney's rejection of the property: to qualify for the loan she would have to use her retirement money; she didn't want to use the money and lose her benefits. This knowledge was sufficient for the Respondents' reasonable and justifiable belief that Mrs. Pinkney was not entitled to return of her deposit.
Recommendation Based upon the foregoing, it is, therefore RECOMMENDED: That a final order be entered dismissing all counts of the Administrative Complaint. DONE and ORDERED this 13th day of May, 1986, in MARY W. CLARK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of May, 1986. COPIES FURNISHED: Harold Huff, Executive Director Division of Real Estate 400 W. Robinson Street Orlando, Florida 32802 James Gillis, Esquire Division of Real Estate 400 W. Robinson Street Orlando, Florida 32802 Simon M. Harrison, Esquire Perch ~ Harrison, P.A. 1820 Colonial Blvd., Ft. Myers, Florida 33907 Fred Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Salvatore A. Carpino, Esquire Department of Professional Regulationff 130 North Monroe Street Tallahassee, Florida 32301 APPENDIX The following constitutes my specific rulings pursuant to subsection 120.59(2), Florida Statutes on all of the proposed Findings of Fact submitted by the parties to this case. Rulings on Petitioner's Proposed Findings of Fact Adopted in Finding of Fact #l.b. Adopted in Finding of Fact #1.c. Adopted in Finding of Fact #l.d. Adopted in Finding of Fact #1.e. Adopted in Finding of Fact #l.f. Adopted in Finding of Fact #l.g. Rejected as contrary to the weight of evidence. The finding that the loan was applied for is, however, adopted in Finding of Fact #5. Adopted in Finding of Fact #11. Adopted in Findings of Fact #7 and 8. Rejected as contrary to the weight of evidence. Rejected as contrary to the weight of evidence. Rejected as contrary to the weight of evidence. Rejected as unnecessary and, as to entitlement to the money, wholly unsupported by competent evidence. Rulings on Proposed Findings of Fact Submitted by the Respondent 1. Rejected as unnecessary. ·2. Adopted in substance in Findings of Fact #1-12 except 2.m and 2.0 which are unsupported by the evidence. The record does not reveal when Mrs. Pinkney attempted to claim the $2,000.00; it does establish that she did not claim the $2,000.00 before or at the time she signed a release. Rejected as a restatement of testimony rather than a finding of fact. Rejected as unnecessary.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, I hereby make the following findings of fact: Respondent is and was at all times material hereto a registered real estate salesman in the State of Florida having been issued license no. 0390547. In March of 1985, the Respondent's real estate salesman's license was placed with Raymond Joseph Deangelis Investments (RDI) in Naples, Florida. Since March of 1985, Respondent has had a couple of transactions that have actually closed with Mr. Deangelis. Prior to being placed with RDI, the Respondent's registration certificate was placed with EVI Properties, Inc., in Naples, Florida. EVI was a registered corporation. On March 31, 1984, the corporate registration of EVI Properties, Inc was canceled due to non-renewal. Some confusion exists in the Florida Real Estate Commission's records as to when the licenses of the associates of EVI were cancelled. By letter dated January 4, 1985, to EVI Properties, Inc., the Records Section stated: "In reviewing the Division's Records, I find that registration held by your corporation/ partnership expired on 3/31/84 and no renewal has been processed as of the above date. For your convenience, I am enclosing proper form 400.3 on which to request renewal of your corporation/partnership. I suggest that same be filed within 20 days from the date of this letter, otherwise we have no alternative than to cancel the licenses of all associates with your corporation/ partnership. . ." (Emphasis Added) Further, the Respondent was issued a salesman's license effective November 17, 1984, expiration date 3/31/86, registered with EVI Properties, Inc. Although that license was apparently issued in error, the Respondent received no further communication regarding it from the Record's Section. Nevertheless, the Respondent was aware that he did not possess a valid current registration certificate as a salesman during the times material to this complaint. The Respondent enrolled in and completed a 12 hour Bert Rodgers Schools of Real Estate course and re-applied for a current registration certificate. The new registration certificate was issued effective March 18, 1985. During the time that Respondent's registration certificate with EVI Properties was cancelled, he was also employed as vice-president of American Home Funding, a large New York based mortgage firm. As vice-president with American Home Funding, the Respondent was in charge of their Florida organization as a mortgage broker. The Respondent has been licensed as a mortgage broker in Florida since 1981. While the Respondent was associated with EVI Properties no transactions transpired and he inadvertently failed to maintain a valid and current registration certificate as a real estate salesman. From April 1, 1984 through March 17, 1985, Respondent did not possess a valid and current registration as a real estate salesman. In June 1984, the Respondent met Mr. James D. Peterson. Mr. Peterson is the owner of several nursing home facilities located in Rhinelander, Wisconsin, Florida, and Illinois. The Respondent attempted to arrange permanent financing for Mr. Peterson for Some property known as Buena Vida, in Naples. However, the transaction was never consummated. The Respondent, in reviewing Mr. Peterson's financial statements while attempting to arrange financing for him, became aware of a nursing home facility owned by Peterson in Rhinelander, Wisconsin. At the time, the Rhinelander nursing facility was not for sale. In October 1984, the Respondent met Deborah M. Maclean, a real estate sales person at a cocktail party. The party was attended by the Respondent, Mr. Corcelli an attorney and CPA, Mr. Corcelli's partner, Joseph Moore, an, attorney and the owner of Naples Title Company and Ms. Debra Maclean. The Respondent had arranged a S1.8 million dollar construction loan for Mr. Corcelli and Mr. Moore to build a facility on Vanderbilt Beach. As a result of obtaining that mortgage loan commitment, and following the closing, the Respondent invited Mr. Corcelli and Mr. Moore and his wife to his home for cocktails. As his guest, Mr. Corcelli brought Deborah Maclean. During the course of the evening at the dinner party, Respondent and Mr. Corcelli were discussing the real estate industry and Respondent mentioned Mr. Peterson. The following day, Ms. Maclean called Respondent and informed him that she was aware of a company which had a strong interest in purchasing nursing home facilities anywhere in the United States. The firm was called Canadian International Health Services' Inc. Ms. Maclean related to the Respondent that she had all cash buyers". Ms. Maclean contacted the Respondent several times requesting that she be introduced to Mr. Peterson, but Respondent refused. Apparently, Respondent was concerned that he might lose an anticipated mortgage brokerage commission because Ms. Maclean had "all cash" buyers. At some point, Ms. Maclean went to the Rhinelander facility and told one of Mr. Peterson's key employees that she had a buyer for any, end all of their facilities, and in particular the Rhinelander facility. Mr. Peterson decided to sell the Rhinelander nursing home facility, but preferred to deal with Respondent rather than Ms. Maclean. Mr. Peterson, therefore, employed Respondent to serve as a shield between he, Mr. Peterson, and Ms. Maclean during negotiations for the sale of the nursing home facility. If a sale had resulted, Respondent expected to be compensated by the sellers at the rate of 4% of the selling price of $13,000,000 less the value of the inventory. The Respondent agreed to share his commission 50/50 with Deborah Maclean. In December of 1984 and May of 1985, a meeting was held between Ms. Maclean, her attorney George P. Langford, and Respondent to further discuss the sale of the facility and any fee arrangements. Respondent informed Mr. Langford that he did not have a current license, but Respondent stated that he felt that the transaction primarily involved a business and not real property. Respondent did not state to any of the persons involved that he had the "listing" for the Rhinelander property. However, Mr. Peterson informed Ms. Maclean that there was a detailed listing for the property. Respondent's employing broker, Raymond J. Deangelis, did not discover that Respondent was attempting to obtain a purchaser for the Wisconsin property through sales negotiations with Deborah Maclean until May, 1985. None of the negotiations or documents involved in the attempted sale of the Rhinelander property were routed through Respondent's broker.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that The Florida Real Estate Commission suspend the real estate salesman's license of Respondent Ronald Gilbert Rice for a period of 6 months and that an administrative fine of $500 be assessed. DONE and ORDERED this 8th day of January, 1986 in Tallahassee, Leon County, Florida. W. MATTHEW STEVENSON, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of January, 1986. COPIES FURNISHED: James H. Gillis Esquire Department of Professional Regulation Division of Real Estate/Legal 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 J. Stephen Crawford, Esquire 12751 Cleveland Avenue Suite 207 Ft. Myers, Florida 33907 Fred Roche Secretary 130 North Monroe Street Tallahassee, Florida 32301 Salvatore A. Carpino, Esquire General Counsel 130 North Monroe Street Tallahassee, Florida 32301 Harold Huff Executive Director Department of Professional Regulation Division of Real Estate 400 West Robinson Street P. O. Box 1900 Orlando, Florida 32802
The Issue The issue in the case is whether the allegations of the Administrative Complaint are correct and, if so, what penalty should be imposed.
Findings Of Fact At all times material to this case, Frederick L. Roberts (Respondent) was a licensed Florida mortgage broker, holding license number MB 316324569. In November 1993, a friend of the Respondent, Alan Petzold, introduced Tami Aaronson to him. Ms. Aaronson owned property in Maryland and was interested in securing a mortgage on the Maryland property to provide funding for a Florida home for herself and her son, Jarrett. According to Ms. Aaronson, Mr. Petzold is the father of a minor son, Jarrett Aaronson. The Respondent believed that such was the case at the time he met the family. The Respondent met several times with Ms. Aaronson. The Respondent gave a “Flagship Mortgage Company” business car to Ms. Aaronson. The business card had the Respondent’s name printed on it. The Respondent had been briefly employed by Flagship Mortgage Company, but apparently was not so employed at the time he met Ms. Aaronson. Frederick L. Roberts (Respondent) received check number 0170, dated November 22, 1993, from Tami Aaronson as “Custodian for Jarrett Aaronson” in the amount of three thousand dollars. The notation on the check states that it is for “refinancing.” Ms. Aaronson believed the check was payment for services the Respondent would render in obtaining refinancing of the Maryland property. There was no written agreement between the Respondent and Ms. Aaronson, or between the Respondent and Mr. Petzold. The Respondent completed no written documentation related to the Aaronson transaction. The Respondent did not place the Aaronson deposit into a segregated escrow account. The Respondent did not record the Aaronson deposit into an escrow transaction journal. During the period he held the Aaronson funds, the Respondent worked on unrelated business, and traveled to China for about thirty days. The Respondent performed no work on behalf of Ms. Aaronson, Mr. Petzold, or Jarrett Aaronson. There is no evidence that the Respondent intended to perform any work on behalf of Aaronson/Petzold. The Respondent asserted that he asked for a three thousand dollar “deposit” as a means of discouraging the couple from asking for his assistance. The assertion is not credible. The Respondent asserts that the three thousand dollars he received from Ms. Aaronson was a deposit against travel expenses he would incur during his examination of the property in Maryland. The assertion is not supported by credible evidence. In the spring of 1994, the Respondent received a telephone call from Ms. Aaronson. The Respondent asserts that he believed Ms. Aaronson to have called him from a mental hospital. For whatever reason, at that time he determined that he no longer wanted to be involved in the Aaronson/Petzold situation. Shortly after receiving the Aaronson phone call in spring 1994, the Respondent also received a call from a Department of Banking and Finance investigator, apparently looking into a complaint received from Ms. Aaronson. The Respondent thereafter contacted Mr. Petzold and made arrangements to return the funds to him. According to a notarized statement dated May 9, 1994, the Respondent returned the three thousand dollars to Jarrett R. Aaronson and Alan C. Petzold. The Respondent testified that the money had been returned on May 8, 1994 to Mr. Petzold. The Respondent offered into evidence a document dated May 8, 1994, purporting to be a receipt received from Mr. Petzold for return of the funds. The signature is not notarized. The Respondent did not return the Aaronson deposit to Tami Aaronson. There is no evidence that Ms. Aaronson authorized the return of the three thousand dollars to Mr. Petzold. There is no evidence that Ms. Aaronson authorized the return of funds to Jarrett. Ms. Aaronson has not received any part of the three thousand dollars allegedly refunded. There is no evidence that the funds have been redeposited into the minor child’s custodial account. The Respondent asserts that he was not acting as a mortgage broker and was merely investigating the property to determine whether the Aaronson property could be used as a source of funds for the purchase of Florida property. The Respondent asserts that had a refinancing situation arisen, he would have referred Ms. Aaronson to another licensed person who would assist in the actual refinancing. The assertion is not supported by credible evidence. The Respondent asserts that in the spring of 1994 he had reason to believe that Ms. Aaronson had been hospitalized in a mental facility, and therefore he returned the funds to Mr. Petzold. The rationale for the failure to return the funds to the appropriate party is not persuasive.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Insurance enter a Final Order suspending the mortgage broker license held by Frederick L. Roberts until the following conditions are met: Payment to Tami Aaronson of $3,000 plus appropriate interest calculated from November 22, 1993. Payment of an administrative fine in the amount of $5,000. After compliance with the above conditions, the license suspension shall be lifted, and a two-year probationary period shall begin RECOMMENDED this 22nd day of October, 1997, in Tallahassee, Leon County, Florida. WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of October, 1997. COPIES FURNISHED: Clyde C. Caillouet, Esquire Department of Banking and Finance 4900 Bayou Boulevard, Suite 103 Pensacola, Florida 32503 Michael W. Carlson, Esquire Carlton Fields Ward Emmanuel Smith & Cutler, P.A. 215 South Monroe Street, Suite 500 Tallahassee, Florida 32301 Harry Hooper, General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350 Hon. Robert F. Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350
Findings Of Fact Ben L. Musick is a registered real estate broker, t/a Ben Musick holding License No. 0062987. In September or October of 1975, Ben Musick was contacted by Barbara Hawkins who requested Musick to represent her in the sale of her home located at 3802 East Esther Street, Orlando, Florida. At that time, Hawkins advised Musick that she had had a recurrence of cancer, was behind on the second mortgage to her house, and desired to sell her home. Musick advised Hawkins that he could assist her in selling the home but that if he undertook to list the house in a direct capacity, that by virtue of his membership in the Orlando/Winter Park Multiple Listing Service that he would have to charge her seven percent commission on the sale. Hawkins advised Musick that she did not desire to have the house so listed and did not desire to place a sign on the property. Hawkins was desirous of paying off the money owned on the house, and obtaining as much money as possible on the sale. Musick was unable to give her an approximation of the money she could hope to realize on the sale of the home because Hawkins was unable to tell him the amount she was in arrears on the second mortgage. Musick undertook to represent Hawkins and advised her that he would check into the status of the second mortgage and would contact her. Upon checking with the second mortgagor and with the courthouse, Musick determined that there was a lien against the property for a deficiency judgment from a small loan company. He also determined the amount of money which she was in arrears on the second mortgage. With this information, Musick met with Hawkins on the 12th or 13th of October, 1975 and discussed with Hawkins the fact that the judgment lien of the small loan company would have to be satisfied together with the amounts due and owing on the second mortgage. A firm purchase price was not reached, but it was their understanding that he would attempt to get the very best price for the home and bring any offers to her and see if she would approve. Musick, having been limited in the manner in which he could advertise Hawkins' property, contacted several friends of his wife and as a result of these contacts showed the home to two couples during the months of October and November. Mrs. Hawkins entered the hospital at the Naval Station in Orlando around November 10, 1975. After her initial examination, it was determined that she would have to be evacuated by air to a cancer treatment center and arrangements were made to do this. She was to be transferred on November 20 or 21, 1975. Ben Musick had shown the Hawkins' home to Bobby and Jerry Hill who on November 19 communicated their decision to Musick that they would offer to pay all outstanding obligations on the Hawkins' home and assume the first mortgage on the home. By this time it had come to light that there was due and owing four months payments on the first mortgage and that both mortgage companies were considering foreclosure. Ben Musick communicated the offer made by the Hills to Hawkins on November 19, 1975 by telephone speaking with her at the Naval Hospital. Based upon her acceptance of the offer and having been advised by Hawkins that her husband was present, Musick prepared the contract for sale based upon the estimates of the cost which the Hills would have to pay and the amount of the first mortgage which they would have to assume. Then Musick presented the contract for purchase and sale and the deed to the property to Barbara Hawkins and her husband at the Naval Hospital on November 20. At that time Musick advised Hawkins that upon signing the contract and deed that the property would be effectively transferred although there would be a formal closing at which he would appear and represent her. Hawkins concurred in this and signed the contract for sale and the deed conveying the property from herself and her husband to Bobby and Jerry Hill. She was told prior to signing that she would receive no cash proceeds from the sale pursuant to the offer of the Hills to pay all debts owing on the home and assume the first mortgage. On November 21, 1975, Barbara Hawkins was transferred from the Naval Hospital in Orlando to Keesler Air Force Base Hospital in Biloxi, Mississippi. The Hills had determined to obtain title insurance on the subject property; and, therefore, Musick turned to Lawyers Title Insurance Company to handle the closing in this transaction because they offered to do so for free thereby saving the Hills money in closing the sale of the property. The final closing statement for the sale of the property was prepared by Jody Sellers of Lawyers Title Insurance Company. She prepared the closing statement based upon information obtained by her from the mortgage companies involved. The information provided her was slightly different from the information provided to Ben Musick and the estimates which he had been required to make regarding the cost of title insurance and other closing costs as stated in the contract for sale. However, the offer was premised upon a payment of debts and assumption of mortgage with the understanding that Hawkins would receive no cash proceeds. Because of the difference in Sellers and Musick's figures there was a slight difference ($250) between the purchase price figures arrived at by Sellers and that arrived at by Musick as expressed in the contract for sale. On November 28, 1975, Ben Musick called Barbara Hawkins at the Air Force Hospital at Keesler Air Force Base, Biloxi, Mississippi, where he advised her that the closing had been approved and was imminent and that she would receive $55 cash from the proceeds of the sale. He further advised her that he would be at the closing and represent her picking up her papers and check. She acknowledged his representation of her at the closing. At closing Jody Sellers requested that Ben Musick execute an affidavit stating that the subject property was free and clear of any mechanics liens, which Ben Musick signed as follows: "Ben Musick, Realtor for Barbara M. Hawkins" Ben Musick signed the closing statement indicating the receipt of $55.31 in behalf of Barbara M. Hawkins in the same manner. Upon her return from Biloxi, Mississippi, around December 10, 1975, Ben Musick delivered the closing papers and the check for $55.31 to Barbara Hawkins.
Recommendation The Hearing Officer, based upon the foregoing findings of fact and conclusions of law, recommends that the Florida Real Estate Commission take no action against the license of Bennett L. Musick, t/a Ben Musick, as a registered real estate broker. DONE and ORDERED this 28th day of December, 1976, in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Randy J. Schwartz, Esquire Florida Real Estate Commission 2699 Lee Road Winter Park, Florida 32789 Thomas F. Lang, Esquire Post Office Box 633 Orlando, Florida 32802 Charles T. Wells, Esquire Post Office Box 3109 Orlando, Florida 32802
The Issue This is a license discipline proceeding in which the Petitioner seeks to have disciplinary action taken against two individual licensees and one corporate licensee on the basis of allegations of several violations of Sections 455.227 and 475.25, Florida Statutes, by each of the Respondents. Each of the three Respondents has been charged in an Administrative Complaint with violation of the following statutory provisions: Sections 455.227(l)(j), 475.25(l)(b), 475.25(l)(j), and 475.25(l)(k), Florida Statutes.
Findings Of Fact Stipulated facts2 Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints pursuant to the laws of the State of Florida, in particular Section 20.165, Florida Statutes, Chapters 120, 455, and 475, Florida Statutes, and the rules promulgated pursuant thereto. Respondent Robert Ian Law is and was at all times material hereto a licensed real estate broker pursuant to Chapter 475, Florida Statutes, having been issued license number 3000835. The last license issued was as a broker in care of Law Property Services, Inc., t/a Century 21 Law Realty, 190 Malabar Road Southwest 120, Melbourne, Florida 32907. Respondent Benjamin Schiff is and was at all times material hereto a licensed real estate broker pursuant to Chapter 475, Florida Statutes, having been issued license number 0449353. The last license issued was as a broker at 9771 Northwest 41st Street, Miami, Florida 33178. Respondent Florida Home Finders Realty, Inc., is and was at all times material hereto a licensed real estate brokerage corporation pursuant to Chapter 475, Florida Statutes, having been issued license number 1003632. The last license issued was at 1648 Southeast Port St. Lucie Boulevard, Port St. Lucie, Florida 34952. At all times material hereto, Selma Del Carmen Schevers, Cheryl Ann Atwood, Lynn Marie Lake, Barbara Kay Davidson, Carol Ann Chandler, and Beverly J. Klemzak were licensed and operating as qualifying brokers and officers of Respondent Florida Home Finders Realty, Inc. On or about April 18, 1995, the real estate brokerage corporate license (former license number 0027454) of Florida Home Finders, Inc., was voluntarily dropped by Florida Home Finders, Inc. Simultaneously, Florida Home Finders Realty, Inc., submitted documents for and received a real estate brokerage corporate license effective April 18, 1995, from the Florida Division of Real Estate. Benjamin Schiff and Ian R. Law are directors of both Florida Home Finders, Inc., and Florida Home Finders Realty, Inc. Benjamin Schiff is the Chief Financial Officer for both Florida Home Finders, Inc., and Florida Home Finders Realty, Inc. Ian R. Law is the Chief Executive Officer for both Florida Home Finders, Inc., and Florida Home Finders Realty, Inc. On or about May 5, 1995, Selma Schevers and Cheryl Atwood notified various banking institutions of the authorized officers/directors and account signatories for Florida Home Finders, Inc., and Florida Home Finders Realty, Inc. On or about June 14, 1995, at the request of Benjamin Schiff, Selma Schevers and Cheryl Atwood authorized various banking institutions to transfer $2,492,000.00 in security deposits and rental trust funds to an account entitled "Florida Home Finders, Inc.," account number 3603969464 at NationsBank of Florida. At no time material did the Respondents obtain the authorization or permission of the owners of the trust funds to transfer the funds. Subsequent to the transfer referenced in paragraph 10 herein, the funds were used to purchase a certificate of deposit (No. 012897). After the purchase of the certificate of deposit, Cheryl Atwood, at the request of Ian Law, signed a document which placed the certificate of deposit as collateral for a commercial loan (No. 018002410263) from loan officer F. Larry Robinette of County National Bank of South Florida. The terms of the loan were: $2,000,000 principal; Benjamin Schiff and Ian Law as borrowers; proceeds payable to Atlantic Gulf Communities, Corp., as partial payment for the stock of Florida Home Finders, Inc., and two related companies. On or about August 21, 1995, Respondent Law instructed Barnett Bank to transfer $65,000.00 from Florida Home Finders, Inc., Rental Receipts Account No. 2274002335 to Florida Home Finders, Inc., Operating Account No. 2274027149.3 After this transfer Respondent Law instructed the bank to transfer the $65,000.00 from the operating account to Atlantic Gulf Communities Corporation, the former owner of Florida Home Finders, Inc., a formerly licensed real estate brokerage company and predecessor to Respondent Florida Home Finders Realty, Inc. On or about June 14, 1995, the following bank funds transfers were requested to be made to Florida Home Finders, Inc., (FHFI) account No. 3603969464 at NationsBank of Florida from the following accounts: Barnett Bank Acct. Name Acct No. Date Amt. FHFI Rental Receipts Escrow Acct 1700027712 6/22 138,000 Rental Security Deposit Acct 1700027810 6/22 398,000 FHFI Rent Receipts Acct 3388072440 6/21 38,000 FHFI Security Deposit Acct 3388072558 6/21 158,000 FHFI Rent Receipts Escrow Acct 2274002335 6/15 179,000 FHFI Rental Security Escrow 2274002343 6/15 609,000 SunBank Acct Name Acct No. Date Amt. FHFI Escrow-Rental Receipts 0809000005795 6/16 87,000 FHFI Escrow-Rental Security 0809000005806 6/16 285,000 1st Union Nat. Bank Acct Name Acct No. Date Amt. FHFI Rental Receipts-Escrow Acct 2161006787374 6/14 152,000 FHFI Rental Security Escrow Acct 2161006724586 6/14 406,000 1st Bank Acct Name Acct No. Date Amt. FHFI Rental Receipts-Escrow Acct 20-116845-06 6/15 8,000 FHFI Rental Security Escrow 20-116888-06 6/15 34,000 Additional facts based on evidence at hearing Prior to April of 1995, Florida Home Finders, Inc., then a licensed real estate brokerage corporation, engaged in soliciting, obtaining, and leasing to tenants the real property of others, pursuant to contracts between Florida Home Finders, Inc., and the property owners. A substantial majority of the money, probably more than 75 percent of the money, contained in the security deposit accounts and rental receipts accounts that was transferred in mid-June of 1995 was money collected from tenants on behalf of property owners while Florida Home Finders, Inc., was a licensed real estate brokerage corporation.4 Subsequent to the transfers of funds in mid-June of 1995, there was on at least one occasion insufficient funds in some of the security deposit and rental receipts trust accounts to meet disbursement demands. On that occasion the bank paid a number of checks for which Florida Home Finders, Inc., did not have sufficient funds on deposit and requested that Florida Home Finders, Inc., make an immediate transfer of funds to cover the insufficiencies. Shortly thereafter a transfer was made to cover the insufficiencies. Subsequent to the transfers of funds in mid-June of 1995, on some occasions funds that had been collected from new clients after those transfers took place were paid out to meet the demands of clients who were owed money that had been paid to Florida Home Finders, Inc., prior to the mid-June transfers. At the end of March of 1995, Respondents Schiff and Law purchased Florida Home Finders, Inc., a real estate brokerage corporation licensed pursuant to Chapter 475, Florida Statutes, (license number 0027464) from Atlantic Gulf Communities Corporation. The purchase price was three and a half million dollars, with the Respondents to pay $500,000.00 down and the three million dollar balance within three months. One aspect of the business plan of the Respondent's Schiff and Law was to create a separate company to conduct real estate brokerage activities and to continue to engage in property management activities with the existing corporation, Florida Home Finders, Inc. Respondents Schiff and Law met with all managers and employees of Florida Home Finders, Inc., during the first week of April of 1995 to explain the business plan to them. At that time they also explained that they intended to utilize the provisions of Section 83.49(1), Florida Statutes, to hold security deposits in a manner which would allow them to pay interest to tenants. Respondents Schiff and Law were not involved in the day to day operations of either Florida Home Finders, Inc., or Florida Home Finders Realty, Inc. At the time the Respondents Schiff and Law purchased Florida Home Finders, Inc., the corporation maintained at least three types of accounts for deposits received from its operations: sales escrow accounts, rental receipts accounts, and security deposit accounts. Each of the seven offices of Florida Home Finders, Inc., maintained its own separate set of accounts. The sales escrow accounts maintained by Florida Home Finders, Inc., contained money derived from purchasing and leasing transactions. The rental receipts accounts maintained by Florida Home Finders, Inc., contained money received from tenants for the payment of rent. The use of these funds was governed by the property management agreements with the landlords. Typically, the funds in these accounts would be used to pay for such things as maintenance and repairs to the rental properties, mortgage payments due on the rental properties, and/or property management fees, with any excess funds being periodically paid to the respective landlords. The security deposit accounts maintained by Florida Home Finders, Inc., contained money received from tenants for security deposits to be held to guarantee the tenants' performance under their respective rental agreements. Shortly after the formation of Florida Home Finders Realty, Inc., and its licensure as a real estate brokerage corporation, the sales escrow accounts of Florida Home Finders, Inc., were transferred to Florida Home Finders Realty, Inc. There were no irregularities in any of the sales escrow accounts while they were under the control of either of these two corporations. Following the creation of Florida Home Finders Realty, Inc., Florida Home Finders, Inc., did not engage in any licensed real estate brokerage activities. All such activities were conducted by Florida Home Finders Realty, Inc., after it was licensed as a brokerage corporation. On or about June 27, 1995, Florida Home Finders, Inc., posted a security deposit bond in the amount of $250,000.00 with the Florida Secretary of State in an effort to comply with Section 83.49(1)(c), Florida Statutes. None of the landlords and none of the tenants were ever provided with notice that money had been transferred from the security deposit accounts and from the rental receipts accounts. None of the landlords and none of the tenants were ever provided with notice that Florida Home Finders, Inc., had posted a bond with the Florida Secretary of State and intended to rely on the provisions of Section 83.49(1)(c), Florida Statutes. Subsequent to the transfer of the $2,492,000.00 to the NationsBank account, the funds were used to purchase three separate certificates of deposit. One certificate of deposit in the amount of $242,000.00 was purchased from NationsBank and secured a loan of the same amount. The second certificate of deposit in the amount of two million dollars was purchased from County National Bank in Miami in the name of Florida Home Finders, Inc., and was used to secure a personal loan to Respondents Schiff and Law in the amount of two million dollars. The third certificate of deposit in the amount of $250,000.00 was purchased from NationsBank in the name of Florida Home Finders, Inc., and was used as security for the bond posted with the Florida Secretary of State. The loan proceeds secured by two of the certificates of deposit described above, plus $100,000.00 from the operating account of Florida Home Finders, Inc., at Barnett Bank, were used to pay Atlantic Gulf Communities Corporation against the balance of the purchase price of Florida Home Finders, Inc. Between the time of the mid-June transfer of funds from the accounts of Florida Home Finders, Inc., and the freezing of the assets of Florida Home Finders, Inc., in September of 1995, Florida Home Finders, Inc., was able to pay all current demands for funds from tenants and landlords. As of September 21, 1995, all funds transferred from the various security deposit and rental receipt accounts of Florida Home Finders, Inc., remained in accounts and financial instruments in the name of Florida Home Finders, Inc. However, $2,242,000.00 of those financial instruments in the name of Florida Home Finders, Inc., were pledged as security for personal loans of the Respondents Schiff and Law and were not available to Florida Home Finders, Inc., while those personal debts remained unpaid.
Recommendation For all of the foregoing reasons, it is RECOMMENDED that a Final Order be entered in these consolidated cases to the following effect: Dismissing all six of the counts of the Administrative Complaint which were voluntarily dismissed by the Petitioner; Dismissing Counts X and XIX (10 and 19) against the corporate Respondent Florida Home Finders Realty, Inc., on the basis of the insufficiency of the evidence; Concluding that the Respondent Law is guilty of violations of Sections 475.25(1)(b) and 475.25(1)(k), Florida Statutes, as charged in Counts VII and XVII (7 and 17); Concluding that the Respondent Schiff is guilty of violations of Sections 475.25(1)(b) and 475.25(1)(k), Florida Statutes, as charged in Counts VIII and XVIII (8 and 18); Imposing a penalty against the Respondent Law consisting of the revocation of his real estate broker license and an administrative fine in the amount of two thousand dollars; and Imposing a penalty against the Respondent Schiff consisting of the revocation of his real estate broker license and an administrative fine in the amount of two thousand dollars. DONE AND ENTERED this 22nd day of April, 1997, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of April, 1997.
