The Issue Whether the application of Petitioner for registration as an electronic repair dealer should be denied.
Findings Of Fact Petitioner Jack Resnick d/b/a Smart Service petitioned for an administrative hearing upon receipt from the Respondent of a Notice of Intent to Deny License or Registration. The hearing was scheduled for November 27, 1978 at 2:00 p.m. in Tallahassee, Florida. Prior to the hearing the parties requested that the Hearing Officer write a Recommended Order upon submission of "Stipulation of Facts and Questions of Law" filed jointly by the parties, copy of which is attached hereto and made a part hereof. The instruments filed in this case reflect that in February, 1978 Petitioner Jack Resnick applied to the Respondent, Division of General Regulation, for an electronic repair dealer registration under the provisions of Chapter 468, Florida Statutes. In April, 1978 the Respondent notified Petitioner of its intent to deny said application for registration for the reason that applicant Jack Resnick intended to employ one Arthur Resnick as a repair work person In the business. Previously, in 1976 Arthur Resnick had been denied a registration certificate as an electronic service dealer by the Respondent, having been determined to be unfit and ineligible to be registered as an electronic repair service dealer. The Recommended Order entered in that cause, which was adopted as Respondent's final order, made the following; findings of fact: Arthur Resnick caused to be advertised in local (Florida)newspaper advertisements which would the public believe Arthur Resnick Television Repair Service was registered with the Bureau of Electronic Repair when, in fact, it was not. Arthur Resnick had been asked to disclose on his application for registration whether he had been convicted of a felony, misdemeanor, or any infraction other than traffic viola- tions to which Arthur Resnick answered "no" when, in fact, Arthur Resnick had been convicted of three counts of theft by deception involving the repair of television sets by the Court of Common Pleas in Montgomery County, Pennsylvania. The Hearing Officer concluded that: The acts and conduct of the Petitioner in operating without a registration; advertising in a leading and deceptive manner; making false statements as an inducement to the public to authorize repair, and his failure to answer truthfully to certain questions on his sworn application for registration is good and sufficient cause for the director of the Department of Business Regulation, Division of General Regulations to deny the Petitioner a registration certificate as an electronic service dealer. The order of the Respondent adopted the Recommended Order noting that it had received no exceptions to the Recommended Order from either party and thereupon denied the application for registration as an electronic service dealer filed by Arthur Resnick. The application of Petitioner Jack Resnick indicates that he is to be the sole proprietor of the business Smart Service. It indicates that Arthur Resnick, who has the same address as the Petitioner, is to do repair work with a possible employee named Jerry Cohen. Respondent gave no other reason for the denial of Petitioner's application except for the indicated employment of Arthur Resnick.
Recommendation Retract the Notice of Intent to Deny License or Registration which was based on the fact that Arthur Resnick was the prospective employee of the Petitioner. Grant Petitioner's application for registration as an electronic repair dealer providing he presently meets the requirements of the Respondent. DONE and ENTERED this 20th day of December, 1978, in Tallahassee, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: David M. Hudson, Esquire Deputy General Counsel Depariment of Business Regulation The Johns Building 725 South Bronough Street Tallahassee, Florida 32304 Alexander M. Siegel, Esquire 1303 North State Road 7 Margate, Florida 33062 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DIVISION OF GENERAL REGULATION DEPARTMENT OF BUSINESS REGULATION JACK RESNICK and SMART SERVICE, Petitioner, vs. CASE NO. 78-1687 DEPARTMENT OF BUSINESS REGULATION, DIVISION OF GENERAL REGULATION, Respondent. /
The Issue The issue to be resolved herein concerns whether the Petitioners are entitled to an award of attorney's fees in this proceeding. Embodied in that general issue are questions concerning whether the Petitioners are the prevailing parties; whether they meet the definition of "small business" parties, including the net worth amounts, enumerated in Section 57.111, Florida Statutes, as well as whether the disciplinary proceeding against both Petitioners was "substantially justified". See Section 57.111(3)(e) , Florida Statutes.
Findings Of Fact The Respondent is an agency of the State of Florida charged with licensing and regulating the practices of real estate salesmen and brokers by the various provisions of Chapter 475, Florida Statutes. Included within those duties is the duty to investigate conduct by realtors allegedly in violation of Chapter 475 and related rules and to prosecute administrative penal proceedings for which probable cause is found as a result of such investigations. At times pertinent hereto, both Ms. Maxwell and Ms. Cosyns, (then Pauline Sealey) were licensed realtors working as independent contractors for Mariner Properties, Inc. and V.I.P. Realty Inc. The complete file of the underlying proceeding DOAH Case No. 86-0140, was stipulated into evidence. That file included the Administrative Complaint filed against these Respondents and the Recommended and Final Order, which Final Order adopted the Recommended Order. The findings of fact in that Recommended Order are incorporated by reference and adopted herein. During the Petitioner's case, counsel for Petitioner voluntarily reduced the attorney's fees bills for both Petitioners such that Ms. Maxwell's bill is the total amount of $2,695.50 and Ms. Cosyns' bill is $17,200, rather than the original amounts submitted in the affidavit. Respondent acknowledged in its proposed Final Order that the fees and costs submitted by the Respondent were thus reasonable. The testimony the Petitioners presented through depositions, transcripts of which were admitted into evidence into this proceeding, was unrefuted. That testimony demonstrates that both Ms. Cosyns and Ms. Maxwell were prevailing parties in the administrative proceeding referenced herein brought by the Respondent, Department of Professional Regulation. They were individually named as Respondents in the Administrative Complaint whereby their professional licenses were subjected to possible suspension or revocation for alleged wrong doing on their part. There is no dispute that they were exonerated in that proceeding and are thus prevailing parties within the meaning of Section 57.111, Florida Statutes. The Petitioners are also "small business parties". In that connection, they both were independently licensed Real Estate professionals during times pertinent to the underlying proceeding and were acting in the capacity of independent contractors for all the activities with which the administrative complaint was concerned. Each established that her net worth is below the limit provided by Section 57.111 as an element of the definition of "small business party". The reasonableness of the fees having been established in the manner found-above and the Petitioners having established that they meet the definitional requirements of prevailing small business parties, there remains to be determined the issue of whether the proceedings against the two Petitioners were "substantially justified", that is, whether the proceeding had a "reasonable basis in law and fact at the time it was initiated by a State agency." See Section 57.111(3)(e), Florida Statutes. The facts concerning each Petitioner's case regarding the three counts of the Administrative Complaint relating to them are as found in the Recommended Order incorporated by reference herein. Respondent Maxwell was charged in the complaint with having worked in conjunction with an office manager, Mr. Hurbanis of V.I.P. Realty, in conspiring with him to submit a fraudulent real estate sales contract to a lending institution for purposes of financing. This allegedly involved submitting a contract to the lending institution with an inflated purchase price in order to secure one hundred percent financing, the scheme being more particularly described in that portion of the findings of fact in the Recommended Order related to Jean Maxwell. In fact, Ms. Maxwell did not work in the realty office as charged in the Administrative Complaint, but rather was employed by Mariner Properties, which may have been a related company. The contract in question, although alleged to be fraudulent was, in fact, a bona fide contract which was a legitimate part of the Real Estate transaction submitted to the bank for financing purposes, about which the bank was kept fully advised. All details of the transaction were disclosed to the lender. Maxwell was specifically charged with concealing the true contract from the lender in order to enhance the percentage of the purchase price that the bank would finance, done by allegedly inflating the purchase price in a second contract submitted to the bank. It was established in the disciplinary proceeding that no such concealment ever took place. In fact, Ms. Maxwell was purchasing a lot from her own employer, Mariner Properties. Two contracts were indeed prepared for the purchase of Lot 69, a single family lot on Sanibel Island. In fact, however, the difference of $42,875 and $49,500 in the stated purchase price, as depicted on the two contracts, was the result of continuing negotiations between Ms. Maxwell and the seller, who was also her employer. The difference in the two prices depicted on the contracts was the result of, in effect, a set-off to the benefit of Ms. Maxwell, representing certain employee discounts and real estate commission due from the employer and seller to Ms. Maxwell, the purchaser. As Petitioners' composite Exhibit 5 reflects, the lender involved, North First Bank of Ft. Myers, Florida, was fully apprised of all the details concerning this transaction at the time it was entered into and the loan commitment extended and closed. Mr. Allan Barnes, the Assistant Vice President of North First Bank revealed, in the letter contained in this exhibit in evidence, that there was no concealment or misrepresentation of the facts to his institution by Ms. Maxwell. This letter is dated April 18, 1984. The other related letter in that exhibit, of May 2, 1984 from attorney Oertel to attorney Frederick H. Wilson of the Respondent agency, thus constitutes notice to the agency well before the complaint was filed, that no concealment or misrepresentation to the lender involved had occurred and the charges were requested to be dismissed. In spite of the fact that the agency was on notice of this turn of events well before the filing of the Administrative Complaint, it proceeded to file the complaint and to prosecute it all the way up to the date of hearing, requiring Ms. Maxwell's attorney to attend the hearing to defend her interests. At the hearing, counsel for the Department acknowledged that there was no basis for prosecuting Ms. Maxwell and voluntarily dismissed the complaint as to her. The Respondent's witness, Investigator Harris, in his deposition taken September 11, 1984, acknowledged that he did not discuss any details concerning the investigation, with attorney Frederick Wilson, who prepared the complaint, nor did he confer with him by telephone or correspondence before the filing of the complaint. Therefore, the complaint was prepared solely on the basis of the investigative report. The investigative report came into evidence as Respondent's Exhibit 1. It reveals that Mr. A. J. Davis the president of Mariner Group and Mariner Properties, who was Jean Maxwell's employer and the owner of the lot in question, signed one contract and his Executive Vice President signed the other. In spite of this, the investigative report does not reveal that the investigator conferred with either Ms. Maxwell, or the sellers concerning this transaction. He conducted a general interview of A.J. Davis concerning the alleged "problem" in his office of "double contracting," but asked him no questions and received no comment about the Jean Maxwell transaction whatever. Nor did the investigator confer with Mr. Allen Barnes or any other representative of North First Bank. If the investigation had been more complete and thorough, he would have learned from Mr. Barnes, if from no one else, that the bank had knowledge of both contracts and all details of the transaction underlying them and there had been no concealment or misrepresentation of the facts regarding the transaction by Ms. Maxwell. This information was learned by attorney Oertel as early as April 18, 1984 by Mr. Barnes' letter, referenced above, and it was communicated to the agency by Mr. Oertel on May 2, 1984. Nevertheless, the complaint was filed and prosecuted through to hearing. Therefore, the prosecution and filing of the Administrative Complaint were clearly not substantially justified. If the Department had properly investigated the matter it would have discovered the true nature of the transaction as being a completely bona fide real estate arrangement. Former Respondent, Pauline Sealy Cosyns was charged with two counts, III and V, in the Administrative Complaint at issue. One count alleged, in essence, that Ms. Sealey had engaged in a similar fraudulent contract situation regarding the sale of her residence to a Mr. and Mrs. Thomas Floyd. The evidence in that proceedings revealed no concealment of any sales contract occurred whatever with regard to the lending institution or anyone else. The facts as revealed at hearing showed Ms. Cosyns and the Floyds, through continuing negotiations after the original sales contract was entered into, amended that contract and executed a second one, in order to allow Ms. Cosyns to take back a second mortgage from the Floyds. This was necessary because Mr. Floyd, an author, was short of the necessary down payment pursuant to the terms of the original contract, because his annual royalty payment from his publishers had not been received as the time approached for closing. The second contract was executed to allow for a second mortgage in favor of the seller, Ms. Cosyns, in order to make up the amount owed by the Floyds on the purchase price agreed upon, above the first mortgage amount. The testimony and evidence in the disciplinary proceeding revealed unequivocally that the lending institution, Amerifirst Mortgage Company, was fully apprised of the situation and of the reason for the two contractual agreements. The $24,000 second mortgage in question is even depicted on the closing statement issued by that bank. There was simply no concealment and no effort to conceal any facts concerning this transaction from the lender or from anyone else. The investigation conducted was deficient because the investigator failed to discuss this transaction with the lender or with the purchasers. He discussed the matter with Ms. Sealy-Cosyns and his own deposition testimony reveals, as does his investigative report, that he did not feel that he got a complete account of the transaction from her. She testified in her deposition, taken prior to the instant proceeding, that she indeed did not disclose all facts of the transaction to him because she was concerned that he was attempting to apprehend her in some "legal impropriety". Therefore, she was reluctant to be entirely candid. The fact remains, however, that had he conducted a complete investigation by conferring with the lender and the purchasers, he would have known immediately, long before the Administrative Complaint was filed and the matter prosecuted, that there was absolutely no basis for any probable cause finding that wrong-doing had occurred in terms of Section 475.25(1)(b), Florida Statutes. Thus, the facts concerning the prosecution as to Count III against Pauline Sealy-Cosyns, as more particularly delineated in the findings of fact in the previous Recommended Order, reveal not only that Ms. Cosyns was totally exonerated in the referenced proceeding, but that there was no substantial basis for prosecuting her as to this count at all. Concerning Count V against Ms. Cosyns, it was established through the evidence at the hearing in the disciplinary case that she was merely the listing agent and did not have any part to play in the drafting of the contract nor the presenting of it to the lender. Because there was no evidence adduced to show that she had any complicity or direct involvement in any fraudulent conduct with regard to the transaction involved in Count V of the Administrative Complaint at issue she was exonerated as to that count as well. It is noteworthy here that a statement was made by counsel for the agency, appearing at pages 20 and 21 of the transcript of the proceeding involving the Administrative Complaint, which indicates that the agency, based upon its review of certain documents regarding Counts III and V, before hearing, felt that indeed there might not be a disputed issue of material fact as to Mrs. Cosyns. The agency, although acknowledging that a review of the documents caused it to have reason to believe that it was unnecessary to proceed further against Ms. Cosyns nevertheless did not voluntarily dismiss those counts and proceeded through hearing. Be that as it may, the investigation revealed that Ms. Cosyns acknowledged that she knew that there were two contractual documents involved, but the investigation also revealed that Ms. Cosyns was only the listing agent. The selling agent was Mr. Parks. The investigation revealed through interviews with Ms. Cosyns, Mr. Parks and Mr. Hurbanis, the office Manager of V.I.P. Realty, that Ms. Cosyns, as listing agent, was merely present when the offer from the buyers was communicated to the office manager, Mr. Hurbanis, and ultimately to the sellers, the Cottrells. There was no reason for the investigator to believe that Ms. Cosyns had anything to do with the drafting of the contracts nor with the communication of them to the lending institution involved. That was done by either Mr. Parks or Mr. Hurbanis or by the buyers. The investigation (as revealed in the investigative report) does not show who communicated the contract in question to the lender. The investigation was simply incomplete. If the investigator had conferred with the buyers, the sellers and especially the lender, he could have ascertained-whether the lender was aware of all the facts concerning this transaction and whether there was any reason to believe that Ms. Cosyns had anything to do with the arrangement and the details of the transaction. It was ultimately established, by unrefuted evidence at hearing, that indeed Ms. Cosyns did not have anything to do with the transaction, nor the manner in which it was disclosed to the lender. The fact that she was aware that two contracts had been prepared did not give a reasonable basis for the investigator to conclude that she had engaged in any wrong-doing. The report of his interviews with Ms. Cosyns, Mr. Hurbanis and Mr. Parks, as well as Donna Ross, does not indicate that he had a reasonable basis to conclude that Ms. Cosyns had engaged in any fraudulent conduct with regard to the transaction, including the conveyance of a bogus contract to the lending institution involved, nor for that matter, that Mr. Hurbanis or Mr. Parks engaged in such conduct. In order to ascertain a reasonable basis for concluding whether Ms. Cosyns was involved in any wrongful conduct, he would have had to obtain more information than he did from these people or confer with the lender, the buyer or the seller, or all of these approaches, before he could have a reasonable basis to recommend to the prosecuting agency that an Administrative Complaint be filed against her concerning this transaction. In fact, he did not do so, but the Administrative Complaint was filed and prosecuted through hearing anyway, causing her to incur the above-referenced attorney's fees. It thus has not been demonstrated that there was any substantial basis for the filing and prosecution of Count V of the Administrative Complaint against Ms. Cosyn. Thus she is entitled to the attorneys fees referenced above with regard to the prosecution of the Administrative Complaint in question.
The Issue The central issue in this case is whether Respondent's yacht and ship salesman's license should be disciplined for the reasons set forth in the notice of intent to revoke license dated June 14, 1994.
Findings Of Fact The Department is the state agency charged with the responsibility to regulate persons pursuant to Chapter 326, Florida Statutes. On April 30, 1993, the Department received an application for a yacht and ship broker or salesman license (the application) submitted by Respondent, Thomas I. Davis, Jr. The application provided, in pertinent part: LICENSES AND CERTIFICATES: Have you now or have you ever been licensed or certified in any other profession such as real estate, insurance, or securities in Florida or any other state? Yes No If you answered yes, please describe: Profession License # First Obtained Status of License (a)Has any license, certification, registration or permit to practice any regulated profession or occupation been revoked, annulled or suspended in this or any other state, or is any proceeding now pending? Yes No (b) Have you ever resigned or withdrawn from, or surrendered any license, registration or permit to practice any regulated profession, occupation or vocation which such charges were pending? Yes No If your answer to questions (a) or (b) is Yes, attach a complete, signed statement giving the name and address of the officer, board, commission, court or governmental agency or department before whom the matter was, or is now, pending and give the nature of the charges and relate the facts. In response to the application questions identified above, Respondent entered the following answers: "No" as to questions 11, 12(a), and 12(b). As a result of the foregoing, Respondent was issued a yacht and ship salesman's license on May 10, 1993. Thereafter, the Department learned that Respondent had been censured by the NASD. In a decision entered by that body accepting Respondent's offer of settlement, Respondent was given a censure, a fine of $20,000.00, and a suspension in all capacities from association with any member for a period of two (2) years with the requirement that at the conclusion of such suspension that he requalify by examination for any and all licenses with the Association. The censure also provided a specific payment plan for the $20,000 fine which was assessed. To date, Respondent has not complied with that provision of the settlement. From 1973 through 1991, Respondent was registered with several different firms pursuant to Chapter 517, Florida Statutes. Additionally, Respondent has been licensed to sell securities in the following states: California, Colorado, Connecticut, Delaware, Idaho, Illinois, Louisiana, Maine, Maryland, Nevada, and New York. Respondent has also been licensed in Washington, D.C. and Puerto Rico. Respondent has been a licensed stock broker with the Securities and Exchange Commission since 1971. Respondent answered questions 11 and 12 (a) and (b) falsely. Respondent knew he was licensed to sell securities and knew of the sanction from the NASD at all times material to the entry of the answers. Pursuant to Rule 61B-60.003, when the Department receives an application for licensure which is in the acceptable form, it is required to issue a temporary license. Had the Respondent correctly answered questions 11 and 12 on the application, the Department would not have issued Respondent's license.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Department of Business and Professional Regulation, Division of Florida Land Sales, Condominiums, and Mobile Homes, enter a final order dismissing Respondent's challenge to the notice of intent and revoking his license. DONE AND RECOMMENDED this 13th day of March, 1995, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH 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 March, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-4258 Rulings on the proposed findings of fact submitted by the Petitioner: Paragraphs 1 through 9, 11, 13, and 15 through 17 are accepted. Paragraph 10 is rejected as repetitive. Except as to findings reached above, paragraphs 12 and 14 are rejected as irrelevant. It is found that Respondent falsely answered question 11. Rulings on the proposed findings of fact submitted by the Respondent: Respondent's proposed findings of fact are rejected as they do not comply with Rule 60Q-2.031(3), Florida Administrative Code. However, to the extent findings do not conflict with the findings of fact above, they have been accepted. Such proposed findings of fact are paragraphs: 1, 7 and 8. The remaining paragraphs are rejected as they are not supported by the record cited (none), irrelevant, argument, or contrary to the weight of the credible evidence. COPIES FURNISHED: Lynda L. Goodgame General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 E. Harper Field Senior Attorney Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-1007 David M. Goldstein LAW OFFICE OF DAVID M. GOLDSTEIN 100 S.E. 2nd Street Suite 2750 International Place Miami, Florida 33131
The Issue There were originally three counts in the Administrative Complaint. Count II was dismissed by the Petitioner Board at the beginning of the hearing. Count I alleges that the Respondents failed to refund a fee as required by the contract and the statutes; and Count III alleges that Respondents employed unlicensed persons as sales personnel. Based upon the stipulation of the parties, the primary issue in Count I was whether the Respondents refused the refund in bad faith or under color of some right to the fee. The issue in Count III was whether the activities engaged in by the unlicensed persons were regulated activities.
Findings Of Fact Count I Sav-On Rentals, Inc. (Sav-On), is a licensed corporate real estate broker located in Orlando, Florida, holding License #211231. Carl Stuart Courtney is the active broker for Sav-On and holds Licenses #0211232 and #0017643. Both Respondents were licensed at all times pertinent to the allegations in the Administrative Complaint. Susan Young and A. J. Stephens went to Sav-On on July 18, 1980, seeking information on renting a house. They executed a contract with Sav-On, paid the required $40 fee, and were given data on houses for rent. The contract contains the following pertinent language: . . .Notice: Pursuant to Florida Law: If the rental information provided under this contract is not current or accurate in any material aspect, you may demand within 30 days of this contract date a return of your full fee paid. If you do not obtain rental information you are entitled to receive a return of 75 percent of the fee paid, if you make demand within 30 days of this contract date. . . That night Young and Stephens changed their minds about renting a house. The next day they called Sav-On and requested a refund of their fee. Young rented an apartment from an apartment complex. On August 14, 1980, Stephens prepared the written refund request at Sav-On. Sav-On had a listing for the sublease of an apartment in the same complex in which Young rented her apartment. There is no evidence that Sav-On gave Young or Stephens any information on that sublease, or that Young rented her apartment based on her contact with Sav-On. Sav-On denied the refund on the basis that Young had leased a property available through Sav-On. As of the date of the hearing, Young and Stephens had not received a refund. Count II Christopher LaFrance, a licensed real estate salesman, was one of the first licensees hired by Sav-On Rentals, Inc., after its incorporation in July of 1979. He was employed until January, 1980. When LaFrance was first hired, there were several unlicensed clinical staff employed by Sav-On. These employees were holdovers from Sav-On's non- licensed business. One of the unlicensed persons, Dawn (last name not stated), was responsible for telephone service to persons already registered. She provided additional listings to persons already registered with Sav-On. Another of the unlicensed persons was Stephanie (last name not stated), who was a verifier. She called listings to determine if they were unrented and still available. Stephanie and Dawn were not licensed at the times in question. Between July of 1979, and January, 1980, these unlicensed personnel were gradually replaced by licensed persons.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, and considering the facts in mitigation, the Hearing Officer recommends that the Respondent, Carl Stuart Courtney, receive a letter of reprimand for violation of Section 475.25(1)(d), Florida Statutes; and that the Respondent, Sav-On Rentals, Inc., be placed on probation for a period of six months for the violation of Section 475.25(1)(d), Florida Statutes. DONE and ORDERED this 15th day of March, 1982, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN, 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 15th day of March, 1982. COPIES FURNISHED: Salvatore A. Carpino, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Ronald W. Brooks, Esquire 338-D North Magnolia Avenue Orlando, Florida 32801 C. B. Stafford, Executive Director Board of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Samuel Shorstein, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
The Issue Whether Petitioner is qualified for registration as an associated person.
Findings Of Fact On December 6, 1990, Cliff J. Guerrieri submitted a Uniform Application for Securities Industry Registration (Form U4) to the National Association of Securities Dealers (NASD) for registration as a securities dealer in Florida. A copy of this form was forwarded to the Department of Banking and Finance by NASD. On this Form U4, Petitioner answered "No" to Question 22A relating to having been convicted of or plead guilty of nolo contendere to: a felony or misdemeanor involving: fraud, false statements, or omissions, wrongful taking of property, or bribery, forgery, counterfeiting or extortion? gambling? any other felony? A check by NASD revealed that Petitioner had pleaded nolo contendere to two charges of petit theft in the County Court, Pinellas County, Criminal Division, on March 10, 1986 (Exhibits 3 and 4); pleaded nolo contendere to exposure of sexual organs in the County Court, Hillsborough County, Criminal Division, on September 7, 1989 (Exhibits 5 and 6). Petitioner's employer was notified of these omissions, and on March 7, 1991, Petitioner submitted an Amended Form U4 on which he again checked "No" to Item 22A, but checked "Yes" to Item 22B, which asks if he had ever been charged with any felony or misdemeanor specified in Questions A(1) or (2). Additionally, Petitioner submitted court records admitted here as Exhibits 3, 4, 5 and 6. Although Petitioner testified that he sent Exhibits 3, 4, 5 and 6 with his amended U4, Respondent acknowledged receipt of Exhibits 3, 4, 5 and 6, but denied receiving a copy of the amended U4 dated March 7, 1991. Petitioner testified that the petit theft charges involved license plates in or on his brother's car, which Petitioner was driving when he was stopped and charged with these violations. No further explanation was provided from which the degree of Petitioner's culpability could be ascertained. With respect to the exposure charge, Petitioner stated that he was changing clothes in an open convertible when he was apprehended. Again, no further explanation was provided from which Petitioner's culpability could be ascertained. With respect to the failure to note his criminal conviction on his initial application, Petitioner testified that his initial reading of Item 22 on the U4 led him to conclude erroneously that all of Items 22A through N involved securities violations and since he had never committed such a violation, his sworn answers to Item 22 was correct. Respondent's sole witness testified that Petitioner's application would have been denied even if he had initially submitted a correct application based solely on his convictions. The convictions plus the failure to disclose constituted the given reason for denial of Petitioner's application.
Recommendation Accordingly, it is recommended that the application of Cliff J. Guerrieri for registration as an associated person be denied. RECOMMENDED this 19th day of November, 1991, in Tallahassee, Florida. K. N. AYERS 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 19th day of November, 1991. COPIES FURNISHED: Cliff J. Guerrieri 4201 North "A" Street Apartment 14 Tampa, FL 33609 Honorable Gerald Lewis Comptroller Department of Banking and Finance Suite 1302, The Capitol Tallahassee, FL 32399-0350 Ashley Peacock, Esquire Department of Banking and Finance Suite 1302, The Capitol Tallahassee, FL 32399-0350 William G. Reeves General Counsel Department of Banking and Finance Suite 1302, The Capitol Tallahassee, FL 32399-0350 =================================================================
The Issue Whether Respondent's license as a registered securities salesman/agent should be suspended or revoked for alleged violations of Sections 517.07 and 517.16(1)(a), Florida Statutes, as set forth in the Administrative Complaint. At the commencement of the hearing, it was noted that the Notice of Hearing was styled incorrectly in showing David R. Edstrom as Petitioner rather than Respondent. This clerical error was harmless in view of the language contained in the body of the notice which identified the word "Respondent" as being a registered securities salesman/agent. Notice of Hearing was issued on September 15, 1976, by the Hearing Officer. Neither the Respondent nor any representative in his behalf-appeared at the hearing. Accordingly, the matter was heard as an uncontested proceeding, pursuant to Rule 28-5.25(5), Florida Administrative Code. On October 6, 1976, Respondent informed the Hearing Officer that he had forgotten the hearing and inquired as to the possibility of another hearing. (Supp. Exhibit 1). By letter of October 12, 1976, counsel for Petitioner objected to Respondent's request, citing the trouble and expense of preparing for and attending the hearing, together with the difficulty encountered in securing witnesses. (Supp. Exhibit 2) On October 14th, Respondent renewed his request, and in the alternative, requested that his license be suspended temporarily until the outcome of an appeal of a criminal conviction. (Supp. Exhibit 3) Rule 28-5.25(9), F.A.C., provides that a hearing officer shall not grant a Motion for re-hearing or reconsideration. Although this Rule admits of no exception, it does not necessarily preclude the agency involved from authorizing a new proceeding in the interests of substantial justice, upon good cause shown. In this instance, Respondent's absence admittedly was due solely to his own negligence and therefore he is not entitled to the requested relief. It is noteworthy that the Notice of Hearing included the following sentence: "The right is reserved to take such action as the law permits if either party fails to appear at the time and place set for their hearing."
Findings Of Fact Respondent is a registered securities salesman/agent under license issued on October 3, 1972, by the Petitioner. (Admin. Complaint). Respondent was president of S.E.I., Inc., Miami, Florida at the time of the alleged statutory violations. (Testimony of Campbell, Exhibit 3). In the summer of 1973, Carl Eigner of Boynton Beach, Florida, having seen newspaper advertisements of Hartwell and Associates, Inc., concerning investments in promissory notes, contacted the firm and met one of its salesman, Bill Taylor. Taylor in formed Eigner that investments in promissory notes issued-by the 2609 corporation, a real estate developer, were safe and that the value of land covered by mortgages which secured the promissory notes, by law, had to be worth twice the cost of any investment. He further stated that the directors of S.E.I., Inc. investigated developers and if found to be in sound condition, recommended sale of their notes. Taylor also told him that he would receive a "valid registered mortgage" in Polk County. Eigner thereupon withdrew money to purchase a $10,000 promissory note issued by the 2609 Corporation, secured by a mortgage deed on 4 lots. Eigner paid $9,850.00 for the note by check to Taylor. The difference of $150.00 represented interest that Eigner otherwise would have received if he had left his funds on deposit. At the time of purchase, Taylor told Eigner that he had nothing to worry about because the land value had been checked by S.E.I., Inc. At no time did Taylor advise him that the note or mortgage was registered with or exempt from registration with the State Division of Securities. The promissory note provided for monthly interest payments at the rate of 12 percent per annum, commencing December 1, 1973. It also provided that the note or any payments thereunder could not be transferred by the holder to anyone who is not a bona fide resident of Florida without the prior consent of S.E.I., Inc. The note further provided. that it would be valid only upon approval by S.E.I., Inc., as sales/agent for the 2609 Corporation. In addition to the signature of the President of 2609 Corporation on the face of the note, it also contained the following: "Sale approved: S.E.I., Inc. by David R. Edstrom, President." This block showed the signature of Respondent. (Testimony of Eigner, Exhibit 3) The securities of 2609 Corporation have never been registered with the Petitioner pursuant to Chapter 517, Florida Statutes. (Exhibit 4) Petitioner submitted in evidence certified copies of an Information and verdicts in criminal proceedings in Palm Beach County, Florida against Respondent, Case No. 75-1242-CF. These proceedings resulted in the conviction of Respondent for the sale of unregistered securities to Carl Eigner and/or Edith Eigner, Robert S. Cox and/or David F. Cox, and Michael J. Leonardi and/or Diana Leonardi, and others in violation of Sections 517.07 and 517.302, Florida Statutes. The conviction is presently on appeal. Although received in evidence, the evidence of criminal convictions is not competent evidence to establish the facts upon which they were rendered and therefore cannot be used as a basis for a finding of fact in these proceedings. (See Boshnack v. World Wide Rent-A-Car, Inc., 195 So.2d 216 (Fla., 1967).
Recommendation That the registration of Respondent, David R. Edstrom as a registered securities salesman/agent be revoked for violation of Section 517.07, Florida Statutes, as authorized by Section 517.16(1)(a), Florida Statutes. DONE and ENTERED this day of October, 1976, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Richard Gentry, Esquire Division of Securities Department of Banking and Finance 239 Carlton Building Tallahassee, Florida 32304 Mr. David R. Edstrom 5748 Northeast 16th Avenue Ft. Lauderdale, Florida 33334
The Issue Whether Florida Administrative Code Rule 15C-16.012(5)1/ (the “Rule”) is an invalid exercise of delegated legislative authority.
Findings Of Fact The following findings of fact are based on the testimony and exhibits admitted at the final hearing and the agreed facts in the pre-hearing stipulation. Parties Petitioner, FADA, is a not-for-profit trade association of licensed franchise motor vehicle dealers in Florida. FADA is organized and maintained for the benefit of approximately 800 members, which includes 85 to 90 percent of the licensed franchise motor vehicle dealers in Florida. FADA regularly coordinates the common interests of its members and represents its members before the Legislature with respect to legislation and rules affecting franchised dealers. Respondent, the Department, is the agency of the State of Florida responsible for regulating electronic filing system (“EFS”) and the EFS agents. The Department adopted the Rule, which became effective December 14, 2010. The Rule was amended on November 22, 2011, but has not been amended since that time. Titling and Registration of Vehicles Every motor vehicle that is to be driven on a road in Florida must be registered with the Department. § 320.02(1), Fla. Stat. The initial registration a customer receives may either be temporary or permanent. If the initial registration is temporary, there is a period of 30 days during which the temporary registration must be converted to a permanent registration. In Florida, sellers of motor vehicles are required to effect transfers of title and registration as part of a sale of motor vehicles. The EFS provides an electronic method for the titling and registration of motor vehicles. EFS agents are those persons or entities who are engaged in selling products for which a title or registration is needed. Fla. Admin. Code R. 15C-16.010(1)(a) and (b). A substantial number of FADA’s members are EFS agents. The EFS was developed in the 1990s to permit dealers to make titling and registration more efficient. The system also enhanced safety during a roadside stop for law enforcement by making registration information readily available. At the beginning of the process, an EFS agent, who could be a motor vehicle dealer, like the members of FADA, sells a vehicle and electronically submits information through the EFS to a Certified Service Provider (“CSP”). The CSP provides the software system that is used by EFS agents to submit titling and registration transactions for processing. Tax collectors are also part of the process and are responsible for preparing the paperwork that is submitted to finalize a titling or registration transaction. Some tax collectors outsource these responsibilities to private entities, which function as private tag agents (“PTAs”). While the EFS is a comprehensive method to electronically file vehicle title and registration transactions, there is also a limited sub-system of the EFS, Electronic Temporary Registration (“ETR”). The ETR is limited to temporary registration of vehicles. It does not involve titling. There are multiple methods for submitting the necessary paperwork for titling and/or registering a motor vehicle. This can be done manually by taking it to a public or private tag agency, and electronically by using the ETR and the EFS or the EFS only. EFS agents are subject to statutes and rules pertaining to titling and registration of motor vehicles in Florida. Rule and Statutory Authority The rule at issue in this case concerns the Department’s authority over the EFS. The Rule, 15C-16.012(5), provides: If an EFS agent charges a fee to the customer for use of the electronic filing system in a title or registration transaction, the fee shall be disclosed separately and in a clear and conspicuous manner in the sales agreement along with the other options for titling and registration. The EFS agent may not disclose or disguise this as a State or Government fee. The Rule requires that an EFS agent charging a fee to use the EFS, disclose the EFS filing fee separately and in a clear and conspicuous manner and provide other options for titling and registration. The Rule cites section 320.03(10)(a), Florida Statutes, as the law being implemented. Section 320.03(10) provides: Jurisdiction over the electronic filing system for use by authorized electronic filing system agents to electronically title or register motor vehicles, vessels, mobile homes, or off-highway vehicles; issue or transfer registration license plates or decals; electronically transfer fees due for the title and registration process; and perform inquiries for title, registration, and lienholder verification and certification of service providers is expressly preempted to the state, and the department shall have regulatory authority over the system. The electronic filing system shall be available for use statewide and applied uniformly throughout the state. An entity that, in the normal course of its business, sells products that must be titled or registered, provides title and registration services on behalf of its consumers and meets all established requirements may be an authorized electronic filing system agent and shall not be precluded from participating in the electronic filing system in any county. Upon request from a qualified entity, the tax collector shall appoint the entity as an authorized electronic filing system agent for that county. The department shall adopt rules in accordance with chapter 120 to replace the December 10, 2009, program standards and to administer the provisions of this section, including, but not limited to, establishing participation requirements, certification of service providers, electronic filing system requirements, and enforcement authority for noncompliance. The December 10, 2009, program standards, excluding any standards which conflict with this subsection, shall remain in effect until the rules are adopted. An authorized electronic filing agent may charge a fee to the customer for use of the electronic filing system. Section 320.03(10) gives the Department regulatory authority over the EFS and requires the Department to adopt rules to administer the EFS. The statute also requires that the Department adopt rules to replace the 2009 program standards. Section 320.03(10) also explicitly provides that an EFS agent is permitted to charge a fee to the customer for use of the EFS. However, there is no requirement in the statute that an EFS agent satisfy any conditions when charging the fee. Specifically, the statute does not require that the EFS agent make any type of disclosure regarding the fee or other options for titling or registration. 2009 Program Standards Respondent relies upon the language in the statute related to replacement of the 2009 program standards to support its position that section 320.03(10) provides authority for the Rule. Over the course of legislative sessions in 2009 and 2010, the regulatory authority for the EFS was transferred from the Florida Tax Collectors Service Corporation (“FTCSC”) to the Department as provided in section 320.03(10). The 2009 program standards were a set of standards used by the FTCSC for administering participation in the EFS when the FTCSC had responsibility for administering the EFS. The 2009 program standards were to remain in place until adoption of the Rule. The 2009 program standards expressly regulated certain participation requirements placed upon dealers seeking to become an approved Limited Branch Office (“LBO”), which is the equivalent of an EFS agent. One of the 2009 program standards required that dealers seeking “appointment as a participating LBO” must submit a letter agreeing to comply with certain disclosure requirements as part of a sale, including the contents of a buyer’s order. The “buyer’s order” referenced in the 2009 program standards has the same meaning in the industry as the term “sales agreement” in rule 15C-16.012(5). Under the 2009 program standards, failure of a dealer to adhere to the standards could result in loss of its LBO status. The relevant portions of the LBO participation requirements are discussed further below. Section III.A.2.a. of the 2009 program standards provided that the letter requesting approval for LBO status shall include a statement that use of the EFS will be an optional transaction and will be disclosed on the buyer’s orders as “Electronic Filing.” Similarly, section V.C.2.(d)4.b.ii. provided that a dealer’s application for LBO status may be rejected if the letter provided to the tax collector does not mention the information required in section III.A.2.a. Section III.A.2.c. provided that a dealer seeking LBO status must include in their letter to the tax collector a statement that the dealer will not represent to the EFS customers that they are required to transact title transaction business through the EFS. Likewise, section V.C.2.(d)4.b.iv. provided that a dealer’s application for LBO status may be rejected if the dealer’s letter does not include a statement that the dealer agrees not to represent to potential EFS customers that the customer is required to transact title transaction business through the EFS and pay additional charges, if applicable. The undersigned finds that these requirements of the 2009 program standards required dealers utilizing the EFS at that time to make certain disclosures for the purpose of participation as an LBO. The disclosure of fees charged to customers for use of the EFS system was not addressed in the 2009 program standards. In fact, the 2009 version of section 320.03(10) provided that a dealer “may charge a fee to the customer for use of the electronic filing system, and such fee is not a component of the program standards.” § 320.03, Fla. Stat. (2009). Different Methods for Titling and Registration In addition to the requirement to disclose the fee for use of the EFS, the Rule requires EFS agents to disclose “other options for titling and registration.” In the motor vehicle industry, there are multiple methods for titling and registration. Dealers can deal directly with county tax collectors for titling and registration, which is performed manually. Dealers can use ETR vendors for the temporary registration process. Like with the EFS, the ETR providers charge dealers a fee for use of the ETR system. A dealer that has a contract with one of the PTAs in Florida can use that PTA to process components of the titling and registration process. PTAs are entities that dealers may hire as a service provider to process registration and titling work manually. Like with EFS providers and ETR providers, PTAs charge dealers a fee for the services they provide in the titling and registration process. Given that dealers must have contracts with PTAs in order to utilize their services and that PTAs charge dealers a fee for use of their services, a dealer using a PTA for components of the titling and registration processes is not the same as a dealer interacting directly with a county tax collector. The multiple methods for titling and registration could result in multiple options for EFS agents. Uncertainty about Meaning of “Other Options” During and after the rulemaking process, Mr. Smith, the president of FADA, expressed concern about the interpretation of the requirement in the Rule to disclose “other options for titling and registration.” Mr. Smith sent a number of emails seeking clarification regarding this requirement. On December 8, 2010, Mr. Smith sent an email on behalf of FADA to Julie Baker at the Department inquiring whether the Rule meant that a dealer would have to disclose all the potential options available in the marketplace or only those options available to that particular dealer. On December 19, 2010, Mr. Smith received a response from Boyd Walden, the Department’s then chief of the Bureau of Titles and Registrations, stating that a legal opinion on the issue was being requested. Mr. Smith never received the legal opinion on the issue. Approximately two years later, on January 7, 2013, Mr. Smith sent Mr. Walden another email notifying the Department that the importance of this issue had escalated because FADA members were being sued by consumers or their representatives for failure to comply with the Rule. Mr. Smith requested guidance from the Department regarding interpretation of the Rule. Mr. Walden, as the then director of the Division of Motorist Services, responded on January 8, 2013, and offered an example of other options. For example, he suggested “the dealer informing the buyer of the option for the dealer to file the paperwork with the tax collector manually.” On January 8, 2013, Mr. Smith emailed Mr. Walden and requested a letter from the Department’s counsel clarifying what the Rule required. On October 30, 2013, Mr. Smith emailed Mr. Walden notifying the Department that dealers were continuing to be sued regarding compliance with the Rule and requesting clarification regarding the Rule. On October 30, 2013, Mr. Walden stated, “there are other options such as manual registration through the tax collector. How you offer those ‘other options’ is up to you.” Mr. Walden continued that FADA’s legal team “should decide how to best meet the ‘other options’ requirement based on the level of risk your clients are willing to assume.” Mr. Smith still had questions regarding compliance with the Rule. Mr. Walden’s responses did not clarify the meaning of “other options for titling and registration.” For example, the Rule fails to provide guidance whether the options include all possible options or only options available to the specific individual dealer. The Rule did not provide specific clarification regarding the type (permanent or temporary) of titling and registration. The ETR is an option that offers titling. However, use of EFS would be required to complete the permanent registration. Further, the Rule requires that a dealer disclose other options for titling and registration, but did not provide guidance regarding the type of options, (i.e., manual, electronic, private, or public). It also specifies “other options” but does not specify whether the disclosure includes other options that also may involve a fee. There are both electronic and manual options that require a fee. Standing The Rule affects EFS agents that charge a fee to customers for EFS filing. A substantial number of FADA members are EFS agents and charge a fee to their customers and are, thus, directly and substantially impacted by the Rule.
