The Issue Whether the Respondents committed the offenses alleged in the Administrative Complaint and, if so, the penalties that should be imposed.
Findings Of Fact Petitioner is the state licensing and regulatory agency charged with the responsibility and duty to regulate the practice of real estate, pursuant to the laws of the State of Florida. At all times pertinent to this proceeding, Respondent, Lynton Oliver Thomas, was a licensed real estate broker, having been issued license number 0504596 in accordance with Chapter 475, Florida Statutes. The last license issued to Respondent Thomas was as a broker-salesperson at Pagliari Realty, Inc., 323 Northeast 167 Street, North Miami Beach, Florida 33162. At all times pertinent to this proceeding, Respondent, L T Express Realty Corp., was a corporation registered as a Florida real estate broker, having been issued license number 0273473 in accordance with Chapter 475, Florida Statutes. At all times pertinent to this proceeding, Respondent Thomas was licensed and operating as qualifying broker and officer of Respondent L T Express Realty Corp. The office for this corporate entity was located at 2124 Northeast 123 Street, North Miami Beach, Florida. There was no evidence that Respondent Thomas operated his corporate entity from any other office. On May 7, 1995, Respondent Thomas, a licensed real estate broker, d/b/a L T Express Realty Corp., negotiated a contract for the sale of a house between Bruce and Ann McCormick (as sellers) and Marie S. Saintel and Carita Luc (as buyers). The buyers gave Respondent Thomas an earnest money deposit in the amount of $5,528.00. The transaction failed to close. The sellers, through their agent, attempted to make a demand upon Respondent Thomas for delivery of the earnest money deposit. The sellers' agent was unable to serve the demand on the Respondents because the Respondents had closed their offices and could not be located. Respondents had, or should have had, a good faith doubt as to the proper way to disburse the escrowed funds. Respondent Thomas, without authorization from the sellers, returned $3,000.00 of the original $5,528.00 deposit to the buyers. The balance of the earnest money deposit, in the amount of $2,528.00, has not been recovered from the Respondents. Rule 61J2-10.032(1), Florida Administrative Code, provides the procedure real estate brokers are required to follow when competing demands are made for funds that have been received in escrow or when a broker has a good faith doubt as to how escrowed funds should be disbursed. At no time did Respondents attempt to invoke those procedures. Kenneth G. Rehm, Petitioner's investigator, visited Respondent L T Express Realty Corp. and discovered that Respondent Thomas had abandoned his registered office. Respondent Thomas failed to notify Petitioner that he closed his real estate office at 2124 Northeast 123 Street, North Miami Beach, Florida.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered that finds Respondents guilty of the violations alleged in Counts I-VIII of the Administrative Complaint. As a penalty for these violations, the Final Order should revoke all licenses issued by Petitioner to Respondents. DONE AND ENTERED this 18th day of November, 1997, in Tallahassee, Leon County, Florida. COPIES FURNISHED: Daniel Villazon, Esquire Department of Business and Professional Regulation Division of Real Estate Post Office Box 1900 Orlando, Florida 32802-1900 Mr. Lynton Oliver Thomas L T Express Realty Corp. 10810 Northeast Tenth Place Miami, Florida 33161 CLAUDE B. ARRINGTON 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 18th day of November, 1997 Henry M. Solares, Division Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802-1900 Lynda L. Goodgame, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact In February of 1988, Petitioner took the real estate broker's examination compiled by Respondent, and otherwise complied with all applicable licensure requirements. The Petitioner received a grade of 74 on the written examination. A grade of 75 or higher is required to pass the test. Had Petitioner answered question number 62 with the answer deemed by Respondent to be correct, Petitioner's score would have been 75 and, as such, would have entitled him to licensure. Question number 62 reads as follows: The Department of Professional Regulation may withhold notification to a licensee that the licensee is being investigated IF: NOTIFICATION COULD BE DETRIMENTAL TO THE INVESTIGATION. NOTIFICATION COULD BE DETRIMENTAL TO THE LICENSEE. THE ACT UNDER INVESTIGATION IS A CRIMINAL OFFENSE. Possible answers to question number 62 were as follows: I only. II only. I and III only. I, II and III. The answer to question number 62 chosen by Petitioner was D. The Respondent determined the correct answer should have been C. The Respondent's examining board followed a standard procedure for conducting and grading the examination. Statistically, 58 per cent of candidates taking the examination and placing in percentile rankings 50 through 99, answered the question correctly. Of those candidates taking the examination and placing in the lower half (0-50 percentile), 33 per cent answered the question correctly. The results obtained to question number 62 from all applicants taking the examination revealed the question exceeded effective testing standards. Question number 62 and the appropriate answer to that question are taken directly from section 455.225(1), Florida Statutes. The purpose of the question is to determine if an applicant is knowledgeable of the law governing real estate broker licensees. The Respondent adopts the position that section 455.225(1), Florida Statutes, mandates that Respondent shall notify a licensee of any investigation of which the licensee is the subject and authorizes withholding notification to that licensee only where such notification would be detrimental to the investigation, or where the act under investigation is a criminal offense. The Petitioner takes the position that section 455.225(1), Florida Statutes, does not prohibit withholding notification of an investigation from a licensee when such notification would be detrimental to the licensee. The Petitioner bases this contention on the broad power provided the Real Estate Commission by section 475.05, Florida Statutes. The Commission has not, however, adopted any rule, regulation or bylaw supportive of Petitioner's position and the statutory mandate is clear. Further, the statute referenced by Petitioner specifically does not support an exercise of this power of the Commission if the result is a conflict with another law of the State of Florida. Section 455.225(1), Florida Statutes, states Respondent "shall" notify "any person" of an investigation of that person. Under that section, discretionary authority to refrain from such notification is allowed only where there is a potential for harm to the investigation, or the matter under investigation is a criminal act.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered confirming the grade of the Petitioner as previously determined. DONE AND RECOMMENDED this 20th day of July, 1988, in Tallahassee, Leon County, Florida. DON W. DAVIS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of July, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-2442 The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's Proposed Findings The Petitioner submitted a document entitled summary of hearing and consisting of seven numbered paragraphs. They are treated as follows: Rejected as unnecessary. Included in findings 5, and 7. Rejected, contrary to the weight of the evidence. 4.- 6. Rejected, contrary to evidence adduced. 7. Rejected as argument. Respondent's Proposed Findings The Respondent submitted a three page document entitled "argument" and consisting of eight unnumbered paragraphs. Numbers 1-8 have been applied to those paragraphs. They are treated as follows: 1.-5. Rejected as conclusions of law. 6. Included in findings 8, 9, and 10. COPIES FURNISHED: H. Reynolds Sampson, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Darlene F. Keller Acting Director Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802 Phillip I. Salerno 11812 Timbers Way Boca Raton, Florida 33428 William O'Neil, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750
The Issue The issues for determination in this proceeding are whether Respondent violated Section 475.25(1)(b) Florida Statutes, 1/ by committing the acts alleged in the Administrative Complaint and, if so, what, if any, penalty should be imposed.
Findings Of Fact Petitioner is the governmental agency responsible for issuing licenses to practice real estate and for regulating licensees on behalf of the state. Respondent is a licensed real estate broker under license number 0478560. The last license issued to Respondent was issued as a broker t/a Concord Financial Realty Co. ("CFR"), 495 E. Semoran Boulevard #115, Casselberry, Florida 32708. Respondent is the sole owner of CFR. CFR carries on regular business activities that include apartment rentals and sales of real estate. On January 31, 1992, Respondent and Mr. Charles Wallman, Respondent's husband, owned all of the stock of C.L. Wallman Associates, Inc ("CWA"). 2/ Respondent's husband owned Concord Financial Services, Inc. ("CFS"). CFS was formed to sell insurance and securities. Respondent and her husband operated CFR, CWA, and CFS out of shared office space. Respondent performed bookkeeping and secretarial duties for CWA and CFS. In January, 1992, Respondent's husband (the "seller") verbally agreed ("agreed") to sell 35 percent of the stock of CFS to Mr. John Topercer (the "purchaser") for $35,000. The seller and purchaser agreed to operate the company as "partners." The sale proceeds were to be invested in the company in which the seller and purchaser were to be partners. The purchaser paid the $35,000 purchase price in five installments from January 31, 1992, through March 12, 1992. During that time, the seller agreed to sell an additional 14 percent of the stock of CFS for an additional $13,000. The purchaser paid the additional $13,000 in three installments from April 14, 1992, through May 13, 1992. In May, 1992, the purchaser and seller agreed to another stock acquisition for $20,000. The seller would merge CFS, CWA, and CFR into a new company to be known as Concord Financial Centre ("CFC"). All of the business activities carried out by the separate companies would be consolidated into CFC. The purchaser would receive 49 percent of the stock of CFC in exchange for his 49 percent stock ownership in CFS. The seller and purchaser would operate CFC as "partners" in the same manner as originally contemplated for CFS. The sale proceeds were to be invested in the company in which the seller and purchaser were to be partners. The purchaser paid $20,000 in five installments from June 2 through June 22, 1992, and tendered his stock in CFS. However, the purchaser never received any stock in CFC. CFC was never formed. The seller never tendered any stock in CFC to the purchaser. The seller used some of the sale proceeds to operate CFS. However, approximately $30,000 of the sale proceeds were misappropriated and used by Respondent and her husband for personal purposes including a down payment on a house and a car. On January 6, 1993, the purchaser filed a civil complaint against Respondent and her husband alleging fraud, recision, and mismanagement of corporate funds. On August 8, 1994, the purchaser received judgment against Respondent and her husband in the amount of $30,000. Respondent and her husband have not satisfied the judgment. Neither has paid any money toward the judgment, and the purchaser has been unable to satisfy the judgment. Respondent knew of the negotiations and business transactions between her husband and Mr. Topercer. Respondent performed the duties of bookkeeper and documented all of the payments made by Mr. Topercer. Respondent was present during some of the discussions between her husband and Mr. Topercer. Respondent agreed to the merger of CFR into CFC. Respondent participated in the misappropriation of the purchase proceeds for her own personal use. When considered in their totality, the acts committed by Respondent constitute fraud and dishonest dealing by trick, scheme, or device within the meaning of Section 475.25(1)(b). Those acts were repeated and continued for more than six months. The amount misappropriated by Respondent is significant. During the three and a half years since June, 1992, Respondent has made no attempt at restitution.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondent guilty of violating Section 475.25(1)(b) and revoking Respondent's real estate license. RECOMMENDED this 9th day of January, 1996, in Tallahassee, Florida. DANIEL MANRY, 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 9th day of January 1996.
Findings Of Fact The Respondent, Joseph J. Kowitt, is now a licensed real estate broker-salesman, having been issued License No. 0048987. At all times pertinent to this proceeding the Respondent was registered and licensed by the Florida Real Estate Commission or the Board of Real Estate, respectively, as a non- active real estate broker. The Respondent's registration certificate bore an effective date of October 1, 1978 and an expiration date of September 30, 1980. Some time prior to October 9, 1979, Mrs. Frieda Frank of Silver Spring, Maryland, was contacted by Mr. Douglas Bradshaw, a broker-salesman in the employ of Powis Properties, Inc., a corporate real estate broker of Boca Raton, Florida, to ascertain her interest in selling two unimproved lots in Palm Beach County, Florida. Mrs. Frank, the owner of the property, indicated to Mr. Bradshaw that he should coordinate activities involved in effecting a sale through her cousin, the Respondent. Mrs. Frank had previously instructed the Respondent to attempt to sell the two lots for her for a certain minimum price. The Respondent was contacted by Mr. Bradshaw either shortly before or shortly after he contacted the seller of the property, Mrs. Frank, but after the Respondent had placed signs on the property indicating it to be for sale by the owner, with the Respondent's telephone number depicted thereon. Upon being contacted by Mr. Bradshaw or Powis Properties, Inc., the Respondent explained that he was not the owner of the property, but that he represented his cousin, Mrs. Frank, who lived in Maryland. The result of the conversation was that the Respondent agreed to give Mr. Bradshaw an "open listing" and the Respondent requested that he be reimbursed for any expenses born personally in preparing for and effecting a sale, indicating that this was his cousin's wish also. There is no evidence to reflect the precise amount of expenses incurred by the Respondent in attempting to sell his cousin's property, his testimony simply consisting of statements to the effect that he had erected four or five signs on the property during the course of the year preceding the sale and had incurred gasoline expenses traveling between the property in Palm Beach County and his home in north Dade County. On approximately October 9, 1979 Powis Properties, Inc. secured an offer to purchase the subject property in the amount of $27,000 and communicated that offer to the seller. She indicated to Mr. Kowitt that a $30,000 sales price would be acceptable, including a 10 percent brokerage fee for Powis Properties who had secured the prospective buyer. At approximately this point in time an agreement was reached between Mr. Kowitt, the Respondent, and Powis Properties, Inc. whereby Mr. Kowitt would receive $500 for his services rendered in effecting the sale and which would he paid to him at the closing of the sale of the two subject lots. This arrangement is reflected in the Respondent's own Exhibit 2, although the Respondent maintained the fee arrangement agreed upon was merely for reimbursement of his expenses incurred in preparing the property for sale and was not a referral fee, as Mr. Stingene of Powis Properties had represented in the letter which is Exhibit Two. The Respondent, however, in the face of the Petitioner's showing that a flat fee of $500 was paid with the understanding of the Petitioner's chief witness that it was for a referral or for "services rendered," offered no concrete evidence to establish what his alleged expense items consisted of nor their respective amounts. A purchase offer was redrawn at the required price of $30,000 in accordance with the seller's wishes and accepted by the seller. The transaction proceeded to closing on October 28, 1980. Approximately three days prior to the closing date, Powis Properties, Inc. inquired of the Registration Division of the Board of Real Estate regarding the status of Mr. Kowitt's registration as a realtor and was informed that he held an inactive status at that time. Powis Properties, Inc. communicated this information to Mr. Kowitt who indicated that his registration renewal application was in process and apparently such was not yet reflected in the records of the Board of Real Estate. Powis Properties, through Mr. Powis or Mr. Stingene, then requested that he evidence his valid registration at the closing in order to receive the subject $500 fee. Powis Properties then drew a check of $500 payable to Mr. Kowitt and authorized its sales agent who would be present at the closing to deliver the check to Mr. Kowitt upon his establishing proof of his registration or otherwise inform him that the fee would have to be held in escrow until he could establish the fact of his active registration. At the closing Mr. Kowitt delivered to the salesman representative of Powis Properties, Inc. a photocopy of registration Certificate No. 0048987 indicating on its face the status of "active broker" and based upon that representation, the sales agent delivered to Mr. Kowitt the $500 check which he later negotiated. Petitioner's Exhibit 7, which was unrefuted, reveals that the Respondent held Certificate No. 0048987 which is a non-active broker's certificate issued October 21, 1976 with an expiration date of September 30, 1980. Petitioner's Exhibit 8 was not contradicted and reveals that the Respondent applied for a renewal as a broker-salesman on October 27, 1979, the day prior to the subject closing. After amending his application to that for a broker-salesman certificate, since he did not maintain an office, a broker- salesman certificate was issued to the Respondent with an effective date of November 6, 1979, although with a date of issuance of December 20, 1979 (Exhibit 9). The dates reflected on Exhibit 9 corroborate the Petitioner's showing (in Exhibit 5) that it is the policy of the Board that a registration certificate reflect the effective date to be the date the request was received by the Board in proper form, as opposed to the date of mailing. At the closing the Respondent represented that he was an active broker by the display of a xerox copy of his registration certificate with the above number and expiration date of September 30, 1980. Be acknowledges and admits that he altered the copy of the certificate to remove the prefix "non" from his ostensible designation as an active broker, but the Respondent contends that he informed the representative of Powis Properties at the closing that he had been assured by "someone" with the Board of Real Estate that he could consider himself an active broker upon posting of his renewal application and fee. Shortly after the closing, Mr. Powis or his agent examined the ostensible broker certificate copy supplied them by the Respondent. Upon the belief that the copy of the broker certificate was irregular when compared to other broker certificates which simply state "broker" rather than "active broker" (as the subject one did after the alteration) inquiry was made by phone to the Registration Division of the Board regarding the Respondent's true status. The Board informed Powis Properties that Mr. Kowitt at that time continued to be a non-active broker. Powis Properties then immediately notified Mr. Kowitt of the circumstances and made demand that he return the $500 fee. After a period of days or weeks had elapsed without satisfactory response from Mr. Kowitt, the subject complaint initiating these proceedings was filed by Powis Properties with the Board of Real Estate. Finally, a meeting was held on November 19th between the Respondent and Powis Properties or its agent or representative, at which time the Respondent could not yet supply concrete evidence of his registration as an active broker or broker-salesman, although the application for active status remained pending. Thus, Powis Properties, Inc. continued to maintain its claim against the Respondent for return of the $500 fee and the Petitioner initiated these proceedings.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence in the record, as well as the candor and demeanor of the witnesses, it is RECOMMENDED that the Respondent, Joseph J. Kowitt, be found guilty of a violation of Section 475.25(1)(b) Florida Statutes (1979), as well as Section 475.42(1)(a), Florida Statutes (1979), and that the penalty of a public written reprimand be imposed on the Respondent. DONE AND ENTERED this 18th day of May, 1981 in Tallahassee, Leon County, Florida. P. MICHAEL RUFF, 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 18ths day of May, 1981. COPIES FURNISHED: Ralph Fetner, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Joseph J. Kowitt 2030 South Ocean Drive Apartment No. 1227 Hallandale, Florida 33009
The Issue Whether the application of the Respondent, Robert A. Whittemore, III, for registration should have been denied.
Findings Of Fact The Respondent, Robert A. Whittemore, III, filed an application for registration as a real estate salesman with the Petitioner Commission on April 18, 1978. The application was denied, and Respondent by letter requested an administrative hearing to "prove that I do meet with the qualifications" for licensure. Respondent was sent notice of hearing on two (2) occasions by mail, and the notices were not returned. He did not appear to testify and sent no representative to testify in his behalf. Respondent had been licensed as a real estate broker in New York, New York, which license expired on October 31, 1973. The application submitted by Repondent showed that he was convicted of conspiracy in the third degree by the Supreme Court in the State of New York on August 19, 1976, and of falsely reporting an incident in the third degree on December 5, 1976, and sentenced on June 16, 1976. Thereafter a certificate of relief from disabilities on his real estate license was issued by a justice of the Supreme Court, State of New York, on October 20, 1977. Said certificate was submitted by Respondent at the time of his application for registration. No memorandum of law was submitted by either party involved in this administrative hearing.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer recommends that Respondent's application for registration be denied. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 30th day of August, 1979. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of August, 1979. COPIES FURNISHED: Frederick H. Wilsen, Esquire Florida Board of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Mr. Robert A. Whittemore, III 5501 North Ocean Boulevard Ocean Ridge Palm Beach, Florida 33435
Findings Of Fact The Respondent, Albert E. Pastorini, is a registered real estate salesman and works out of the office of Elanor Hollis, a registered real estate broker trading under the name of Hollis Real Estate. Under the stationary of Hollis Real Estate, the Respondent Pastorini offered eleven separate parcels of realty to Palm Beach County as offerings under their $50 million parks and recreation land acquisition program. One of those parcels was designated, for purposes of this hearing, as the Schine property. Schine Enterprises, Inc. is a landowner in Palm Beach County with ocean front properties. Mr. Howard P. Miller is an employee of Schine Enterprises and is also a registered real estate broker. Mr. Miller testified that he has had contact with the Respondent, Pastorini, for quite some time and has on repeated occasions told him that the Schine property was not available for sale and that no listings were available. Mr. Miller testified he learned early in 1975 that the 27 acre Schine property had been offered to the county for consideration under the bond program. Miller testified that he learned this property had been offered by Pastorini but that he had never given Mr. Pastorini authorization to do so. Miller also testified that some time in April, 1975, Ms. Hollis and Mr. Pastorini came to his office at his request and he informed Mr. Pastorini in no uncertain terms that he had no authorization to list the property. Mr. Pastorini, according to Mr. Miller, stated that Mr. Miller had given him a verbal listing which Miller denied. When the county began reviewing the offerings of property, they became aware that some of these offerings had not been authorized by the owners and so they therefore by letter, requested all brokers and salesmen that had submitted offerings to demonstrate proper authorization from the owners or else the county would purge these offerings from their list of available properties. Of the eleven offerings that Pastorini submitted to the county, he was able only to produce two authorizations; one for thirty days and the other for an open listing. No evidence was presented regarding any activities on behalf of Elanor Hollis, the other Respondent.
Findings Of Fact Scorpio, Inc. was incorporated to do business in this State on September 18, 1973 and was registered as a corporate real estate broker on 4/8/74 with certificate to expire 3/31/75. Laverne Pariso was a registered real estate broker and Active Firm Member for Scorpio, Inc. from 4/8/74 to expiration date of license 3/31/75. Michael W. Karpan was a registered real estate salesman from 10/1/74 to 9/30/76 the expiration date of his registration and was employed by Scorpio, Inc. About the time Scorpio, Inc. was registered as a corporate broker the real estate market was not conducive to the success of housing developments and, since the registration of Scorpio, Inc. was obtained to facilitate sale of the developed property and no development was started, Scorpio, Inc. did no business of the type for which it was registered. No listings were obtained, no sales were made, and no effort was put forth to do either. An escrow account was opened with an initial $50 deposit but during the time the registration was effective no deposits were made to, or withdrawals from, this escrow account. Ardina E. Karpan, the mother of Michael W. Karpan, owns all of the stock of Scorpio, Inc. Laverne Pariso, the APM, left the employ of Scorpio, Inc. in March, 1975 but did not notify the FREC or take steps to place her registration in an inactive status. Applications were made for renewal of the broker's license of neither Pariso nor Scorpio, Inc. when due, 3/31/75. By Corporate Resolution dated February 1, 1974 Scorpio, Inc. authorized the establishment of an escrow account at the Barnett Bank of Miami. An initial deposit of $50 was made to this account on February 6, 1974. The resolution authorizes Laverne Pariso and Michael W. Karpan or Ardina Karpan to sign checks on this account and notes that two signatures are required. The resolution further provided authorized signers "are both Laverne Pariso and Michael William Karpan, Jr., both signature are required". Scorpio, Inc.'s primary business was the management of shareholder's investments and real estate holdings. In May, 1975 Michael Karpan was approached by a business associate, whose daughter was a creditor of Chandelier of the Virginia Playhouse d/b/a Track and Turf Lounge, to assist in the negotiations for the sale of the business in order to pay off the creditors and salvage his daughter's loan. The purchaser was already at hand and Karpan was selected to hold funds advanced pending the closing of the deal. After the principals had agreed on the basic price to be paid for the business an earnest money deposit of $5,000 was given by the buyer to Karpan on or about May 21, 1975 and the agreement was memorialized in a letter of May 21, 1975 from Karpan, on Scorpio, Inc. letterhead to the buyer, Walker (Exhibit 25). Nowhere on this letter is reference made to either Karpan or Scorpio, Inc. being associated with real estate sales. The $5,000 received from Walker was deposited in Scorpio, Inc's escrow account on deposit slip dated May 21, 1975 and the bank statement (Exhibit 10) shows $5,000 deposited in this account 5/30/75. No other agreement between the parties was reduced to writing and signed by the buyer and seller. At no time during the negotiations did Karpan hold himself out to be a real estate salesman or broker or indicate he expected a commission for his services if the sale was consummated. On May 29, 1975 Karpan borrowed $5,000 from the Barnett Bank and used the $5,000 in the escrow account as cash collateral for the loan. The signature of Pariso was not on any paper to authorize the withdrawal of this money from the escrow account. The loan was placed in the regular account of Scorpio, Inc. c/o Michael Karpan and one check dated 5/30/75 in the amount of $3,699 was drawn on the account payable to the Intercontinental Bank of Miami and used to make interest payment owed by the Chandelier of the Virginia Playhouse. $1,301 was delivered to the manager of Track and Turf Lounge by Karpan (Exhibit 4). Karpan contends that the buyer, Walker, authorized him to make whatever payments were necessary out of the $5,000 deposit to insure that the liquor license would not be lost or the Track and Turf Lounge be placed out of business before the deal was consummated. Following the delivery of the $5,000 to Karpan the buyer brought his attorney into the proceedings. The property on which the Track and Turf Lounge is located was owned by D. Mitchell Investments, Inc. The lease arrangements (or lack thereof depending on which witness is more credible) were such that the sale could not be consummated. By letter dated June 12, 1975 the buyer, through his attorney, demanded return of the $5,000 deposit given to Karpan. No evidence was presented as to the date the $1,301 was given to Roy O'Nan, the manager at Track and Turf. The letter evidencing such payment is dated well after the transaction had fallen through and demand for return of the $5,000 had been made. A suit was subsequently filed by Walker and a default judgment was obtained against Scorpio, Inc. after a Motion to Strike Defendant's, Scorpio, Answer because Scorpio, Inc. was delinquent in paying the annual $5.00 filing fee required of Florida corporations, was granted. At the time the transactions here being contested occurred the registration of Laverne Pariso and Scorpio, Inc. had expired. Since Karpan can only work under the supervision of a broker, his license too was not operative. Ms. Pariso renewed her license as a broker-salesman with another realty office in September, 1975 but no evidence was presented that Scorpio, Inc. ever applied for registration renewal. During the period between March and September, 1975 Ms. Pariso did no real estate work. Numerous discrepancies appeared between the testimony and documents. Although the authorization for withdrawing funds from the escrow account provided that the signature of Pariso and Michael Karpan or his mother was required the bank apparently interpreted that to require any two of the signatures and then authorized one first deposit placed in the escrow account after the initial deposit to be withdrawn with only Karpan's signature. Several witnesses alluded to Track and Turf leasing the premises which they occupied but evidence was presented that no lease payments were to be made until 1978. Certainly the inability of the "tenant" to transfer the "lease" was a major factor in the failure of the sale to transpire. The sale here involved was the sale of a business as contrasted to the sale of real property.
The Issue The issues are whether Respondent is guilty of issuing checks from his escrow account without sufficient funds so as to constitute culpable negligence, breach of trust, misrepresentation, or concealment, in violation of Section 475.25(1)(b), Florida Statutes; failing to reconcile escrow accounts, in violation of Section 475.25(1)(e) and (k), Florida Statutes, and Rule 61J2-14.012, Florida Administrative Code; employing an unlicensed person, in violation of Section 475.42(1)(c), Florida Statutes; failing to maintain business records, in violation of Section 475.5015, Florida Statutes; and violating a lawful order of the Florida Real Estate Commission by failing to pay a citation within the required time, in violation of Section 475.25(1)(e), Florida Statutes. If Respondent is guilty of any of these allegations, an additional issue is the penalty that should be imposed.
Findings Of Fact Respondent became a licensed real estate salesperson in 1987. The following year, he became a licensed real estate broker, and he has remained a broker continuously since that time. From September 30, 1996, through January 30, 2000, Respondent was the qualifying broker of Express Realty and Investments, Inc. (Express Realty). At no time relevant to this case was Novellete Faye Hanse a Florida-licensed real estate broker or real estate salesperson. At all relevant times, Ms. Hanse was the office manager of Express Realty. Respondent formed Express Realty in 1995. Respondent was the sole director and president. Ms. Hanse's son was an officer of Express Realty from the time of its formation. Respondent met Ms. Hanse in 1991. She informed Respondent that she was a licensed mortgage broker. Respondent and Ms. Hanse agreed in late 1991 to form a joint real estate/mortgage broker operation in a single office. However, when Hurricane Andrew struck in 1992, Respondent, who has been a licensed general contractor since 1978, engaged exclusively in construction until 1995. Respondent formed Express Realty to pursue the prior plan of a joint real estate/mortgage broker operation. The two businesses occupied an office building owned by Ms. Hanse, who did not charge Respondent's business any rent. The address was 6306 Pembroke Road in Miramar. Express Realty served as an escrow agent in a contract dated May 9, 1999, for the sale and purchase of real property located at 6360 Southwest 23rd Street in Miramar. In this capacity, Express Realty, held various funds in escrow for the closing. For the closing, Express Realty issued two checks payable to the closing agent, totaling $19,169.08, and drawn on its escrow account. The checks, which are dated July 15, 1999, and signed by Ms. Hanse, bear the name, "Express Realty & Investments, Inc. Escrow Account" and bear the address 6306 Pembroke Road in Miramar. The bank failed to pay these checks due to insufficient funds. After receiving a complaint that Express Realty had failed to produce these escrow funds at the closing, Petitioner's investigator conducted an audit of Respondent's escrow account. At the audit, which took place the day prior to the day scheduled, the investigator found Ms. Hanse, but not Respondent, at the Express Realty office. Despite repeated requests on and after the day of the office visit, the investigator could not obtain relevant records from Ms. Hanse or Respondent concerning the real estate transaction for which Express Realty had issued escrow checks with insufficient funds. On August 23, 1999, the Florida Real Estate Commission issued a citation to Respondent at 6306 Pembroke Road in Miramar. The citation was served on Respondent within one week of the date of issuance. The $100-citation was for the failure to give the required disclosure or notice in a real estate transaction. The citation gave Respondent 30 days to contest the citation or 60 days to pay the citation. After the deadline, the investigator contacted Respondent and asked him about the citation. Respondent stated that he had forgotten about it. When Respondent still failed to pay the citation, the investigator called again, and Respondent stated that he had mailed the money, but it had been returned due to a faulty address. Respondent paid the citation approximately four months after it had been served on him. Shortly after Respondent belatedly paid the citation, Petitioner received another complaint concerning a contract for the sale and purchase of real property located at 850 Southwest 9th Avenue in Hallandale. In this transaction, Ms. Hanse represented herself to be a licensed real estate broker, showed the property to prospects, and accepted $5000 in escrow on behalf of Express Realty. In July 2000, Petitioner's investigator conducted an audit of Express Realty's escrow account. Again, the investigator was unable to find any documents by which he could undertake an independent reconciliation of the account or otherwise document the role of Express Realty in the subject transaction. At the hearing, Respondent claimed that he was unaware that Ms. Hanse had been conducting real estate business without his authority in the name of Express Realty. Although he admitted that she was an employee of Express Realty, he disclaimed any knowledge that she had removed him from the escrow account and otherwise taken over the management of the real estate broker company. However, Respondent could not explain why, after his claimed discovery of these misdeeds in the summer of 1999, he did nothing to prevent Ms. Hanse from continuing to use Express Realty as the means by which to conduct unlicensed real estate activities, as she did a few months later. Under the circumstances, Petitioner proved that Respondent was at all times aware that Ms. Hanse was conducting unlicensed real estate activities through Express Realty.
Recommendation It is RECOMMENDED that the Florida Real Estate Commission enter a final order finding Respondent guilty of the allegations contained in Counts I-IV and VI of the Amended Administrative Complaint, imposing a $5000 administrative fine, and suspending his license for three years; provided, however, if Respondent fails to pay the fine in full within 180 days of the final order, his license shall be revoked without further notice. DONE AND ENTERED this 9th day of July, 2002, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 9th day of July, 2002. COPIES FURNISHED: Jack Hisey, Deputy Division Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Dean Saunders, Chairperson Florida Real Estate Commission Division of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Hardy L. Roberts, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202 Juana Carstarphen Watkins Senior Attorney Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32801 Wayne Wagie 11900 North Bayshore Drive, Unit No. 5 Miami, Florida 33181
