The Issue The issue presented for decision herein is whether or not Respondent unlawfully refused to honor a subpoena issued by Petitioner as is more particularly set forth hereinafter in detail.
Findings Of Fact Respondent, ASPEC, Inc., is a Florida Corporation engaged in the business of Mortgage Brokerage in Florida. Shanker S. Agarwal is President of ASPEC, Inc. Mr. Agarwal has been licensed by the Department as a Mortgage Broker since May 24, 1985 and currently holds License No. HB-0016435 which expired, by its terms, August 31, 1986. On February 14, 1986, the Department received a consumer complaint about ASPEC, Inc., and pursuant to its investigation of Respondent's brokerage activities, the Department sent a certified letter to ASPEC, Inc., on March 21, 1986, to the attention of President Agarwal requesting that an appointment be scheduled with its Area Financial Manager, Division of Finance, Paul Richman. The returned service of the referenced letter was postmarked April 14, 1986. President Agarwal, or an officer from Respondent failed to schedule an appointment with Paul Richman as requested. On May 22, 1986, the Department served Respondent a subpoena duces tecum on May 23, 1986, by its then Financial Examiner Analyst I, Kevin J.C. Gonzales. (Petitioner's Exhibit 1, pp 9-10.) The subpoena issued to President Agarwal requested that the custodian of records, an officer, director, employee or member of ASPEC, Inc. appear before Paul Richman on May 30, 1986, at 9:00 a.m. at the Department's Miami Office and produce all books, papers and documents (of ASPEC, Inc.) from its inception to April 29, 1986, so that the Department could determine ASPEC's compliance with Chapter 494, Florida Statutes. President Agarwal, or a representative on behalf of ASPEC, Inc., failed to appear at the date and time specified on the subpoena, or thereafter, at the designated place to produce the requested documents. Respondent has challenged on constitutional and other procedural grounds, the Department's authority to conduct an investigation of Respondent as a licensee under the Mortgage Brokerage Act. Respondent's challenges were determined to be either beyond the authority of the Hearing Officer or lacked merit, and rulings to this effec were made during the course of the hearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED: Petitioner enter a Final Order suspending the Mortgage Brokers License No. HB-0016435 issued to Respondent for a period of (1) year. RECOMMENDED this 8th day of May 1987, in Tallahassee, Florida. JAMES E. BRADWELL 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 8th day of May 1987. COPIES FURNISHED: Miles J. Gopman Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399 Mr. Shanker S. Agarwal, President ASPEC, INC 6912 Stirling Road Hollywood, Florida 33024 Ronald P. Glantz, Esquire 320 Southeast 9th Street Fort Lauderdale, Florida 33316 Hon. Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0305 =================================================================
The Issue In this proceeding pursuant to Section 120.56(4), Florida Statutes, Petitioner Dave Taylor (“Taylor) alleges that various purported “statements” which he attributes to Respondent Department of Banking and Finance (the “Department”) constitute rules-by-definition that were not adopted under, and therefore violate, Section 120.54(1)(a), Florida Statutes.
Findings Of Fact The evidence adduced at final hearing established the facts that follow. The Department of Banking and Finance is the state agency charged with the administration of Chapter 494, Florida Statutes, titled “Mortgage Brokerage and Mortgage Lending.” As such, it is responsible for regulating all persons, including mortgage brokers and lenders, licensed under that chapter. Taylor is licensed under Chapter 494 as a mortgage broker and as a “continuing education school.” His firm, Florida Compliance Specialists, Inc., provides consulting services to Chapter 494 licensees. The present dispute stems from amendments to Chapter 494 that the legislature enacted during the 2001 regular session. See Ch. 2001-228, Laws of Florida. These amendments were contained in a bill (CS/HB 455) approved by the governor on June 13, 2001, and became effective on October 1, 2001; they created a new position called “principal representative.” As defined by the legislature, the term “principal representative” means “an individual who operates the business operations of a licensee under part III.” Section 494.001(29), Florida Statutes (2001) (emphasis added).4 This statutory definition is amplified in a mandate that requires all licensees (and applicants) to designate a “principal representative who exercises control of the licensee’s business[.]” Sections 494.0061(8) and 494.0062(11), Florida Statutes. (Emphasis added). Notably, the terms “operates” and “exercises control of” are not defined. As mentioned, the statute requires all licensees and applicants to designate a PR. Although PRs do not engage in a licensed occupation (i.e. there is no PR license), an individual appointed to the post of PR after October 1, 2001, must satisfy certain educational and testing requirements (the details of which are not important here), and the designating lender must submit documents showing that its PRD has complied with those requirements.5 After the governor signed CS/HB 455 into law but before the amended statutes took effect, the Department began making rules to implement the new provisions. Before long, proposed rules were published in the August 31, 2001, issue of Florida Administrative Weekly. One provision of these proposed rules instructed that “[a]n individual can only be a principal representative for one [lender].” This “one lender to a PR” proposal did not implement an explicit statutory directive but arose from the Department’s then-prevailing interpretation of the statutory description of a PR as one who “operates” and “exercises control of” the lender’s business. Further illuminating the Department’s understanding of these terms were the Designation forms that it proposed to adopt, wherein the PRD was required to acknowledge that he or she would be “in full charge, control, and supervision of the [lender’s] business.” A person, the Department reasoned, could be “in full charge,” etc., of but one company at a time. In the course of rulemaking, however, the Department receded from its original interpretation. As a result, revised proposed rules——from which the bright line, “one lender to a PR” directive had been deleted——were published in the October 5, 2001, Florida Administrative Weekly.6 An amended Designation, which unlike earlier versions lacked language requiring a PRD to confirm (with his or her signature) having “full charge, control, and supervision” of the applicant’s or licensee’s business, was proposed as well.7 By the end of January 2002, the Department’s proposed rules relating to PRs had been adopted and, at the time of this Final Order, were among the agency’s duly promulgated, existing rules. See Rule 3D-40.242, Florida Administrative Code. Although the Department does not presently have a bright line rule or policy that flatly forbids an individual from serving simultaneously as PR to more than one licensee, the Department continues to be skeptical that a dual designee can effectively perform, for more than one lender at a time, the responsibilities that it believes inhere in the office of PR. Accordingly, whenever a lender or applicant nominates an XPR for PR, the Department without exception subjects that lender’s Designation to stricter scrutiny than would be given if its PRD were not an XPR. (Indeed, if the PRD is not an XPR, then the Department presumes that he or she will be able to carry out the duties of a PR and hence makes no inquiry as to how the PRD will function as PR.) The first outward manifestations of the Department’s internal decision to scrutinize any Designation in which an applicant’s PRD is an XPR emerged in late November 2001 after the agency had received four separate applications naming Taylor as PR.8 As the Department had discovered upon review of these four applications, Taylor was already serving as PR to an existing licensee. This situation had given rise to a dilemma for which the Department was not fully prepared, as evidenced by a November 26, 2001, e-mail message from an agency attorney to the responsible policy makers in which she (the attorney) had advised that: There are two pending applications in which there are no deficiencies and we need to decide how will [sic] we will proceed since we took out the language in the rule that specifically stated an individual could only be a PR for one company at a time. Let me know what times you would be available [for a meeting to decide what to do]. The Department quickly decided what to do. Between November 27 and November 29, 2001, the Department issued four nearly identical letters, one sent by certified mail to each applicant who had chosen Taylor as its PR, which provided, in pertinent part: We are in receipt of your company’s application to become licensed as a mortgage lender in the State of Florida. A review of the application materials indicates that [applicant’s name] has designated Dave Taylor at [address] as the company’s Principal Representative. [The next four paragraphs quote Sections 494.001(29); 494.0062(11); 494.0062(1)(f); and 494.0062(12), Florida Statutes, which pertain to PRs.] Sections 494.0072(1) and (2)(c), Florida Statutes, provide as follows: Whenever the department finds a person in violation of an act specified in subsection (2), it may enter an order imposing one or more of the following penalties against that person: Revocation of a license or registration. Suspension of a license or registration, subject to reinstatement upon satisfying all reasonable conditions that the department specifies. Placement of the licensee or applicant on probation for a period of time and subject to all reasonable conditions that the department specifies. Issuance of a reprimand. Imposition of a fine in an amount not exceeding $5,000 for each count or separate offense. Denial of a license or registration. Each of the following acts constitutes a ground for which the disciplinary actions specified in subsection (1) may be taken: (c) A material misstatement of fact on an initial or renewal application.[9] Dave Taylor has already been designated as a principal representative for another licensed lender under part III of Chapter 494, Florida Statutes. Please advise in detail how Mr. Taylor will operate and exercise control over your business.[10] We request that your response be submitted to the Department within 10 days of the date of this letter. If you have any questions regarding this matter, please call me at [phone number]. On or about November 30, 2001, the Department created a new deficiency code, DF 416, the description of which is “principal representative is designated to more than one entity.” This is an active deficiency code and is used consistently as a “red flag” on all applications to which it applies. When an application is tagged with a DF 416, the applicant is sent a letter in the form of the letters quoted in the preceding paragraph. This letter will hereafter be referred to as the “DF 416 Inquiry Letter.”11 It is important to emphasize that all applicants whose PRD is an XPR are sent the DF 416 Inquiry Letter, without exception.12 It is undisputed that Taylor has met all of the educational and testing requirements necessary to serve as a PR, and that the Department has no objection, based on facts and circumstances unique to Taylor, to Taylor’s being a lender’s PR. (In fact, he is presently a PR to one lender,13 under a designation to which the Department, consistent with its policy and practice of making no inquiry concerning PRDs who are not XPRs, raised no objection.) The Department’s concern about Taylor’s having been designated a PR by more than one company is indistinguishable from the concern that it expresses regarding all dual designees. This is why, although the contents of the DF 416 Inquiry Letter were developed to resolve a problem that specifically involved Taylor and his clients, the Department decided (and was able) to implement its Taylor-made solution on a generally applicable basis by sending the DF 416 Inquiry Letter to all applicants whose PRD is a dual designee. Each of the four applicants that had designated Taylor as its PR declined the Department’s November 2001 invitation to submit detailed information regarding the manner in which Taylor would operate and control the licensed business. Each applicant chose, instead, to designate someone else as PR. Thus, whatever advantages or considerations Taylor expected to receive in exchange for serving as these lenders’ PR were lost; the Department’s letters (the letters that became the form for the DF 416 Inquiry Letter) were the proximate cause of that loss, in that but for the letters, the lenders would not summarily have severed their respective business relationships with Taylor. After deciding how to deal with applicants whose PRDs are XPRs, the Department turned its attention to the dual designees of existing licensees. This was, in a sense, a bigger problem because, in their respective Designations, more than 50 licensees had selected an individual for PR who was a dual designee. Beginning around December 12, 2001, the Department sent all these lenders a letter similar to the DF 416 Inquiry Letter. This letter stated: We are in receipt of the principal representative designation forms for the following companies: [lender’s names]. A review of the principal representative forms indicates that [PRD’s name and address] has been designated the Principal Representative for both companies. [The next two paragraphs quote statutory provisions pertaining to PRs.] Sections 494.0072(1) and (2)(p) state as follows: Whenever the department finds a person in violation of an act specified in subsection (2), it may enter an order imposing one or more of the following penalties against that person: Revocation of a license or registration. Suspension of a license or registration, subject to reinstatement upon satisfying all reasonable conditions that the department specifies. Placement of the licensee or applicant on probation for a period of time and subject to all reasonable conditions that the department specifies. Issuance of a reprimand. Imposition of a fine in an amount not exceeding $5,000 for each count or separate offense. Denial of a license or registration. Each of the following acts constitutes a ground for which the disciplinary actions specified in subsection (1) may be taken: (p) Failure to comply with, or violations of, any other provision of ss. 494.001-494.0077. Please advise in detail how you will operate and exercise control over both of the above- mentioned businesses. We request that your response be submitted to the Department within 14 days of the date of this letter. If you have any questions regarding this matter, please call me at [phone number]. This form letter will be referred to as the “Compliance Inquiry Letter.” The evidence is unequivocal that the Department has sent, and plans to send, the Compliance Inquiry Letter to all licensees whose Designation names a person determined to be a dual designee, without exception.14 Taylor’s Description of the Alleged Rules-by-Definition In his petition, as required by Section 120.56(4)(a), Florida Statutes, Taylor described the alleged rules-by- definition. Here, in his words, are the Department’s alleged statements: Only one person can realistically “operate the business operations” of a licensee and “exercise control over the licensee’s business.” Therefore, only one individual shall prima facie be designated as principal representative for only one mortgage lender. The above rule shall not apply, however, to mortgage lenders which the Department deems to be “grand-fathered” i.e., such companies who designated their principal representative on or prior to October 1, 2001, the effective date of the statutory amendments. In such instances, an individual will be permitted multiple designations without further departmental scrutiny or inquiry as to how that individual will “operate” or “exercise control over each business.”[Footnote omitted]. Except for “grand-fathered” companies, if an individual once designated principal representative by a mortgage lender is similarly designated principal representative by a separate mortgage lender, the Department based upon the agency statement recited in (a) above, will require the subsequent mortgage lender(s) (i.e., the lender(s) other than the one first designating that individual) to provide in writing a detailed explanation to the Department, subject to potential sanctions, describing how that individual will operate and exercise control over that second mortgage lender. The Department considers as a “licensing deficiency” any mortgage lender application or principal representative designation submitted to the Department where the individual designated as the mortgage lender’s principal representative has previously been and continues to be designated principal representative by another mortgage lender. The Department, based upon this “deficiency,” shall not deem the application(s) “complete” for purposes of section 120.60, Florida Statutes. Such application(s) shall be subjected to the licensing procedures set forth in paragraphs (e) and (f) hereafter. In conformity with the agency statement set forth in (a) above, the Department will not undertake an inquiry of the principal representative designation submitted by the mortgage lender who first designated the individual as its’ principal representative. The Department will require mortgage lenders to provide the information referred to in section c above, through the use of a form, [i.e., the form letters attached as EXHIBITS “14”, “15”, & “16”, to this Petition]. Further, this form created for the purpose of soliciting information [not specifically required by statute or an existing rule] will require mortgage lenders to provide a response, specifically subject to announced sanctions, of details not otherwise required under the applicable statutes or rules. The Department, though requiring mortgage lenders to comply with the agency statements through the threat of announced sanctions, shall not provide to mortgage lenders or their designated principal representatives any clarifying or defining circumstances or criteria the Department will deem as acceptable——contractual or otherwise——for a person to be designated as principal representative for more than one mortgage lender. Any responses provided by such mortgage lenders in response to the Department’s written form shall be submitted by the applicant “at their peril.” Ultimate Factual Determinations In his just-quoted statements “a,” “c,” “d,” and “e,” Taylor described, with reasonable particularity, the essence of policies that, in fact, fall within the statutory definition of the term “rule.” Statement “a” describes (albeit somewhat imprecisely) a Departmental mindset, the view that a person is likely to have difficulty simultaneously serving more than one master as a PR; the last sentence of statement “d” accurately describes the Department’s related policy of not inquiring as to how a PRD who is not a dual designee will operate and control the lender’s business (because the agency presumes that a person will probably have no difficulty serving as PR to one lender at a time). Taken together, these views, in fact, constitute the Department’s interpretation of the PR statutes.15 Taylor’s statement “c” and the third sentence of “d” (all of which, of course, he attributes to the Department) correctly describe, for the most part,16 the Department’s policy of requiring additional information from all licensees and applicants whose Designations nominate an XPR for the position of PR. This policy is plainly driven by the Department’s interpretation of the PR statutes, and it leads, in turn, directly to statement “e.” Restated to conform to the evidence, statement “e” holds that the Department will send either the DF 416 Inquiry Letter or the Compliance Inquiry Letter, whichever is applicable, to any lender whose PRD is an XPR. It is the form letters——the DF 416 Inquiry Letter and the Compliance Inquiry Letter——that have emerged as the most visible, most readily identifiable unadopted rules of the Department, for they solicit information not specifically required by statute or by an existing rule. By the end of December 2001 at the latest, rulemaking was both feasible and practicable with regard to the above- described statements, but no effort was made to adopt them as rules. Thus, the Department failed timely to commence rulemaking with regard to these statements in accordance with Section 120.54(1)(a), Florida Statutes.17
Conclusions For Petitioner: H. Richard Bisbee, Esquire Law Office of H. Richard Bisbee 124 Salem Court, Suite A Tallahassee, Florida 32301-2810 For Respondent: Cynthia K. Maynard, Esquire James H. Harris, Esquire Department of Banking and Finance Fletcher Building, Suite 526 101 East Gaines Street Tallahassee, Florida 32399-0350
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original notice of appeal with the Clerk of the Division of Administrative Hearings and a copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the Appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.
Findings Of Fact 1. Prior to September 1, 1986, mortgage brokers in Florida who worked for several companies were issued separate licenses for each company. P. Ex. 10, P. The Respondent, Dennis C. Young, had several such licenses, the first having been issued on March 26, 1982. Id., P. 9. Prior to September 1, 1986, mortgage broker's licenses were issued for only one year and expired annually on August 31st. P. Ex. 10, P. 9-10. During the period from September 1, 1985, through August 31, 1986, the Respondent had only one mortgage broker license HA 0006667 as an additional broker for American Financial Consultants of Central Florida. R. Ex. 1, P. Ex. 10, P. 10-11. That license expired on August 31, 1986. Id. at P. 14. On January 22, 1986, the Respondent applied to the Petitioner, the Department of Banking and Finance, Division of Finance, for registration as a mortgage broker under Chapter 494, Florida Statutes. P. Ex. 7. This application was for a license with Southern States Mortgage Company. P. Ex. 10, P. 12. On April 18, 1986, Petitioner denied the application of the Respondent for registration as a mortgage broker. The basis of the denial was a finding by the Petitioned of a number of statutory violations by the Respondent as a mortgage broker for American Financial Consultants of Central Florida. P. Ex. 10, P. 13. On July 11, 1986, or shortly thereafter, the Petitioner advised the Respondent that his request for a formal administrative hearing with respect to the denial of his application for registration as a mortgage broker was denied because not timely filed, and advised the Respondent that he had thirty days from July 11, 1986, in which to file an appeal, if he so desired, to the Fifth District Court of Appeal. The Respondent contacted the attorney for the petitioner. The attorney for the petitioner in fact told the Respondent that he could reapply for a license, and if his application was again denied, the Respondent could then seek a formal administrative hearing and judicial review. The Respondent was also told that the petitioner would not forego or abate the final order denying the application, but was advised to "let sit" the final order denying his January 22, 1986, application. T. 100. The Respondent did not file a judicial appeal from the July 11, 1986, order. During the period from September 1, 1986, to November 12, 1987, the Respondent was not a licensed mortgage broker licensed by the Department of Banking and Finance, Division of Finance. P. Ex. 6, P. Ex. 10, P. 15. Between January 22, 1986, and June 12, 1987, the Respondent did not file any application with the Petit loner for licensure as a mortgage broker. P. Ex. 10, p. 15. In about December, 1986, the Respondent was hired by Independence One Mortgage Corporation as a builder's loan representative for a builder that Independence One Mortgage Corporation was then servicing. The builder was building and selling homes in the Williamsburg subdivision. T. 33, 35-37, 64. The Respondent's office was located at the building site. Independence One Mortgage Corporation hired the Respondent to offer to the clients of the builder the type of mortgage that Independence One Mortgage Corporation was then offering, and in so doing, to handle all aspects of negotiating mortgage loan commitments, from initial interview, making quotes of daily mortgage rates to the builder's customers, and following up on the application from the beginning to closing of the mortgage. T. 37. The Respondent told Independence One Mortgage Corporation that he held a current valid mortgage broker's license with Investor's Home Mortgage Company and showed the agent of Independence One a "license" that the Respondent claimed was his and was then valid. T. 37. This statement was untrue. The agent for Independence One Mortgage Corporation who hired the Respondent had known the Respondent several years earlier as an aggressive mortgage solicitor. T. 36 Independence One Mortgage Corporation thought that the Respondent then held a valid mortgage broker's license, and would not have hired the Respondent if he had not represented that he was a licensed mortgage broker. T. 37-38. While employed by Independence One Mortgage Corporation, the Respondent negotiated mortgage loans. He quoted mortgage rates to prospective borrowers, received and processed applications from prospective borrowers, prepared good faith estimates of settlement charges, and closed mortgage loans. T. 42-56, 96-97; P. Exs. 1, 2, 4, and 5. During his employment with Independence One Mortgage Corporation, the Respondent negotiated over 40 mortgage loans. T. 55. From December, 1986, to May, 1987, the Respondent was paid a salary by Independence One Mortgage Corporation. In May, 1987, due to a lack of mortgage demand, Independence One placed the Respondent on a commission basis only. About two weeks later, the Respondent resigned his employment with Independence One. T. 55-57, 65-66. At about the same time, Independence One Mortgage Corporation learned that the Respondent did not have a valid mortgage broker's license. T. 57-59. On June 12, 1987, the Respondent filed another application for licensure as a mortgage broker. P. Ex. 9. In answer to question number 6, which asked whether he had ever had his license "denied, suspended or revoked," he answered no. This answer was not true. P. Ex. 10, P. 16. The Respondent testified that he answered question number 6 in the negative because he thought that he would be afforded a right to contest the previous denial of his application if the new application was denied. At the time that the Respondent stated in his application that he had never had a license previously denied, the Respondent knew that statement was not true. He knew that he might again reapply and in such reapplication contest the basis for denial, but he also knew that the denial of the first application was final and that he had lost his right to appeal. See findings of-fact 5 through 8. If the Respondent had answered yes to question 6, he was required by the application form to identify the agency that denied the application for licensure and to provide the names of the complaining parties. P. Ex. 9. By failing to truthfully answer question 6, the Respondent failed to notify the Petitioner of the existence of the prior dispute concerning his licensure. This was a material misstatement of fact. If the Respondent had been candidly pursuing the option of making a second application in order to gain another appeal right, he would have candidly disclosed to the Petitioner in his second application that a prior application had been denied. In that manner, the Respondent would have laid the issue squarely on the table. By answering no to question 6, the Respondent affirmatively sought to mislead the Petitioner so that the prior basis of denial might not become the basis for denial of the second application. The Petitioner construes the provisions of Chapter 120, Florida Statutes, as mandating that a license be issued if not denied within ninety days from the filing of the application. P. Ex. 10, pp. 20-23. During the period in which the June 12, 1987, application was pending, the Petitioner did not independently verify the answers to questions on the license application, and assumed that the answer to question 6 was correct. P. Ex. 10, pp. 16 and 20. Had it known that the Respondent had previously been denied a mortgage broker's license, the Petitioner would have denied the application of June 12, 1987, for a material misrepresentation of facts. P. Ex. 10, P. 23. For these reasons, and since the ninety day period had expired, the Petitioner issued mortgage broker license HA 261088342 to the Respondent on November 12, 1987. P. Ex. 6. In July, 1987, Colony First Mortgage Corporation was looking for a branch manager for its Mount Dora, Florida, office. The company wanted a branch manager who held a mortgage broker's license to solicit business, as well as to hire and supervise other loan officers. T. 25. The Respondent applied for the job, and Colony First Mortgage Corporation asked for his mortgage broker's license. T. 93. The Respondent told Colony First Mortgage Corporation that he had a mortgage broker's license. T. 26. This statement was untrue. In July, 1987, the Respondent was employed by Colony First Mortgage Corporation as a branch manager in the Mount Dora, Florida, office. T. 24-25, 59-60. Colony First Mortgage paid the Respondent a salary with an override of the branch's mortgage loan production. It was also possible for the Respondent to have been paid a small commission for mortgage loans that he might personally have solicited, but there is no evidence in the record (one way or the other) that any commissions were ever paid or not paid. T. 26, 28. The Petitioner requires that licensed mortgage brokers who change employment file an "application for endorsement" to change the registration of that license to the new employment. T. 72# At some time shortly before August 11, 1987, the Respondent filed with the Petitioner an "application for endorsement" for endorsement of a mortgage broker's license to work for Colony First Mortgage Corporation. P. Ex. 8. Colony First Mortgage Corporation required the Respondent to file this application as a condition of the Respondent's employment. The application bears the signature of a William D. Tharpe, dated August 11, 1987, representing himself as the principal broker for the Respondent, and stating that the Respondent was employed on July 6, 1987, as a mortgage broker. The Respondent submitted the application for endorsement 50 that he would be licensed as a mortgage broker working as a mortgage broker for Colony First Mortgage Corporation. The Respondent characterized his own activity at Colony First Mortgage as operation as a mortgage broker for Colony First Mortgage. T. 10. But he denied that he personally solicited loans, T. 109, and characterized his work as supervision of loan officers, who did solicit and negotiate mortgage loans. T. 109-111. In his employment at Colony First Mortgage, the Respondent hired staff, since all prior staff had left, and trained and supervised loan officers. T. 110-111. There is no evidence that the Respondent personally solicited or negotiated mortgage loans. Toward the end of October, 1987, Colony First Mortgage learned that the Respondent did not have a mortgage broker's license. The company removed the Respondent from his manager's position and subsequently terminated his employment. T. 27# Directly under the heading of the Respondent's application for endorsement is the statement: "Use this form only if currently licensed." Two lines under that statement is the following statement in bold print: "CURRENT LICENSE MUST BE RETURNED WITH THIS APPLICATION." The Respondent signed the form and stated in part I of the form that he had license number HA 001637. Another license number appears above the first number, and is HA 0016329. P. Ex. 8. The application for endorsement is used only if the applicant has a current license. Neither license number was a valid license currently or previously held by the Respondent. Thus, the representation on the application for endorsement, P. Ex. 8, as to license numbers was untrue. T. 114. The Respondent admits placing the first number on the form and denies placing the second number on the form. The Respondent asserts that the first number he placed on the form was his guess as to the correct number, and that he thought the petitioner would correct it if it were incorrect. He further asserts that he represented that he was licensed because he thought that since he had reapplied, the prior denial of licensure was still a pending issue, and that he could rely on earlier licenses that had expired. He further stated that he intended the number to represent the number of one of his earlier licenses. T. 115. The Respondent did hold license number HA 0016329, which expired on August 31, 1985, and license number HA 0006667, which expired on August 31, 1986. R. Ex. 1 and 2. It is credible that the Respondent was trying to use one of his expired license numbers, notably, the one that expired on August 31, 1985, HB 0016329, which is similar to the number he used, HA 001637. But it is not credible that the Respondent thought that he was "currently licensed" as required by the form. The Respondent knew that his prior licenses expired automatically each year. T. 116. He knew that his January 22, 1986, application had been denied. He knew he was not currently licensed. T. 102. He only had pending an application for a license, and had no currently active license number. Thus, it is concluded that the Respondent knew that he did not have a valid license number when he placed the number HA 001637 on the application for endorsement. This was a material misstatement of fact. See findings of fact 38, 39, and 47. The Respondent denies that he placed the second license number HA 0016329 upon the application. The second series of numbers is written in larger script than the first one. While there are some similarities in some of the numbers compared to other numbers written by the Respondent on the application (the 6 is the same as the 6 in the Respondent's social security number and telephone number, the 2 is the same as the first 2 in the telephone number), there is insufficient evidence in this record to conclude that the Respondent placed the second license number on the application. P. Ex. 8. The Petitioner relied upon the statements in the application for endorsement, P. Ex. 8, when it issued the mortgage broker's license to the Respondent on November 12, 1987. p. Ex. 10, P. 20.
Recommendation For these reasons, it is recommended that the State of Florida, Department of Banking and Finance, Division of Finance, enter its final order finding that Dennis C. Young committed the violations described above and revoking license number HA 261088342 issued to him on November 1, 1987. DONE and ENTERED this 11th day of October, 1988, in Tallahassee, Florida. WILLIAM C. SHERRILL JR. 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 11th day of October, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-2273 The following are rulings upon proposed findings of fact which have either been rejected or which have been adopted by reference. The numbers used are the numbers used by the parties. Statements of fact in this appendix are adopted as additional findings of fact. Findings of fact proposed by the Petitioner: 1. The phrase "due to fiat of operation of law" is a conclusion of law, not fact. 2, 5, 6, 7, 22, 23, 39, 46 (second sentence) 49, 50, and 55. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 14 (first sentence). The fact that a witness "testified" in a certain way is not a relevant finding of fact. The subject matter of the Respondent's testimony, that he in fact filed another application in May or June of 1986, is rejected as not proven by credible evidence. The Department had no evidence of any application between January 22, 1986, and June 12, 1987. The testimony of the Respondent on this point was not supported by a copy of the alleged application. Due to the Respondent's evasiveness as to other material points at issue in this case, the testimony of the Respondent is rejected as not credible and unsupported. Findings of fact proposed by the Respondent: 1.C. This proposed finding of fact is contrary to the credible evidence. 1.E. While these proposed findings of fact are true, they are irrelevant. A "mortgage broker" is defined by law (section 494.02(3), F1a. Stat.) to include any person, who for compensation or gain, "directly or indirectly" "negotiates" "a mortgage loan or mortgage loan commitment." The relevant issue is what the Respondent in fact did, not what the titles on the form said. 1.F-H. These proposed findings of fact are contrary to the credible evidence. 2.D.and G. A "mortgage broker" is defined by law (section 494.02(3), Fla. Stat.) to include any person, who for compensation or gain, "directly or indirectly" "negotiates" "a mortgage loan or mortgage loan commitment." As discussed in the conclusions of law, the Respondent indirectly negotiated mortgage loans through his supervision of loan officers at Colony First Mortgage Corporation. 2.F. This proposed finding of fact is contrary to the credible evidence. See P. Ex. 8. 3.A.1-3. The Respondent admitted that Mr. Berkowitz told him to "let sit" the denial of his January 22, 1986, application, and the Respondent admitted that Mr. Berkowitz, on behalf of the Petitioner, would not abate or forgo the decision of denial. T. 100. Thus, it is clear that the Respondent knew that his application had been denied. This, coupled with receipt of P. Ex. 7, makes any contrary belief not credible. 3.B.4. There was intent to deceive. The Respondent knew he was not currently licensed. He knew the earlier license (the one which he tried to place by number on application) had expired. He knew that his last application had been finally denied. He only had a pending application (June 12, 1987), and had no decision on that yet. The Respondent told Colony First Mortgage Corporation that he was currently licensed. If the Respondent had no intent to deceive, he would have clearly mentioned on the application for endorsement the denial of his January 22, 1986, application, and his theory of the continued "existence" of his expired license. COPIES FURNISHED: Elise M. Greenbaum, Esquire Assistant General Counsel Office of the Comptroller 400 West Robinson Street, Suite 501 Orlando, Florida 32801 Dennis C. Young 4050 Gallagher Loop Post Office Box 771 Casselberry, Florida 32707 Hon. Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350 Charles L. Stutts, Esquire General Counsel Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0350
The Issue The issue in this case is whether the Petitioner’s application for licensure as a mortgage broker should be approved.
Findings Of Fact The parties set forth an extensive set of stipulated facts in the Prehearing Stipulation filed prior to the commencement of the hearing. The stipulated facts describe the activities of Richard Eric Watts (Petitioner) on behalf of Frederick M. Larry in relation to a $50,000 investment of Mr. Larry's funds with D. F. Owen, Inc., in May 1985. At approximately the same time as the Larry investment was made, the Petitioner contracted with D.F. Owen to act as an investment adviser for a fee of $33,500. The stipulated facts describe the activities of the Petitioner on behalf of Cynthia Halabrin Trust. The Petitioner was the trustee for the trust, which was a residence. During a period of time that the residence was under renovation, the Petitioner allowed Mr. Larry to reside without payment to the trust. The stipulated facts describe the activities of the Petitioner regarding the unregistered operation of "Watts Investment Management, Inc." during 1985 and the subsequent registration of the entity in 1986. The stipulated facts describe the activities of the Petitioner regarding his employment as a broker for Paine Webber from 1982-1985, and the failure to obtain approval for outside employment activities while working for the investment firm. The stipulated facts describe the legal action taken by Cynthia Halabrin Raybuck against the Petitioner and Paine Webber related to the activities of the Petitioner as trustee of the Halabrin trust. The parties settled the case through arbitration. The stipulated facts address the creation of "Danbury Mortgage Company," and describe the preliminary activities of the unlicensed entity. The facts also identify the Petitioner's association with the Paradigm Mortgage Company, based in Jacksonville, Florida. For purposes of this Recommended Order, all stipulated facts set forth in the prehearing stipulation filed by the parties are adopted and incorporated herein. On or about August 29, 1996, the Petitioner filed an application with the Department of Banking and Finance, Division of Finance (Department) seeking licensure as a mortgage broker. The Petitioner’s application disclosed that in 1989 he was denied admission to the Florida Bar. In January 1989, the Petitioner was notified by the Florida Board of Bar Examiners (“Board”) of their intent to deny his application for admission to the Florida Bar. A hearing was conducted in June 1989 regarding the denial. The Petitioner was represented by legal counsel and testified under oath at the hearing. On August 31, 1989, the Board of Bar Examiners denied Petitioner’s application for admission. Based on the facts set forth in the Board's order, the Board concluded that the Petitioner “engaged in acts to serve his own interest to the detriment of others, violated registration laws, neglected payment of student loan obligations and issued numerous worthless checks.” The Board also determined that the Petitioner provided misleading testimony at his Bar hearing and failed to disclose material information on his application. Although at the formal administrative hearing the Petitioner attempted to explain the circumstances under which the Board's determination occurred, the testimony at hearing and the stipulated facts support the findings made by the Board. Upon the filing of the Petitioner's application for licensure as a mortgage broker, the Department undertook a review of the application. Based on the review, the Department determined that the Petitioner had held himself out for business as a mortgage broker without an appropriate license. In December 1995, the Petitioner registered the name "Danbury Mortgage Corporation" with the Florida Department of State, Division of Corporations. In January 1996, the Petitioner established a business location for Danbury Mortgage Corporation. The Petitioner listed the business under the "mortgage brokers" section of the Sarasota Yellow Pages. At no time was the Danbury Mortgage Company licensed by the Department of Banking and Finance. At the hearing, the Petitioner suggested that no mortgage business had been conducted by Danbury Mortgage Company. The Petitioner asserted that he had affiliated with another company (Paradigm) and that the other company was handling the registration of his office as a Paradigm branch. The evidence establishes that the Petitioner was involved in completion of at least one mortgage loan application on behalf of Paradigm Mortgage Company without appropriate licensure. The Paradigm "branch" office was located in the same building as Danbury Mortgage Company, and shared the Danbury telephone number. Based on a cryptic telephone message received by the Petitioner from a Paradigm supervisor, the Petitioner assumed that he was licensed. The Petitioner did not return the telephone call and made no credible attempt at determining whether he was licensed prior to acting on behalf of Paradigm Mortgage Company.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department enter a Final Order denying the application of Richard Eric Watts for licensure as a mortgage broker. DONE AND ORDERED this 30th day of December, 1997, in Tallahassee, Leon County, Florida. _ _ WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 30th day of December, 1997. COPIES FURNISHED: Honorable Robert F. Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 Harry Hooper, General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350 Richard E. Watts, pro se 1345 Main Street, Suite C-4 Sarasota, Florida 34236 Pamela R. Jacobs, Esquire Regional Counsel Department of Banking and Finance 1300 Riverplace Blvd, Suite 640 Jacksonville, Florida 32207
Findings Of Fact Respondents Phillip A. Banks (Banks) was at all times Material hereto a licensed real estate broker in the State of Florida, having been issued license number 0324865. Banks was the qualifying broker for Respondent, Abode Realty, Inc., which was at all tines material hereto registered as a real estate broker in the State of Florida, having been issued license number 0232550. On August 24, 1985, Respondents received in escrow $2,200 from Patricia Turner, as a deposit on her agreement to purchase a home located at 1300 Westview Drive, Miami, Florida. Pertinent to this case, the agreement was conditioned on Ms. Turner's ability to qualify for and obtain a first mortgage, insured by the FHA or guaranteed by the VA, in an amount not less than $40,837. Ms. Turner's application for the subject mortgage was duly submitted to American International Mortgage Company (American International). That application was, however, denied because the property did not appraise at the contract price. Following the denial of her application for mortgage financing on the first house, Ms. turner entered into an agreement through Respondents, dated November 20, 1985, to purchase another home located at 2501 Northwest 155 Terrace, Miami, Florida. At that time, Respondents returned to Ms. Turner the $2,200 deposit on the first contract, and she in turn deposited such sums with Respondents as a deposit on her agreement to purchase the second home. Pertinent to this case, the agreement was conditioned on Ms. Turner's ability to qualify for and obtain a first mortgage, insured by the FHA or guaranteed by the VA, in an amount not less than $39,867. The agreement further provided: When this contract is executed by the Purchaser and the Seller and the sale is not closed due to any default or failure on the part of the Purchaser, Purchaser shall be liable to Broker for full amount of brokerage fee. The agreed brokerage fee was 7 percent of the purchase price, or $2,800. The second home was owned by Independent Properties, Inc., a corporation owned, at least in part, by Banks. This ownership interest was, however, fully disclosed to Ms. Turner at the time the agreement was executed. Ms. Turner's application for the mortgage on the second home, as with the first home, was processed by American International. While that loan was being processed, Ms. Turner contracted to purchase and purchased, unbeknown to Respondents or American International, a different home (the third home). When a American International discovered this fact, Ms. Turner's application was disapproved because she lacked sufficient resources to afford two homes and because she could not comply with the FHA regulation which required that the buyer reside in the home. But for Ms. Turner's purchase of the third home, she would have qualified for the mortgage contemplated by the second agreement. Ms. Turner entered into the agreement to purchase the third home on or about January 20, 1986, and her application for the mortgage on the second home was disapproved by American International on April 1, 1986. In the interim, on January 30, 1986, Ms. Turner secured a loan of $1,000 from Banks on the pretext that her uncle had been charged with a criminal offense and the monies were needed to secure his release. The proof established, however, that Ms. Turner had no intention of fulfilling her agreement to purchase the second home, and that the pretext she used to secure $1,000 from Banks was but a subterfuge to secure the return of some of her deposit. Ms. Turner made no demand for the return of any of her deposit monies. She did, however, file a civil action in January 1987 to recover such monies. That action was dismissed on motion of Respondents, but faced with the threat of continued litigation Respondents offered to settle with her for $1,100. Ms. Turner rejected Respondents' offer, and commenced a second civil action. That action resulted in the entry of a final judgment in her favor for $1,100 and costs. Respondents are ready, willing and able to satisfy such judgment, and have attempted to satisfy such judgment through Ms. Turner's counsel without success.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final order be entered dismissing the Administrative Complaint. DONE and ENTERED this 11th day of January 1988, in Tallahassee, Florida. WILLIAM J. KENDRICK 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 a Division of Administrative Hearings this 11th day of January 1988. COPIES FURNISHED: James H. Gillis, Esquire Division of Real Estate Legal Section 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Brian M. Berman, Esquire SMITH & BERMAN, P.A. 2310 Hollywood Boulevard Hollywood, Florida 33020 William O'Neil, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Darlene F. Keller Acting Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
The Issue Whether petitioner's application for a mortgage broker's license should be granted or denied.
Findings Of Fact Application and Reasons for Denial Applicant is a 52-year-old former mortgage broker who resides in Dade County, Florida. He was first licensed as a mortgage broker in Florida in 1959. His license remained in effect until it expired in 1976. He reapplied for registration as a mortgage broker in December, 1976. In June, 1977, the Department denied his application despite Applicant's attempt to withdraw his application in January, 1977. (P-1, R-6, R-7.) On March 18, 1981, Applicant filed another application with the Department for a license to act as a mortgage broker. That application is the subject of this proceeding. The Department seeks to deny it on grounds that the Applicant is insolvent; that he had a final judgment entered against him in a civil action on grounds of fraud, misrepresentation, or deceit; and that he lacks the requisite competence, honesty, truthfulness, and integrity to act as a mortgage broker in Florida. II. Insolvency Applicant is insolvent and deeply in debt. His insolvency arises out of his association with a company known as Guardian Mortgage and Investment Corporation ("Guardian Mortgage"), a mortgage brokerage firm operating in Dade County. He was secretary/treasurer and one of several mortgage brokers who worked for that company. Prior to its going out of business in 1976, it and its several brokers were accused of numerous financial misdealings. Between 1974 and 1980, over 31 civil lawsuits were filed against Applicant concerning financial transactions in which he was involved; most of the transactions occurred in connection with his employment at Guardian Mortgage. As a result of these lawsuits, and his failure to defend against them (on advice of counsel) , final judgments in excess of $500,000 have been entered against him and remain unpaid. Applicant has not attempted to pay off any of these judgments, although his codefendant, Archie Struhl, has made efforts to satisfy some of them. (Testimony of Lipsitt, Haber; R-4, R-5, R-6.) After Guardian Mortgage ceased operations, Applicant ran a hotel and orange grove operation in Central America. His wife was a preschool teacher. He has not earned any money beyond that necessary to meet his basic needs. (Testimony of Haber.) In the past, the Department has ordinarily refused to issue mortgage broker licenses to applicants who are insolvent. The reason for this policy is that the public "could be injured if a man [mortgage broker] did not have sufficient monies to back him up . . ." Tr. 144.) The only exception to this policy of denying applications on grounds of insolvency is when an applicant has shown that he is making an honest effort to satisfy and pay off the outstanding judgments. (Testimony of Ehrlich.) III. Civil Judgment of Fraud Entered Against Applicant In April, 1977, a civil action was filed by Murray Ritter against three codefendants: Applicant, Archie Struhl, and Guardian Mortgage. (Circuit Court of Dade County, Case No. 77-10849, Division II.) Count II of the complaint alleged that the defendants committed fraud by failing to invest $10,000 in a first mortgage and, instead, converted the money to their own use. On July 20, 1977, the circuit court, upon plaintiff's motion, entered a Final Summary Judgment in favor of plaintiff and against the three defendants. The judgment awarded plaintiff $10,000 in compensatory damages, $5,000 in punitive damages, and court costs of $63, for a total of $15,063. (R-5, R-6.) IV. Experience, Honesty, Truthfulness, Integrity, Competency, and Background of Applicant Applicant was a licensed mortgage broker for many years. The Department acknowledges that his experience in mortgage financing is adequate. (Testimony of Ehrlich.) Applicant denies that he ever engaged in wrongdoing as a mortgage broker, that he knew of improprieties occurring at Guardian Mortgage, or participated in a cover-up. He denies that he ever misrepresented facts or acted dishonestly as a mortgage broker. The evidence is insufficient to establish that Applicant lacks honesty, truthfulness, or integrity. (Testimony of Haber.) However, Applicant has not demonstrated that he has the requisite background and competence to engage in financial transactions involving mortgage financing. Civil judgments were entered (by the Circuit Court of Dade County) against Applicant in the following cases, each of which involved mortgage financing, unsecured loan transactions, or real estate investments negotiated by Applicant: Irvings S. Philipson, et al. v. Venus Development Corporation, et al., Case No. 74-1320. Dr. Seymour Z. Beiser, et al. v. Guardian Mortgage and Investment Corporation, et al., Case No. 76-24374. Dade Federal Savings and Loan Association of Miami v. Brenda Alexander, et al., Case No. 75-16230. City National Bank of Miami v. Guardian Mortgage and Investment Corporation, et al., Case No. 75-39444. Leon Earler, et al. v. Venus Development Corporation, et al., Case No. 76-22138. Jesus Suarez v. Leonard Gordon, et al., Case No. 76-26381. John J. Nussman, et al. v. Melvin J. Haber, et al., Case No. 76-30569 (12). County National Bank of North Miami Beach v. Sid Shane, et al., Case No. 77-27909 (14). Herman Mintzer, et al. v. Guardian Mortgage and Investment Corporation, Case No. 76-16842. Melvin Waldorf, et al. v. Guardian Mortgage and Investment Corporation, Case No. 76-16344. Florence Margen v. Guardian Mortgage and Investment Corporation, et al., Case No 76-39412. Biscayne Bank v. Guardian Mortgage and Investment Corporation, et el., Case No. 76-39857 (8). Harry Jolkower, et al. v. Archie Struhl, et al., Case No. 77-19172. Hilliard Avrutis v. Archie Struhl, et al., Case No. 32494. Julius Wladawsky, et al. v. Melvin J. Haber, et al., Case No. 76-22554 (14). Taken as a whole, these judgments support an inference that Applicant lacks the competence and background necessary to act as a responsible mortgage broker in Florida. 2/ (Testimony of Ehrlich; R-4, R-5.)
Recommendation Based on the foregoing, it is RECOMMENDED: That the application for a mortgage broker's license be DENIED. DONE AND RECOMMENDED this 15th day of January, 1982, in Tallahassee, Florida. R. L. CALEEN, JR. 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 January, 1982.
The Issue The central issue in this case is whether Petitioners are entitled to recover against the Mortgage Brokerage Guaranty Fund and, if so, the priority of payment to be applied to their claim. A secondary issue is whether claimants who gave notice prior to Petitioners are entitled to payment or whether they have waived or abandoned their claims.
Findings Of Fact Based upon the stipulations filed by the parties and the documentary evidence, I make the following findings of fact: The Mortgage Brokerage Guaranty Fund (the "fund") was created in 1977 to provide recovery for any person who meets all of the conditions prescribed in Section 494.043, Florida Statutes. The Department is charged to disburse the fund according to Section 494.044, Florida Statutes. Section 494.043, Florida Statutes, (Supp.1986) provides: Any person who was a party to a mortgage financing transaction shall be eligible to seek recovery from the Mortgage Brokerage Guaranty Fund if: The person has recorded a final judgment issued by a Florida court of competent jurisdiction in any action wherein the cause of action was based on s. 494.042(2); The person has caused to be issued a writ of execution upon such judgment and the officer executing the same has made a return showing that no personal or real property of the judgment debtor liable to be levied upon in satisfaction of the judgment can be found or that the amount realized on the sale of the judgment debtor's property pursuant to such execution was insufficient to satisfy the judgment; The person has made all reasonable searches and inquiries to ascertain whether the judgment debtor possesses real or personal property of other assets subject to being sold or applied in satisfaction of the judgment, and by his search he has discovered no property or assets or he has discovered property and assets and has taken all necessary action and proceedings for the application thereof to the judgment, but the amount thereby realized was insufficient to satisfy the judgment; The person has applied any amounts recovered from the judgment debtor, or from any other source, to the damages awarded by the court. The person, at the time the action was instituted, gave notice and provided a copy of the complaint to the division by certified mail; however, the requirement of a timely giving of notice may be waived by the department upon a showing of good cause; and The act for which recovery is sought occurred on or after September 1, 1977. Recovery of the increased benefits allowable pursuant to the amendments to s. 494.044 which are effective October 1, 1985, shall be based on a cause of action which arose on or after that date. The requirements of paragraphs (1)(a),(b),(c),(d), and (e) are not applicable if the licensee or registrant upon which the claim is sought has filed for bankruptcy or has been adjudicated bankruptcy; however, in such event the claimant shall file a proof of claim in the bankruptcy proceedings and shall notify the department by certified mail of the claim by enclosing a copy of the proof of claim and all supporting documents. Pertinent to this case, Section 494.044, Florida Statutes, (Supp. 1986) Provides: Any Person who meets all of the conditions Prescribed in s 494.043 may apply to the department for payment to be made to such person from the Mortgage Brokerage Guaranty Fund in the amount equal to the unsatisfied portion of that person's judgment or judgments or $20,000, whichever is less, but only to the extent and amount reflected in the judgment as being actual or compensatory damages. As to claims against any one licensee or registrant, payments shall be made to all persons meeting the requirements of s. 494.043 upon the expiration of 2 years from the date the first complete and valid notice is received by the department. Persons who give notice after 2 years from the date the first complete and valid notice is received and who otherwise comply with the conditions precedent to recovery may recovery from any remaining portion of the $100,000 aggregate, in an amount equal to the unsatisfied portion of that person's judgment or $20,000, whichever is less, but only to the extent and amount reflected in the judgment as being actual or compensatory damages, with claims being paid in the order notice is received until the $100,000 aggregate has been fully disbursed. * * * (3) Payments for claims shall be limited in the aggregate to $100,000, regardless of the number of claimants involved, against any one mortgage broker or registrant. If the total claims exceed the aggregate limit of $100,000, the department shall prorate the payment based on the ratio that the person's claim bears to the total claims filed. The first notice received by the Department alleging a claim against Barry Koltun or Oakland Mortgage Company was filed on August 13, 1984. This notice was filed on behalf of John and Mary Ahern. The Department utilized this notice in computing the two-year period addressed in Section 494.044(1), Florida Statutes. For purposes of recovery from the fund, the individual mortgage broker (Koltun) and the company qualified by the broker (Oakland) are treated as one. Petitioners filed an initial notice of their claim against the fund on October 16, 1985. This claim was asserted against Oakland Mortgage Company, Barry Koltun and Robert Tamarro. On January 23, 1987, the Department issued a "Notice of Intent to Grant or Deny Payment from the Mortgage Brokerage Guaranty Fund Re Oakland Mortgage Company." This notice outlined the status of some thirteen claims which had given notice of their civil actions against the licensee within the two year period. Two claimants, Kusich and Szafran, had provided all documentation required by Section 494.043, Florida Statutes; consequently, they were approved for payment. The Petitioner's claim was denied because they had allegedly failed to satisfy the statutory requirements of Section 494.043, Florida Statutes and had failed to do so prior to August 12, 1986 (the end of the two year period). The Petitioners timely filed a petition for formal Chapter 120 proceedings challenging the Department's denial of their claim for payment. Subsequent to January 23, 1987, Petitioners completed the conditions precedent for recovery and submitted all documentation required to satisfy the requirements of Section 494.043, Florida Statutes. On July 6, 1987, the Department received notice and a claim from the Intervenors. This claim satisfied the requirements of Section 494.043, Florida Statutes. Of the thirteen original claims filed, only two claimants (Kusich and Szafran) completed all conditions of Section 494.043, Florida Statutes, on or before August 12, 1986.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Banking and Finance, Division of Finance, enter a Final Order finding the claims of Rusich and Szafran eligible for payment, and that the claim of Petitioners be evaluated as part of the second class established in Section 494.044(1), Florida Statutes, DONE and RECOMMENDED this 1st day of December, 1987, in Tallahassee, Florida. JOYOUS D. PARRISH 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 1st day of December, 1987. COPIES FURNISHED: Paul A. Zeigler, Esquire Ruden, Barnett, McClosky, Smith, Schuster & Russell, P.A. Suite 1010, Monroe Park Tower 101 North Monroe Street Tallahassee, Florida 32301 Paul C. Stadler, Jr., Esquire Department of Banking and Finance Division of Finance Suite 1302 The Capitol Tallahassee, Florida 32399-0350 Joseph Degance, Esquire 1995 East Oakland Park Boulevard Suite 101 Fort Lauderdale, Florida 33306 Jack F. Weins, Esquire Boca Bank Building Suite 200 855 South Federal Highway Boca Raton, Florida 33432 Morey Udine, Esquire 3111 University Drive Suite 425 Coral Springs, Florida 32065-6930 Hon. Gerald Lewis Department of Banking and Finance Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350 Charles L. Stutts General Counsel Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0350 =================================================================
Recommendation Based on the foregoing Stipulated Facts, Supplemental Findings Of Fact and Conclusions Of Law, it is recommended that Respondent, Department of Banking and Finance, enter a final order that the following disbursements from the Mortgage Broker Guaranty Fund be made Payee on the claims against Polk Investments, Inc.: Amount Amendolaro $ 2,661,22 Victorias 10,000.00 Fournier, Janice 10,000.00 Wilson 1,334.71 Ledfords 6,573.09 Fournier, Robert 10,000.00 Murphy 4,715.49 Murphy as Trustee 4,715.49 Total $50,000.00 RECOMMENDED this 13th day of November, 1986 in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSON, 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 13th day of November, 1986. COPIES FURNISHED: Paul C. Stadler, Jr., Esquire Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301 Dennis P. Johnson, Esquire SHELNUT AND JOHNSON, P.A. Suite One Belvedere Professional Center 1525 South Florida Avenue Lakeland, Florida 33806-2436 Cristy F. Harris, Esquire HARRIS, MIDYETTE & CLEMENTS, P.A. Post Office Box 2451 Lakeland, Florida 33806-2451 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32301 Charles Stutts General Counsel Plaza Level The Capitol Tallahassee, Florida 32301
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Respondent Ronald E. Clampitt is the President of Respondent Action Mortgage Corporation and is the person designated to act on behalf of said corporation under the provisions of Chapter 494, Florida Statutes. Action Mortgage Corporation currently holds a mortgage brokerage license. The individual mortgage broker license issued to respondent Clampitt expired on August 31, 1980, and has not been renewed. Respondent Joseph W. Langford currently holds a license as a mortgage solicitor for and on behalf of Home Mortgage Investment Corporation. His prior individual mortgage broker license expired on August 31, 1980, and has not been renewed. COUNT I The respondents were counter codefendants in a civil suit filed in the Circuit Court of Sixth Judicial Circuit of the State of the Florida in and for Pinellas County, which case was numbered 78-12033-18 and styled Action Mortgage Corporation, etc., et al., Plaintiffs, vs. Denture Services, Inc., etc., et al., Defendants. On February 8, 1980, a Final Judgment was entered in that proceeding by Circuit Court Judge David Seth Walker. Judge Walker found, as a matter of fact, that a limited confidential/fiduciary relationship existed between Langford and the counter-plaintiffs, and opined that certain activities on the part of the individual counter-defendants were "bedecked with the badge of fraud." The Court, inter alis, awarded the counter-plaintiffs Final Judgment in the nominal sum of $1.00, plus costs. It was noted that the claim of the counter-plaintiffs for punitive damages had previously been denied. Subsequent to the Final Judgment enteed in Case No. 78-12033-18, the counter-plaintiffs filed a Motion for Rehearing on the matter of punitive damages, since the Court had noted in its Final Judgment that the activities of the counter-defendants were "bedecked with the badge of fraud." The counter- defendants (respondents herein) also moved the Court to alter or amend its Final Judgment so as to remove the fraud language quoted above. By Order filed on March 10, 1980, both motions were denied by Judge Walker. Judge Walker's deposition was taken on August 22, 1980, and was received into evidence in this proceeding as petitioner's Exhibit 9. Referring to the language in the Final Judgment "bedecked with the badge of fraud," Judge Walker makes the following comments: "I do not interpret that as a finding of fraud absolute, but just that there were indicia of fraud." (p.4) "But I did not consider this to be an absolute finding of fraud. I think I mentioned that on one of the motions that the counter-plaintiffs made to reconsider the judgment of $1.00 or the refusal to grant punitive damages. I reiterated at that hearing that I found that it was an indicia, but I did not go so far in my own mind as to specifically find fraud." (p. 4) "If I had wanted to find specifically that they were in fact guilty of fraud, I would have said as much. The phrase, in my mind, 'bedecked with a badge of fraud,' is meant to suggest the indicia of fraud. Fraud is a legal conclusion that must be based upon several legally accepted circumstances. And in law school we learned the term, 'badges of fraud.' But a badge of fraud does not per se constitute fraud. I didn't feel that I needed to go too deeply in the questions, because of my finding that the counter-plaintiffs had not in fact suffered any real damage." (pp. 7 and 8) "I listed a certain series of circmustances and activities which had taken place, rather specifically. And I found that these activities and circumstances were bedecked by the badge of fraud which is admittedly a little bit flowery for normal language, but that's what I said. I did not specifically find fraud. Fraud always carries with it the badges of fraud in and of it- self does not collaterally, and on the other hand mean that fraud exists. I did not go that far in this particular judgment. I did not feel I had to." (pp. 18 and 19) "I did not feel that it was necessary for the Court to delve into the ultimate determination of fraud." (p. 20) "I do not perceive that my final judgment made an absolute finding of fraud. Again, the phrase, 'badge of fraud,' simply menas to me an indicia of fraud, and I'm confortable with the finding that that indicia is there. But as far as a finding of fraud is concerned, I did not proceed to that point, and it's not there." (pp. 20 and 21) COUNT II In 1978, Dorothy L. Jones and Byron A. Jones were the owners of real property located at 2656 Granada Circle East in St. Petersburg, Florida. The first mortgage on that property held by Molten, Allen and Williams, Inc. or the Mortgage Corporation of the South, was in default and a foreclosure action, and is pendens against the property had been filed. The monthly mortgage payments were approximately $225. At that time, Dorothy Jones was separated from her husband, lived in the home with her five minor children and was having financial difficulties. Having seen a newspaper advertisement, Dorothy Jones contacted the Respondents in an effort to obtain a second mortgage or additional funds with which to pay her debts and preserve her homestead. Neither of the Respondents agreed to make a second mortgage loan to Mrs. Jones. Instead, they agreed to make an outright purchase of the Jones's residence and lease the property back to Dorothy Jones at a monthly payment which approximated her prior monthly mortgage payment. The lease payments were later increased to $275 per month due to the loss of homestead exemption on the property. It was Mrs. Jones' understanding that she would be given the opportunity to repurchase the home at less than fair market value though she may have to pay a down payment and higher monthly payments. No appraisal was performed on the property. The closing of the transaction took place at a title company, independent of the Respondents. Mrs. Jones understood that she was signing a deed to the property and other documents transferring title to Respondents. The property was purchased by the Respondents in February of 1978 for $23,656.54 and the transfer was made subject to the mortgage to Molten, Allen and Williams, Inc., in the amount of $21,848.44. No funds were paid to Mr. or Mrs. Jones at the time of closing. During the months which followed, Dorothy Jones fell far behind in her lease payments to the Respondents. In May of 1979, Respondent Langford notified Mrs. Jones that the property owners had elected to sell the property in the near future, and advised her to contact his office if she was still interested in purchasing the property. In July of 1979, Dorothy Jones filed a Complaint against the Respondents in the Circuit Court in and for Pinellas County seeking a declaratory decree as to her rights under the aforementioned deed, lease and oral agreement to repurchase the property. (Civil No. 79-7307-17). Mrs. Jones was represented by an attorney in that action. By Order filed on July 29, 1980, the Circuit Court approved the terms and conditions of a Stipulation entered into by the Respondents and Mrs. Jones whereby Mrs. Jones was given the opportunity to purchase the subject property from the Respondents for $32,000 within 90 days, and was also required to pay back rental payments to the Respondents. For some reason not clear from the evidence adduced in the proceeding, Mrs. Jones did not repurchase the property from the Respondents. By Final Judgment filed on October 15, 1980, Mrs. Jones' claim against the Respondents was dismissed with prejudice and Respondents were awarded a judgment against Mrs. Jones in the amount of $2,887.50. Apparently, an eviction action in the County Court for Pinellas County resulted in the award of possession of the home to the Respondents. Mrs. Jones vacated the subject property in October of 1980. In April of 1981, Respondents sold the subject property to Harold and Peralita Odlam for a purchase price of $41,7000. COUNT III Respondent Clampitt was licensed as an individual mortgage broker for the years 1978 and 1979. His 1979 license expired on August 31, 1979, as did the license of Action Mortgage Corporation. Mr. Clampitt made an attempt to renew his individual mortgage broker license on October 16, 1979. The renewal license for Action Mortgage Corporation also bears the date of October 16, 1979. During the period of time between August 31, 1979 (the date upon which his individual mortgage broker license expired) and October 16, 1979 (the date upon which said renewal license was issued), respondent, Clampitt, as an individual mortgage broker, received at least three mortgage brokerage fees or commissions. A broker is considered to be licensed by the petitioner when a completed application form accompanied by the correct fee is received by the petitioner. It is the petitioner's practice to mail out renewal application to its approximately 6,500 licensees on July 15 of each year with the request that they be returned by August 15. All licenses expire on August 31 and are reissued for the following year to be effective from September 1 to August 31. Those applications which are received by the petitioner after August 31 bear a different license date. The correct amount to be remitted for the renewal of respondent Clampitt's individual license was $125-- a $75 license fee and a $50 guaranty fund fee. The $190 check received by the petitioner from the respondent on or before August 31, 1979, was accompanied by three renewal application cards. The petitioner did not apply $125 of the $190 to the renewal of respondent Clampitt's individual license because petitioner could not ascertain how the respondent desired to have the funds applied. Although a small minority of licensees do not renew their licenses in a timely fashion, it is not the practice of the petitioner to directly notify a licensee that his license has expired. Respondent Clampitt did hold a license with an effective date of September 13, 1979, as an additional broker for Fickling and Walker, Inc. in Winter Park, Florida. Under this license, respondent Clampitt would have no authority to act individually or on behalf of anyone other than Fickling and Walker, Inc. COUNT IV Respondent Clampitt arranged for a loan to a Mr. and Mrs. Fink. When examining the respondent's books, petitioner's financial examiner was unable to account for an apparent overcharge of $13.80 for credit life insurance on the loan. The examiner did not examine the loan closing documents with regard to this transaction. The evidence establishes that there had been a clerical error in the respondent's office concerning this transaction, that the cost of the credit life insurance had been miscalculated and that respondent Clampitt was entitled to the $13.80. COUNT V It is the practice of the respondent Clampitt to interview his clients over the telephone, look at the involved property and then, if he agrees to make a loan, send the client to a title insurance company to sign the necessary papers. These papers include a loan closing statement, the required RESPA statement and a recision notice which allows the customer to cancel the transaction within 72 hours without cost or obligation. Thereafter, generally five to seven days later, the customer returns to the title company to receive the loan proceeds. Respondent Clampitt does not take deposits and most often does not even meet this clients on a face-to-face basis. All borrower disclosures and rights required by law are provided respondent's clients by the title insurance company.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED THAT: The Administrative Charges and Complaint filed on March 23, 1981, against Joseph W. Langford be DISMISSED; The Administrative Charges and Complaint filed on February 3, 1981, against Action Mortgage Corporation be DISMISSED; Counts I, II, IV and V of the Administrative Charges and Complaint filed against Ronald E. Clampitt on February 3, 1981, be DISMISSED; and Respondent Ronald E. Clampitt be found guilty of accepting fees at a time when his individual license had expired, but, because of the unintentional violation of the pertinent statutory provisions, no disciplinary action be imposed for this offense. Respectfully submitted and entered this 27th day of July, 1981, in Tallahassee, Florida. DIANE D. TREMOR 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 27th day of July, 1981. COPIES FURNISHED: Walter W. Wood Assistant General Counsel Office of the Comptroller Suite 1302 - The Capitol Tallahassee, Florida 32301 John C. Dew and Jay Emory Wood Harris, Barrett and Dew Post Office Drawer 1441 600 Florida National Bank Building St. Petersburg, Florida 33731 Comptroller Gerald A. Lewis State of Florida The Capitol Tallahassee, Florida 32301
The Issue Whether or not the Respondent, Evers & Associates, Inc. and Dovard J. Evers, its President, a licensed mortgage broker in the State of Florida, has charged and accepted fees and commissions in excess of the maximum allowable fees or commissions on the transactions set forth in the administrative complaint, Exhibit "A," in violation of Sec. 494.08(4), F.S., and thereby subjected the Respondent to a possible suspension under the terms of 494.05(1)(g), F.S.
Findings Of Fact Evers & Associates, Inc. through the parson of Dovard J. Evers, its President, was a licensed mortgage broker in the State of Florida, during the time period contemplated by the administrative complaint. Subsequent to the time of receiving the mortgage brokers-license, Dovard J. Evers, on behalf of Evers & Associates, Inc., entered into an agreement with several other parties to sell notes secured by mortgages on real estate. One of the agreements was with David Edstrom, of a corporation known as S.E.T., Inc., Mr. Edstrom being the President of said corporation, and the location of that corporation being in Fort Lauderdale, Florida. A similar agreement was held with one Gary George of the Mortgage Consultants, Inc., Ocala, Florida. The agreement with Gary George involved a sale of mortgages for the benefit of the mortgagor, Washington Development Corporation. The third such agreement was with Phil Swan of Southeast Florida Corporation. The written conditions of the S.E.T., Inc. arrangement with Mr. Evers can be found in Respondent's Exhibits No. 2 through No. 5. Essentially, the arrangement was to have Mr. Evers, through Evers & Associates, act as a salesman for the benefit of S.E.T., Gary George and Phil Swan. Their agreement envisioned that Mr. Evers would be afforded a percentage discount varying from 14 percent to 16 percent of the amount of a mortgage loan which was a note secured by real estate. In actual , the contact was made between S.E.T., Gary George and Phil Swam Mr. Evers for purposes of placing notes that were for sale. The apparatus worked by having Mr. Evers contact mortgagees/investors who made a check payable to Evers & Associates for the full amount of the mortgage loan, whose price had been quoted by the intermediary; S.E.T., Gary George and Phil Swan. This amount was held in escrow until such time as the note and mortgage which secured the note could be drawn. The executed note and mortgage went directly to the third party mortgagee/investor without ever having the name of Mr. Evers or Evers & Associates, Inc., affixed to such documents. After this note and mortgage had been executed in behalf of the third party investor, Mr. Evers deducted a fee in favor of Evers & Associates, Inc., according to the percentage agreement with S.E.T., Gary George and Phil Swan and sent the balance of the money to S.E.T., Inc.; Washington Development Corporation through the person of Gary George and to Phil Swan of the Southeast Florida Corporation. The arrangement with Washington Development Corporation changed at a later date because Gary George was no longer involved and payments subsequent to his involvement were sent directly to Washington Development Corporation. The facts show that in the transactions found in Petitioner's Exhibit "A," the complaint, charges were made in behalf of Evers & Associates in the person of Mr. Evers which exceed the statutory allowance for fees and commissions in the amount stated in the column entitled overcharges. These overcharges are according to the percentage agreement between Mr. Evers and S.E.I., Inc., Gary George, and Phil Swan, minus adjustments made in behalf of the third party investor/mortgagee, as indicated in the testimony. This finding of facts, excludes the mortgage by M. Berkell which was stipulated between the parties as not being a matter for further consideration in the hearing. There was no evidence offered of the charge, if any, between S.E.T., Inc., Gary George, and Phil Swan in their dealings with their developer/mortgagors. At present the Respondent, Evers & Associates, Inc., and Dovard J. Evers, its President, have failed to renew the license in the current license period and, as of the moment of the hearing, have expressed no further interest in such renewal.
Recommendation It is recommended that the license of Evers & Associates, Inc., by Dovard J Evers, its President, be suspended for a period not to exceed 30 days. DONE and ENTERED this 8th day of June, 1976, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Fred O. Drake, III, Esquire Office of the Comptroller The Capitol Tallahassee, Florida 32304 Earl M. Barker, Esquire 218 East Forsythp Street Jacksonville, Florida 32202
