The Issue The issue in this case is whether Respondent’s rights and benefits under the City of Tampa General Employees’ Retirement Fund are required to be forfeited pursuant to article II, section 8(a) of the Florida Constitution and the implementing statute.
Findings Of Fact The Fund is a public retirement system as defined by Florida law. The Fund is charged with administering and managing a pension plan for City employees. Respondent was an employee of the Tampa Police Department. She worked there for approximately 31 years until her employment ended on April 9, 2014. By reason of her employment with the City’s police department, Respondent was enrolled in the pension plan administered by the Fund. She was employed long enough to be a vested participant. At the time her employment ended, Respondent was a police community service officer, a position she had held since September 2007. Shortly before her employment ended, Respondent became one of the subjects of a criminal investigation regarding Tampa Police Department employees using their access to restricted computer databases to obtain personally identifiable information of individuals, such as social security numbers and birth dates. The personal information was passed on to a former police informant, Rita Girven, who was using the information to fraudulently obtain federal income tax returns. Respondent, a friend of Ms. Girven’s, was identified in the investigation as one of three employees using their access to restricted databases to obtain personally identifiable information to provide to Ms. Girven. During the course of the investigation, the City suspended Respondent and subsequently gave her the option to resign in lieu of termination, which she accepted. Respondent resigned effective April 9, 2014. The investigation culminated in a federal indictment against Respondent on multiple counts. Respondent was represented by an attorney in the federal criminal proceedings. Respondent ultimately entered into a plea agreement to plead guilty to two counts (counts two and five of the indictment) of obtaining information from a protected computer in violation of 18 U.S.C. § 1030(a)(2) and (c)(2)(B)(ii). The crimes to which Respondent pled guilty are felonies. In the plea agreement executed by both Respondent and her attorney, Respondent admitted the following facts: Defendant is pleading guilty because defendant is in fact guilty. The defendant certifies that defendant does hereby admit that the facts set forth below are true, and were this case to go to trial, the United States would be able to prove those specific facts and others beyond a reasonable doubt.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the City of Tampa General Employees’ Retirement Fund enter a final order determining that Respondent, Tonia Bright, has forfeited all of her rights and benefits in the pension plan administered by the Fund, except to the extent of Respondent’s accumulated contributions, if any, as of the date her employment ended. DONE AND ENTERED this 18th day of September, 2017, in Tallahassee, Leon County, Florida. S ELIZABETH W. MCARTHUR Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day September, 2017.
The Issue The issue is whether Respondent's request for a hearing to contest a Stop-Work Order and Amended Order of Penalty Assessment (Amended Assessment) issued by Petitioner, Department of Financial Services, Division of Workers' Compensation (Division), was timely filed by virtue of the doctrine of equitable tolling.
Findings Of Fact The Division is the state agency responsible for enforcing the various requirements of chapter 440. Respondent is a Florida limited liability company engaged in the construction business. Its offices are located at 1717 West Memorial Drive, Lakeland, Florida. On April 6, 2015, while driving in Spring Hill, Florida, Dale Russell, a Division compliance inspector, observed three individuals reroofing a single-family residence located at 1006 Chastile Drive. The three individuals confirmed that they were employed by Respondent's construction firm. Mr. Russell contacted Mr. Hutchinson, the owner of the corporation, who confirmed that the three individuals were employed by his firm and that the three were not covered by workers' compensation insurance. Because Mr. Hutchinson was in Lakeland that day, a Stop-Work Order was not served. However, the two agreed to meet at a later date in the Division's Tampa District Office. A Stop-Work Order and request for business records was served on Mr. Hutchinson by another investigator on April 8, 2015. The Stop-Work Order contained an Order of Penalty Assessment, which explained how a penalty is calculated, but gave no specific amount pending a review of Respondent's financial records. On May 20, 2015, an Amended Assessment was prepared indicating that Respondent was being assessed a total penalty of $96,364.78 for failing to secure the payment of workers' compensation insurance. The Amended Assessment was personally served on Respondent by Mr. Russell on May 26, 2015, when Mr. Hutchinson visited the Tampa District Office. The standard assessment form contains two important deadlines that must be met by the employer. On the first page, the form states that pursuant to Florida Administrative Code Rule 69L-6.028, "if the Division imputes the employer's payroll, the employer shall have twenty business days after service of the first amended order of penalty assessment to provide business records sufficient for the Division to determine the employer's payroll for the period requested in the business records request for the calculation of the penalty." It goes on to state that these records may be used to recalculate the employer's penalty "only if the employer provides all such business records within the twenty days after service of the first amended order of penalty assessment. Otherwise, the first amended order of penalty assessment will remain in effect." This means that Respondent had until June 23, 2015, in which to provide business records to the District Office. On the second page of the Amended Assessment is a section entitled Notice of Rights (Notice). Among other things, it states that if the employer requests a hearing, he "must file the petition for hearing so that it is received by the Department within twenty-one (21) days of your receipt of this agency action." Notably, this timeframe is measured in calendar days, not business days, and means that if Respondent decided to request a hearing rather than providing additional financial records, the request had to be filed with, and received by, the Division no later than June 15, 2015. During his meeting with Mr. Hutchinson, the investigator explained the Amended Assessment, section by section. He specifically told Mr. Hutchinson that he had 20 business days in which to produce additional business records. He also told him that he had 21 calendar days in which to request a hearing. Mr. Russell is an experienced investigator, having worked as a deputy sheriff for 28 years before working as a Division inspector. He has issued numerous notices and is very familiar with the deadlines. Although Mr. Hutchinson testified that he asked Mr. Russell to confirm that he had 21 business days in which to file his business records, and was told that this was correct, which differs from Mr. Russell's version of the conversation, the testimony of the experienced investigator is accepted as being the most credible on this issue. The undersigned finds that Mr. Russell correctly explained the ramifications of the two deadlines and he did not mislead Mr. Hutchinson. The facts here do not demonstrate equitable tolling. Even though he was given accurate information regarding the two deadlines, it is evident that Mr. Hutchinson, a lay person, either misunderstood what he was told or was just plain confused. Obviously, he did not read the instructions on the Amended Assessment before submitting his records. Faced with a potential $96,364.78 assessment, it is somewhat surprising that Mr. Hutchinson did not contact the Tampa District Office after the May 26 meeting to reconfirm the precise date on which the records (or request for a hearing) were due. Even at hearing, he admitted that he did not know the difference between submitting business records and requesting a hearing. Believing that he had 21 business days to provide business records, Mr. Hutchinson carried his records to the Tampa District Office on June 24, 2015, or one day past the deadline established in the Amended Assessment. He was told by a Division supervisor that the submission was untimely and he had waived his right to produce them. Even though it was now too late, she recommended that Mr. Hutchinson prepare a request for a hearing, which would be submitted to Tallahassee for legal counsel to review. Pursuant to her instructions, that same morning, Mr. Hutchinson prepared a handwritten, one-page letter requesting a hearing. According to Respondent, the assessment is based on missing checks that, if produced, would establish that no penalty assessment is warranted. At hearing, over the Division's objection, Respondent was allowed to introduce into evidence bank records and copies of checks. See Resp. Ex. 6-23. Although the Division has not yet reviewed them, it acknowledged that they may substantially reduce the assessment. Throughout this proceeding, Respondent's qualified representative has contended that the Amended Assessment is defective because it does not inform the employer that a qualified representative can represent its interests. The first paragraph of the Notice in both the Amended Assessment and the Stop-Work Order states that "you may be represented by counsel," but it makes no reference to a qualified representative. However, in the second paragraph, which provides information regarding the filing of a petition requesting a hearing, it states that the petition must contain "the name, address, and telephone number, and facsimile number of the attorney or qualified representative of the petitioner (if any) upon whom service of pleadings and other papers shall be made." While more clarity in the first paragraph of the Notice would be appropriate, there is sufficient information in the Notice, if read, to alert the employer that alternative representation is allowed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order determining that Respondent's request for a hearing was untimely. However, it is recommended that the business records provided by Respondent at hearing be reviewed and considered to determine the correct amount owed, if any. DONE AND ENTERED this 3rd day of February, 2016, in Tallahassee, Leon County, Florida. S D. R. ALEXANDER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of February, 2016. COPIES FURNISHED: Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed) Trevor Sutor, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 (eServed) Jamison Jessup, Qualified Representative 557 Noremac Avenue Deltona, Florida 32738-7313 (eServed)
Findings Of Fact Mr. Myers is, and has been at all times relevant to this proceeding, an employee of the Department with permanent status in the Career Service System. Mr. Myers is a member of the Florida Public Employees Council 79, an affiliate of the American Federation of State, County and Municipal Employees, AFL-CIO (hereinafter referred to as "AFSCME"). AFSCME is the bargaining unit for those State employees who are members. AFSCME has entered into a Master Contract with the State of Florida. The Master Contract, which is effective from July 1, 1987 through June 30, 1990, established certain requirements for the treatment of AFSCME members by State employers. The Master Contract applied to Mr. Myers. Since March 2, 1987, Mr. Myers has been employed as an Insurance Specialist III (or similar title) within the Department's Bureau of State Liability Claims (hereinafter referred to as the "Bureau"). The Bureau is part of the Department's Division of Risk Management. Mr. Myers has received satisfactory evaluations while employed by the Department. Mr. Myers has not been subjected to any formal disciplinary action, i.e. oral or written reprimand, suspension, while employed by the Department. The Bureau is responsible for processing and disposing of claims against various agencies of the State of Florida. During 1987 or 1988 the Bureau was organized into two components, a "North" and a "South" group. Each group was supervised by an Administrator C. The two Administrator C's were supervised by Ms. Trilly Lester, the Chief of the Bureau. Ms. Lester has been the Chief of the Bureau since May, 1988. Ms. Lester received a B.A. degree in history with a minor in government from Florida State University. Ms. Lester has been a supervisor for more than eleven years. Each group within the Bureau consisted of an Administrator C, five insurance specialist III's, a secretary specialist, a claims processor and clerk typist specialists. Mr. Myers was assigned to the North group. Lewis "Ray" Williams was the Administrator C of this group. Mr. Williams was Mr. Myers' immediate supervisor at all times relevant to this proceeding. At times Mr. Williams has been critical of Mr. Myers' work and has attempted to inform Mr. Myers how he expects Mr. Myers to perform his duties. Mr. Williams' criticism of Mr. Myers has not been well received by Mr. Myers. A great deal of friction has arisen between Mr. Williams and Mr. Myers. Mr. Myers has, and still does, harbor a great deal of resentment and anger over the way Mr. Williams has supervised his work. During the late summer or early fall of 1988 Mr. Williams reviewed a written document prepared by Mr. Myers. As a result of criticisms of the document by Mr. Williams, the document had to be retyped on more than one occasion. Mr. Myers did not believe the criticisms were justified and filed a grievance concerning Mr. Williams because he believed that Mr. Williams was harassing him and his typist about the document. An "oral step grievance" was held at Mr. Myers' request on September 23, 1988. An "oral step grievance" is the first step required by the AFSCME Master Contract for processing grievances filed by State employees who are members of AFSCME. The September 23, 1988, conference was held in a vacant office in the building where the Department was then located. The conference was attended by Mr. Myers, Helen Burgess, a staff representative of AFSCME, Ms. Lester and Mr. Williams. During the September 23, 1988, conference Mr. Myers was angry about what he believed was Mr. Williams' mistreatment. Mr. Myers' face became ashen and his mouth was dry during the conference. Mr. Myers was visibly upset and angry. During the September 23, 1988, conference, Mr. Myers was "emotionally upset". At least four times during his testimony in this case Mr. Myers stated that he had been "emotionally upset" during the September 23, 1988. During the September 23, 1988, conference Mr. Myers stated that it was hard for him to concentrate on his work because he sat at his desk "boiling." Mr. Myers also stated that if Mr. Williams did not "back off" and stop criticizing his work, he did not know what he might do; after all, he was only human. (These statements will hereinafter be referred to as the "Comments"). The evidence concerning whether Mr. Myers made the Comments was not consistent. The weight of the evidence, however, supports a finding that Mr. Myers made the Comments. Both Ms. Lester and Mr. Williams remembered the Comments being made. Mr. Williams took notes during the oral step grievance meeting and, at the end of the meeting, wrote the following summary concerning his notes about the Comments: After rec'g criticism from Mr. W he became so upset he could not conc on his work as he sat at his desk "boiling" If Mr. W does not "back off" and stop criticizing his work, he did not know what he might do - after all he was only human See the last page of Respondent's exhibit 8. Mr. Williams' summary of the Comments was made immediately after the oral step grievance meeting and was based upon notes made by Mr. Williams at the same time that Mr. Myers made the Comments. Mr. Myers testified that he did not use the term "boiling" or say that he did not know what would happen. Mr. Myers' testimony concerning whether he made the Comments is not, however, credible because his testimony is inconsistent with the following: (1) Ms. Lester's and Mr. Williams' recollection of what was said; (2) the notes taken during the meeting by Mr. Williams; (3) the fact that Ms. Lester repeated the Comments on several occasions immediately after the Comments were made; (4) the fact that Mr. Myers did not deny making the Comments at a meeting with Ms. Lester and Mr. Williams on October 10, 1988; (5) the fact that Mr. Myers did not deny making the Comments in a memorandum from Mr. Myers of October 11, 1988, and a message Mr. Myers wrote to Ms. Lester on October 12, 1988; and (6) the fact that Mr. Myers stated during a meeting held after October 10, 1988, that he simply did not remember whether he had used the term "boiling" and stated that his comment about not knowing what he might do was simply not complete because he had ended it by saying "if Mr. Williams comes and has a confrontation with me." The Comments were not shouted by Mr. Myers. They were made in a normal tone. Mr. Myers was, however, emotionally upset and he admitted at the formal hearing that the tone or volume of his voice during the September 23, 1988, conference was "a little bit above average." Line 9, Page 95 of the Transcript. Mr. Myers also admitted the following during the formal hearing: A I felt that I was being provoked, and I am a human person. And sometimes when some people want to press on something again and again, you get worked up, and I was worked up. Lines 19-22, Page 93 of the Transcript. Based upon Mr. Myers' Comments, Ms. Lester and Mr. Williams believed that Mr. Myers was bitter toward his work environment and that his bitterness was affecting his ability to be an effective employee. They also believed that Mr. Myers' comment about not knowing what he might do was a threat. Ms. Lester's and Mr. Williams' concern about Mr. Myers' attitude during September, 1988, and their interpretation of the Comments was reasonable. The nature of the Comments and the manner in which they were made support this conclusion. Additionally, Mr. Myers made the following statements in a letter dated September 23, 1988, which support Ms. Lester's and Mr. Williams' concern: As a condition to resolve this grievance I will accept a transfer over to Southern region under Charles Paintor. I will not accept any direction or supervision from Ray Williams after this transfer is made. In the interim I request that Ray Williams and I have no personal or oral contact. Material should pass through our secretaries or through you the Bureau [sic] Chief. Respondent's exhibit 4. Mr. Myers was no longer willing to even deal directly with his immediate supervisor in a strictly professional capacity. Mr. Myers' difficulty with Mr. Williams was also evidenced by the fact that he filed four grievances with the Department, all of which were either filed specifically against Mr. Williams or involved Mr. Williams' supervision of Mr. Myers. Three of the grievances were decided in favor of the Department and the fourth was withdrawn by Mr. Myers. Ms. Lester was concerned about the Comments and believed that steps needed to be taken to diffuse Mr. Myers' bitterness. Therefore, Ms. Lester spoke to Lynn Dickinson, the Division Director, about the Comments. Ms. Dickinson suggested that Ms. Lester speak to Rene Ash, a senior personnel manager in the Department's personnel office. Ms. Lester spoke with Ms. Ash a few days after the September 23, 1988, conference. Ms. Lester told Ms. Ash that Mr. Myers had made the Comments and expressed her concern that Mr. Myers' bitterness needed to be diffused. Ms. Ash agreed and suggested that Ms. Lester suggest to Mr. Myers that he consider using the Department's Employee Assistance Program (hereinafter referred to as the "EAP"). Ms. Ash is the coordinator of the Department's EAP. The purpose of the Department's EAP was described by Ms. Ash as follows: A The purpose of the program is to assist employees who may be experiencing work-related problems, which may be caused by emotional problems, financial, drug, alcoholism. . . . Lines 13-17, Page 122 of the Transcript. The EAP is not a disciplinary program. Participation in the EAP is strictly voluntary. All records concerning an employee's participation in the EAP are treated by the Department as confidential. Documentation concerning participation in the EAP is maintained in a confidential file, separate from an employee's official personnel file. The Department does not keep offers of the availability of the EAP to employees confidential. If participation in the EAP is suggested to an employee during a counseling session, the Department's policy is to document the EAP offer. On October 10, 1988, Ms. Lester met with Mr. Myers to discuss the Comments, to inform Mr. Myers of the availability of the EAP and to discuss the role of the Bureau's clerk typist and insurance specialists. Mr. Williams also attended the October 10, 1988, meeting. The October 10, 1988, meeting was considered a "counseling session" by Ms. Lester and the Department. It was not, however, a formal disciplinary meeting. During the October 10, 1988, meeting, Ms. Lester indicated her concern over the fact that Mr. Myers had made the Comments during the September 23, 1988, conference, repeated the Comments and offered to assist Mr. Myers to coordinate with the EAP in an effort to diffuse his bitterness. Ms. Lester offered her assistance to Mr. Myers to coordinate his participation in the EAP in order to assist Mr. Myers with his bitterness toward Mr. Williams and the apparent affect his bitterness was having on his work. Ms. Lester did not take the actions she took because she bore Mr. Myers any personal animosity. At the October 10, 1988, meeting, Mr. Myers did not deny making the Comments. Mr. Myers merely informed Ms. Lester that he was in control of his emotions and did not believe that his participation in the EAP was necessary. On October 11, 1988, Ms. Lester prepared a memorandum (hereinafter referred to as the "Memorandum") memorializing the October 10, 1988, meeting. The contents of the Memorandum are correct and trustworthy. Ms. Lester accurately reflected the events described in the Memorandum. A copy of the Memorandum was sent to the Department's personnel office before it was provided to Mr. Myers. Ms. Ash reviewed and approved the Memorandum. A copy of the Memorandum was provided to Mr. Myers. It is the Department's policy to document counseling sessions and to file a copy of such documentation in the employee's personnel file. It was reasonable for the Department to document reasonable actions it takes in the management of Department employees. Consistent with the Department's policy of documenting offers to employees concerning the availability of the EAP, a copy of the Memorandum was filed in Mr. Myers' personnel file. The Memorandum includes the following statement: I also discussed with you my concern over some remarks you made concerning your feelings during your recent Oral Step conference. Specifically you had stated that you were emotionally upset and sat in your office "boiling". Also that you were only human and did not know what might happen. I expressed my concern to you over what I perceive as a bitter attitude toward your work and work environment. I offered my assistance to you in coordinating with the Employee Assistance Program to perhaps diffuse your feelings. You advised this was not necessary. Marlin, should you change your mind, please let me know. Joint exhibit 1. Ms. Lester's actions in this matter were consistent with Department policies and procedures concerning participation in the EAP. The Department failed to adequately explicate why documentation concerning participation in the EAP by an employee should be confidential but a direct suggestion to an individual employee that he or she should consider participating in the EAP should be documented and not kept confidential. The weight of the evidence failed to prove that a direct suggestion to an individual employee that he or she should participate in the EAP should be treated differently than actual participation in the program. Prospective employers with whom Mr. Myers may seek employment may review Mr. Myers' personnel file, and may, therefore, read the Memorandum. The weight of the evidence failed to prove, however, that the Memorandum will have any adverse affect on Mr. Myers. No competent substantial evidence proved how prospective employers would view a suggestion that Mr. Myers participate in the EAP. Additionally, the weight of the evidence failed to prove that the information in the Memorandum is so inflammatory or untrue that prospective employees should not be informed of the actions described in the Memorandum. Article 12 of the AFSCME Master Contract provides the following: There shall be only one official personnel file for each employee, which shall be maintained in the central personnel office of the employing agency unless a different location is approved by the Secretary of the Department of Administration or his designee. Duplicate personnel files may be established and maintained within an agency. Such duplicate personnel files may contain part or all of the items filed in the official personnel file, but may not contain any items which are not filed in the official personnel file. Information in an employee's official personnel file shall only refer to matters concerning (affecting) the employee's job or related to his State employment. If any derogatory material is placed in an employee's official personnel file, a copy will be sent to the employee. The employee will have the right to answer any such material filed, and his answer will be attached to the file copy. An employee will have the right to review his own official personnel file and any duplicate personnel files at reasonable times under the supervision of the designated records custodian. Where the Agency Head or his designee, the State Labor Relations Director, the Public Employees Relations Commission, the courts, an arbitrator, or other statutory authority determines that a document has been placed in an employee's personnel file in error, or is otherwise invalid, such document will be placed in an envelope together with a letter of explanation. The envelope shall be sealed, stamped "NOT VALID" and returned to the employee's personnel file. Provided, however, that nothing in this provision shall grant any official, officer, or other person the authority to take any action not otherwise authorized.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered rejecting Mr. Myers' request that the October 11, 1988, memorandum be removed from his State of Florida personnel file and dismissing Mr. Myers' Petition with prejudice. DONE and ENTERED this 4th day of November, 1990, in Tallahassee, Florida. LARRY J. SARTIN 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 4th day of November, 1990. APPENDIX The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. Mr. Myers' Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 and 3. Hereby accepted. 3 4-5. 4 30, 35 and 38. 5 13, 32, 35 and 39. 6 14-18, 32, 35 and 39. The third sentence is not supported by the weight of the evidence. Although the last five sentences of the first paragraph, all of the second paragraph and all of the fourth paragraph of proposed finding of fact 6 are correct, they are not relevant to this proceeding. The last two paragraphs of proposed finding of fact 6 are not supported by the weight of the evidence. 7 See 42. 8-10 Although generally true, these proposed findings of fact are not relevant. 11-12 28. See 41. Conclusion of law. Not supported by the weight of the evidence. Not supported by the weight of the evidence or not relevant to this proceeding. The Department's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1 and 3. 2 10. 3 7-8. 13-18. The next to the last sentence of the first sentence of these proposed findings of fact is not supported by the weight of the evidence. The first paragraph is hereby accepted. The second paragraph is not relevant to this proceeding. Not supported by the weight of the evidence or not relevant to this proceeding. 7 22. Although generally true, this paragraph is argument. 20-21. The last two sentences are not supported by the weight of the evidence. 10 33. 11 40. 12 23-24. 13 35 and 38. Hereby accepted. Not relevant to this proceeding. 16 26-27. 17 29 and 38. But see 41. 18 36. 19-20 43. 21-22 See 42. 23 28. Copies Furnished To: Ben R. Patterson, Esquire Post Office Box 4289 Tallahassee, Florida 32315 Dennis Silverman, Esquire Division of Legal Services Department of Insurance 412 Larson Building Tallahassee, Florida 32399-0300 Tom Gallagher, Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300
The Issue The issue is whether the registration of Mervyn Katz under Section 517.12, Florida Statutes, should be revoked or other sanctions should be imposed against him.
Findings Of Fact Mervyn Katz was employed by Hampton Securities, Inc. (Hampton) on July 15, 1988. His application to the Department for registration as an associated person of Hampton was not granted until several months later, on October 24, 1988. Katz remained registered with the Department as an associated person of Hampton until January 1, 1990; he is currently registered with Chatfield Dean & Company, Inc. Before they became associated with Hampton, both Mervyn Katz and his wife, Wilma Katz, had arranged to have all money due to either of them for their activities with other securities dealers paid to a corporation known as "MK." Mervyn and Wilma Katz had intended to continue this practice when they became employed at Hampton, but were prevented from doing so by a new ruling which prevented brokerage firms from paying commissions to corporations. As a result, they arranged that money earned by Wilma Katz as commissions on transactions she handled would be paid directly to Mervyn Katz personally. This instruction was given in a memo to Hampton's accounting department dated July 28, 1988, in which Wilma Katz asked that all money due her for "broker production" be paid directly to her husband, Mervyn Katz. When he was hired on July 15, 1988, Mervyn Katz executed a "Agreement of Association" with Hampton. Under the agreement Mr. Katz was to receive compensation of five thousand dollars per month salary; sixty-two percent of commissions charged on trades of securities sold from Hampton's own inventory; fifty percent of the commissions charged on agency trades, mutual funds and options; and a one half of one percent commission on firm-wide gross commissions. He was also to receive normal expenses for himself and his wife for travel on Hampton's business, and a payment for twenty-five percent of the cost of health insurance for Wilma and Mervyn Katz (Exhibit 7). Shortly after joining the firm, it was agreed that the monthly salary would be reduced to $4,500. The record contains no evidence about the agreement Wilma Katz must have had with Hampton Securities defining her commission schedule. Hampton was a small firm, which in the trade is sometimes known as an "introducing firm" which deals with retail clients. Introducing firms contract with larger "clearing firms" to hold funds, clear client trades, match buying and selling transactions, and handle paperwork for the introducing firm. Hampton used Southwest Securities as its clearing firm. As a result, many of the documents which are relevant to the charges against Mr. Katz are documents generated by Southwest Securities. As a normal part of its regulatory activities, the Department examines the records of security firms such as Hampton. The Department's area financial manager, Tiffany Lynn, was assigned to examine Hampton Securities. During the course of an examination, the Department investigators gather data from the books and records of the securities firm, and also speak with the firm managers to determine the firm's operating protocols. The Department reviews the information and issues an examination report. During the course of the Hampton Securities' examination, the examiners spoke with the president of Hampton, Delores Easthom, and the firms compliance officer, Andrew Greitz. These persons provided Hampton's books and records, some of which were retrieved from a storage warehouse. The records prepared by Southwest Securities for Hampton list Mervyn Katz as a registered representative, his account number was 21H 2694. (The first portion of the number, "21H" designated the West Palm Beach office.) The representative number for Wilma Katz was 21H 1303. House accounts produced by Hampton's West Palm Beach office are carried on the records generated by Southwest Securities in the same manner as trades generated by registered representatives, and the account number for house accounts is 21H 0844. The end-of-month sales record for West Palm Beach house account 0844 for the period ending 9/23/88 show the initials "MK" by the following names: Riddy, R & C; Zukerberg, S & R; Allen, R & J; Currier, M & T; Duxbury, R & A; Khalaf, N; Kushner, M; Pona, S & P; Trogdon, W; and Ward, P & S. No evidence was introduced about who placed these initials on the end-of-month sales record or that it was the normal business practice of Hampton to place such initials on those records in order to indicate that the sales carried as "house" sales were actually sales attributable to a registered representative. The records of Hampton Securities showed that Mr. Katz received a check, #3405 dated September 15, 1988, in the amount of $9,929 which was labelled "8-88 performance bonus". Check number 3756 payable to Mr. Katz bears the notation that it is for "9/88 commissions," although Mr. Katz denies that the check was actually for commissions. Mervyn and Wilma Katz had served as brokers for Dr. Paul E. Ward before their association with Hampton. In response to a questionnaire sent by the Department, Dr. Ward stated that his broker at Hampton was Mervyn Katz, and that he first did business with Hampton on 5/17/88, but there was no evidence introduced at hearing, such as records of Southwest Securities, that Dr. Ward actually placed any trades with Hampton on 5/17/88. Dr. Ward did not testify at the final hearing. There is a "new account data sheet" for Dr. Paul E. Ward and Sonia Ward which was completed on July 22, 1988, which in the place for identification of the registered representative shows only the number for the house account, account 0844. On October 11, 1988, Dr. Paul E. Ward and his wife Sonia Ward bought 25,000 shares of Home Assurance, Inc. through Hampton at a cost of $4,516. For that trade the registered representative is also listed as a house account, rather than an individual. On August 29, 1988, Steve and Renee Zukerberg purchased 200,000 shares of Downing Street Partners, Ltd. through Hampton at a cost of $4,224.45. The order form for the trade and the confirmation show the registered representative as the house account, 21H 0844, and the box for the registered representative's initials contains only the word "house." The bottom of the order form contains, outside the boxed area in the form, the initials "MK." On August 25, 1988, William Trogdon purchased 500 shares of Probac International Corporation through Hampton at a cost of $3,274.45. Hampton's order form and its confirmation show the registered representative as "house," account number 21H 0844. The order form lists the initials "MK" in the box for the initials of the registered representative. On August 12, 1988, Nultam M. Khalaf purchased 100,000 shares of Home Assurance, Inc. through Hampton for $18,766.95. Hampton's order form and its confirmation form lists the registered representative as the house account number 21H 0844. The order form also bears the initials "MK" in the box for the initials of the registered representative. On August 25, 1988, Ralph G. Duxbury or his wife Alice Marie purchased 1,000 shares of Probac International Corporation through Hampton at a cost of $6,524.45. Hampton's order form and its confirmation form lists the registered representative as the house account, number 21H 0844. The order form lists the initials "MK" in the box for the initials of the registered representative. On August 25, 1988, Marilyn Currier or Tamara Currier purchased 100 shares of Probac International Corporation through Hampton at a cost of $674.45. Hampton's order form and its confirmation form lists the registered representative as the house account, number 21H 0844. The order form lists the initials "MK" in the box for the initials of the registered representative. On September 1, 1988, Nulta M. Khalaf sold 200,000 shares of Home Assurance, Inc. through Hampton for $25,983.05. Hampton's order form and its confirmation form lists the registered representative as the house account, number 21H 0844. The order form shows "house" in the box for the initials of the registered representative. On September 7, 1988, Nulta M. Khalaf purchased 200,000 shares of Home Assurance, Inc. at a cost of $26,016.95. Hampton's order form and its confirmation form lists the registered representative as the house account, number 21H 0844. The order lists "MK" in the box for the initials of the registered representative. On October 21, 1988, Nulta M. Khalaf purchased another 300,000 shares of Home Assurance, Inc. through Hampton at a cost of $10,516.95. Hampton's order form and its confirmation form list the registered representative as the house account, number 21H 0844. The order form lists "house MK" in the box for the initials of the registered representative. On October 20, 1988, Steve Zukerberg or Renee Zukerberg purchased 100,000 shares of Home Assurance, Inc. through Hampton at a net cost of $3,516.95. Hampton's order form and its confirmation form lists the registered representative as the house account, number 21H 0844. The order form lists "house MK" in the box for the initials of the registered representative. On October 20, 1988, Ralph G. Duxbury or Alice Marie Duxbury purchased 100,000 shares of Home Assurance, Inc. through Hampton at a total cost of $3,516.95. Hampton's order form and its confirmation form list the registered representative as the house account, number 21H 0844. The order form lists "house MK" in the box for the initials of the registered representative. On October 20, 1988, Dr. Paul E. Ward or Sonia Ward purchased 50,000 shares of Home Assurance, Inc. through Hampton at a net cost of $1,766.95. Hampton's order form and its confirmation form lists the registered representative as the house account, number 21H 0844. The order form lists "house MK" in the box for the initials of the registered representative. On October 21, 1988, Mervyn Katz or Wilma Katz purchased 10,000 shares of Vantage, Inc. through Hampton at a cost of $766.95. Hampton's order form and its confirmation form lists the registered representative as the house account, number 21H 0844. The order form lists "house MK" in the box for the initials of the registered representative. The confirmation lists the number of another registered representative, Barry Topal, account 21H 4309. Barry Topal was the registered representative listed on Hampton's "new account data sheet" dated June 29, 1988, for Wilma and Mervyn Katz. All of the trades listed above took place before Mervyn Katz received his registration as an associated person with Hampton from the State of Florida. The evidence is insufficient to determine who placed the initials "MK" on any of the order tickets. The Department did not offer into evidence writing samples of any employee of Hampton's accounting office in West Palm Beach, or of Mervyn or Wilma Katz. There was no evidence of who at the West Palm Beach office of Hampton would routinely place initials on order forms as part of its regular business practice. Mervyn Katz' testimony that he did not put his initials on the forms is persuasive. No evidence shows whether the initials on the order form indicate the person who performed the trade, the person to whom commissions would be paid, or what the significance of the initials is. After Mervyn Katz was registered as an associated person of Hampton, Hampton's clearing firm, Southwest Securities, assigned him registered representative number 2694. A document prepared by Southwest Securities dated February 21, 1989, show that Duxbury, Khalaf, Trogdon, Ward and Zukerberg were customers of Mervyn Katz. The Department did not produce any direct evidence at the hearing that any of the transactions for persons who were clearly customers of Mervyn Katz after October 24, 1988, had been placed by Katz before October 24, 1988, when he became registered with the State of Florida. No customer testified at the hearing about who place their trades. Hampton's commission calculation sheet for Mervyn Katz for the pay period which ended July 22, 1988, includes a debit of $589 for registration fees to the "central registration depository" for "Merv," which is a reference to Mervyn Katz. Hampton's commission calculation sheet for Mervyn Katz for the period ending August 19, 1988, shows the following commission calculations from trades performed under the "house" number 21H 0844: $9,393.00 as a 62% commission on $15,150 in brokerage fees on over-the-counter securities; $341.25 as a 65% commission on $525 in brokerage fees on the sale of Probac stock; $783.75 as a 5% bonus on total sales of $15,675. The commission calculation sheet also contains a previous balance of a negative $589 which corresponds to the previous deduction for registration fees for Mervyn Katz. The commission was $9,929, which was paid to Mr. Katz on September 15, 1988, by Hampton check 3405. There are two Hampton commission calculation sheets for Mervyn Katz for the pay period ending September 23, 1988. The first only contains a $50 debit for telephone expenses. The second sheet lists the following commissions: $2,651.12 as a 62% commission on brokerage fees of $4,276 on over-the-counter funds; $300 as a 50% commission on $600 in brokerage fees for "CTHI"; $33.90 as a "customer write off." The net amount of $2,917.22 was paid to Mervyn Katz on October 14, 1988, with Hampton check 3756. Additionally, a "performance bonus" of $4,500 was paid to him with Hampton check number 3757. Based upon the evidence, the performance bonus was actully salary. Hampton's commission calculation sheet for Mervyn Katz for the period ending October 21, 1988, shows the following transactions: $4,920.02 as a 62% commission on $7,935.51 in sale of over-the-counter securities; $15 as a debit for "Airborne" with a net amount due of $4,905.02. Mervyn Katz was also paid a "performance bonus" or salary of $4,500. The end-of-the-month sales records for Mervyn Katz for the period ending November 17, 1988, shows no activity for Mervyn Katz for that period. The commission calculation sheets for Mervyn Katz for November 30, 1988, shows the following: $1,085 as a 62% commission on over-the-counter security trades of $1,750; $30 as a 30% commission on $100 of agency trades; $9 as a debit for "Airborne." The net amount of $1,106 was paid to Mervyn Katz by Hampton check number 4265, and he also received a "performance bonus" or salary of $4,500. By contrast, the commission calculation sheets for Wilma Katz for the pay period ending July 22, 1988, list only a debit of $224 for central registration depository charges. The Southwest Securities end-of-the-month sales record for Wilma Katz where the same period shows no activity for Wilma Katz. Hampton's commission calculation sheets for Wilma Katz for the period ending August 19, 1988, list only the previous balance of negative $224, an additional debit of $10 for central registration depository registration fees, for a net due of a negative $234. The sheet shows no trading activity. The end-of-month sales record of Southwest Securities for this same period shows no trading activity under the account number for Wilma Katz. The end-of-month sales record of Southwest Securities for Wilma Katz for the periods ending July 22, 1988; August 19, 1988; September 23, 1988; October 21, 1988; and December 22, 1988; and the preliminary payroll register prepared by Southwest Securities for Hampton account executives for the period ending August 18, 1988, show no trading under the account number for Wilma Katz. Hampton's commission calculation sheets for Wilma Katz for the periods ending July 22, 1988; August 19, 1988; September 23, 1988; and October 21, 1988, show no trading activity under her account number. The absence of entries is consistent with Mervyn Katz' testimony that customers who called him were referred to Wilma, who placed trades, but that under the instructions given to the accounting department, commissions payable to her were actually credited to Mervyn Katz. Southwest Securities end-of-month sales record for Wilma Katz for the period ending November 17, 1988, shows a single transaction, the purchase by Mervyn and Wilma Katz of 70,000 shares of Home Assurance, Inc., for $1,050. Hampton's records for Mervyn Katz for the year 1988 which were filed with the Internal Revenue Service on form 1099 shows compensation for Mervyn Katz of $42,357.24. This amount is within $4.09 of the total of the credits and debits listed in the paragraphs above on the commission calculation sheets for 1988 for both Mervyn and Wilma Katz, assuming an additional payment of $5,000 was made as a "performance bonus" or salary to Mervyn Katz for August, which would be consistent with the "Agreement of Association" between Mervyn Katz and Hampton, even though it is not listed on the August commission calculation sheet.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered dismissing the Administrative Complaint against Mervyn Katz. RECOMMENDED this 26th day of July, 1991, at Tallahassee, Florida. WILLIAM R. DORSEY, JR. 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 26th day of July, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-6835 Rulings on the proposed findings made by the Department: Adopted in Findings 1, 3 and 5. Rejected as argument. Adopted in Finding 5. The implicit argument that the performance bonus was not salary is rejected, See, Finding 27. The commissions were paid due to the agreement Wilma Katz had with Hampton to pay her commissions to Mervyn Katz, See, Finding 2. See, Finding 8. Generally adopted in Findings 9-20. Adopted in Finding 24. Adopted in Finding 3, although the contention that Katz placed the trades is rejected. Adopted in Findings 2 and 31. Adopted in Finding 35. While Exhibit 10 does show that the trade for Khalaf was solicited, it does not show who solicited the trade, and there is insufficient reason to believe that Mervyn Katz was the one who solicited it. Rejected as unnecessary. The testimony of Mr. Klein does generally comport with that of Mr. Katz. It is true he could not observe Wilma and Mervyn Katz at all times. Generally rejected as argument, not proposed findings of fact. See, also, Finding 35. Rejected for the reasons stated in Finding 23. Rulings on the proposed findings made by the Respondent: Adopted in Finding 1. Adopted in Finding 2. Adopted in Finding 2. Adopted in Finding 3. Adopted in Finding 4. Adopted in Finding 24, except for the final sentence which is rejected as unnecessary. Adopted in Finding 5. Adopted in Finding 6. Adopted in Finding 8. Adopted in Finding 8. Adopted in Finding 8. Adopted in Finding 9. Adopted in Finding 10. Adopted in Finding 11. Adopted in Finding 12. Adopted in Finding 13. Adopted in Finding 14. Adopted in Finding 15. Adopted in Finding 16. Adopted in Finding 17. Adopted in Finding 18. Adopted in Finding 19. Adopted in Finding 20. Adopted in Finding 21. Adopted in Finding 23. Rejected as recitation of testimony not a finding of fact. Adopted in Finding 24. Adopted in Finding 25. Adopted in Finding 26. Adopted in Finding 27. Adopted in Finding 28. Rejected as unnecessary. Rejected as unnecessary, by that time Mr. Katz was registered. Adopted in Findings 5 and 31. Adopted in Finding 32. Adopted in Finding 33. Adopted in Finding 34. Adopted in Finding 35. COPIES FURNISHED: Deborah Guller, Esquire Office of Comptroller 111 Georgia Avenue - Suite 211 West Palm Beach, FL 33401-5293 Gary R. Rutledge, Esquire R. Michael Underwood, Esquire 215 South Monroe Street, Suite 400 First Florida Bank Bldg. Tallahassee, FL 32301 Honorable Gerald Lewis, Comptroller Department of Banking and Finance The Capitol, Plaza Level Tallahassee, FL 32399-0350 William G. Reeves, General Counsel Department of Banking and Finance The Capitol Plaza Level, Room 1302 Tallahassee, FL 32399-0350
The Issue The issue in the case is whether the allegations of the Administrative Complaint for Revocation of Certification of Registration are correct.
Findings Of Fact At all times material to this case, the Respondent operated a used car dealership at 1014 West Central Boulevard, Orlando, Florida, 32805. At all times material to this case, the Respondent's registered corporate agent was identified as Jennifer Hamilton, 3517 Domino Drive, Orlando, Florida, 32805. Florida law requires specified persons conducting business within the state to register with the Petitioner and to obtain a certificate of registration essentially for purposes of tax collection. As a dealer, the Respondent was required to register with the Petitioner and received Certificate of Registration No. 58-8011915294-5 from the Petitioner. As a dealer, the Respondent was required to collect sales and use taxes from purchasers and to submit monthly tax returns and collected taxes to the Petitioner. The Respondent filed proper tax returns, but failed to remit taxes received for the following months: September 2004, October 2004, December 2004, January 2005 through October 2005, December 2005, March 2007 through July 2007, and September 2007 through December 2007. The unremitted taxes totaled $21,194.32. Based on the Respondent's failure to remit the taxes, on July 22, 2008, the Petitioner assessed a penalty of $3,271.64 pursuant to Subsection 212.12(2), Florida Statutes. Based on the Respondent's failure to remit the taxes, the Petitioner assessed interest charges of $4,304.62 (as of July 22, 2008) pursuant to Subsection 212.12(3), Florida Statutes. The interest charges continue to accrue until they are paid. The Respondent failed to file tax returns for the months of January 2008 through July 2008. Pursuant to Subsection 212.12(5), Florida Statutes, the Petitioner assessed an estimated tax liability of $3,500.00 against the Respondent. Pursuant to Subsection 212.15(4), Florida Statutes, the Petitioner has recorded warrants in the public records of Orange County, Florida, for the unpaid taxes. Pursuant to Subsection 212.18(3)(d), Florida Statutes, the Petitioner issued a Notice of Conference of Revocation of Certificate of Registration dated July 30, 2008, and an informal conference was conducted on September 4, 2008. No one appeared at the conference on behalf of the Respondent. The Petitioner thereafter filed the Administrative Complaint underlying this proceeding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner enter a final order revoking the certificate of registration held by the Respondent. DONE AND ENTERED this 3rd day of March, 2009, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 2009.
The Issue The issue is whether the Amended Order of Penalty Assessment issued to Respondent, Dave's Tractor, LLC, on August 27, 2018, is correct.
Findings Of Fact Respondent is a limited liability company engaged in the construction business with offices at 434 Skinner Boulevard, Suite 105, Dunedin, Florida. It uses tractors and a grading process to prepare land prior to building construction for commercial clients. Its managing member is David Richardson. The Department is the state agency responsible for enforcing the requirement of the Workers' Compensation Law that employers secure the payment of workers' compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat. To enforce this requirement, the Department conducts random inspections of job sites and investigates complaints concerning potential violations of workers' compensation rules. On May 25, 2018, Christina Brigantty, a Department investigator, conducted a routine inspection of a job site at 3691 Tampa Road, Oldsmar, Florida. She observed two men working in a ditch, one man mixing cement, the other man driving a tractor. Investigator Brigantty observed four individuals at the job site, including the two working in the ditch: Dylan Richardson; Ismael Demillon; Javier Mastica; and Jorge Duran. She was informed by the individuals that they worked for Richardson Trailers, LLC. Investigator Brigantty called Mr. Ramsey, corporate officer for Respondent, who confirmed that Respondent hired Richardson Trailers, LLC, as a subcontractor. She later confirmed through discussions with Dylan Richardson and the Coverage and Compliance Automated System that Richardson Trailers, LLC, had no workers' compensation insurance on its employees. The parties have stipulated that at the time of the inspection, Respondent had not secured workers' compensation for any of the four individuals observed on the job site. Investigator Brigantty received approval from her supervisor to issue Respondent a Stop-Work Order and Request for Business Records for Penalty Calculation (BRR). These papers were served on Respondent on June 30, 2018. The BRR requested numerous types of business records for the period May 26, 2016, through May 25, 2018, including business tax receipts (occupational licenses), trade licenses or certifications, and competency cards held by Respondent or any of its principals; payroll documents (time sheets, time cards, attendance records, earnings records, check stubs, and payroll summaries for both individual employees and aggregate payrolls, and federal income tax documents reflecting the amount of remuneration paid or payable to each employee, including cash); and account documents including all business check journals and statements, which would include cleared checks for all open and/or closed business accounts established by the employer. Respondent failed to provide any business records in response to the BRR to determine Respondent's payroll for the audit review period. Therefore, the Department proceeded to compute a penalty based on imputed payroll in accordance with section 440.107(7)(e), Florida Statutes. This formula produced a penalty assessment of $165,654.10. On August 27, 2018, the Department served Respondent with an Amended Order of Penalty Assessment totaling $165,654.10. Pursuant to Florida Administrative Code Rule 69L-6.028(4), the Department also gave Respondent 20 business days in which to provide business records that would confirm Respondent's actual payroll during the two-year review period. This meant the records were due by September 25, 2018. A final hearing was scheduled initially for January 24, 2019. By agreement of the parties, on January 4, 2019, the case was rescheduled to March 15, 2019. One ground for granting a continuance was that the parties were "waiting on outstanding discovery that is being located and is necessary for an amicable resolution," presumably referring to items listed in the BRR. The final hearing was conducted on March 15, 2019, or almost seven months after the Amended Order of Penalty Assessment was issued. A week before the final hearing, Respondent began providing business records to the Department, including bank statements and checks on March 8, 2019, and a general ledger on March 13, 2019. Given the time constraints, they were not reviewed by the auditor until the day before the final hearing. The auditor conceded at hearing that these records would result in a "significantly lower" penalty, and they were sufficient to recalculate the penalty. Even so, at this late date, the Department refuses to recalculate the assessment. Respondent's principal, Mr. Richardson, testified that he has "no way to pay" the penalty, it will force him out of business, and he will be required to terminate his employees. Mr. Richardson also testified that he requested the records from the bank on "numerous occasions," but the bank refused to provide them directly to the Department or referred him to other branch offices. However, bank records are not the only way an employer can demonstrate the amount of payroll. This also can be established by business taxes or other records described in the BRR. Mr. Richardson denied knowing that business taxes are an option if bank records are unavailable.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order finding that Respondent violated the workers' compensation laws by failing to secure and maintain required workers' compensation insurance for its employees, and imposing a penalty of $165,654.10. DONE AND ENTERED this 3rd day of May, 2019, in Tallahassee, Leon County, Florida. S D. R. ALEXANDER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of May, 2019. COPIES FURNISHED: Steven R. Hart, Qualified Representative Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 (eServed) Kyle Christopher, Esquire Department of Financial Services Hartman Building 2012 Capital Circle Southeast Tallahassee, Florida 32399 (eServed) Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed) Adrian Shawn Middleton, Esquire Middleton & Middleton, P.A. 1469 Market Street Tallahassee, Florida 32312-1726 (eServed)
The Issue Petitioner's liability for tax, interest, and penalty, pursuant to Chapter 212, Florida Statutes, as set forth in Notice of Assessment, dated December 9, 1975. At the hearing, it was stipulated that the sale by Petitioner to one Norady as set forth in Paragraph B of the Petition was no longer in issue, and accordingly this count was withdrawn by Petitioner. The amount of sales by Petitioner to Triumpho Electric as shown in Paragraph C of the Petition was stipulated to be in the amount of $243,724.34 instead of $248,255.26. In view of the above Stipulations, the Hearing Officer requested that a revised assessment be prepared and submitted after the hearing to reflect the amount now sought by Respondent and to indicate thereon the taxes, penalty aid interest attributable to sales to Ivan Alexander, Triumpho Electric, Grand Bahama Development Company, and Agregados de Cal, purchasers from Petitioner. The revised schedule in the total amount of $12,358.37 was submitted on April 30, 1976, received by the Hearing Officer on May 4, 1976, and is marked as Respondent's Exhibit 1. The parties stipulated at the hearing that the method of computation was correct and Petitioner has filed no objections to the counts of the revised assessment. Accordingly, it is deemed to reflect the amount due and owing if imposition of tax is valid.
Findings Of Fact During the period November 1, 1973 to February 28, 1975, Petitioner made sales of merchandise to the following: Ivan Alexander, Triumpho Electric, Grand Bahama Development Company and Agregados de Cal. the circumstances of each of these transactions are set forth below. Ivan Alexander Construction Co., Ltd. a. Petitioner made sales of electrical equipment in amount of $1,646.50 to Ivan Alexander Construction Co., Ltd. Freeport, Grand Bahamas1 on September 24, 1974. Petitioner delivered e merchandise to Lindsley-RBC, Miami, Florida. Lindsley-RBC was not licensed exporter, but acted in an agency capacity for the purchaser. Subsequent to Petitioner's delivery, Lindsley-RBC consolidated the merchandise with other purchases made by Ivan Alexander, for shipping purposes. After consolidating the merchandise, Lindsley-RBC delivered the merchandise to the shipping vessel, the Tropic Day. It was received by the purchaser in Freeport on October 11, 1974. (Stipulation, Petitioner's Composite Exhibit 7). Triumpho Electric, Inc. Petitioner made sales of electrical construction equipment n the amount of $237,634.57 to Triumpho Electric, Inc., Christiansted, St. Croix, Virgin Islands, during the period under consideration. The procedures used in purchasing, delivering and shipping the merchandise are s follows: Ivan M. Bauknight, an employee of Triumpho, placed the order or the merchandise "on behalf of Triumpho" personally at Petitioner's - place of business, by telephonic communication with a salesman employed by Petitioner, or by contacting its sales representative who took the order in person from Bauknight. In August of 1972, Triumpho had formed Caribbean Supply Company, Inc., a wholly-owned subsidiary, for purposes of purchasing merchandise, consolidating said merchandise in its own warehouse, and shipping. To further effectuate their purposes, warehouse pace was secured at Miami International Airport. Although Bauknight as in charge of Caribbean Supply Company, Inc., he was not an employee of that company. In fact, Caribbean Supply Company, Inc., had no employees during the period in question, excepting casual labor at intervals who were supervised by Mr. Bauknight. Although it was not a "licensed exporter", Caribbean possessed an export sales tax number issued by Respondent. Subsequent to the placing of orders in the above-described manner, Petitioner delivered the merchandise to Caribbean Supply Company, Inc.'s warehouse located at Miami International Airport where the merchandise was consolidated with other purchases. After delivery, and after packaging and consolidating the merchandise in Caribbean Supply Company, Inc.'s warehouse, Bauknight contacted a shipping company and requested that a "piggyback" trailer be provided on which to load the merchandise. The shipping company then placed the trailer upon Caribbean Supply Company, Inc.`s loading lock where Bauknight and laborers would load the merchandise onto the trailer, seal it, and then inform the shipping company which would take it to Dodge Island Seaport, Miami, Florida, and load it upon a ship. During the assessment period in question, all trailers were loaded at Caribbean Supply Company, Inc. Another method of transportation was shipment by air from Miami International Airport. In such cases, the merchandise was delivered by Petitioners to Caribbean's warehouse where it was packaged and taken to commercial airlines for shipment. (Testimony of Bauknight, Petitioner's Composite Exhibits 1-4). Grand Bahama Development Company, Ltd. Petitioner made sales of merchandise in the amount of $21,407.55 to Grand Bahama Development Company, Ltd., during the period in question. Procedures used in purchasing, delivering and shipping were as follow: America Devco, Inc., Miami, Florida, a wholly-owned company of Grand Bahama Development Company, Ltd., was created by the latter to represent its interests in the United States. At all times pertinent to the instant transactions, America Devco, Inc., was not a licensed exporter but was acting as Grand Bahama Development Company, Ltd's agent. It did, however, possess an export sales tax number issued by Respondent. America Devco, Inc., contacted Petitioner's sales representative by telephone and placed orders subsequently issuing a confirming purchase order to Petitioner. In about 60 percent of the transactions, Petitioner delivered the merchandise to America Devco, Inc.'s warehouse. In about 40 percent of the transactions, America Devco, Inc., went to Petitioner's business site, picked up the merchandise and took it to its warehouse. By both methods, the merchandise usually remained at America Devco, Doc's warehouse from one to three days in order to create shipping documents or to take advantage of the hundred pounds air shipping minimum. America Devco, Inc., utilized its trucks to deliver the merchandise to the airline cargo loading platform. All supplies were kept in the original containers supplied by Petitioner and America Devco, Inc., only affixed shipping label. Shipping documents were prepared by the shipping company. In one transaction, Petitioner delivered purchased merchandise to Alco Shipping Company at the dock in Port Laudania, Florida. (Testimony of Gomez, Petitioner's Composite Exhibit 5). Agregados de Cal. Petitioner made sales of merchandise in the amount of 905.90 to Agregados de Cal during the period in question. The merchandise was delivered by Petitioner to Mr. Robert de la-Puirtilla, in employee or representative of Agregados de Cal, at Petitioner's lace of business, at which time he took possession of the merchandise nd delivered it to the airport. (Stipulation, Petitioner's Composite Exhibit 6).
Recommendation That the tax assessment of $12,358.37 against Petitioner under the provisions of Section 212.05, F.S., including interest and penalties be imposed by the Department of Revenue and enforcement thereof be effected in accordance with the provisions of law. DONE and ENTERED this 12th day of July, 1976, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Patricia S. Turner Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 George A. Buchmann Penthouse B2 7000 S.W. 62 Avenue South Miami, Florida 33143 Attorney for Petitioner
The Issue The issue in this case is whether Respondent, the Department of Revenue, should grant Petitioner's application for a consumer's certificate of exemption from sales and use tax.
Findings Of Fact Petitioner is a nonprofit organization incorporated under the laws of the State of Florida on or about August 27, 1997. Petitioner applied to Respondent for a consumer's certificate of exemption from sales and use tax. While the application indicates that it is based on exemption status as an "enterprise zone," Petitioner clarified at final hearing that it actually was basing its application on exemption status as a "charitable institution." ("Enterprise zone" is not an exemption category under the applicable statutes. See Conclusions of Law, infra.) The IRS has determined that Petitioner is exempt from federal income tax under IRC Section 501(a) as an organization described in IRC Section 501(c)(3). A letter dated February 2, 1999, stated that Petitioner: was formed in 1997 to plan and implement redevelopment efforts in the Greater Newtown Community which lead to overall improvement in the quality of life of its residents. In the short time since our inception, we have responded to community needs by implementing a broad range of programs that will have a positive impact on our community. But from the evidence presented (which included no testimony from either party), it is difficult to ascertain factual detail about Petitioner, its activities, or its finances. In addition to grant application and fund-raising activities, it appears that Petitioner has been involved in informational and participation-recruitment meetings and information-gathering surveys for planning purposes (called the Business Retention and Expansion Survey). Petitioner also appears to have been involved in a Storefront Renovation Program and several community celebrations. Petitioner has plans for other economic and community redevelopment activities. But it cannot be ascertained from the evidence which of the other economic development activities have taken place and which are still in grant application or planning stages. For example, documentation regarding Petitioner's involvement in one activity refers to the activity as the "proposed WAGES Employment Challenge." Petitioner obtained $128,000 of funding from the City of Sarasota for seed money for its economic redevelopment and other activities. Petitioner budgeted to spend the $128,000 in 1998. The entire budget consists of salaries, fringe benefits, and overhead expenses. According to a "Profit and Loss" statement for January through October 1998, Petitioner spent $30,581.49 during that time period. All of those expenditures were in the category of payroll and overhead expenses. One activity referenced in Petitioner's documentation is Petitioner's "partnering" with financial institutions and mortgage brokers to process mortgage loans for affordable housing. In that case, the expenditures would be by the other institutions, not by Petitioner. There is no information as to any other expenditures made by Petitioner.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order denying Petitioner's application for a consumer's certificate of exemption from sales and use tax. DONE AND ENTERED this 5th day of November, 1999, in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSTON 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 5th day of November, 1999. COPIES FURNISHED: Bill Nickell, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Cynthia E. Porter, Executive Director Greater Newtown Community Redevelopment Corporation 1751 Dr. Martin Luther King, Jr., Way Sarasota, Florida 34234 Joseph C. Mellichamp, III, Esquire Office of Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact Thomas Carter, Jr., holds a real estate license in Florida, No. 0469236, and held this license at the times relevant to the charges in this case. His last license was as a broker at Palatka Realty, Inc., in Palatka, Florida. From sometime in October or November 1988, until January 31, 1989, Carter was affiliated with Palatka Realty, Inc. The financial arrangements between Carter and Palatka Realty are unclear. Walter C. Messer, Jr., president of and qualifying broker for Palatka Realty, testified that Carter was to pay one-half of the office overhead and keep all of the commissions he generated or pay no overhead and get one-half of the commissions he generated. However, Messer told a DPR investigator that Carter was to pay Palatka Realty $500 for rent, utilities and advertising, or $750 per month for total office expenses, and that the commissions were to be split in half between Palatka Realty and Carter. Carter testified that there was to be no sharing of commissions and that Carter and Messer were to share expenses with Messer presenting copies of office bills to Carter for payment. Carter said he was to pay $350 per month for office expenses. However, Carter told the DPR investigator that he was to pay $350 per month plus half of additional advertising expenses and that the commissions were to be split in half. It is clear that Messer and Carter had no written agreement and no clearly delineated verbal agreement regarding spliting of expenses and commissions. Both now remember the "terms" of their agreement in the manner which best benefits their respective positions. Neither's version is reliable or credible. Additionally, Carter never paid Messer anything for office expenses. Carter claims that he never paid because Messer demanded more money than they had agreed on and never showed him the bills to support the demands. Messer claims Carter never saw the bills because Carter failed to show up every time they had arranged to look at the bills. On January 26, 1989, Carter negotiated a sales contract between buyers Platt and seller Phillips. Carter received a $1000 earnest money deposit check from the Platts payable to Palatka Realty to secure the sales contract. The contract was signed by Carter and stated that the realtor was Palatka Realty, Inc., and that Palatka Realty represented the seller. On January 31, 1989, Carter submitted a resignation from Palatka Realty, Inc. Prior to the closing of the Platt-Phillips transaction, Messer gave Carter a $1000 Palatka Realty check, which represented the deposit, for presentation to the closing agent. At the time of the Platt-Phillips closing, Messer believed the commission should be remitted to Palatka Realty for distribution to Palatka Realty and Carter. On March 23, 1989, the Platt-Phillips transaction was closed by Sharri B. Hunter, closing agent for Lawyers Title Insurance Corporation. Ms. Hunter reviewed the settlement statement and determined that the sales commission should be paid to Palatka Realty. Carter, who attended the closing, instructed Ms. Hunter to make the sales commission check payable to him personally. Ms. Hunter told Carter that she would need a letter from Palatka Realty, Inc., authorizing disbursement of the commission to Carter personally. When Ms. Hunter requested an authorization letter, Carter told her he was "Palatka Realty." Ms. Hunter typed a statement dated March 23, 1989, which stated: "I, Thomas C. Carter, Jr., Vice president of Palatka Realty, Inc., authorize Lawyers Title Insurance Corporation to disburse the real estate commission check to Thomas C. Carter, Jr." Carter read and signed the statement as vice president of Palatka Realty, Inc. Ms. Hunter signed and notarized the statement. Based on this sworn statement, Ms. Hunter disbursed the entire sales commission of $4490 to Carter personally. On March 23, 1989, Carter was not employed by or affiliated in any way with Palatka Realty, Inc., having resigned on January 31, 1989. Subsequent to the closing of the Platt-Phillips transaction, Messer discovered the sales commission had been paid to Carter personally. On March 29 or 30, 1989, Messer sent a letter to Carter by certified United States Mail demanding the return of the Platt-Phillips commission and the document file relating to the transaction. On April 11, 1989, Messer sent a letter to F. Linton Stone of Lawyers Title Insurance Corporation advising that the Platt-Phillips commission was wrongfully paid to Carter and demanding that one-half of the commission be paid to Palatka Realty, Inc. Lawyers Title Insurance Corporation ultimately admitted liability for the commission and remitted one-half of the commission to Palatka Realty, Inc. Carter never paid one-half of the commission to Palatka Realty or Lawyers Title Insurance Corporation, and he never returned the document file to Palatka Realty.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Professional Regulation, Division of Real Estate, enter a Final Order and therein: Find Thomas Carter, Jr., guilty of violating Sections 475.25(1)(b) and (d), Florida Statutes. Impose an administrative fine of $500 per count for a total administrative fine of $1000. Suspend Carter's real estate license for a period not to exceed one (1) year. RECOMMENDED this 28th day of August, 1990, in Tallahassee, Florida. DIANE K. KIESLING Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of August, 1990. APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-5415 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, Department of Professional Regulation, Division of Real Estate Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 2-4(1-3); 5-19(5-19); 21(3); 22(3); 23(4); 24(3); and 30-32(20-22). Proposed findings of fact 1, 29, and 33 are unnecessary or irrelevant. Proposed findings of fact 25-28 are subordinate to the facts actually found in this Recommended Order. COPIES FURNISHED: Janine B. Myrick Senior Attorney Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 James A. Bazley Attorney at Law 418 Kingsley Avenue Post Office Box 815 Orange Park, Florida 32067-0815 Darlene F. Keller, Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, FL 32802 Kenneth E. Easley General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792
