Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Petitioner is a Florida corporation headquartered in Boca Raton, Florida. William Kirschner is Petitioner's owner and chairman of the board. Stacey Interlandi is its President and principal broker. Petitioner is in the mortgage lending and brokerage business. All of the mortgage loans it makes are sold to investors. Petitioner held an active mortgage brokerage business registration (No. HB 592567137 00) issued pursuant to former Section 494.039, Florida Statutes, which was effective from September 1, 1990, until its expiration on August 31, 1992. 2/ It currently holds a mortgage brokerage business license (No. MBB 592567137 000) issued pursuant to Section 494.0031, Florida Statutes. The effective date of this license was September 1, 1992. The license expires on August 31, 1994. From October 1, 1989, through September 30, 1991, Petitioner acted as a seller or assignor of mortgage loans and/or a servicer of mortgage loans. Since October 1, 1991, Petitioner has made mortgage loans by advancing funds to mortgage loan applicants. With respect to each of these loans, however, the commitment to advance funds was made prior to October 1, 1991. Since October 1, 1991, Petitioner has sold or assigned mortgage loans to non-institutional investors, but for no monetary gain. Since October 1, 1991, Petitioner has serviced mortgage loans pursuant to agreements into which it entered prior to October 1, 1991. At no time has Petitioner been licensed as a mortgage lender pursuant to Chapter 494, Part III, Florida Statutes. On or about July 31, 1991, the Department sent the following written advisement concerning the revisions made by the 1991 Legislature to Chapter 494, Florida Statutes, to all registered mortgage brokerage businesses, including Petitioner: The 1991 Legislature revised Chapter 494, Florida Statutes, effective October 1, 1991. A copy of the new law is enclosed. Some of the changes which affect mortgage brokerage businesses are: A mortgage brokerage business may not make (fund) loans or service loans. Only mortgage lenders and correspondent mortgage lenders may make (fund) loans. Only mortgage lenders may service loans. A mortgage brokerage business may ONLY act as a mortgage broker. "Act as a mortgage broker" is defined as: "... for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, accepting or offering to accept an application for a mortgage loan, soliciting or offering to solicit a mortgage loan on behalf of a borrower, or negotiating or offering to negotiate the terms or conditions of a mortgage loan on behalf of a lender." There are no net worth requirements for mortgage brokerage businesses. A principal broker designation form must be completed and maintained in the principal place of business and a branch broker designation form must be completed and maintained at each branch. The required forms will be sent to your office prior to October 1, 1991. To act as a mortgage broker, a licensed individual must be an associate of a licensed brokerage business and is prohibited from being an associate of more than one mortgage brokerage business. "Associate" is defined as: ". . . a person employed by or acting as an independent contractor for a mortgage brokerage business . . ." Under the new law, no fee or notification to the Department is required when a mortgage broker becomes an associate of your business. However, the license of each mortgage broker must be prominently displayed in the business office where the associate acts as a mortgage broker. Note: The Department will discontinue processing change of status requests under the current law effective August 1, 1991. Mortgage brokerage businesses in good standing which hold an active registration are eligible to apply for licensure as a mortgage lender pursuant to the saving clause. The applicant must have: For at least 12 months during the period of October 1, 1989, through September 30, 1991, engaged in the business of either acting as a seller or assignor of mortgage loans or as a servicer of mortgage loans, or both; Documented a minimum net worth of $25,000 in audited financial statements; Applied for licensure pursuant to the saving clause before January 1, 1992 and paid an application fee of $100. Should you meet the above requirements and wish to apply for licensure as a mortgage lender pursuant to the saving clause or if you wish to apply for licensure as a mortgage lender pursuant to Section 494.0061, please contact the Department for the appropriate application. These applications will be available in early September 1991. THESE CHANGES ARE EFFECTIVE OCTOBER 1, 1991. PLEASE REVIEW THE ENCLOSED COPY OF THE LAW CAREFULLY FOR OTHER CHANGES WHICH MAY AFFECT YOUR MORTGAGE BROKERAGE BUSINESS. As promised, application forms for licensure as a mortgage lender were available the first week of September, 1991. Petitioner requested such an application form on September 18, 1991. The requested form was mailed to Petitioner the following day. On December 31, 1991, Petitioner submitted a completed application for licensure as a mortgage lender pursuant to the "saving clause," Section 494.0065, Florida Statutes. The application was accompanied by an application fee of $100.00 and an audited financial statement reflecting that Petitioner had a net worth in excess of $25,000.00. At the time of the submission of its application, Petitioner had an unblemished disciplinary record.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order granting Petitioner's application for licensure as a mortgage lender pursuant to the "Saving Clause." DONE AND ENTERED in Tallahassee, Leon County, Florida, this 18th day of November, 1992. STUART M. LERNER 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 18th day of November, 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-4313 The following are the Hearing Officer's specific rulings on the findings of facts proposed by the Department: 1-7. Accepted and incorporated in substance, although not necessarily repeated verbatim, in this Recommended Order. 8. Rejected because it is more in the nature of a statement of the law, albeit an accurate one, than a finding of fact. 9-12. Accepted and incorporated in substance. 13. Rejected because it is more in the nature of a statement of the law, albeit an accurate one, than a finding of fact. 14-15. Accepted and incorporated in substance. 16. Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer. 17-21. Accepted and incorporated in substance. 22. Rejected because it is not supported by persuasive competent substantial evidence. 24 6/-39. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer. 40. Rejected because, even if true, it would have no bearing on the outcome of the instant case.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, as well as the parties' stipulations of fact, the following relevant facts are found: The petitioner Jose A. (Tony) Torres was employed by the respondent Office of the Comptroller, Department of Banking and Finance, Division of Finance from approximately June of 1963 until February of 1986. For about 13 years, he held the position of Area Financial Manager in the Tampa office and was responsible for and in charge of regulating mortgage brokerage businesses and licensees in ten counties along the west coast of Florida. By letter dated February 11, 1986, petitioner was notified of the respondent's intent to dismiss him from employment on the grounds that, in spite of prior warnings, he had obtained loans from licensed individuals and institutions he was responsible for regulating. Petitioner was given the opportunity to respond to this notice, did so and the respondent thereafter affirmed its intent to dismiss him. Petitioner did not contest or appeal his dismissal. On March 6, 1986, petitioner submitted to the respondent his application for registration as a mortgage broker. By Order dated and filed on May 23, 1986, respondent denied his application, concluding that petitioner does not have the requisite experience, background, honesty, truthfulness or integrity to act as a mortgage broker in Florida. The factual bases cited for this conclusion are that petitioner was arrested in September of 1979 for gambling; that he declared bankruptcy in 1980; and that he obtained loans in 1981, 1983, and 1984 from individuals and/or financial institutions which were licensed by the Division of Finance, and also that said loans have never been repaid. The Centro Asturiano Club is a private social club where gambling (poker) regularly occurs. On Friday, August 31, 1979, at approximately 3:00 p.m., petitioner and others were arrested for gambling at the Centro Asturiano. At the time of the arrest, the police seized certain items including a Smith and Wesson .38 caliber firearm and $670. A motion to suppress evidence and a motion to dismiss were ultimately granted and the petitioner was not convicted. The gambling arrest occurred on a regular business day in the Office of the Comptroller. Petitioner states that he was on annual leave at the time. An employee in his office observed petitioner's secretary make changes in the petitioner's leave slip forms on the afternoon of August 31, 1979. It was not established that such alterations were not proper. On May 30, 1980, petitioner filed a petition pursuant to Title 11, United States Code. An order for relief was entered under Chapter 7, with a Discharge of Debtor ordered on October 8, 1980, by the United States Bankruptcy Court for the Middle District of Florida (Bankruptcy No. 80-00750). At least six entities listed as creditors in petitioner's bankruptcy proceeding were licensees of the Department of Banking and Finance. At the time, petitioner was charged with examining and regulating those six entities in his capacity as the Area Financial Manager for the Division of Finance. In 1979 and/or 1980, petitioner's superiors in the Department admonished him to refrain from obtaining loans from the industry he regulated, and that such activity constituted a violation of Departmental policy and the Code of Ethics for Public Officers and Employees, Chapter 112, Florida Statutes. On March 1, 1983, petitioner obtained a signature loan of approximately $2,200 from the A. L. Machado, M.D. Pension Trust. Colonial Mortgage, Inc., which was then licensed with the Division of Finance as a mortgage broker, serviced the loan. Darrell T. DiBona, the director of Colonial, became licensed as an additional broker on June 19, 1983. The payment record on this loan, discovered during an examination by the Division of Finance in May of 1985, reflected that four interest payments had been made, but that the principal balance was still outstanding. Darrell T. DiBona made a check payable for one of the petitioner's interest payments owed to the Machado pension fund. The petitioner's version of the facts surrounding the Machado loan is not credible. He states that he had known Darrell T. DiBona for many years. DiBona handled petitioner's insurance needs, and petitioner, wishing to increase his coverage, had had a medical examination which indicated either an irregular heartbeat or fatty tissues in his blood. According to petitioner, he was having lunch with DiBona one day, and DiBona needed to stop by Dr. Machado's office on business. DiBona apparently handled pension funds for various physicians. While at Dr. Machado's office, the subject of petitioner's medical condition arose. Petitioner states that Dr. Machado offered to check his irregular heartbeat and gave him an EKG. During that examination petitioner asserts that he told Dr. Machado that he was having financial difficulties, and Dr. Machado offered to loan him $2,200. Petitioner insists that he made three or four payments on a note, and then paid it off in full in May or July of 1984. This latter payment, according to petitioner, was made in cash and handed to DiBona. Petitioner never received a receipt for the "$2,200 in cash plus the interest." Petitioner states that he subsequently asked for a receipt or the note on several occasions, but was told that it could not be found. The note and payment record were found by the respondent during an examination of Colonial Mortgage in May of 1985. As noted above, the payment record revealed that only three or four interest payments had been made. Dr. Machado has no recollection of examining petitioner in his office or otherwise discussing a loan with him. Had petitioner been examined by Dr. Machado, a ledger card or chart would have been prepared. No ledger card or chart for the petitioner could be discovered in Dr. Machado's office. Dr. Machado did not become aware that money from his pension fund was lent to petitioner until after DiBona's death. His office manager was then asked to write a letter stating that the petitioner's loan had been paid in full. Such a letter was written and petitioner picked up the letter from Dr. Machado's office. Although he had no knowledge concerning the loan, Dr. Machado agreed to sign the letter because he thought that petitioner could be one of DiBona's innocent victims. He, as well as other physicians, lost pension fund monies from accounts handled by Darrell DiBona. Beneficial Mortgage Company was licensed with the Division of Finance in November of 1984 as a mortgage broker. During that time, petitioner contacted the regional supervisor of Beneficial, who does not himself regularly take loan applications, regarding a home mortgage loan for his mother. On November 20, 1984, a $30,590 mortgage loan from Beneficial Mortgage was obtained, and petitioner co-signed the loan documents. The loan proceeds were utilized to pay off two prior mortgages, one of which was Colonial Mortgage. Petitioner's mother is elderly, speaks little English and petitioner often handled her financial affairs. According to the regional supervisor, petitioner was asked to co-sign the note in order to avoid any questions which might arise in the future regarding Mrs. Torres' competency to enter into such a transaction. As a co-signer, however, petitioner was guaranteeing the account. While the mortgage loan was for an amount less than the house was appraised and contained no preferential terms or rates, Beneficial required no standard credit report, income analysis or other financial documentation concerning the petitioner. Mrs. Torres' income and debt ratio were barely sufficient to make the monthly payments on the loan. Petitioner has two brothers and a sister who also live in Tampa. On December 6, 1984, petitioner obtained a $2,000 signature loan from N. D. Properties, Inc. N. D. Properties was solely owned at that time by Ben Langworthy, Jr., who also owned Diversified Mortgage Associates, Inc. At that time, both Diversified and Langworthy were licensed with the Department of Banking and Finance, Division of Finance. The petitioner made at least two loan payments directly to Ben Langworthy, who he knew was licensed by the Department. The $2,000 check given to petitioner was signed by Ben Langworthy. According to petitioner, Mr. Langworthy told him that N. D. Properties, Inc. was owned by two private investors. Petitioner's loan payment record with N. D. Properties shows that the loan has not been timely repaid.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the application of Jose A. (Tony) Torres for registration as a mortgage broker in Florida be DENIED. Respectfully submitted and entered this 3rd day of June, 1987, 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 3rd day of June, 1987. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 86-2473 The proposed findings of fact submitted by the petitioner and the respondent have been fully considered and have been accepted and/or incorporated in this Recommended Order, except as noted below. Petitioner p.1, last paragraph: Rejected; legal conclusion as opposed to factual finding p.2, 2nd paragraph, 2nd sentence: Rejected, irrelevant and immaterial p.2, 3rd paragraph: Rejected; immaterial p.2, 5th paragraph: Rejected; argumentative p.3, 1st two paragraphs: Rejected; argumentative p.3, paragraphs 7, 8 & 9: Accepted, but not included as irrelevant to ultimate disposition p.4, last four paragraphs: Rejected; contrary to the greater weight of the evidence p.5, paragraphs 3 - 5: Rejected; contrary to the greater weight of the evidence p.7, paragraphs 1 and 3: Rejected; not proper factual findings p.8, paragraphs 1 through 7: Rejected; argumentative and improper factual findings Respondent #6: Rejected; not supported by competent, substantial evidence #20 & 21: Rejected; not supported by competent, substantial evidence COPIES FURNISHED: Dick Greco, Esquire Molloy, James & Greco, P.A. 501 East Kennedy Boulevard Suite 910 Tampa, Florida 33602 Sharon L. Barnett Assistant General Counsel Office of the Comptroller 1313 Tampa Street, Suite 713 Tampa, Florida 33602-3394 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0305 Charles Stutts General Counsel Department of Banking and Finance The Capitol - Plaza Level Tallahassee, Florida 32399-0305 =================================================================
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: Petitioner's application to take the examination to be licensed as a mortgage broker be DENIED. DONE and ORDERED this 28th day of January, 1988, in Tallahassee, Florida. JAMES E. BRADWELL 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 29th day January, 1988. COPIES FURNISHED: Scott William Katz 361 Midpines Road Palm Springs, Florida 33461 Lawrence S. Krieger Assistant General Counsel Department of Banking and Finance Office of Comptroller 111 Georgia Avenue West Palm Beach, Florida 33401-5293 Honorable Gerald Lewis, Comptroller, State of Florida The Capital Tallahassee, Florida 32399-0350 Charles L. Sutts General Counsel Plaza Level The Capitol Tallahassee, Florida 32399-0350
The Issue The issue is whether PMF, Inc.’s (PMF), mortgage broker license should be revoked and an administrative fine imposed on PMF’s principal loan originator, Scott Cugno, for the reasons stated in an Administrative Complaint (Complaint) issued by the Office of Financial Regulation (OFR) on January 18, 2017.
Findings Of Fact Background OFR is the state agency charged with administering and enforcing the provisions of chapter 494, which regulates loan originators, mortgage lenders, and mortgage brokers. Rules implementing the statutory law are found in chapter 69V-40. To ensure compliance with the law, OFR conducts periodic audits of the records and activities of all licensees. In early 2012, Mr. Cugno assumed ownership of PMF. From January 25, 2012, until January 1, 2015, PMF was a licensed mortgage lender with its principal office located at 142 West Platt Street, Suite 118, Tampa. Besides the principal office, PMF operated five branch offices. As a mortgage lender, PMF could offer credit to an applicant, make the mortgage loan, and close the loan in its own name. § 494.001(23), Fla. Stat. To settle an earlier disciplinary action, PMF surrendered its lender license in December 2014. Pet’r Ex. 5. On December 30, 2014, PMF was issued mortgage broker license number MBR 1689, which still remains active. A mortgage broker conducts loan originator activities through one or more licensed loan originators employed by the broker. § 494.001(22), Fla. Stat. A broker shops an applicant’s credit and loan application to different lenders, but unlike a mortgage lender, it cannot close loans in its own name. § 494.001(17), Fla. Stat. Mr. Cugno is the sole owner of PMF and its principal loan originator. By definition, he is the control person of PMF. § 494.001(6)(a), (b), and (f), Fla. Stat. A control person is subject to administrative penalties if the broker or lender engages in prohibited acts set forth in section 494.00255(2). An audit of PMF’s business records and activities was conducted by OFR for the period July 1, 2014, through April 30, 2015. After the audit was concluded, a formal Report of Examination (Report) was forwarded to Mr. Cugno on February 25, 2016. Pet’r Ex. 1. The Report stated that it contained a series of findings “that may be violations of Chapter 494, Florida Statutes.” Therefore, it recommended that management thoroughly review the matter and promptly respond in writing stating any exceptions or disagreements it had, any action taken to correct the possible violations, and any mitigating evidence. A written response was filed by Mr. Edgar, PMF’s independent consultant, who interacted with the auditors on behalf of PMF during the examination and responded to document requests. Pet’r Ex. 2. After receiving Mr. Edgar’s response, the Complaint was issued by OFR on January 18, 2017. Although the Report contains 13 findings that may be violations of chapter 494, the Complaint relies on only eight. Based upon the scope and nature of the violations, the charging document seeks to revoke PMF’s mortgage broker license and to impose a $53,300.00 administrative fine on Mr. Cugno, as the control person of the lender and broker. No action is proposed regarding Mr. Cugno’s loan originator license. The thrust of the Report is the failure of Mr. Cugno to have complete control over the operations of the business. In determining the merits of the charges, the undersigned has considered: a) Mr. Cugno’s responses to OFR’s Requests for Admissions, which admit the allegations in five Counts3/; b) Mr. Edgar’s written response to the Report, which essentially admits all of the violations and outlines the proposed corrective action that PMF intends to implement; and c) the evidence in the record. The Charges Count I Count I alleges that during the audit period, PMF operated a branch office in Delray Beach, Florida, without a license. Each branch office is required to be separately licensed. § 494.0011(2), Fla. Stat.; Fla. Admin. Code R. 69V- 40.036. A branch office is defined in section 494.001(3) as a location, other than a mortgage lender’s or mortgage broker’s principal place of business, where business is conducted under chapter 494, and one of the following is true: Business cards, stationery, or advertising references a licensee’s name associated with a location that is other than the licensee’s principal place of business; Advertising, promotional materials, or signage using a licensee’s name suggests that mortgage loans are originated, negotiated, funded, or serviced at a location that is other than the licensee’s principal place of business; or Mortgage loans are originated, negotiated, funded or serviced by the licensee at a location that is other than its principal place of business. The Delray Beach location was not licensed as a branch office. Without a license, PMF was not authorized to use the Delray Beach address on any materials used in its mortgage business or to originate loans from that location. During the audit period, a PMF employee, Bryan J. Mittler, then a recently admitted attorney who had worked for PMF since around 2012, was using business stationery and business cards under the name of PMF that referenced his name and the Delray Beach location, 2236 Bloods Grove Circle. Pet’r Ex. 10. The printed material contained statements such as “We’re your key to financing your new home” and “For a free no-obligation consultation and instant pre-approval call us anytime!” Id. Another business card identifies Mr. Mittler as an attorney and branch manager of PMF. Id. None of these materials mention the address of the principal office in Tampa. They support a finding that Mr. Mittler was using promotional materials to originate, negotiate, fund, or service mortgage loans at the Delray Beach location. Other indicia of operating a branch office are found in Mr. Mittler’s response to a written inquiry by the auditor in September 2015, in which he signed the letter as “Branch Manager.” Pet’r Ex. 8. Mr. Mittler’s letter states in part that “[w]e became a branch in November 2012 with the first loan disposition in December 2012.” Id. He also acknowledges that “[o]ur branch’s loan files are maintained at 2236 Bloods Grove Circle, Delray Beach, FL.” Id. In yet another letter to the auditor, Mr. Mittler identifies himself as Branch Manager. Pet’r Ex. 10. The Delray Beach office also maintained its own bank account and identified it as a branch bank account. Pet’r Ex. 11. Finally, internet advertising by PMF during the audit period states that Mr. Mittler “was chosen to head our new, Delray Beach branch office.” Pet’r Ex. 13. In response to a request by the auditor that PMF provide a list of all PMF employees, on September 29, 2015, Mr. Edgar submitted a list of employees as of that date, which identifies Mr. Mittler as the branch manager of the Delray Beach office. It describes his duties as “manag[ing] all operations of branch office [and] Originating Mortgages.” Pet’r Ex. 7. Finally, Mr. Edgar’s response to the Report states that “I am surprised to find that the Delray Beach office was not licensed as a branch.” Pet’r Ex. 2. He characterizes this as “negligence” on the part of PMF and represents that PMF intends “to license this branch and be in full compliance.” Id. PMF was eventually issued a branch license for the Delray Beach office in March 2016. At hearing, Mr. Cugno denied that PMF was operating a branch office in Delray Beach. He testified that even though there was no branch office, Mr. Mittler was allowed to use the title of branch manager because Mr. Mittler did not want to be given a less important title. Mr. Cugno also explained that a “statute” or “regulation,” later identified in Respondents’ PRO as Rule 1-3.3, The Rules Regulating the Florida Bar, required Mr. Mittler to provide his Delray Beach address on all documents and materials that he prepared or was using. While the rule requires that an attorney’s official bar name “be used in the course of a member’s practice of law,” it does not specifically require that a member’s address be reflected on all documents prepared. Assuming that the rule imposes this requirement, nothing in the record suggests, much less proves, that Mr. Mittler’s activities on behalf of PMR were part of his practice of law, he was employed as an attorney for PMF, or a law office was even located at the Delray Beach address. The PRO contends the Delray Beach location “may” have been a law office which caused confusion in PMF’s “paperwork.” These arguments have been rejected. By clear and convincing evidence, OFR has established that during the audit period, the Delray Beach location was a branch office within the meaning of section 493.001(3), and it operated without a license. Count II Each mortgage broker and lender must maintain a Mortgage Brokerage and Lending Transaction Journal (Journal) which, at a minimum, contains the name of the mortgage loan applicant, date of the application, disposition of the application, and the name of the lender, if applicable. § 494.0016(1), Fla. Stat.; Fla. Admin. Code R. 69V-40.265(1). Count II alleges that during the audit period, PMF violated the statute and rule by failing to maintain a complete and accurate Journal of all transactions at its Tampa office. PMF’s response to the Report states that, to correct the deficiency described in Count II, the firm would begin “implementing controls” and making “periodic audits” to ensure that a current Journal would be maintained in the future. Pet’r Ex. 2. Also, in its response to the Requests for Admissions, PMF admits that it maintained separate Journals for each of the branch offices, and the principal office Journal was incomplete or inaccurate. Finally, unrefuted testimony by the auditor at hearing established that an examination of PMF’s Journal revealed that certain loans were not listed and “entries that were part of the requirements of the loan journal were not made.” Notably, out of more than 470 transactions identified in PMF’s mortgage loan report (a quarterly report that must be filed by licensed companies indicating their loan activity), the Journal listed only 182 loans. Pet’r Ex. 20. At hearing, Mr. Cugno testified that PMF did not know how to fill out a journal, and efforts by his former compliance manager to get instructions from OFR were unsuccessful. However, this does not excuse the violation. By clear and convincing evidence, the charge in Count II is sustained. Count III A mortgage broker is required to maintain at its principal place of business the complete documentation of each mortgage loan transaction/application for three years from the date of the original entry. § 494.0016(1), Fla. Stat.; Fla. Admin. Code R. 69V-40.175(8). The Complaint alleges that PMF violated this requirement by failing to maintain at its principal office all records of email and electronic communications between PMF and its borrowers. The evidence shows that during the audit period, complete documentation of every application/transaction was not maintained at the Tampa office. For example, some loan originators at branch offices had individual email accounts through which they were communicating and transmitting documents for loan files, but they did not copy those email communications to the principal office. Pet’r Ex. 23 and 24. In his response to the Requests for Admissions, Mr. Cugno admitted that certain documentation for loan applications was kept at locations other than their Tampa office. In his response, Mr. Edgar also acknowledged that PMF did not comply with the statute and rule and represented that PMF would utilize a new “email usage policy and procedure” to correct the problem. While Respondents allege the information from the Tampa and branch offices was available on-line, this does not satisfy the requirement that complete documentation be maintained at the principal office. By clear and convincing evidence, the allegations in Count III have been established. Count IV Section 494.00165(2) requires that a licensee maintain a record of samples of each of its advertisements for examination by OFR for two years after the date of publication or broadcast. The purpose of this requirement is to enable the auditor to verify that the licensee’s advertisements are not deceptive or misleading. To comply with the statute, PMF was required to maintain for two years in a central file a copy of each advertisement. During the examination, the auditor requested that PMF provide its complete file of advertisements during the audit period. PMF initially responded that there was no corporate advertising and therefore no samples were kept on file. Pet’r Ex. 12. A subsequent audit of the branch offices revealed that business cards, flyers, placards, posters, and internet were used by the branch offices for advertising purposes. Pet’r Ex. 10, 11, 13, 15, and 17. The auditor also found entries on PMF’s books reflecting advertising expenses of over $200,000.00 during the audit period. In his response to the Report, Mr. Edgar admitted that due to operating the business as a “decentralized model,” PMF did not have proper supervision of the marketing activities of loan officers. Mr. Edgar went on to state that he was “surprised” to learn that “several Loan Officers appear to have engaged in either limited advertising campaigns or hosting their own independent activities.” He promised that PMF would “begin to exercise more control over the marketing activities of all employees” and to ensure that all documentation related to advertising would be sent to the Tampa office for centralized storage. At hearing and in their PRO, Respondents took a different tack and argued that: it is technically impossible to provide the auditor with every single copy of material that could be characterized as a marketing activity; the $200,000.00 advertising expense on their books was a “coding error”; and during the audit period, Respondents misunderstood what OFR considers to be advertising, and once this misconception was cleared up, they submitted “a more fulsome response.” These arguments have been considered and rejected as being contrary to the clear and convincing evidence. By clear and convincing evidence, the charge has been sustained. Count V Section 494.00165(1)(e) prohibits licensees from engaging in misleading advertisements regarding mortgage loans, brokering services, or lending services. Count V alleges that after January 1, 2015, PMF continued to advertise itself as a lender even though its lender license had been surrendered.4/ As of January 1, 2015, PMF was a licensed mortgage broker and no longer held a mortgage lender license. Advertising by the Fort Myers branch office after January 1, 2015, identified PMF as a “full correspondent lender” and listed the old mortgage lender license number. Pet’r Ex. 15. Also, as late as February 2016, advertising posters were on the windows at the Tampa office, visible to the public, reflecting that PMF was an approved VA lender. Pet’r Ex. 17. Finally, OFR witness Slisz testified that as of March 30, 2018, the Fort Myers branch office still was advertising itself as a full correspondent lender. By advertising in this manner, PMF implied to consumers that it would originate the loan, negotiate the terms of the loan, and determine the fees that would be charged, things it could not do as a broker. In his response to the Report, Mr. Edgar admitted that PMF did not comply with the statute “due entirely to [its] negligence in updating PMF’s logo and promotional materials after the change in licensing that occurred [on January 1, 2015].” Pet’r Ex. 2. However, he asserted there was no intent to deceive or mislead customers. In their PRO, Respondents also concede “there were a few months where this advertisement occurred,” but maintain there is no evidence that any consumer had been impacted. Finally, in their response to the Requests for Admissions, Respondents admit that after January 1, 2015, PMF continued to represent itself as a licensed mortgage lender. In mitigation, Mr. Cugno pointed out that no customer was harmed. Also, he blamed the advertising signs in the windows at PMF’s Tampa office on the building manager, who he says put the signs up for a few days to block the sun while new blinds were being installed. By clear and convincing evidence, OFR has established that the charges in Count V are true. Count VI Section 494.0025(7) provides that a licensee cannot “pay a fee or commission in any mortgage loan transaction to any person or entity other than a licensed mortgage broker or mortgage lender, or a person exempt from licensure under this chapter.” The statute is designed to ensure that every person receiving fees in a transaction is licensed. Count VI alleges that during the audit period, Respondents paid commissions or fees from mortgage loan transactions to entities that were not licensed brokers or lenders. During the audit period, several loan originators established separate entities that were not licensed but were paid fees or commissions for various transactions. Pet’r Ex. 18. In its response to the Report, Mr. Edgar conceded that such fees were paid incorrectly because PMF “mistakenly believed” that its practice of paying a loan officer’s separate business entity was equivalent to paying the loan officer personally. The response added that in the future, “only licensed individuals will be paid commissions on mortgage loan transactions” and “no separate loan entities will be compensated any amount for any work performed on mortgage loan transactions.” Pet’r Ex. 2. Respondents also acknowledge in their response to the Requests for Admissions that they paid fees, costs, and expenses to persons or entities that did not hold loan originator licenses. Finally, at hearing, Mr. Cugno admitted that unlicensed entities were “definitely” paid, but there was no intent to deceive customers. By clear and convincing evidence, OFR has established that the allegation in Count VI is true. Count VII Section 494.00665(1) requires each mortgage lender business to be operated by a principal loan originator who is to have full charge, control, and supervision of the business. The Complaint alleges that Mr. Cugno was not in full charge, control, and supervision of PMF when it held a mortgage lender license. PMF was a licensed mortgage lender during the first six months of the audit period, July 1, 2014, through December 30, 2014. During that time, Mr. Cugno was PMR’s principal loan originator. The Complaint alleges that while Mr. Cugno was the control person in 2014, PMF engaged in two or more of the following acts: Operated a branch office without a license; Failed to maintain complete and accurate Mortgage Lending Transaction Journal; Failed to maintain complete documentation at its principal place of business; and Advertised without maintaining a record of samples of each advertisement. The significance of having committed “two or more” violations was not explained. As previously found, however, all of these charges have been established by clear and convincing evidence. Respondents contend they did not have proper notice as to which of the four acts OFR relies upon to prove this charge. But items (a) through (d) simply track Counts I through IV in the Complaint. In his response to the Requests for Admissions, except for the branch office allegation, Mr. Cugno admitted that the other allegations are true. The response to the Report states that Respondents are “embarrassed” by the auditor’s findings and that new policies and procedures will be implemented to address the deficiencies. The response acknowledges that PMF “has been without a committed and proactive compliance professional in a full time capacity for some time,” and represents that Mr. Edgar will become PMF’s Vice President of Compliance and Human Resources and apply for a license as a loan originator. Pet’r Ex. 2. At hearing, Mr. Cugno did not directly respond to the charges. Instead, he testified that he would defer to the undersigned’s judgment in deciding whether the charges are true. By clear and convincing evidence, the allegations in Count VII have been proven. Count VIII Section 494.0035(1) requires each mortgage broker business to be operated by a principal loan originator who is to have full charge, control, and supervision of the mortgage broker. PMF was a licensed mortgage broker during the last four months of the audit, January 1, 2015, through April 30, 2015. During this same time period, Mr. Cugno was the principal loan originator. The Complaint alleges that Mr. Cugno was not in full charge, control, and supervision of PMF when it engaged in two or more of the following acts: Operated a branch location without a license; Failed to maintain complete and accurate Mortgage Brokerage Transaction Journals; Failed to maintain complete documentation at its principal place of business; Advertised without maintaining a record of samples of each advertisement; Inaccurately advertised themselves as a lender; and Paid fees or commission from mortgage loan transactions to entities that were not licensed mortgage brokers or mortgage lenders. Items (a) through (f) are the six violations described in Counts I through VI of the Complaint. Although the significance of having committed “two or more” violations was not explained, each of these allegations has been proven by clear and convincing evidence. Even the response to the Report admits that Mr. Cugno did not exercise full control over the operations of the business during the audit period. By clear and convincing evidence, the allegations in Count VIII have been proven. Disciplinary Guidelines Rule 69V-40.111 adopts by reference a range of penalties that may be imposed on a mortgage loan originator and mortgage entity for violating each of the 102 statutory provisions that OFR enforces. See Form OFR-494-14. Depending on the nature of the violation, the administrative fines are categorized as Level A ($1,000.00 to $3,500.00), B ($3,500.00 to $7,500.00), and C ($7,500.00 to $10,000.00). In determining an appropriate penalty that falls within the penalty guidelines, OFR must consider the mitigating and aggravating factors set forth in subsection (3) of the rule. Mitigating factors to be considered are as follows: If the violation rate is less than 5% when compared to the overall sample size reviewed; No prior administrative actions by the Office against the licensee or control person within the past 10 years; If the licensee detected and voluntarily instituted corrective responses or measures to avoid the recurrence of a violation prior to detection and intervention by the Office; If the violation is attributable to a single control person or employee, and if the licensee removed or otherwise disciplined the individual prior to detection or intervention by the Office; If the licensee is responsive to the Office’s requests or inquiries or made no attempt to impede or delay the Office in its examination or investigation of the underlying misconduct; or Other control, case-specific circumstances. Aggravating factors to be considered in assessing a penalty are as follows: If the violation rate is more than 95% when compared to the overall sample size reviewed (sample size must be equal to or greater than 25 transactions and cover a date range of at least 6 months); The potential for harm to the customers or the public is significant; Prior administrative action by the Office against the licensee or an affiliated party of the licensee within the past 5 years; If the licensee’s violation was the result of willful misconduct or recklessness; The licensee attempted to conceal the violation or mislead or deceive the Office; or Other control relevant, case-specific circumstances. In its PRO, OFR maintains that PMF’s broker license should be revoked, and an administrative fine in the amount of $53,300.00 should be imposed on Mr. Cugno. On the other hand, Respondents’ PRO contends that revocation of the broker license is not warranted, and “a fine of no more than $10,000.00 total for all matters in the Administrative Complaint is a fair outcome.” The worksheet used by OFR in determining the proposed penalties would be helpful, but it is not in the record. Also, at hearing, neither party addressed in detail the mitigating and aggravating factors. However, testimony by OFR’s Director of the Division of Consumer Finance, Mr. Oaks, briefly explained the rationale for OFR’s proposed disciplinary action. For operating a branch office without a license, the rule calls for a penalty of $1,000.00 per day, with a maximum penalty of $25,000.00. Because this violation occurred every day during the 304-day audit period, Mr. Oaks explained that OFR is proposing the maximum penalty of $25,000.00. For failing to maintain a complete and accurate Journal at the principal office, the guidelines call for a penalty ranging from $1,000.00 to $3,500.00 and suspension or revocation of the license. Mr. Oaks testified that after reviewing all mitigating and aggravating circumstances, the maximum penalty of $3,500.00, and license revocation, are appropriate for the violations described in Count II. For failing to maintain at its principal place of business the complete documentation of each mortgage loan transaction/application for three years from the date of original entry, the disciplinary guidelines call for a fine ranging from $1,000.00 to $3,500.00 and suspension or revocation of the license. Mr. Oaks testified that OFR is extremely dependent on records when conducting a compliance examination. If complete and accurate records are not kept at the principal place of business, OFR cannot ensure that the business is operating in a lawful manner. Where there is an absence of records, there is potential for great consumer harm. Given the circumstances presented here, he proposes a $2,700.00 penalty and revocation of the license. For failing to maintain a record of samples of each advertisement for a period of two years, the disciplinary guidelines call for a fine ranging from $1,000.00 to $3,500.00 and suspension or revocation of the license. In this case, PMF had no samples of advertisements at its principal office. When no samples are maintained, OFR is unable to determine whether a licensee is engaging in misleading or deceptive advertising. For this reason, Mr. Oaks proposes a fine of $3,500.00 and revocation of the license. For engaging in misleading advertising, the disciplinary guidelines call for a fine ranging from $3,500.00 to $7,500.00 and suspension or revocation of the license. Mr. Oaks characterized PMF’s advertising after January 1, 2015, as “completely misleading” because it erroneously represented to the public that PMF was a correspondent lender. For this reason, he proposes the maximum penalty of $7,500.00 and revocation of the license. For paying a fee or commission in any transaction to a person or entity other than a lender or broker, the disciplinary guidelines call for a fine ranging from $3,500.00 to $7,500.00 and suspension or revocation of a broker’s license. Mr. Oaks explained that the licensing process is designed to protect consumers from unlicensed individuals and to ensure that only licensed individuals will be involved in the transaction. For violating the statute, Mr. Oaks proposes a fine of $4,100.00 and revocation of the license. If a principal loan originator fails to have complete control over the operations of a mortgage lender, the disciplinary guidelines call for a penalty ranging from $1,000.00 to $3,500.00. Because of the number and nature of violations, Mr. Oaks concluded that Mr. Cugno did not have control of his business and did not take adequate steps to ensure that the business was “being run lawfully.” Besides Mr. Oaks’ testimony, OFR witness Slisz, the Tampa area financial manager, also concluded there was a lack of complete control by Mr. Cugno based on loan originators “using emails not on the company server”; an “unlicensed location”; “loan originators taking freedom to advertise on their own without approval”; and PMF’s inability “to produce a log of the loans that the company received applications for.” OFR seeks the maximum penalty of $3,500.00. If a principal loan originator fails to have complete control over the operations of a broker, the disciplinary guidelines call for a penalty ranging from $1,000.00 to $3,500.00. For the reasons enunciated by Mr. Oaks and witness Slisz, OFR seeks the maximum penalty of $3,500.00. Besides the foregoing testimony, the evidence shows that there was a potential for harm to customers or the public; most of the violations proven were “serious”; PMF has one prior disciplinary action in December 2014, which was resolved by PMF surrendering its lender license and paying a $2,500.00 fine; and PMF was issued a notice of non-compliance regarding its late filing of quarterly reports for the year 2012. Pet’r Ex. 4. In mitigation, there is no evidence that any specific customer was harmed or misled. There is no evidence that the violations were the result of willful misconduct or recklessness on the part of Respondents, or that they attempted to conceal a violation or mislead or deceive OFR. The violations cited by the auditor appear to be due to a lack of oversight by management, neglect, or a failure to understand OFR regulations. Although Respondents did not detect or voluntarily institute corrective action or measures prior to the audit, there is evidence that beginning with his assumption of control of the business in 2012, and during the audit, Mr. Cugno occasionally contacted the Tampa district office seeking advice on how to comply with OFR statutes and rules. Finally, there is no evidence that PMF attempted to impede or delay the examination or investigation of the underlying misconduct, or that any customer was harmed. Considering the aggravating and mitigating factors on which the parties presented evidence, the undersigned determines that the mortgage broker license should be suspended for six months and a $20,000.00 administrative fine imposed on Mr. Cugno. Procedural Issues In their PRO, Respondents focus largely on the argument that Mr. Cugno was not qualified to represent himself or PMF, and therefore the case should be reopened to allow Respondents, with the assistance of counsel, “to make [their] record and better present the facts and the circumstances.” PRO at 16. Mr. Cugno is the owner and president of the corporation. As such, he may represent the corporation in an administrative proceeding, even though he is not an attorney. See The Magnolias Nursing & Convalescent Ctr. v. Dep’t of Health & Rehab. Servs., 428 So. 2d. 256, 257 (Fla. 1st DCA 1982)(“it is clear that self-representation by corporations is permissible in administrative hearings”). Because Mr. Cugno is not a “qualified representative” under rule 28-106.106, there is no requirement that a preliminary determination be made that he is "qualified" to represent his corporation. Likewise, the rule does not require that a preliminary determination be made that an individual, acting pro se, is qualified to represent himself. Mr. Cugno is an experienced operator of a mortgage business, having been in that field for 22 years. Besides PMF’s operations in Florida, Mr. Cugno testified that he operates “businesses” in Alabama, Tennessee, Kentucky, Minnesota, and Georgia. Mr. Cugno acknowledged receipt of the Complaint on February 6, 2017. After initially requesting that an informal telephonic hearing under section 120.57(2) be conducted to contest the application of the law, on September 28, 2017, he asked that he be given a formal hearing under section 120.57(1) to contest the factual findings in the Complaint. During the seven-month informal phase of this proceeding, Mr. Cugno elected to represent himself and the corporation. After the proceeding was converted to a formal proceeding, an Initial Order was issued on September 29, 2017, which informed Mr. Cugno that a “party may appear personally or be represented by an attorney or other qualified representative.” Notwithstanding this information, Mr. Cugno voluntarily decided to continue to represent himself and the corporation. Prior to the hearing, he participated in three depositions taken by OFR; he deposed OFR witness Quaid; he responded to discovery requests; and he served discovery on OFR. At hearing, he engaged in extensive cross-examination of the OFR auditor. Finally, in a letter to OFR dated August 19, 2015, Mr. Cugno stated that PMF has its own “legal department,” see Petitioner’s Exhibit 12; and, at hearing, he testified that PMF employed three attorneys, on at least a part-time basis, as loan originators. If these representations are true, legal advice was not far away. In any event, Respondents are not entitled to a second hearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Office of Financial Regulation enter a final order sustaining the charges in Counts I through VIII; suspending PMF’s mortgage broker license for six months; and imposing an administrative fine on Mr. Cugno in the amount of $20,000.00. DONE AND ENTERED this 29th day of June, 2018, 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 29th day of June, 2018.
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 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 These administrative proceedings involve three related cases which were consolidated for purposes of proceedings before the Division of Administrative Hearings. DOAH Case No. 87-3299 began on or about May 13, 1987, with the issuance of an Administrative Complaint and Notice of Rights by the Department of Banking and Finance, Division of Finance (hereinafter "Department"), against Respondents Mid South Mortgage Corporation (hereinafter "Mid South"), Carolyn G. Stanley (hereinafter "Stanley"), William D. Hughes (hereinafter "Hughes"), John Childers (hereinafter "Childers"), and Janie Cincotta (hereinafter "Cincotta"). An Amended Administrative Complaint was filed later. The Amended Administrative Complaint charges the Respondents with nine counts of violations of the Mortgage Brokerage Act, Chapter 494, Florida Statutes. In addition to the Administrative Complaint, on about May 13, 1987, the Department issued a Cease and Desist Order and Notice of Rights against Childers and Cincotta, which was docketed as DOAH 87-3300, and a second Cease and Desist Order and Notice of Rights against Mid South, which was docketed as DOAH Case No. 87-3301. The Administrative Complaint in DOAH Case No. 87-3299 was never served on Cincotta. At the commencement of the formal hearing, the Department announced that it was not pursuing the Administrative Complaint against Cincotta. The Cease and Desist Order in Case No. 87-3300 was served on Cincotta. At the commencement of the formal hearing, Cincotta confirmed that she did not contest the Cease and Desist Order in Case No. 87-3300. Prior to the formal hearing, Hughes and the Department entered into a stipulation for the disposition of all issues in DOAH Case No. 87-3299 that relate to Hughes. Following the hearing in this case, a transcript of the proceedings at hearing was filed. Thereafter the Department filed proposed recommended orders in all three of these consolidated cases. The Respondents have not filed any proposed recommended orders. The Department's proposed recommended orders have been carefully considered during the formulation of this recommended order. Specific rulings on all proposed findings of fact are contained in the appendix which is attached hereto.
Findings Of Fact Based on the exhibits received in evidence and on the testimony of the witnesses at the hearing, I make the following findings of fact. Preliminary Factual Findings Mid South is a corporation organized and existing under and by virtue of the laws of the State of Florida. Mid South has been and is conducting business in the State of Florida as a mortgage brokerage business pursuant to Chapter 494, Florida Statutes, having been issued license No. HB-592335611. Mid South has been and is conducting business in the State of Florida as a mortgage brokerage business at 1815 West 15th Street, Suite 8, Panama City, Florida 32407. Persons Employed by Mid South John Childers From October 1983 until present, Childers has been employed at Mid South. Childers is President of Mid South and a 50 percent shareholder of Mid South. Childers is the chief executive officer in charge of running Mid South in Mississippi, Alabama, Georgia, Tennessee, and Florida. Childers is not now, nor has he ever been, licensed pursuant to Chapter 494, Florida Statutes. Although Childers explained to Carolyn G. Stanley, the designated Principal Mortgage Broker of Mid South, that she was in charge of the offices of Mid South, Childers assumed the responsibility of overseeing the mortgage brokerage business of Mid South, because Stanley did not have time to do so. In the event a borrower became angry because his interest rates were increased above what was agreed to, it was Childers who would try to "work out a deal" with the borrower by reducing the points. Ann King Beach From on or about July 25, 1985, Ann King Beach was the Designated Principal Mortgage Broker of Mid South pursuant to Chapter 494, Florida Statutes, having license No. HB-16762. From on or about September 1, 1985, Ann King Beach ceased to be employed by Mid South. Janie Cincotta Cincotta was employed by Mid South in Pensacola, Florida, for two different periods of time. The first period of employment began on or about September 1985 and ended on or about February 1986. From on or about September 1985 through on or about February 1986, the Pensacola, Florida, office of Mid South was continuously open. Cincotta's second period of employment with Mid South began on or about October 1986 and ended on or about March 1987. From on or about the end of October 1986 to on or about March 1987, the Pensacola, Florida, office of Mid South was continuously open. Cincotta's job responsibilities included the same responsibilities as those of Linda Banquicio, described below, and more. Cincotta would send out the verifications, work up the Good Faith Estimate, type the application, answer the telephone, and interview the applicants. Childers was aware of Cincotta's job responsibilities. Cincotta was compensated by Mid South. Cincotta was not licensed pursuant to Chapter 494, Florida Statutes. William D. Hughes From on or about September 19, 1985, the Mid South office at 692 Heinberg Street, Pensacola, Florida, was licensed pursuant to Chapter 494, Florida Statutes, having license No. HB-17159. From on or about September 19, 1985, William D. Hughes was designated as the broker in full charge, control, and supervision of the Pensacola, Florida, office of Mid South. Hughes terminated his employment with Mid South on or about April 15, 1986. On or about April 1, 1986, Hughes informed Childers that he was terminating his employment with Mid South. By letter dated September 2, 1986, Mid South notified the Department that Hughes was no longer employed by Mid South. On or about October 14, 1986, Hughes filed an Application for Registration as a Branch Office for the Pensacola, Florida, location of Mid South. On or about December 15, 1986, Hughes became the Designated Associate Broker at the branch office of Mid South, having license No. HT-9017. Said branch office was assigned license No. HL-1724. On or about April 1, 1987, Hughes notified the Department that he had terminated his employment with Mid South. Although Hughes became licensed with the Department as the Designated Associated Broker at the Pensacola, Florida, branch office of Mid South, he never actually worked there in that capacity. During the second period of Cincotta's employment, Childers knew that Hughes was not working at the Pensacola, Florida, office of Mid South. At the end of October or the beginning of November 1986, Childers told Cincotta that if Hughes received a telephone call, she was to respond that Hughes was not in. Thereafter, Childers would return the telephone call for Hughes. The reason for the foregoing instructions was to prevent Mid South from getting "into trouble," because Mid South did not have a licensed broker in the Pensacola, Florida, office of Mid South. Hughes received commissions only on the loans that he brought into Mid South. Hughes did not receive a commission on any other mortgage loan that was processed through the Pensacola, Florida, office of Mid South and which was considered to be a "house loan." There appear to have been two types of house loans on which Hughes did not receive commissions during his employment at Mid South. The first type was mortgage loans referred to Mid South from Source Mortgage wherein Source Mortgage shared a brokerage fee with Mid South. The other type of house loan involved borrowers who sought the services of Mid South, but did not initiate the mortgage loan process through either Hughes or Source Mortgage. Kenneth E. Boles From on or about November 20, 1985, Kenneth E. Boles was designated Principal Mortgage Broker of Mid South pursuant to Chapter 494, Florida Statutes, having license No. HB- 17651. From on or about July 24, 1986, Kenneth E. Boles ceased to be employed by Mid South. Linda Banquicio Linda Banquicio began working in the Pensacola, Florida, office of Mid South from on or about June 13, 1986, to on or about August 22, 1986. Banquicio was employed at Mid South to answer the telephone, type, inform borrowers of the interest rates, provide loan application forms to borrowers, assist borrowers in filling out the loan applications, type the verification forms to be mailed out, and fill in the estimated closing costs on the Good Faith Estimate. Childers was aware of Banquicio's job responsibilities. Banquicio was not licensed pursuant to Chapter 494, Florida Statutes. Carolyn G. Stanley From on or about January 13, 1986, Carolyn G. Stanley was designated as Principal Mortgage Broker of Mid South pursuant to Chapter 494, Florida Statutes, having license No. HB- 16762. Stanley was employed as Principal Mortgage Broker of Mid South in Panama City, Florida. As Principal Mortgage Broker of Mid South, Stanley did not take any action to oversee the offices of Mid South other than the Panama City, Florida, office where she was employed, because Childers had assumed that responsibi1ity. From on or about July 8, 1987, Stanley ceased to be employed by Mid South. Harold J. Larrieu, Jr. Harold J. Larrieu, Jr., filed an application to act as broker at the Pensacola, Florida, office of Mid South on or about August 25, 1986, but he withdrew his application on or about September 9, 1986. Advertisements of Mid South On April 27, May 4, 11, 18, and 25, 1986, Mid South advertised fixed rate financing in the Pensacola News Journal without stating the address of Mid South or that Mid South was a licensed mortgage broker. On June 29 and July 6, 13, 20, 27, and August 24, 1986, Mid South advertised fixed rate financing in the Pensacola News Journal. Lock-ins During Cincotta's second period of employment, it was the practice of Mid South to lock-in interest rates for a period of sixty days. However, few, if any, of the mortgage loans would close within that sixty-day lock-in period. Excessive Charges The following charges incurred are in excess of the costs disclosed to the following borrowers at the time Mid South accepted the application with respect to said borrowers: Borrower/cost Amount disclosed at time deposit or application Amount description accepted charged Michael A. Adam Discount/Origination Fee $2,384.00 2,460.00 Appraisal 200.00 225.00 Title Insurance 476.80 500.00 Doc. Preparation 0 200.00 Intangible tax 119.20 123.00 Doc. Stamps 89.40 92.25 Insurance 64.84 246.00 Thomas E. Almon Discount/Origination Fees 4,200.00 4,900.00 Recording 15.00 25.00 Survey 100.00 125.00 Pest Inspection 10.00 15.00 Copy Fee 0 6.00 Doc. Preparation 0 200.00 Jimmy M. Avera Title Insurance 425.00 496.60 R.E. Tax 217.87 293.16 Survey 150.00 225.00 Exp. Mail 0 24.75 ASMT 0 5.00 Doc. Preparation 0 200.00 Gloria F. Bates Survey 200.00 375.00 Title Insurance 650.00 736.00 Darrell R. Bond Appraisal 200.00 250.00 Title Insurance 326.00 381.00 Pest Inspection 25.00 40.00 Doc. Preparation 0 200.00 Fed. Express 0 12.50 Long Distance 0 10.00 Randy K. Burelson Hazard Insurance 0 210.00 Survey 83.00 150.00 David K. Bush Appraisal 175.00 200.00 Title Insurance 320.00 325.00 Survey 75.00 90.00 Pest Inspection 35.00 40.00 Doc. Preparation 0 200.00 City/County Tax 0 30.00 State Tax 0 40.00 James H. Cameron Survey 150.00 525.00 Doc. Preparation 0 200.00 Recording Fees 27.00 509.00 Sharon L. Cook Appraisal 125.00 200.00 Title Insurance 320.00 400.00 Thomas Elder Discount/Origin Fees 1,662.50 1,805.00 Hazard Insurance 0 326.00 Doc. Preparation 0 200.00 Willie C. Mixon PMI Insurance 370.58 670.12 Hazard Insurance 0 186.00 Doc. Preparation 0 200.00 John W. Whalen Survey 100.00 200.00 Betty A. Wilson Pest Inspection 25.00 40.00 Appraisal 0 250.00 Credit Report 0 35.00 Document Preparation Fees In addition to receiving brokerage fees, Mid South received a document preparation fee in the following amounts involving the below-noted borrowers although there is no documentation to indicate that the document preparation fee was disbursed to a third party. Borrower Amount Michael A. Adams $200.00 Thomas Almon 150.00 Jimmy M. Avera 200.00 Gloria F. Bates 150.00 Darrell R. Bond 150.00 Randy K. Burelson 200.00 David K. Bush 150.00 James H. Cameron 150.00 Sharon L. Cook 150.00 Thomas Elder 200.00 Edward E. Jackson 200.00 Willie C. Mixon 150.00 Russell O. Paul 200.00 John D. Reeder 150.00 John W. Whalen 150.00 Betty A. Wilson 150.00 In the following mortgage loan transactions brokered by Mid South, the Closing Statement failed to disclose the name of the broker or co-broker paid. Borrower Amount of brokerage fee Actual recipient of brokerage fee Michael A. Adams $2,460.00 Mid South Thomas E. Almon 4,900.00 unknown Jimmy M. Avera 584.00 Alabama Federal 1,168.00 Alabama Federal Gloria F. Bates 1,840.00 First Southern Savings 1,840.00 Mid South Darrell R. Bond 816.00 First Southern Savings 816.00 Mid South David K. Bush 400.00 First Southern Savings 400.00 Mid South James H. Cameron 2,000.00 First Southern Savings 200.00 Mid South Sharon L. Cook 800.00 First Southern Savings 800.00 Mid South Willie C. Mixon 494.00 Source Mortgage 1,482.35 Mid South and First Southern Savings Russell O. Paul 424.00 unknown 424.00 unknown John W. Whalen 646.65 First Southern Savings 646.65 Mid South 431.10 Source Mortgage Betty A. Wilson 1,088.00 First Southern Savings 1,088.00 Mid South Edwards Transaction Robert Edwards is a contractor who does remodeling, renovations, and room additions on residences. Edwards located a residence, which was run down and had been abandoned for two years but was in a nice neighborhood and on a beautiful wooded lot. The purchase price of the house was $19,000. With $10,000 to $15,000 of renovations put into the house, it could have been sold for approximately $45,000 at a profit of between $11,000 to $16,000. On or about early June 1986, Edwards called Mid South to inquire about the possibility of borrowing enough money to purchase and renovate the house. During that telephone conversation, an unidentified employee of Mid South told Edwards that he would have to discuss his proposal with Childers, but if his credit checked out, it would take from two to four weeks to close the loan. In early July 1986, Edwards met with Childers to discuss his proposal. At that meeting, Childers reviewed the proposal and "said he thought it would fly, that it was a good idea." Edwards thereupon filled out a credit application, was given a loan application to complete, and was told by Banquicio to sign a blank Good Faith Estimate. Subsequent to the early July 1986 meeting, Edwards completed the paperwork and informed Banquicio that he did not want to obtain an appraisal before he had qualified for the loan. Thereafter, Banquicio informed Edwards that Childers had indicated that Edwards should have the appraisal done because the loan looked good. In reliance on the foregoing representation, Edwards had an appraisal done on the residence on August 26, 1986, at a cost of $250. On or about September 3, 1986, Edwards went to the Pensacola, Florida, office of Mid South to seek assistance in obtaining his mortgage loan, at which time Stanley provided him his first completed Good Faith Estimate. At that time Stanley informed Edwards that all he had to do was wait for the closing and that Mid South would be getting in contact with him. However, contrary to Stanley's representation, Mid South never contacted him, so he began calling the Mobile, Alabama, office of Mid South, but was unable to speak to Childers. Shortly thereafter, the residence was sold to another purchaser, because Edwards had been unable to obtain his mortgage loan. At no time did Mid South inform Edwards that he did not make enough money to get the mortgage loan. Suhrheinrich Transaction During late June or early July 1986, Robert Suhrheinrich contacted Banquicio, an employee of Mid South, by telephone in order to apply for a mortgage loan. During the telephone conversation, Banquicio agreed to try to obtain a mortgage loan for Suhrheinrich. Prior to July 13, 1986, Suhrheinrich obtained a letter from Childers. The letter indicates that Suhrheinrich was eligible for a 15 year mortgage loan at an interest rate of 9 3/4 percent. Subsequent to receiving that letter, Suhrheinrich obtained from Mid South a Good Faith Estimate that indicated the interest rate was now 9 percent, a Request for Verification of Employment dated July 24, 1986, and a document entitled Loan Package Instructions, which states, in part, "If you have any questions regarding the information requested, please feel free to call John Childers at (904) 438-9760." During this period, Childers indicated to Suhrheinrich that he could obtain 90 percent loan to value. Thereafter, sometime in October 1986, Childers contacted Suhrheinrich and indicated that the mortgage loan was ready to close, but that the interest rate was about 10 percent and that he could give Suhrheinrich a loan of only 80 percent to value. Prior to the conversation wherein Suhrheinrich was told that the loan was ready to close, Suhrheinrich was never informed that the interest rate might be changed from the 9 percent figure disclosed to him on the Good Faith Estimate, or that a 90 percent loan to value could note be obtained. As a result of Mid South's increasing the interest rate to approximately 10 percent, Suhrheinrich did not obtain the mortgage loan because at that rate it did not pay to refinance his first and second mortgages. Further, the 80 percent loan to value offered by Mid South did not meet Suhrheinrich's needs. In reliance on the representation Mid South made to Suhrheinrich, he spent a total of $400 on an appraisal, survey, and termite inspection. Ward Transaction On or about August 3, 1986, Mary Ward contacted Banquicio, an employee of Mid South, by telephone and inquired about obtaining a mortgage loan. On or about August 21, 1986, pursuant to Banquicio's request, Ward went to the Pensacola, Florida, office of Mid South and filled out various documents in order to obtain the mortgage loan. During September 1986, Ward went to the Pensacola, Florida, office of Mid South to obtain her paperwork, because she had not been able to speak with Childers to find out whether she had been approved. Sitting in the office was an individual whom Banquicio identified as being Mid South's broker. Although Ward requested to speak to the individual identified as being Mid South's broker, Banquicio did not accommodate said request. Meinscher Transaction On or about August 18, 1986, Alacia Meinscher contacted Banquicio, an employee of Mid South, to obtain a mortgage loan. Banquicio agreed to attempt to obtain a mortgage loan for Meinscher. Meinscher filled out an application and, pursuant to Banquicio's request, signed a blank Good Faith Estimate. Approximately a week after filling out the application, Childers informed Meinscher the amount of the points that she would be charged and that the interest rate would be 9 3/4 percent. Childers and Banquicio informed Meinscher that it would take approximately twenty-one days for a determination as to whether Meinscher could obtain a mortgage loan. After waiting approximately sixty days for an indication from Mid South as to whether Meinscher could obtain a mortgage loan, Meinscher "gave up" on Mid South and went to another company. Meyers Transaction On or about October 10, 1986, Donald Meyers contacted Cincotta, an employee of Mid South, by telephone and inquired about the possibility of obtaining a $75,000 mortgage loan. During that conversation, Cincotta indicated that Mid South was offering an 8 1/2 percent fixed rate for thirty years. On or about October 28, 1986, Meyers met with Cincotta in the Pensacola, Florida, offices of Mid South and filled out a loan application form. At the October 28, 1986, meeting, Cincotta indicated that Mid South could obtain a mortgage loan for Meyers and she gave Meyers a Good Faith Estimate disclosing an interest rate of 8.5 percent and 2 points. The interest rate on the Good Faith Estimate has since been altered to read 9.5, whereas it originally was 8.5 when the document was prepared. At the October 28, 1986, meeting, Cincotta represented that, unless there was some unforeseen situation, the mortgage loan could close within 30 to 60 days. Cincotta locked in Meyers' mortgage loan for 60 days at 8 1/2 percent and 2 points. After the 60 day lock-in expired, Cincotta did not relock Meyers' rate, because the practice was that, once the loan had been submitted to Childers, Childers handled the lock-ins if they expired. On or about November 1986, Meyers received a second Good Faith Estimate Which indicated an interest rate of 8.5 percent and 2 points. On or about February 17, 1987, Meyers went to the offices of O. Gwen King for the closing. At the closing, the loan documents shows an interest rate of 9 1/2 percent with 2 1/2 points. At the closing, Meyers, by telephone, spoke to Childers who indicated that the loan of 8 1/2 percent plus 2 points was not available, but that he could lower the points on the 9 1/2 percent loan. After further discussions with Childers, Meyers left the February 17, 1987, meeting without closing. On or about April 7, 1987, Meyers requested by letter that his loan file (including the loan application, credit report, and appraisal) be returned to him. Meyers never received a response to his letter of April 7, 1987. In reliance on the representation made to Meyers, he spent $225 on an appraisal. Gillis Transaction On or about November 10, 1986, James G. Gillis called Mid South about obtaining a mortgage loan and spoke with Cincotta, an employee of Mid South. On or about November 12, 1986, Gillis met with Cincotta who agreed to try to obtain a mortgage loan for Gillis. At the meeting with Cincotta on November 12, 1986, Gillis obtained a Good Faith Estimate which showed the interest rate to be 9 percent. Gillis declined to lock-in the 9 percent interest rate at that time, because Cincotta indicated her belief that the rates were coming down. Cincotta estimated that it would take between four and six weeks to close the mortgage loan. The Advance Disclosure Statement-Fixed Rate Mortgage Loan dated December 29, 1986, which indicates an interest rate of 9 percent and 2 points, was blank when it was signed by Gillis. On or about January 7, 1987, Cincotta locked Gillis in at the rate of 8 1/4 percent and 2 points. Cincotta indicated to Gillis that he was locked in until the mortgage loan closed. On or about March 24, 1987, Childers contacted Gill and indicated that he was ready to close at an interest rate of 8 3/4 percent and 3 points. In response, Gillis requested that he be given 8 1/4 percent with 2 points as agreed to on the Good Faith Estimate. On or about March 26, 1987, Childers and Gillis engaged in negotiations with regard to the mortgage loan but were unable to reach agreement. After the 60 days lock-in expired, Cincotta did not relock Gillis because the practice was that, once the loan had been submitted to Childers, Childers handled the lock-ins if they expired. By letter dated April 7, 1987, Gillis requested return of his appraisal, survey, credit report, and pest inspection, but did not receive any of said documents back. In reliance on the representations made by Mid South, Gillis spent $225 on an appraisal, $30 on a pest inspection, and $80 on a maintenance agreement. Mock Transaction On or about early January 1987, Jewel and George Mock received a Rate Bulletin put out by Mid South dated January 2, 1987. The Rate Bulletin stated in part: RATE FEES REMARKS . . . ONE YEAR A.R.M. 15 Year 5.00 percent 2.00 + 1.00 Annual, 5 percent Life Cap 2.5 percent Margin NO NEGATIVE In reliance on the Rate Bulletin, Mr. and Mrs. Mock, along with Gene Bogan, their realtor, went to the office of Mid South to obtain said A.R.M. loan on or about January 14, 1987, and spoke to Cincotta, an employee of Mid South. During the January 14, 1987, office visit, Cincotta agreed to attempt to obtain the A.R.M. loan for them. During the January 14, 1987, office visit, the Mocks were not told that the A.R.M. could become unavailable. Subsequent to the January 14, 1987, office visit, Mr. and Mrs. Mock received a Regulation Z Disclosure Statement which indicated that the Annual Percentage Rate of their mortgage loan was 9.399 percent. Mrs. Mock contacted Cincotta about the 9.399 percent on the Disclosure Statement. In response, Cincotta indicated the form was just a "general disclosure." Although Mr. and Mrs. Mock signed and returned the Disclosure Statement, they still were under the impression that they had qualified for the A.R.M. On or about February 1987, Bogan informed Mr. and Mrs. Mock that the loan on the Disclosure Statement was not the same as the loan that Mr. and Mrs. Mock had applied for. Rather than giving the Mocks the A.R.M., the Disclosure Statement was for a fixed rate of 8 3/4 percent G.E.M. loan. During February or March of 1987, Childers contacted Bogan and when Bogan insisted that the Mocks be given the loan they applied for, Childers responded, "Well, nobody can give you that." Childers further stated that the A.R.M. in the Rate Bulletin was a "misprint." On or about February 1987, Childers contacted Mr. Mock to inform him that the loan Mid South was obtaining for him was better because "the initial payments would be equivalent to somewhat less than five percent," and tried to persuade Mr. Mock to take the G.E.M. loan that Mid South was actually offering. During March or April 1987, Cincotta confirmed to Mr. Mock that the A.R.M. was not available. The A.R.M. would have been a better mortgage than the G.E.M. loan that was actually offered because, among other things, it would more quickly reduce the principal amount of the mortgage debt. In reliance on Mid South's representations that they were offering the A.R.M., Mr. and Mrs. Mock spent approximately $400 for brass fixtures, mirrors, and for having the rugs cleaned in the house they were seeking to purchase. Due to the failure of Mid South to give the Mocks the A.R.M., Bogan lost half of a $7,000 commission.
Recommendation Based upon all of the foregoing, it is recommended that the Department issue final orders in these cases to the following effect: In DOAH Case No. 87-3299 Incorporating the terms of the stipulation and consent agreement entered into between the Department and William D. Hughes; Placing Carolyn G. Stanley on probation for a period of three years under the condition that she will not act as a principal mortgage broker, designated associated mortgage broker, or in any way supervise the operation of, or be responsible for the supervision of, a person or an office engaged in the business of acting as a mortgage broker pursuant to Chapter 494, Florida Statutes; Revoking the license of Mid South Mortgage Corporation to act as a registrant pursuant to Chapter 494, Florida Statutes; Fining John Childers a total of $10,000.00; and Fining Mid South Mortgage Corporation a total of $15,000.00. In DOAH Case No. 87-3300 Entering a cease and desist order against John Childers and Janie Cincotta ordering said persons to cease and desist from any and all present and future violations of the provisions of Chapter 494, Florida Statutes, or the rules duly promulgated by the Department with respect thereto, more specifically, but not by way of limitation from, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly making, negotiating, acquiring, selling, or arranging for, or offering to make, negotiation, acquire, sell, or arrange for, a mortgage loan or mortgage loan commitment. In DOAH Case No. 87-3301 Entering a cease and desist order against Mid South Mortgage Corporation ordering said mortgage broker to cease and desist from any and all present and future violations of the provisions of Chapter 494, Florida Statutes, or the rules duly promulgated by the Department with respect thereto, more specifically, but not by way of limitation from, operating a mortgage brokerage office in the state of Florida without having a duly licensed broker in full charge, control, and supervision of said office on a full-time basis. DONE AND ENTERED this 28th day of July, 1988, at Tallahassee, Florida. MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parlay Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of July, 1988. APPENDIX TO RECOMMENDED ORDER IN CASE NOS. 87-3299, 87-3300, & 87-3301 The following are my specific rulings on all of the proposed findings of fact submitted by all parties. Findings proposed by Petitioner All proposed findings of fact submitted by the Petitioner have been accepted and Incorporated into the findings of fact in this recommended order, except as specifically noted below: Paragraphs 1, 2, 3, and 4: The findings proposed in these paragraphs have been omitted from the findings of fact because they involve primarily procedural or introductory details. (Most of this information has been included in the introduction to the recommended order.) Paragraph 5: The findings proposed in this paragraph have been omitted as unnecessary subordinate details. Paragraph 50: Rejected as Irrelevant. Paragraph 51: Rejected a Irrelevant or as subordinate and unnecessary details. Paragraphs 141, 142, and 143: Rejected as subordinate and unnecessary details (I have found that the A.R.M. would have been a better mortgage than the G.E.M.) Findings proposed by Respondents (The Respondents did not submit any proposed findings.) COPIES FURNISHED: John Childers, President Mid South Mortgage Corporation 955 Downtowner Boulevard, Suite 105 Mobile, Alabama 36609 Ms. Carolyn G. Stanley Mid South Mortgage Corporation 955 Downtowner Boulevard, Suite 105 Mobile, Alabama 36609 Ms. Janie Cincotta 2829 Village Circle Pensacola, Florida 32504 Mr. William D. Hughes 4347 Burton Wood Court Pensacola, Florida 32504 Paul C. Stadler, Jr., Esquire Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350
The Issue This concerns the question of the Petitioner, George Castro's entitlement to be granted a mortgage solicitor's license by the Respondent, State of Florida, Department of Banking and Finance. See Chapter 494, Florida Statutes.
Findings Of Fact The Petitioner in this action is an individual who desires to be licensed as a mortgage solicitor in the State of Florida. The Respondent in this cause, State of Florida, Department of Banking and Finance, is an agency within the State of Florida, which has, among other functions, the licensure and regulation of those persons who would practice as a mortgage solicitor. At the commencement of the hearing in this cause, it was stipulated to between the parties that all requirements for the licensure of the Petitioner as a mortgage solicitor in the State of Florida related to the application form for registration have been met, with the exception that the answer to question (5) on the mortgage solicitor's application executed by the Petitioner, by its terms, would allegedly cause the denial of the application premised upon the requirements and conditions of Subsections 494.04(4) and 494.05(4), Florida Statutes. 1/ In particular, the Respondent contends that the initial answer to question (5), given under oath by the Petitioner contains substantive omissions or misstatements of material facts demonstrating that the Petitioner was engaging in the course of conduct which exhibits a lack of honesty, truthfulness and integrity, within the meaning of Subsection 494.04(4), Florida Statutes, and that the eventual correct answer to question (5) relating to arrest and indictments for crimes were, by their substance, such that it would cause the rejection of Petitioner as an applicant for licensure as mortgage solicitor, premised upon his alleged lack of honesty, truthfulness and integrity, again within the meaning of Subsection 494.04(4), Florida Statutes. In an effort to obtain a mortgage solicitor's license, the Petitioner, George Castro, executed an application form provided by the Respondent, and through that action answered question (5) in the affirmative. He also indicated that an affidavit was attached. Question (5) makes the inquiry, "Have you ever been arrested or indicted for crime?" It goes on to request "If your answer is in the affirmative, attach complete signed notarized statement of the charges and facts, together with the name and location of the court in which the proceedings were held or are pending." The Petitioner reviewed this question and further requirement and sought the assistance of his probation officer in an effort to comply with question (5). After placing next to question (5), the word "yes," and the words "affidavit attached," which words were found in parentheses, he went to the probation office in Dade County, Florida, in view of his probation and parole status arising out of a conviction in the Superior Court of Lumokin County, Georgia, to the charges of violation of the Georgia Controlled Substance Act, dating from an arrest in late 1976, or early 1977. His entry of a guilty plea was made on June 15, 1977, and he was adjudged guilty by the Georgia court and sentenced to confinement for a period of ten (10) years, five years to be served and the balance to be probated. On June 25, 1979, an amended order of the court was entered reducing the sentence which was imposed on June 15, 1977, to allow service of the balance of his sentence on probation and parole supervision through a transfer arrangement with the State of Florida. The Petitioner actually served approximately seven (7) months in prison. After June 28, 1979, he was under probation and parole supervision in the State of Florida and is still in their charge. Castro's intentions on, arriving at the probation and parole office was to have his probation and parole supervisor complete question (5) by making out an affidavit over the signature of the supervisor. The supervisor was not available and the application form and request was left with Castro's supervising officer's superior. Castro then operated on the assumption that the official would know how to respond to question (5), in view of the fact that Castro was of the opinion that a "rap sheet" containing his prior arrest history would be available to the probation and parole official in completing the affidavit. An affidavit was made by Lester R. Brandt, Supervisor, Probation and Parole Services within the State of Florida, Department of Corrections. That affidavit may be found as part of the Joint Composite Exhibit No. 1, admitted into evidence at the hearing. That exhibit also contains a copy of the application form. By the affidavit, Brandt alludes to the Georgia conviction in a general way but fails to make mention of any other offenses for which the Petitioner had been arrested. Once the affidavit had been completed, the affidavit and application form were placed in a preaddressed and stamped envelope provided by the Petitioner and sealed. The Petitioner returned to the office of the Probation and Parole Services and picked up that envelope containing the application and affidavit and mailed those items without examining the attached affidavit. When the application and affidavit form were received by the Respondent's office in Tallahassee, Florida, and compared with a "rap sheet" provided by the State of Florida, Department of Law Enforcement, it was determined that the affidavit failed to speak to certain items found on that "rap sheet." The "rap sheet" may be found as Respondent's Exhibit No. 1, admitted into evidence. On that sheet are arrests dating from January 1, 1976, related to a reckless driving matter which lead to a fine against the Petitioner. The next item dated April 9, 1976, related to driving offenses and other matters set forth, lead to a fine placed upon a plea to being guilty of public intoxication. An arrest from January 30, 1977, in St. Lucie County, Florida, lead to dismissals of those actions by Nolle Prosse. The arrest in Georgia as related herein brought about the judgment and sentence referred to above. Concerning a May 11, 1979, arrest for driving while intoxicated, the disposition was not clear in terms of the testimony presented at the hearing. It was, however, revealed that the Petitioner has had his driver's license privilege suspended due to an accumulation of adverse points and now may only drive to school and work by special permission of the Florida Department of Highway Safety and Motor Vehicles. When confronted with the failure to mention the other related matters found in the "rap sheet," aside from the Georgia experience, the Petitioner stated that he did not intend to omit or misstate his answer to question (5), instead it was a matter of oversight. Nonetheless, in Administrative Proceeding No. 80-19DOF (MB) the State of Florida, Department of Banking and Finance, offered a proposed final order which would deny the application of George Castro premised upon alleged substantive omissions or misstatements of material facts which put at issue the Petitioner's honesty, truthfulness and integrity as required by Subsection 494.04(4), Florida Statutes. This proposed order was entered on December 4, 1980, and contemporaneously the Petitioner was afforded a right to hearing on the question of his application and through the present hearing processes, availed himself of that opportunity. The proposed order and notice of right to hearing may be found in the Joint Composite Exhibit No. 1, admitted into evidence. Persons who have known the Petitioner for a period of two to two and one half years, one of which was a former Federal Bureau of Investigation Agent and the other a Senior Personnel Officer in the City of Miami, Florida, gave testimony at the hearing and spoke positively of the Petitioner's present propensity for truthfulness, honesty and integrity. Those persons have familiarity with the Petitioner's family, the former FBI Agent who is now a consultant in real estate type pursuits, having business relationships with the Petitioner's father by way of receiving advice from the Petitioner's father on real estate matters and the personnel officer being a family friend of the father's of long standing duration. The City official has indicated willingness to give an accounting position to the Petitioner in the City of Miami if that position were available. Neither of these individuals has seen the petitioner under the influence of any form of drug, be it alcohol or narcotics, within the time that they have known him. The former FBI Agent has seen the Petitioner approximately thirty (30) times in the two and one half years he has known him and the City official sees the Petitioner twice a week on an average. The Petitioner, while serving his probation and parole responsibility has been found to be a model probationer as stated in the affidavit. Castro is now employed as a runner for a mortgage broker, and that mortgage broker would be willing to hire the Petitioner as a mortgage solicitor if he is entitled to be granted a mortgage solicitor's license, to include passage of the mortgage solicitor's test.
Findings Of Fact Petitioner Roy L. McCutcheon, born June 21, 1924, in College Park, Georgia, began in the mortgage brokerage business in Atlanta in 1946, as an employee of the Jefferson Mortgage Company. Nights he attended Georgia State University. He moved, in 1950, to Albany, Georgia, where he worked for Southeastern Mortgage Company. In 1958, he received a bachelor's degree in business administration from Georgia State University. He obtained a Florida mortgage broker's license in 1963, the year he moved to Florida, and became active in the business both as a principal of Peachtree Mortgage Corporation and as a principal of Peachtree Development Corporation. On December 4, 1974, in the middle of a divorce and in an unfavorable business climate, petitioner and both companies with which he was associated filed for bankruptcy, and petitioner did not renew his mortgage broker's license. He has not been licensed as a mortgage broker since. STARTING OVER Petitioner ended up remarried and working in a trailer park in Palm Beach County, as an employee of Southeastern Home Mortgage Company (SHMC), owner of the park. He started work for SHMC, of which Cecil A. Moore was the president, chairman of the board, and sole stockholder, on December 1, 1974, but began managing the trailer park in late May or early June of 1975, when the trailer park had a 90 percent occupancy rate. Mr. McCutcheon had responsibility for the trailer park's books and records of account. Because various discrepancies pertaining to the trailer park's revenues were detected in paperwork reaching SHMC's home offices, Mr. Moore caused George R. Hollingsworth II, a C.P.A. employed by SHMC as comptroller at the time, to investigate the situation. The investigation began in January of 1979. Among other things, Mr. Hollingsworth discovered that some of the trailer park's 302 lots had trailers on them, even though they had been reported vacant to SHMC's home office. The trailer park accounts did not balance. Mr. Hollingsworth was unable to account for something in excess of six thousand dollars ($6,000). One explanation petitioner offered at the time was that cash had been used to pay retail trailer dealers (or their employees) an "incentive fee" of $160 per trailer for steering new owners of trailers to SHMC's Meadow Brook Mobile Park. At the hearing, however, petitioner put the "incentive fee" at $200 per trailer. At some point in 1977 or 1978, there was a glut of trailer park lots for rent in Palm Beach County; a competing park offered three months' free rent to prospective tenants. During 1977 and 1978, Vivian Elaine Grossi worked with petitioner for approximately two years as a "Girl Friday." She answered the telephone, typed, filed, kept various records, and made deposits to SHMC's bank account from time to time. Petitioner agreed to pay Alan Lindner, manager of Mustang Mobile Homes, money for every trailer he caused to he placed at Meadow Brook Mobile Park. He made 13 to 18 such payments. Some half-dozen like payments were made to Better Mobile Homes and Mobile Home Resales. Cecil Moore knew of these payments, if not their amount. When a trailer lot was rented to a new tenant Mr. Lindner had referred, Ms. Grossi noted the fact on a slip of paper. Ordinarily, she did not report the new tenant to SHMC's home office for two months, at least. Instead, monthly rents, typically $89.50, $94.50, or $99.50, were diverted to a slush fund. If the new tenant paid by check, an equivalent amount of cash, paid by somebody else as rent for another lot, was diverted into the slush fund. Ms. Grossi testified that Mr. Lindner's incentive fee was $200 but that she got a $10 rebate on three or four occasions for her own personal use. On this point, Mr. Lindner testified "[w]hen she handed me $200, it was nothing for me to drop $20 down in her purse. Whether she claimed it on her income tax is entirely up to her, but I was never a pig." Deposition of Alan Lindner, p. 68. Mr. Lindner did not share any of his "incentive payments" with petitioner. This system of "incentive" or "bird dog" payments persisted into a period when there was a shortage of trailer park lots in Palm Beach County. After Ms. Grossi had worked at the trailer park for about a year, she and Mr. McCutcheon decided to expand the slush fund, even though they regularly received checks for petty cash from SHMC's home office. Rents paid by new tenants not reported to SHMC's home office continued to be the main source of funds, although occasionally fees paid by nonresident golfers or swimmers for use of the trailer park's golf course or swimming pool might be added in. Ms. Grossi purchased swimming caps, which were for sale at the trailer park, but she never saw anybody buy one. Sometimes a new tenant would occupy a lot for six months before being reported to SHMC's home office. Mr. Lang, whose trailer stood on one lot, rented an adjacent lot, No. 274, on which he kept a picnic table, and paid Mr. McCutcheon fifty dollars ($50) a month from June 1, 1977, to July 1, 1979. Those rent payments, aggregating some $1,200, were never reported to SHMC and are in addition to the $6,100 or $6,200 Mr. Hollingsworth could not account for at all. SHMC's board of directors decided not to pursue the matter. Mr. McCutcheon resigned effective July 31, 1979, after four-and-a-half years without a raise. A NEW JOB On August 1, 1979, petitioner went to work as comptroller of Charles E. Brooks Mortgage Company, Inc. (BMC). Mr. McCutcheon performed draw inspections, as an employee of BMC, including three or four at building sites where construction by Raymond W. Tompkins or one of the companies with which he was associated was in progress. These draw inspections were at the builder's request, presumably as a prerequisite to the disbersal of moneys by or through BMC. On or before July 10, 1980, Mr. McCutcheon complained to Charles E. Brooks, BMC's president and chairman of its board, that he could not live comfortably on his salary. Mr. Brooks authorized petitioner at that time to look for other employment. After further discussions, petitioner's salary at BMC "almost doubled" to $30,000 annually. Thereafter, Sam Shaw called Mr. Brooks and reported that petitioner was working for Mr. Tompkins, at the time BMC's largest account, and parking his car in the garage of a model home used by Mr. Tompkins as an office, so that the car would not be visible from the street. Mr. Brooks drove to the model home but did not find petitioner there. When Mr. Brooks arrived at his office on the following day, September 10, 1980, he found a note typed by his secretary, Elaine Marie Kennedy, to the effect that Mr. McCutcheon would be out of town for the day on personal business. Suspicious, Mr. Brooks again visited the model home, this time finding Mr. McCutcheon ensconced in one of the bedrooms talking on the telephone. Mr. Brooks closed the door and said something like, "I think we need to have a talk," to which Mr. McCutcheon responded, "I am sorry. I hope God will forgive me," or words to that effect. Before their 90-minute conversation was over, Mr. Brooks had told petitioner never to return to the BMC office. Mr. Tompkins told Mr. Brooks that Mr. McCutcheon had told him (Tompkins) that he (Mr. McCutcheon) had quit the employ of BMC. In fact, petitioner was employed by BMC until he was discharged by Mr. Brooks on September 10, 1980. See Petitioner's Exhibit No. 1. Mr. Brooks called Ernest James Rourke, a mortgage broker then associated with BMC in Tampa, and told him that he had fired petitioner because he was working for Roy Tompkins on the side. As of September 8, 1980, petitioner was on the payroll of Tompkins Land and Housing (TLH), the result of a couple of nocturnal telephone conversations, during the preceding month, between petitioner and Mr. Tompkins. Mr. McCutcheon worked for TLH through April 3, 1981, at a salary of $400 weekly, together with a weekly $100 automobile allowance. CURRENT EMPLOYMENT Howard Sobin, a licensed mortgage broker, is the principal in an Orlando firm, HSR Financial Corporation (HSR), organized in December of 1981, to arrange mortgages and leasing. Since his affiliation with HSR, petitioner has taken credit applications, ordered credit reports, sent out verification forms, worked with title companies, and taken pictures of houses. In December of 1981, Mr. Sobin promised to pay petitioner $10,000 during the ensuing six months, although he was not sure at the time just how he would "handle it." That was Mr. Sobin's explanation for having taken no deductions for F.I.C.A. or anything else from a $1,750 payment by HSR to petitioner in the form of a check dated February 25, 1982, on which was typed "Centrella Commission." Respondent's Exhibit No. 2. According to Mr. Sobin, the $1,750 payment represented petitioner's wages and "Centrella Commission" referred only to the source of the money. There was no other evidence that petitioner did any work on either of the loans HSR has closed for Jim Centrella. GOOD REPUTATION IN SOME QUARTERS Howard Sobin testified that petitioner was well qualified to work as a mortgage broker even though petitioner had forgotten more than Mr. Sobin ever knew about the business. Elton F. Fletcher, a deacon in Orlando's First Baptist Church, testified that petitioner is an honest, moral, ethical, godly man. Mr. Tompkins testified that he would rehire petitioner. Ernest James Rourke, a licensed mortgage broker who met petitioner in 1979, testified that builders enjoyed petitioner's company and his honesty. Except for two years, Ray H. Puckett, a certified public accountant, audited Peachtree Mortgage Company's books. He also audited the books for Southeastern Mortgage Company in Albany, Georgia, when petitioner was employed there. In all he performed 24 annual audits of the books and records of companies with which petitioner was associated, and each audit was unqualified. Mr. Puckett never audited petitioner's personal books but did prepare some of his tax returns. Once or twice the Internal Revenue Service audited petitioner's tax returns and raised questions which were eventually resolved. Sybil T. Rutherford, vice-president of Pan-American Bank of Orlando, met petitioner and dealt with him before Peachtree Mortgage Company went into bankruptcy, causing the bank she worked for at the time to sustain losses in excess of $400,000. She knows nothing adverse about Mr. McCutcheon's reputation as a mortgage broker. Harry R. Miller, a former employee of Peachtree Mortgage Company, testified that petitioner is competent, skilled, and knowledgeable, and that there had been no mismanagement or misappropriation of moneys at Peachtree Mortgage Company. At the time of the hearing, petitioner was solvent and there were no judgments outstanding against him. In preparing the foregoing findings of fact, the hearing officer has had the benefit of petitioner's proposed recommended order. To the extent proposed findings of fact have not been adopted, they have been rejected as irrelevant or as unsupported by the evidence.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent deny petitioner's application for licensure as a mortgage broker. DONE AND ENTERED this 9th day of June, 1982, in Tallahassee, Florida. ROBERT T. BENTON, II 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 9th day of June, 1982. COPIES FURNISHED: Clayton D. Simmons, Esquire Post Office Box 1330 Sanford, Florida 32771 Alfred T. Gimbel, Esquire Office of the Comptroller The Capitol, Room 1302 Tallahassee, Florida 32301 Honorable Gerald Lewis Office of the Comptroller The Capitol Tallahassee, Florida 32301
