The Issue The issues in this instance are presented through a Notice to Show Cause/Administrative Complaint, in which the Petitioner accuses Respondent, Mary Hordge, through actions of her agent, servant or employee, Mary Donnovan, of unlawfully selling alcoholic beverages in a manner not permitted by the license, namely the sale for consumption on-premises under the package sales license, contrary to Section 562.12, Florida Statutes.
Findings Of Fact Mary E. Hordge, referred to in the Administrative Complaint is the holder of License No. 26-2310, Series No. 2-APS. That type license allows the sale of beer and wine as package sales for consumption off-premises. On- premises consumption is not authorized by that license. An inspection of the licensed premises was made on June 3, 1983. The licensed premises is in Jacksonville, Florida. The licensed premises was open for business on that date. When the inspector entered, Johnny L. Holmes, son of licensee and business manager of the licensed premises, was seated at a counter and an opened can of Coors beer was on the counter in front of him. Another employee of the licensed premises at that time was one Mary Darwell, who is a cook in the licensed premises, and whose other responsibilities include clearing of tables in the bar area. No other conduct was observed related to alcoholic beverages.
The Issue Whether or not on or about February 2, 1977, James P. Pope, a licensee under the beverage laws, failed to file application for transfer of said license after a bona fide sale of said business and license was made by James P. Pope to Gary W. Simmons and Anthony W. Speakman contrary to 561.32, F. S. Whether or not on or about February 2, 1977, James P. Pope, licensed under the beverage laws, did allow persons, to wit; Gary W. Simmons and Anthony W. Speakman to assume a direct interest and engage in selling alcoholic beverages prior to filing a sworn application and being approved, contrary to 561.17, F. S. Whether or not on or about February 2, 1977, James P. Pope, licensed under the beverage laws, failed to manage and maintain control of all business conducted on his licensed premises, by allowing Gary W. Simmons and Anthony W. Speakman to take complete control of his premises contrary to Rule 7A-3.17, Florida Administrative Code.
Findings Of Fact The Respondent, James P. Pope, is the holder of license no. 27-526, series 2-COP, held with the Petitioner, State of Florida, Division of Beverage. James P. Pope has held this license from October 1, 1976, up to and including the date of the formal hearing. This license allows the licensee to sell beer and wine for consumption on the licensed premises. The licensed premises is located at 4220 West Fairfield Drive, Pensacola, Florida. The licensee is trading as Tavern on the Mall. On February 2, 1977, agent Daniel J. Cobb, State of Florida, Division of Beverage, went to the Respondent's licensed premises. When he arrived at the licensed premises, he spoke with one Gary W. Simmons. Simmons indicated that he was the new owner of the licensed premises although the transfer of ownership had not been completed. Simmons further indicated that he was in charge of the licensed premises and running the licensed premises. Simmons indicated that he and Anthony W. Speakman had a lease agreement with the licensee, James P. Pope. This lease agreement as shown by Petitioner's Exhibit no. 3, admitted into evidence and made a part of the record, establishes that James P. Pope as lessor entered into a lease agreement with Gary Simmons and Anthony W. Speakman as lessees, in which the lessees would manage the Tavern on the Mall, with the option to buy the business and equipment as soon as the beverage department approved the application for the transfer of the beer and wine license. The lease also indicated that the lessees would receive all the money from the business for managing the business, with the exception of $150 a week which was to be paid to James P. Pope and would go toward the down payment for the licensed premises which would come about at the time of the license transfer. The lease agreement additionally said that the purpose of the Tavern was for dispensing beer and wine. Agent Cobb also discovered the existence of a bank account which Simmons and Speakman had established to operate the business on the licensed premises. In addition, agent Cobb found that a local utility company, Gulf Power, was providing electric power to the licensed premises in the name of Simmons and Speakman. In an interview on February 3, 1977, between Cobb and Pope, the Petitioner's Exhibit no. 3 was presented to agent Cobb to establish the arrangement between Pope, Simmons and Speakman. (This lease was produced voluntarily and the Respondent has cooperated with the Division of Beverage in investigating this matter.) James P. Pope was not running or managing the business at the licensed premises on February 2, 1977, nor has he been managing the business from February 2, up to and including the date of the hearing. Pope only comes to the licensed premises two or three times a week just for purposes of checking up, but not for purposes of management. The facts in this cause do not establish that on or about February 2, 1977, James P. Pope, a licensee under the beverage laws, faced to file an application for a transfer of his license after a bona fide sale of the business located 4220 West Fairfield Drive, Pensacola, Florida, under s. 561.32, F. S. The agreement between James P. Pope and Gary W. Simmons and Anthony W. Speakman is a lease agreement with an option to buy and this is not a bona fide sale of the premises. The facts in this cause do establish that James P. Pope did allow Gary W. Simmons and Anthony W. Speakman to assume a direct interest in the licensed premises and engage in selling alcoholic beverage prior to filing a sworn application and being approved by the Division of Beverage, contrary to s. 561.17, F. S. This is established by the conditions existant on February 2, 1977, in the licensed premises. Finally, the facts as established, show that on February 2, 1977, James P. Pope, licensed under the beverage laws, was not managing and controling all the business conducted on the licensed premises under the beverage law, nor was his authorized employee or employees managing or controlling such business conducted on the licensed premises under the beverage law. Therefore James P. Pope was operating contrary to Rule 7A-3.17, Florida Administrative Code.
Recommendation Based upon the facts as shown, and the violations as established, it is RECOMMENDED: That the Director of the Division of Beverage grant the Respondent, James P. Pope, 30 days from the date of the final order, within which time to effect a legal transfer of his beverage license, license no. 27-526, series 2-COP, to Gary W. Simmons and Anthony W. Speakman or some satisfactory party, after which time if no legal transfer has been achieved, the license held by James P. Pope, license no. 27-526, series 2-COP shall be revoked. DONE AND ENTERED this 15th day of June, 1977, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Charles T. Collett, Esquire Division of Beverage The Johns Building 725 South Bronough Street Tallahassee, Florida 32304 James P. Pope 4220 West Fairfield Drive Pensacola, Florida
Findings Of Fact 10. The Division hereby adopts and incorporates by reference the Finding of Fact in foto, as set forth in the Recommended Order.
Conclusions The Director, Division of Alcoholic Beverages and Tobacco, Department of Business and Professional Regulation (hereinafter’Division’), after consideration of the complete record of this case on file with the Division, hereby enters this Final Order.
The Issue The issues for resolution in this proceeding are whether the Respondent committed the violations alleged in an administrative complaint, as amended, and if so, what discipline is appropriate.
Findings Of Fact Respondent, Mano's, Inc., doing business as Sea Port (Mano's) is now and has at all relevant times been a licensee of the Division of Alcoholic Beverages and Tobacco (DABT) holding a 4 COP SRX special restaurant license. Mano's operates a restaurant and lounge located in Cape Canaveral, Brevard County, Florida. Mano's license requires that at least 51 of its gross retail sales be served from food and non-alcoholic beverages. Mano's license application clearly acknowledges this and the requirement that it maintain a bona fide restaurant with 4000 square feet of floor space and seating for 200 patrons. Raymond Joseph Cascella is the president, sole corporate officer, and sole stockholder of Mano's. Attached to his license application dated May 14, 1991, is his sketch of the licensed premises. The instructions on the application provide that the sketch must include all specific areas which are part of the premises sought to be licensed. The sketch provided by Mr. Cascella includes the bar, restrooms, dining rooms, and kitchen. On September 10, 1996, Sam Brewer, then a special agent with DABT, conducted an inspection of Mano's licensed premises. Special Agent Brewer found several violations on his visit; he spoke with Mr. Cascella and gave Mr. Cascella a copy of the inspection report and three notices related to the violations. The violations observed and noted by Special Agent Brewer were improper display of the facility license (in the office rather than conspicuously displayed), insufficient seating (160 seats rather than 200), and failure to maintain sales receipts or other records to document that the 51 percent non- alcoholic beverages and food requirement was met. One of the notices provided to Mr. Cascella stated that no later than September 25, 1996, he must bring to the Rockledge DABT office records pertaining to total sales of food, non- alcoholic, and alcoholic beverages for the period June 1, 1996, through September 10, 1996. Mr. Cascella came to the Rockledge office on September 25, 1996, but the records he brought were computerized summaries of credit card transactions and did not reflect a break-out of sales of alcoholic beverages and non-alcoholic beverages and food. There were no guest receipts nor register tapes (also called "z-tapes") provided. On September 30, 1996, Special Agency Brewer issued another notice to Mano's. The notice, signed by Mr. Cascella, directs the licensee to produce these records to the Rockledge DABT district office no later than October 15, 1996, or administrative changes would be brought against the alcoholic beverage license: All records relating to gross retail sales of food and non-A/B and all records relating to gross retail sales of A/B (including source documents) (i.e., Z-tapes, waitress order checks), for the period June 1, 1996 thru September 10, 1996. All records relating to purchases of food and non-A/B and all records relating to purchases of A/B, for the period June 1, 1996, thru September 10, 1996. (Petitioner's Exhibit No. 4) Mr. Cascella returned to the Rockledge office on October 15, 1996, with a box of papers. These papers were records of purchases made from different vendors but there were no records of any retail sales by Mano's. In spite of letters to Special Agent Brewer from Mano's counsel promising full compliance and in spite of Mr. Cascella's several efforts, Mr. Cascella never produced all of the required records for the relevant period (June 1, 1996 through September 10, 1996). At the hearing in this proceeding Mr. Cascella submitted a large plastic ziplock bag stuffed with register receipts from June 1, 1996, through September 10, 1996. Mr. Cascella thought he had shown these or copies to Special Agent Brewer but was not sure. Mr. Cascella also conceded that the tapes were not complete, as they were only from the cash register at the bar, and none were from the register in the restaurant. Thus, the receipts reflected mostly liquor sales for each day, and very little food. (Transcript pp. 231-238) On February 7, 1997, Special Agent Brewer sent an official notice to Mano's informing the licensee that DABT intended to file administrative charges for failure to produce records as requested, in violation of Section 561.29(1)(j), Florida Statutes. On March 8, 1997, Special Agent Brewer, two other DABT agents, and several officers or agents from other law enforcement agencies appeared at Mano's licensed premises in Cape Canaveral. Mr. Cascella, who lived upstairs with his wife, was summoned by the bartender and came downstairs immediately. Mr. Cascella was very upset and told the officers that they had no right to be there without a search warrant. Throughout the inspection he remained very vocal and argumentative. Special Agent Brewer was looking for food items as part of his inspection and he requested that Mr. Cascella grant access to a locked area within the kitchen, a walk-in cooler or freezer. When Mr. Cascella refused, Special Agent Brewer informed him that the refusal was a violation of the law and he could be arrested. Eventually during the inspection the agents gained access to the area only after they cut the lock. Mr. Cascella was arrested for his refusal to stop interfering with the inspection and for his persistent and obstreperous comments during the agents' questioning of the bartender. Between October 1996, and December 1996, Jane Davis, an auditor with DABT conducted a surcharge audit of Mano's for the period July 1, 1993, through June 30, 1996. Mr. Cascella was cooperative and had the records available for Ms. Davis' review. She did not conduct an SRX audit requested by Special Agent Brewer, as she was being transferred from Rockledge to Lakeland and she could not take on the task of reviewing all of the Z- tapes for a long period of time. The surcharge audit Ms. Davis conducted was for a purpose different from the determination of percentage of alcohol sales and non-alcohol sales; her audit period, and consequently the records she reviewed, were not the June 1, 1996, through September 10, 1996, period addressed in the notices of violation issued by Special Agent Brewer.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the agency enter its final order finding that Respondent violated Rule 61A-3.0141, Florida Administrative Code, and Section 562.41(3), Florida Statutes, and imposing civil penalties of $250 and $1,000, respectively, for a total of $1,250. DONE AND ENTERED this 29th day of August, 2000, in Tallahassee, Leon County, Florida. MARY CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of August, 2000. COPIES FURNISHED: James D. Martin, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202 Allen C. D. Scott, II, Esquire Scott & Sheppard, P.A. 101 Orange Street St. Augustine, Florida 32084 Barbara D. Auger, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202 Joseph Martelli, Director Division of Alcoholic Beverages and Tobacco Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202
The Issue Each of the Petitioners is an applicant for an alcoholic beverage license. The issue in each case is whether the license application of each Petitioner should be granted or denied.
Findings Of Fact The parties have stipulated to the facts set forth in subparagraphs (a) through (o), below, which facts are taken as established without the need for proof: That the records from City National Bank in Respondent's Exhibit 30 accurately reflect that on November 22, 1996, the Petitioners received a $8,200,000 wire funds transfer from Parex Bank, Riga, Republic of Latvia, which was received through the Bank of New York. That the records from City National Bank in Respondent's Exhibit 30 accurately reflect that on November 22, 1996, the Petitioners transferred $8,000,000 to Rubin, Baum, Levin, et al., trust account. The Petitioners assert that this transfer was made to satisfy the terms of the Agreement entered into by the Petitioners and the MJP Entities. That the records from NationsBank in Respondent's Exhibits 32 and 33 accurately reflect that on November 13, 1996, SS Trans, Inc., transferred by check a sum in the amount of 1.5 million dollars ($1,500,000) to International Value Group's account at NationsBank. That the records from NationsBank in Respondent's Exhibit 33 accurately reflect that on November 21, 1996, SS Trans, Inc., made a funds wire transfer in the amount of $100,000 to Parex Bank, Riga, Republic of Latvia. That the records from NationsBank in Respondent's Exhibit 32 accurately reflect that on November 20, 1996, a company known as Oakdale Trading, Ltd., made a wire fund transfer in the amount of five million dollars ($5,000,000.00) to International Value Group's NationsBank account no. 3660385026. That the records from NationsBank in Respondent's Exhibit 32 accurately reflect that on November 21, 1996, International Value Group, Inc., made a wire funds transfer in the amount of 6.5 million dollars to Parex Bank, Riga, Republic of Latvia. That on January 14, 1997, the MJP Entities filed a Petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court in and for the Southern District of Florida, Broward Division, in Case Nos. 97-20219-BKC-PGH through and including 97-20226-BKC-PGH. That the MJP Entities as referenced herein are the Debtors in the bankruptcy petition referenced in Stipulation [g] above, and as referenced in the Exhibits 28 and 29, [mentioned] above. Larry Church, Chief Executive Officer for the Petitioners, was sole corporate officer of the MJP Entities while in bankruptcy until approximately June, 1997. He is no longer serving in such capacity. The Schedule of Assets filed by the Debtor MJP entities in U.S. Bankruptcy Court lists the three alcoholic beverage licenses that the Petitioners are seeking as assets of the Debtors. The Schedule of Assets filed by the Debtor MJP Entities in the U.S. Bankruptcy Court lists the three businesses for which the Petitioners seek licensure as assets of the Debtors. That Skobeltsyn was physically present in the State of Florida, United States of America, on November 19, 20, 21, and 22, 1996. That Skobeltsyn's B-1 Visa has been canceled by the United States' Embassy in Moscow, Russia, under INA 221(g) and INA 214(b). Skobeltsyn is permanently excluded from entry into the United States under INA 212(A)(6)(e). There is no formal appeal process available to Skobeltsyn because he is a foreign national outside the territory of the United States. However, Skobeltsyn may at any time submit a visa petition with the consular section of the United States' Moscow Embassy and attempt to establish that the earlier L-1 petition should not be a basis for denial. The alcoholic beverage license transfer applications by Wilan Corporation d/b/a Pure Platinum Club and Olympic Investments Corporations d/b/a Thee Doll House Club filed in January 1997 in the Division's Orlando District office have not been disapproved by the Division. However, the Division is investigating the qualifications of the applicants. Michael J. Peter also has a term in the sale agreements for these Orlando clubs that permits the clubs to use his trademarks. The United States Attorney's Office has not sought criminal charges against Michael Peter for violation of the terms of his Plea Agreement. Respondent is the State of Florida, Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (hereinafter "the DABT"). On January 22, 1997, the Petitioners filed three alcoholic beverage transfer applications with the DABT. The Petitioner, Golden Show, Inc., d/b/a Solid Gold, filed an application for license number 23-00030 to sell alcoholic beverages at its premises located in Dade County. The Petitioner, Platinum Show, Inc., d/b/a Pure Platinum, filed an application for license number 16-00010 to sell alcoholic beverages at its premises located in Broward County. The Petitioner, Silver Show, Inc., d/b/a Solid Gold, filed an application for license number 16-00504 to sell alcoholic beverages at its premises located in Broward County. Cinderella Ice, Inc. (hereinafter "Cinderella Ice"), is the sole stockholder of the Petitioner corporations (hereinafter "the clubs"). Sergey V. Skobeltsyn (hereinafter "Skobeltsyn") is the sole corporate officer and sole stockholder of Cinderella Ice. Skobeltsyn is also the sole corporate officer of each of the Petitioner corporations. Following an investigation, by means of a Notice of Disapproval dated May 8, 1997, the DABT advised the Petitioners in writing that each of their alcoholic beverage license applications were disapproved. The Notice of Disapproval stated the following specific reasons for the proposed disapproval of each application: The Applicants have failed to correct errors and/or omissions on their alcoholic beverage license applications and have thus submitted incomplete alcoholic beverage license applications. The Applicants have failed to supply additional information required by the Division in order for it to conduct a full investigation of the qualifications of the applicants as required by Section 561.18, Florida Statutes, and as requested in the Division's letters of January 27, February 12, and April 18, 1997. The Applicants' sole corporate officer and sole shareholder of Cinderella Ice, Inc., Sergey V. Skobeltsyn is not qualified to hold an interest in an alcoholic beverage license. He is not legally authorized to manage and control the premises sought to be licensed as required by Rule 61A-3.017, Florida Administrative Code, and Section 561.17, Florida Statutes. Mr. Skobeltsyn is an alien national who has not been authorized by the U.S. Department of State or the U.S. Department of Justice, Immigration and Naturalization Service, to enter the United States as a foreign investor who can manage and control a business in this country. Furthermore, Mr. Skobeltsyn's current B-1 Visa does not permit him to be an employee for hire in the United States. Therefore, Mr. Skobeltsyn cannot legally serve as an employee or corporate officer of the Applicant corporations, by which capacity he could legally exercise management and control of the business sought to be licensed. The Applicants do not exercise ultimate over-all control over the businesses sought to be licensed. The business conducted on the licensed premises is not managed and controlled by the Applicants, or managed by an authorized employee or employees of the applicants, contrary to Rule 61A-3.017, Florida Administrative Code, and Section 561.17, Florida Statutes. A person not qualified to hold an alcoholic beverage license has a direct or indirect financial interest in the businesses sought to be licensed contrary to Section 561.17(1), Florida Statutes, to wit: Michael J. Peter, who is disqualified from holding an alcoholic beverage license pursuant to Section 561.15, Florida Statutes, has a direct or indirect financial interest in the business sought to be licensed. The Applicants have falsely sworn to the alcoholic beverage license applications by not disclosing the direct or indirect financial interest of Michael J. Peter and/or of various business entities owned by Michael J. Peter, contrary to Section 559.791, Florida Statutes. The Applicants have falsely sworn to the alcoholic beverage license applications by not disclosing the direct or indirect financial interest of International Value Group, Inc., and/or Tathimtrans, LLP (a foreign corporation), and/or SS Trans, Inc., and/or Oakdale Trading (a foreign corporation), contrary to Section 559.791, Florida Statutes. The Applicants have falsely sworn to the alcoholic beverage license applications by declaring on the applications that the source of investment funds was an 8.2 million dollar commercial loan from Pareks Banka in Riga, Latvia, contrary to Section 559.791, Florida Statutes. The Notice of Disapproval also notified the Petitioners of their right to request a hearing. The Petitioners timely invoked that right. On November 22, 1996, the Petitioners entered into an agreement with Michael J. Peter, the prior license holder and owner of the three clubs, for purchase of the three clubs. The purchase price for these clubs was eight million dollars ($8,000,000). A key term of the agreement for sale was that the sellers would file a Chapter 11 Bankruptcy under the U.S. Bankruptcy Code. The sellers, who would become the debtors in bankruptcy, would then submit a plan of reorganization to the bankruptcy court by which the clubs and their alcoholic beverage licenses would be transferred to the Petitioners. During the pendency of the bankruptcy, the purchasers would act as the managers of the clubs, and all profits from the clubs would be used to satisfy the debts of the clubs and sellers. In this regard, section 2(e) of the agreement of November 22, 1996, reads as follows: (e) Following the termination of the Receivership and until confirmation of the Plan, all earnings of the Clubs shall be used to pay down the liabilities of the Clubs as quickly as possible; provided, however, that MJP shall permit Purchaser or its designee to manage the Clubs following termination of the Receivership, subject to Purchaser or its designee obtaining the appropriate licenses therefore, and to receive a management fee not to exceed $70,000 per month (which shall accrue from month to month to the extent that the Clubs' revenues after paying all other operating expenses due for the month are insufficient. The sellers filed for bankruptcy on January 15, 1997, and the bankruptcy court issued an order by which the Petitioners were placed in possession of the clubs and were authorized to manage and control the clubs.1 However, as of the date of these proceedings, no plan for reorganization has been approved by the bankruptcy court. It appears that the Petitioners intend to propose a change in the plan, by means of which Skobeltsyn will contribute an additional one million dollars and Cinderella Ice will receive the real estate associated with two additional clubs in Orlando. Although Petitioners have paid eight million dollars for the clubs, the transfer of the clubs from the seller is not final and is still awaiting a confirmation order, or plan approval, by the bankruptcy court. Michael J. Peter is disqualified from holding an interest in an alcoholic beverage license by virtue of a Federal felony conviction, stemming from his criminal failure to disclose the interest of another person in these alcoholic beverage licensed businesses. Michael J. Peter entered into a consent order with the DABT wherein he agreed to divest himself, prior to January 15, 1997, of all ownership interests in any and all alcoholic beverage licenses in which he has an interest. Michael J. Peter also agreed to divest himself of all ownership interests in any entity holding an alcoholic beverage license. The November 22, 1996, sale agreement did not sell to the Petitioners the trademarks used by the businesses. The trademarks "Pure Platinum" and "Solid Gold" remain the personal assets of Michael J. Peter. Michael J. Peter and the Petitioners entered into a License and Support Agreement for the use of these trademarks. According to this agreement, the Petitioners are licensed to use the trademarks with certain specific restrictions, and with the requirement that certain business activities of the clubs be subject to Michael J. Peter's approval. For example, the Petitioners can transfer their rights to use the trademarks only if they sell the clubs, and then only in accordance with the following provision of the amended License and Support Agreement: However, if Licensee desires to effectuate a Transfer in conjunction with the sale of any or all of the Clubs, Licensee shall be permitted to do so, provided that (a) in Licensor's reasonable judgment, the transferee has the knowledge, expertise and financial wherewithal to maintain the standards of quality required by this Agreement, and (b) such transferee expressly assumes this Agreement in a written instrument in form and substance reasonably acceptable to Licensor. If either of the conditions stated in (a) or (b) are not met, Licensor shall be permitted to terminate this Agreement. Under the amended License and Support Agreement, Michael J. Peter is also authorized to exercise control over certain business decisions of the clubs, including the entertainers hired by the clubs to promote the trademarks and the quality of certain merchandise sold by the clubs. Michael J. Peter is also authorized to control, at least indirectly, the quality of the clubs' business activities by virtue of the language in the amended License and Support Agreement which, as a condition of the used of the trademarks, require that the clubs will . . . not apply the Licensed Marks to any Products of less than the highest quality, use the Licensed Marks in connection with any marketing, advertising or promotional materials or productions not of the highest quality, allow any Licensed Business to provide service, food and beverage or entertainment of less than the highest quality, or allow the appearance of any Licensed Business to be anything less than the highest quality. (Emphasis added.) The right to use the trademarks "Pure Platinum" and "Solid Gold" are rights that are very valuable to the Petitioners. These trademarks are a valuable asset in attracting customers to the Petitioners' businesses. It would be difficult to sell the Petitioners' businesses without also being able to transfer the right to continue to use the trademarks. By reason of his ownership of the subject trademarks, and by the rights and authority he has reserved to himself under the amended License and Support Agreement, Michael J. Peter has an interest, direct or indirect, in the Petitioners' businesses by reason of his ability to assert control of how some aspects of those businesses are operated, as well as by reason of a potential financial benefit to himself in the event of a future sale of the clubs, at which time Michael J. Peter would have an opportunity to dictate the terms on which the use of the licensed trademarks would be transferred to the new purchaser of the clubs. The Petitioners assert that they acquired the 8.2 million dollars for purchase of the clubs by a means of a commercial loan from Parex Bank. The purported bank loan was wired to the Petitioners on November 22, 1996, the same day they entered into the sale agreement for purchase of the clubs. Parex Bank is in Riga, Latvia, a country of the former Soviet Union. The Petitioners submitted to the DABT several loan documents. The documents were written in the Russian language, but English translations were also provided by the Petitioners. The loan application, dated November 19, 1996, consisted of a brief one page request. The purported loan agreement, titled "Credit Agreement No. 3102," and dated November 21, 1996, was the principal loan document that was presented by the Petitioners as evidence of a loan. Skobeltsyn was physically present in the State of Florida on the date that he and Cinderella Ice allegedly entered into his agreement with Parex Bank. The provision of law pursuant to which Skobeltsyn has been excluded from entry into the United States, INA 212(A)(6)(e), provides that any person who knowingly aids another alien to enter, or to try to enter, the United States in violation of law is inadmissible. The applications in these cases were accompanied by a copy of an L-1 visa petition which had earlier been filed on behalf of Skobeltsyn. Skobeltsyn does not now have an L-1 visa, or any other type of visa, for entry into the United States. An L-1 visa permits a foreign national to enter the United States to be employed by a subsidiary in the United States of a foreign corporation. The L-1 Visa petition represented that Skobeltsyn was entering the United States to be employed by International Value Group, Inc. (IVG). IVG is a wholly-owned subsidiary of Tathramtrans, a Russian corporation, which is co-owned by Skobeltsyn and Yevgenii Sulyagin. Nothing else is known of Sulyagin. Skobeltsyn is the President of Tathramtrans. The L-1 petition states that the business of IVG is selling household goods, auto parts, and airplane parts to Russia. The DABT's investigation revealed that the business address stated on the L-1 petition for IVG was an empty store front, with no export business activity, or any other activity, occurring at the location. Rodion Sokrovichtchouk (Rodion),2 born on April 24, 1977, has been, according to his petition for an L-1 visa, a vice-president of IVG since 1993, when he was sixteen years old.3 He is also a Russian citizen. He entered the United States under a student visa, but has since obtained an L-1 visa to be employed by IVG in its export of goods to Russia. Rodion is a personal friend of Skobeltsyn. Rodion has been described as the eyes and ears of Skobeltsyn. Skobeltsyn communicates through Rodion with the employees of Cinderella Ice and its affiliates, and with his chief executive officer, Lawrence Church. Rodion is fluent in Russian and English. Rodion is an essential link between Skobeltsyn and the chief executive officer, Lawrence Church, because Mr. Church does not speak Russian and Skobeltsyn does not speak enough English to discuss business in English. Rodion is also a link in the transmission of business documents. For example, business checks and other bank documents of Cinderella Ice that require Skobeltsyn's signature are given to Rodion. Rodion then arranges for the documents to be delivered to Skobeltsyn, and when they are signed, the documents are returned to Rodion, who then distributes them to Lawrence Church or to whichever other employee needs the documents. Although Lawrence Church has a contract to manage the clubs, Rodion is, of necessity, actively involved in the management of the clubs, because he is the only person to whom Skobeltsyn can effectively communicate instructions. Furthermore, in view of the long personal and business relationships between Rodion and Skobeltsyn, and the relatively brief relationship between Church and Skobeltsyn, it is more likely than not that whatever managerial authority may actually be exercised by Church is subordinate to the authority actually exercised by Rodion in the management of Cinderella Ice and its clubs. The corporate office of IVG is located at the corporate offices of Cinderella Ice. Rodion now uses the business office that was used by Skobeltsyn prior to Skobeltsyn's exclusion from the United States. IVG has not limited its business activities to the export activities described in the L-1 petitions it filed on behalf of Skobeltsyn and Rodion. It has also entered into two contracts with Cinderella Ice and into one contract with Professional Parking Management, Inc. One of the contracts between IVG and Cinderella Ice is one pursuant to which, in the words of Lawrence Church, IVG "supplies hats, T-shirts, novelty items to the three applicant companies."4 The most reasonable inference that can be drawn from the little that appears in the record regarding this agreement, is that IVG has contracted with Cinderella Ice to provide the "Licensed Products" and items bearing the "Licensed Marks" described in the License and Support Agreement between Michael J. Peter and Cinderella Ice.5 That agreement, as amended, includes the following language at section 9.2: Licensor [Michael J. Peter] agrees to provide or to cause one or more of his affiliates to provide to Licensee [Cinderella Ice], but only to the extent requested by Licensee, Licensed Products and other items bearing the Licensed Marks or on or to which the Licensed Marks are to be applied for use at or in connection with the Licensed Businesses. It is clear from the information in the L-1 petitions that IVG does not have any expertise or experience in providing the types of goods described in the preceding paragraph. There does not appear to be any logical business reason for Cinderella Ice to enter into such an agreement with IVG. From the point of view of IVG, it would not make good business sense to enter into such an agreement unless it expected to make a profit by marking up the cost of the goods it sold to Cinderella Ice. From the point of view of Cinderella Ice, it would not make good business sense to buy goods at an inflated price from IVG when it can buy the same goods directly from Michael J. Peter, or his affiliates, without paying a marked-up price to IVG. The other contract between Cinderella Ice and IVG is titled Valet Parking Agreement. Under the terms of this agreement, dated December 23, 1996, IVG agrees to provide valet parking services and parking lot security services at all three of the clubs operated by Cinderella Ice. In exchange for providing such services, IVG ". . . shall be entitled to retain all income derived from the operation of the valet parking service and is obligated to pay all expenses, including security services, associated therewith." The Valet Parking Agreement dated December 23, 1996, includes the following introductory language: WHEREAS: The Concessionaire is in the business inter alia, of operating automobile valet parking services at divers clubs, restaurants, hotel and other public places. The very next day after signing the Valet Parking Agreement with Cinderella Ice, on December 24, 1996, IVG signed a contract with Professional Parking Management, Inc., a Florida corporation. The essence of that agreement is that Professional Parking Management will provide all of the valet parking and security services that IVG agreed to provide in its contract with Cinderella Ice. In exchange for providing those services, Professional Parking Management will receive fifty percent of the net pre-tax profit. The other fifty percent of the profit will be retained by IVG. It is clear from the information in the L-1 petitions that IVG does not have any expertise or experience in providing valet parking services or security services. Professional Parking Management, on the other hand, is operated by people who do have such expertise and experience. From the point of view of Cinderella Ice, it does not make good business sense to use IVG, which has no experience in such matters, as an intermediary to obtain valet parking services and parking lot security services from Professional Parking Management, an experienced provider of such services. Had Cinderella Ice contracted directly with Professional Parking Management, Cinderella Ice would be receiving half of the profits from the operation of the valet parking service. As it is, that share of the profits goes to IVG, in exchange for which IVG performs no service of value to Cinderella Ice. For reasons that are not explained in the record of these cases, the contracts described above between Cinderella Ice and IVG have the effect of diverting revenue from Cinderella Ice to IVG without any useful service or function being performed by IVG. In essence, under these contract, Cinderella Ice is giving money to IVG without receiving anything of value from IVG. There is evidence of additional unexplained entanglements between IVG, Rodion, and S.S. Trans Incorporated and Cinderella Ice and the clubs it operates. On at least one occasion, Cinderella Ice has paid an American Express credit card bill for Rodion. During March and April of 1997, Cinderella Ice made a number of payments to IVG and to S.S. Trans Incorporated. On at least one occasion, Rodion signed a twenty thousand dollar ($20,000) check on Cinderella Ice's account at First Union Bank. During the investigation of these applications, the DABT sought to learn more about the relationships between Rodion and Skobeltsyn, between Rodion and Cinderella Ice, between Rodion and IVG, between IVG and Skobeltsyn, between IVG and Cinderella Ice, and between S.S. Trans Incorporated, Skobeltsyn, and Cinderella Ice. To that end a DABT agent served Rodion with an investigative subpoena. When Rodion appeared in response to the subpoena, he asserted his right to remain silent guaranteed by the Fifth Amendment of the United States Constitution. Rodion did not answer any questions at all. During the entire DABT investigation of these applications, Skobeltsyn was unable to make himself available for interview in the State of Florida. The relationships mentioned immediately above, which the DABT has not been able to fully investigate, are sufficient to warrant an inference that at least Rodion and IVG have undisclosed financial interests in Cinderella Ice and/or the clubs operated by Cinderella Ice. The existence of such an undisclosed financial interest is the most logical explanation for the contracts between IVG and Cinderella Ice, pursuant to which IVG receives financial benefits without providing any useful service for Cinderella Ice. The inference is compelling when the foregoing is considered in light of the fact that, as addressed in further detail below, IVG sent six and a-half million dollars ($6,500,000) to the Parex Bank the day before the Parex Bank sent eight million two hundred thousand dollars ($8,200,000) back to Cinderella Ice. The DABT's licensing processes are conducted primarily through the DABT's local District Offices. The DABT issued to the Petitioners temporary licenses, prior to the issuance of permanent licenses. The DABT must issue a temporary license upon the submission of an application that on its face appears to disclose no grounds for denial. A license investigation is then conducted by the office responsible for the district in which the applicant's business is located. Because of the similarity of the three applications in these cases, the Dade County application of Golden Show, Inc., was processed and investigated through the Broward County office along with those of the other two Petitioners. The DABT assigned Special Agent Philip Krauss to investigate the qualifications of these applicants. Special Agent Krauss has had many years of experience conducting investigations of this type for the DABT. Special Agent Krauss began his investigation in these cases by conducting a thorough review of the applications. This is the first step in a license investigation process, and it includes a review of any supporting documents submitted with the applications, such as the personal questionnaires, and management agreements, leases, and contracts. The next step in a license investigation is to advise the applicant in writing of the need for any additional information to correct any errors, ambiguities, or omissions in the applications. In letters dated January 27, 1997, February 12, 1997, and April 18, 1997, the DABT requested additional information and documents from the Petitioners and advised them of deficiencies in the applications. One of the issues in these cases is whether the Petitioners complied with the DABT's requests. The funds used for the purchase of the clubs came from a bank in Latvia, a republic of the former Soviet Union. Even though the Iron Curtain has fallen, it is difficult to obtain investigative information from Russia, such as date of birth, place of birth, or employment verification. In the investigation of these cases, the DABT has had to rely to a greater degree than usual on the applicants for information. Therefore, it was more important than usual that the information provided by the applicants be complete, consistent, accurate, and timely. In the January 27, 1997, correspondence the DABT asked the Petitioners to provide, among other things, copies of all closing statements between Skobeltsyn and his corporate entities, and Michael J. Peter and his entities. The DABT never received a copy of a closing statement showing that the applicants had ever acquired an ownership interest in the businesses. Such a record could not be provided because the sale agreement does not reflect a final sale and transfer of the business assets. Rather, as mentioned earlier in these findings of fact, transfer of the business assets to Cinderella Ice will not be final until the bankruptcy court issues a confirmation order or plan approval. The DABT does not normally approve an application to transfer an alcoholic beverage license until there has been a final sale of the business to the applicant. Until the sale is final, the DABT views the application as incomplete. The investigation of these applications of necessity focused on Skobeltsyn, because he is the only natural person disclosed as having an ownership interest in any of the applicant businesses. In its January 27, 1997, letter the DABT also asked the Petitioners to provide a "Net Worth Statement for Skobeltsyn which identifies all assets, tangible and intangible, all incomes, royalties, savings, expense allowances and equity in real property." Similar requests were made in the DABT's letters of February 12, 1997, and April 18, 1997. In the April 18, 1997, letter the DABT also made it clear that it sought such information for each of the applicant corporations and for the officers and shareholders of each of the applicant corporations. The Petitioners responded through their attorneys that there was no net worth statement in existence, but provided what they described as "copies of various items that reflect Mr. Skobeltsyn's ownership of real and personal property such as an apartment, a vehicle, etc." In its April 18, 1997, letter, the DABT explained that the previously provided information did not provide sufficient information to conduct a full investigation of Skobeltsyn's financial background. The DABT had good reason to conclude that the previously provided information was not a complete response to the DABT's requests. For example, the information did not disclose all of the personal property and business investments that the DABT's investigation had revealed, such as Skobeltsyn's residence in North Miami Beach and his ownership interests in IVG and S.S. Trans Incorporated. The previously provided information also failed to mention such things as Skobeltsyn's business and personal bank accounts and credit card accounts at the Kazan branch of the Mezhcom Bank. As a result of these shortcomings, in its letter of April 18, 1997, the DABT rephrased its request for information, as follows: The Applicants are hereby requested to provide documents, records and/or information which identifies all assets, tangible and intangible, all income, royalties, savings, expense allowances, and equity in real property, of the Applicant corporations, its officers and shareholders. The Petitioners never fully complied with the above-quoted request. To the contrary, as noted in further detail below, the information provided by the Petitioners was incomplete, inconsistent, inaccurate, and illogical. And some of it simply appears to have been false. In order to conduct a complete investigation, the DABT must have sufficient information to verify the applicants' financial ability to obtain a commercial bank loan, especially when the loan is as large as the one involved in this case. The goal of the DABT's inquiry into such matters is to confirm that there are no other interested persons involved in the applicants' businesses that need to be disclosed to the DABT. The primary concern of the DABT in this regard is to make certain that all persons that have a direct or indirect interest in the businesses are qualified. The DABT could not conduct a full investigation without verifying the source of the Petitioner's investment funds. The purported loan agreement, Credit Agreement No. 3102, and the Personal Guaranty of Skobeltsyn state that the loan was secured by all of the tangible and intangible assets of the borrower, Cinderella Ice.6 The DABT attempted to verify the existence and extent of these tangible and intangible assets. The DABT apparently never received any information about any assets of Cinderella Ice, other than the $8,200,000 it received from the Parex Bank. If Cinderella Ice had no other assets, then it is most unlikely that a bank would loan an empty corporate shell $8,200,000 with which to start a business in a foreign country. If Cinderella Ice did have other assets, those assets should have been disclosed when requested by the DABT. The DABT's requests for information along these lines was for the purpose of confirming that the investment funds did not originate from persons other than Skobeltsyn or the Petitioners. According to the information submitted with the applications, Skobeltsyn was a bookkeeper for Tattramsgaz, a company in Kazan, Russia, from 1991 through 1992. From 1992 to the present, he asserts that he has been the president of two corporations in Russia, Edson, Inc., and Tachentrans (possibly the same entity as Tathramtrans). If the information submitted with the application is true, in four years, Skobeltsyn progressed from a job as a bookkeeper to become the president of a corporation that can obtain a loan of $8,200,000 from a Latvian bank within two days of submitting a brief one-paragraph loan request, a request which was submitted and approved without Skobeltsyn even having to go to the bank. In response to the DABT's request for a net worth statement, Skobeltsyn's attorneys provided a document titled Personal Financial Statement. It is a rather bare bones summary of what is purported to be Skobeltsyn's assets and liabilities as of April 29, 1997. It does not contain any identifying information regarding any of the assets and liabilities, with the sole exception of Skobeltsyn's ownership of "Thaimtrans Corporation" and Cinderella Ice. Some interesting details reported in the Personal Financial Statement include the following. Skobeltsyn is reported to have total assets of $69,702,000, and total liabilities of $29,062,000, which results in a net worth of $40,640,000. But he is reported to have only $40,000 cash in checking and savings accounts. He is reported to have none of the following: notes owed to him, certificates of deposit, treasury bills, savings certificates, life insurance, money market funds, precious metals, stocks, or bonds. Other than the cash mentioned above, Skobeltsyn's only reported assets consist of: Real estate (market value) 1,530,000 Vehicles (market value) 132,000 Ownership: "Thaimtrans" Corporation 60,000,000 Ownership: Cinderella Ice, Inc. 8,000,000 Notably, the Personal Financial Statement makes no mention of Skobeltsyn's ownership interest in S.S. Trans Incorporated. The Personal Financial Statement reports Skobeltsyn's liabilities as follows: Credit card obligations 15,000 Home mortgage 840,000 Auto loans 7,000 Personal Guarantee-Pareks Bank for Cinderella Ice, Inc. 8,200,000 Business loan obligations- Tathimtrans Corporation 20,000,000 Total Liabilities 29,062,000 44. During the course of the investigation, the DABT agents obtained numerous documents related to Skobeltsyn's purchase of a residence in North Miami Beach, Florida. Those documents include a Uniform Residential Loan Application signed under oath by Skobeltsyn on March 8, 1996. That application included representations as to Skobeltsyn's assets and liabilities. The only assets listed in the loan application of March 8, 1996, were as follows: Cash deposit towards purchase 80,000 Bank account at Nations Bank, Ft. Laud. 419,963 Net worth of businesses owned 2,000,000 1996 720 BMW automobile 90,000 Total Assets 2,589,963 The loan application also reported Skobeltsyn's net worth as $2,589,963, because he reported as his only liability a single credit card account, on which he reportedly owed no balance. The loan application included several other relevant details. Skobeltsyn reported that he was paying rent of $4,500 per month. Skobeltsyn reported that he was receiving a salary of $50,000 per month. Skobeltsyn answered "no" to the following question on the application: "Are you a co-maker or endorser on a note?" Skobeltsyn also answered "no" to the following question: "Have you had an ownership interest in property in the last three years?" Skobeltsyn answered "yes" to the following question: "Are you a permanent resident alien?" The loan application was signed under oath before a Notary Public. At the time of signing the loan application, Skobeltsyn was not a permanent resident alien. In support of the residential loan application discussed above, Skobeltsyn submitted a copy of a bank statement dated January 31, 1996, from NationsBank for an account in the name of S.S. Trans Incorporated. The bank statement showed an account balance as of January 31, 1996, of $419,963. The bank statement also shows a "miscellaneous debit" in the amount of $80,000, which is the exact amount that Skobeltsyn paid as a deposit on the residence he bought in North Miami Beach in March of 1996.7 In support of the residential loan application discussed above, Skobeltsyn submitted a letter dated February 8, 1996, written in Russian, and purportedly signed by the president of the Kazan Branch of the Mezhcom Bank, along with an English translation of the letter. The translation was prepared by Rodion. The text of the translated letter of February 8, 1996, from the Mezhcom Bank is as follows:8 We are acknowledging Mr. Sergey Skobeltsyn as a good customer of the Kazan branch. Mr. Sergey keeps large balances in U.S. currency. As a result we have issued to him a Eurocard, MasterCard and a Mexhchom Bank/Gold bank cards. He has always been successful in timely paying all debts. Indeed, he constantly keeps large balances in his business and personal accounts. We are anxious to assist him in all his business ventures. R. F. Kamaleev President Kazan Branch Mezhcom Bank In support of the same loan application, Skobeltsyn also submitted a letter on the stationery of Tathimtrans, Inc., dated February 8, 1996, and written in Russian, along with an English translation. This translation was also prepared by Rodion. The text of the translated letter of February 8, 1996, on Tathimtrans stationery is as follows: Mr. Sergey Skobeltsyn's annual income as President of "Tathimtrans" for 1995 was: U.S. $600,000.00. Mr. Sergey Skobeltsyn's projected income for 1996 is $650,000.00. N. A. Varfolomeeva Senior Accountant Also submitted in support of the mortgage loan application was a letter dated the eighth day of an untranslated month in 1996, written in Russian on the stationery of Alma, Inc., along with an English translation of the letter. Again, the translation was prepared by Rodion. The text of the translation of the letter on Alma, Inc., stationery is as follows: This letter verifies the sum of U.S. $150,000 on January 22, bank reference number 430016533 and the sum U.S. $350,000 on January 25, bank reference number 430024652, were wired to the account of "SS TRANS" for services rendered as per our agreement. F. R. Shakeirov Director On March 8, 1996, Skobeltsyn closed on the purchase of a residence in North Miami Beach, Florida. The purchase price was $800,000. In conjunction with the purchase, Skobeltsyn signed a mortgage in the amount of $500,000. It is clear from the documents related to Skobeltsyn's real estate transaction in March of 1996 that Skobeltsyn was treating the assets of S.S. Trans Incorporated as his personal assets. However, the Personal Financial Statement submitted in April of 1997 makes no mention of S.S. Trans Incorporated. This is one of a number of unexplained inconsistencies in the documentation surrounding Skobeltsyn's personal and business financial circumstances. It is clear from the documents related to Skobeltsyn's real estate transaction in March of 1996 that he represented his net worth at that time to be $2,589,963. Thirteen months later, in the Personal Financial Statement, he reports a net worth of $40,640,000. While it is within the realm of possibility that a talented and fortunate businessman could increase his net worth that much in a mere thirteen months, it is also highly unlikely that any mere mortal actually did so. Absent some plausible explanation, and there is none in the record of these cases, the most reasonable inference is that Skobeltsyn has from time to time provided false information about his financial circumstances. The Petitioners never provided the DABT with an itemization of Skobeltsyn's sources of income, as requested in the January 27, 1997, letter, and in later letters. In its letter of January 27, 1997, the DABT also required the Petitioners to submit the following information: Regarding Credit Agreement 3102: Provide a copy of the loan application, all schedules and attachments to the credit agreement, copies of all personal loan guaranty agreement(s) and a loan amortization schedule. The Petitioners responded to the DABT's request by asserting in the February 7, 1997, letter, the following: There is no loan application, schedules or attachments to the subject credit agreement, other than what has already been provided to AB&T in the original application package. The loan amortization schedule is included in the body of the subject credit agreement and in order to obtain copies of any personal guaranty documents in existence, if any, an extension of time is needed. Notwithstanding the Petitioners' assertions that there were no additional documents relating to the loan apart from a possible personal guaranty, on May 1, 1997, they subsequently submitted additional documents. The additional documents, which are discussed below, included copies of the original brief request for credit, a purported amendment to the credit agreement (along with a translation and a "correction" of the translation), and a request for an extension of time regarding the interest payments due under the credit agreement. The submission of documents late in an investigation, after representations that there are no additional documents, is the sort of inconsistency that raises the strong possibility of fabrication. Credit Agreement 3102 and the documents related to it raise more questions than they answer. The first problematic document is the loan application document, Respondent's Exhibit 8, which reads in its entirety, as follows: To the President AO "Pareks-Bank" Mr. Karginu V. I am requesting credit, for the sum of 8 200 000 (eight million two hundred thousand) U.S. dollars, for accomplishing a deal to buy three night clubs in South Florida, which are estimated by experts to be one of the best in the U.S. territory. We are ready to submit a business plan from which it would be clearly respectable and profitable for this type of business. Sincerely, Skobeltsyn, S.V. "CINDERELLA ICE, INC" 12000, BISCAYNE BLVD,FL. Signature Dated: 11/19/96 Cinderella Ice, Inc. Corporate Seal 1996 Florida During the course of the application investigation, the Petitioners' attorney explained that the business plan referred to in the brief credit application was not the usual type of business plan. Rather, as explained in the attorney's letter of May 1, 1997: The "business plan" submitted in connection with the subject loan application and referenced in Mr. Skobeltsyn's letter of November 1996 to the Pareks Bank consisted of copies of the voluminous Receiver's Reports and proforma profit and loss statements related to the business. I have enclosed herewith copies of the Receiver's Reports submitted from March through October 1996 which included the subject profit and loss statements. The Receiver's Reports were obviously the most accurate description of the financial state of the businesses that existed at the time. It was most logical to submit that data rather than a projected business plan. The Pareks Bank accepted those reports in lieu of the business plan. It is nothing less than incredible that, within 48 hours, the Pareks Bank, solely on the basis of a one-paragraph loan request, a collection of receiver's reports, and Skobeltsyn's personal guarantee, would loan $8,200,000 to a brand-new Florida corporation with no assets, so that it could buy a portion of the business assets of a convicted criminal, all of which assets were in the hands of a receiver, and were involved in complex litigation involving millions of dollars of claims. During the course of its investigation, the DABT requested a copy of the "Schedule One" mentioned in Section 2.5 of Credit Agreement No. 3102. By letter of May 1, 1997, the Petitioners' attorney explained: Schedule One to Credit Agreement No. 3102 is a copy of the November 1996 agreement between MJP and Cinderella Ice, Inc., as confirmed by the December 23, 1996 amendment to Section 2.5 of the subject credit agreement, which is enclosed. Enclosed with the letter of May 1, 1997, were three documents; a document in Russian that purports to be an amendment to Section 2.5 of Credit Agreement No. 3102, an English translation of the purported amendment, and a written statement in English signed by Lawrence Church describing an error in the translation. The English translation reads as follows: 23.12.96 Amendment part of section 2.5 of the Credit Agreement Contract No. 3102, dated November 20, 1996, shall be the contract between Cinderella Ice, Inc. and M. J. Peter, executed on December 21, 1996. V. Kargin President, AO Parex Bank Church's clarification of the above reads as follows: To Whom It May Concern Please be advised that due to a translator's scriviners error, translation document dated 23.12.96 should read: "Amendment part of section 2.5 of the Credit Agreement Contract No. 3102, dated November 21, 1996, shall be the contract between Cinderella Ice, Inc. and M. J. Peter, executed December 20, 1996." Lawrence Church Agent for Cinderella Ice, Inc. (Emphasis in original.) The purported amendment, with or without Church's clarification, is unintelligible and, therefore, of questionable validity. One cannot tell which part of Section 2.5 the amendment purports to amend. The purported amendment could just as logically be interpreted as an amendment to the first sentence of Section 2.5 or as an amendment to the last sentence of Section 2.5. The legitimacy of the purported amendment is also cast into doubt by the fact that it purports to be a unilateral amendment by the bank, without Skobeltsyn's signature agreeing to the amendment. Further, the purported amendment refers to a contract between Cinderella Ice and M. J. Peter executed on December 20 or December 21, 1996. Cinderella Ice and Michael J. Peter did not enter into a contract on either of those dates. Last, but not least, the purported amendment does not answer the underlying question which was posed by the DABT; the still unanswered question being: What comprised the original "Schedule One" referred to in Section 2.5 of Credit Agreement No. 3102 prior to any amendment of the agreement? In the final analysis, the most logical inference to be drawn from the purported amendment to Section 2.5 of the credit agreement is that it is a clumsily executed fabrication designed to conceal an oversight or omission in an illegitimate and false document titled Credit Agreement No. 3102. The credit agreement states that the interest rate on the loan is 9 percent per year to be paid monthly. The monthly interest due on an 8.2 million dollar loan at 9 percent per annum is $61,500 per month. The Petitioners attempted to explain the absence of interest payments by submitting to the DABT a copy of a request to Parex Bank dated December 28, 1996, for a six-month extension of the interest payments, which, curiously, also includes a promise to begin making interest payments by no later than April 30, 1997. The request for a six-month extension appears to be signed by Skobeltsyn, as well as by someone identified in the document as "President, AO Parex Bank." It is not clear whether the second signature constitutes agreement to the request or merely acknowledgment of receipt of the request. In April 1997, the Petitioners made a single interest payment of thirty thousand dollars. This is the only interest payment that the Petitioners have made on the purported loan. The Petitioners presented no persuasive evidence to explain the absence of interest payments.9 The absence of regular interest payments by the Petitioners casts a significant cloud of doubt over the legitimacy of the loan. The most reasonable inference to be drawn from all of the irregularities and inconsistencies surrounding the purported 8.2 million dollar loan, is that the document titled Credit Agreement No. 3102 is some type of sham or subterfuge, and there is no genuine loan agreement from the Parex Bank. During the period from January 22, 1996, through November 21, 1996, S.S. Trans Incorporated received ten transfers of large sums of money from sources unknown to the DABT. Most of the funds originated from Parex Bank in Latvia, but four of the transfers originated from unknown banks and accounts. Four of the wire transfers from the Parex Bank came from account number 0714926. The total amount received by S.S. Trans Incorporated from account number 0714926 was one million five hundred seventy thousand dollars ($1,570,000). The sums transferred ranged in amount from seventy thousand dollars ($70,000) to one million dollars ($1,000,000). The sums transferred into the account comprised a grand total of two million seven hundred seventy thousand dollars ($2,770,000). IVG received money transfers totaling six and a half million dollars ($6,500,000) in November of 1996. On November 13, 1996, S.S. Trans Incorporated transferred one and a half million dollars ($1,500,000) to IVG's account at NationsBank. On November 20, 1996, a company known as Oakdale Trading, Ltd., transferred five million dollars ($5,000,000) to IVG's account at NationsBank. On November 21, 1996, IVG made a wire funds transfer in the amount of six and a half million dollars ($6,500,000) to Parex Bank, Riga, Latvia, into account number 0714926. On the same day, S.S. Trans Incorporated made a wire funds transfer in the amount of one hundred thousand dollars ($100,000) to the same account number at Parex Bank. The very next day, on November 22, 1996, Cinderella Ice received an eight million two hundred thousand dollar ($8,200,000) wire transfer from Parex Bank. On December 12, 1996, Cinderella Ice wrote a check in the amount of one hundred thousand dollars ($100,000) to S.S. Trans Incorporated. The one hundred thousand dollars paid to S.S. Trans Incorporated on December 12, 1996, was part of the proceeds of the 8.2 million dollars that Cinderella Ice had received from Parex Bank. These unexplained transfers of large sums of money, occurring immediately prior to the disbursement of the purported loan funds from the Parex Bank, indicate that there were other undisclosed entities providing investment capital for the purchase of the clubs. The use of numerous corporate entities as part of the ownership structure, and the use of other corporations and business entities to hide ownership or to disguise the source of payments, constitutes a course of conduct indicative of the existence of undisclosed interests. The one hundred thousand dollars paid on December 12, 1996, by Cinderella Ice to S.S. Trans Incorporated is undoubtedly related to the one hundred thousand dollars that S.S. Trans Incorporated transferred to the Parex Bank on November 21, 1996. The evidence of unexplained wire transfers by other interests associated with Skobeltsyn and the Petitioners further justifies the DABT's concern that the Petitioners have not submitted complete applications by virtue of their failure to provide to the DABT the additional information it requested of the Petitioners. Specifically, the DABT requested that the Petitioners provide: "A listing, which contains name and address of all financial institutions, with account numbers, and current balance as of December 31, 1996, for which Skobeltsyn is a sole or joint account holder, in the United States or elsewhere." The DABT repeated its request for this information on at least two additional occasions. The Petitioners did not satisfactorily comply with this request, thus preventing the DABT from conducting a full investigation. The Petitioners responded to these requests for account information by replying that they would not object to any subpoenas issued on the accounts of IVG and S.S. Trans Incorporated that were discovered by the DABT. The Petitioners also noted in their response that they interpreted the request as not referring to corporate accounts, but as limited to Skobeltsyn's personal accounts in which he was a "sole or joint account holder." However, at least by April 18, 1997, the Petitioners knew that the request encompassed corporate accounts to which Skobeltsyn has access, including the accounts for S.S. Trans Incorporated. In their May 1, 1996, letter, the Petitioners noted their narrower interpretation, but nevertheless provided information regarding some of the corporate accounts and expressed their willingness to cooperate with the DABT's efforts to subpoena "any bank anywhere in the world for any records that AB&T seeks." The Petitioners' stated willingness to cooperate with the DABT's subpoenas was worthless, however, without the requested list of bank accounts. Without the requested list, including the names and addresses of the financial institutions, and the account numbers, the DABT could not effectively serve subpoenas. It is clear from the evidence in this case that there are other bank accounts in the control of Skobeltsyn, or to which Skobeltsyn has access, beyond those which the Petitioners have disclosed and which the DABT has been able to examine. The DABT's examination of the bank records from NationsBank revealed references to accounts in foreign banks. These are accounts that were not disclosed to the DABT, despite repeated requests. For example, in the wire transfer of November 21, 1996, for six and a half million dollars ($6,500,000) from IVG to Parex Bank, the transfer was made into Parex Bank account number 0714926. S.S. Trans Incorporated made a wire transfer in the amount of one hundred thousand dollars ($100,000) to the same account. The Petitioners never provided to the DABT a list or other information identifying this account. The wire transfers to S.S. Trans Incorporated of January 22, 1996, through August 22, 1996, of funds ranging in amount from one hundred thousand dollars ($100,000) to one million dollars ($1,000,000) originated from banks and accounts that were never identified or disclosed to the DABT. Among the bank accounts the DABT sought to obtain information about were the bank accounts of IVG, a corporation of which Skobeltsyn was President and in which he has an ownership interest. When the DABT repeated its request for the IVG bank account information, the Petitioners' attorney responded with a letter of May 1, 1997, which included the following: As to the banking records from IVG's Capital Bank account from the time that Mr. Skobeltsyn acquired his interest in IVG, please note that the account is now closed and without Mr. Skobeltsyn['s] presence in the United States, I cannot produce the records sought inasmuch as he was the sole signer on the account. The above-quoted response is indicative of a lack of cooperation on the part of the applicants. Regardless of whether the account was closed or not, and regardless of whether Skobeltsyn could return to the United States or not, with written authorization from Skobeltsyn, the attorneys for the applicants could have obtained the records and could have furnished them to the DABT. The above-quoted response about IVG's bank account is also inconsistent with other information about the activities of International Value Group, Inc. Since December of 1996 and continuing through the date of the final hearing in this case, IVG has been engaged in at least two business activities in Florida, specifically the two business activities described in paragraphs 20 through 28 of these findings of fact. In the normal course of events those two business activities have been regularly generating revenues in the form of cash, checks, and/or credit cards. It is contrary to common sense to believe that IVG is engaged in business without having an open checking account. Yet another example of the Petitioners' inconsistency and inaccuracy is reflected in the following statement from their attorney in a letter of May 1, 1997, responding to DABT comments that Skobeltsyn had failed to fully disclose his employment during the past five years: Further, in his personal questionnaire listing his employment for the past five years, Mr. Skobeltsyn did not recite that he had been president of International Value Group and president of SS Transcorp, Inc., because at the time he completed the questionnaire, Mr. Skobeltsyn may not have been president of either company. He was a shareholder in SS Transcorp, Inc., which had no assets in, and was doing no business in, the United States. Further, Mr. Skobeltsyn did not state that he was "president" of International Value Group, as he may have not yet served as president. Notwithstanding the foregoing, Mr. Skobeltsyn received no salary or benefits of any nature whatsoever from either corporation and therefore, correctly did not recite the names of these corporations under a heading which requested employment information. The foregoing assertions become troublesome when considered in light of the following facts. Skobeltsyn signed his personal questionnaire on December 29, 1996. On November 13, 1996, Skobeltsyn signed a check written on the account of S.S. Trans Incorporated at NationsBank in Fort Lauderdale, Florida, in the amount of $1,500,000. The check was payable to International Value Group, Inc. The check was good, and there were funds left in the account after it cleared. When Skobeltsyn opened the S.S. Trans Incorporated account at NationsBank, he identified himself as president of the corporation. On November 13, 1996, Skobeltsyn opened a bank account in the name of International Value Group, Inc., at NationsBank in Fort Lauderdale, Florida, with the $1,500,000 check from S.S. Trans Incorporated. When he opened the account, he identified himself as president of International Value Group, Inc. On or about December 27, 1996, Skobeltsyn and Rodion signed a corporate resolution in conjunction with a bank account at First Union Bank of Florida in the name of International Value Group, Inc., in which Skobeltsyn is described as president of the corporation. All three of the alcoholic beverage applications at issue in these cases were signed on December 29, 1996. On each of the three applications, Skobeltsyn is listed as holding each of the following offices in each of the applicant corporations: President, Vice President, Secretary, and Treasurer. On each of the applications, Cinderella Ice is listed as the owner of 100 percent of the stock of each of the applicant corporations. Each of the three applications contains a statement reading: "Sergey V. Skobeltsyn is the sole director, officer and shareholder of Cinderella Ice, Inc." The records of the Florida Department of State include the following information regarding Golden Show, Inc. The articles of incorporation were filed with the Secretary of State on November 26, 1996. Skobeltsyn was the initial director of the corporation. The articles of incorporation did not identify any initial officers of the corporation. On January 27, 1997, Skobeltsyn, in his capacity as director, signed a document titled Articles of Amendment to Articles of Incorporation of Golden Show, Inc. That document was filed with the Secretary of State on January 31, 1996. The document states that several amendments were adopted on January 27, 1997. One of those amendments reads as follows: SERGEY V. SKOBELTSYN was elected President, Secretary, Vice-President, Treasurer and Director, and his address is 3363-5 N. Federal Highway, Ft. Lauderdale, FL 33306." The records of the Florida Department of State include the following information regarding Silver Show, Inc. The articles of incorporation were filed with the Secretary of State on November 26, 1996. Skobeltsyn was the initial director of the corporation. The articles of incorporation did not identify any initial officers of the corporation. On January 27, 1997, Skobeltsyn, in his capacity as director, signed a document titled Articles of Amendment to Articles of Incorporation of Silver Show, Inc. That document was filed with the Secretary of State on January 31, 1996. The document states that several amendments were adopted on January 27, 1997. One of those amendments reads as follows: SERGEY V. SKOBELTSYN was elected President, Secretary, Vice-President, Treasurer and Director, and his address is 3363-5 N. Federal Highway, Ft. Lauderdale, FL 33306." The records of the Florida Department of State include the following information regarding Platinum Show, Inc. The articles of incorporation were filed with the Secretary of State on November 26, 1996. Skobeltsyn was the initial director of the corporation. The articles of incorporation did not identify any initial officers of the corporation. On January 27, 1997, Skobeltsyn, in his capacity as director, signed a document titled Articles of Amendment to Articles of Incorporation of Platinum Show, Inc. That document was filed with the Secretary of State on January 31, 1996. The document states that several amendments were adopted on January 27, 1997. The amendments concerned such matters as the principal place of business of the corporation, the mail address of the corporation, and the new registered agent for the corporation, but no provision regarding the election or appointment of any officers. The records of the Department of State do not show that anyone has ever been appointed or elected to the offices of President, Vice-President, Secretary, or Treasurer of Platinum Show, Inc. The records of the Florida Department of State include the following information regarding Cinderella Ice, Inc. The articles of incorporation were filed with the Secretary of State on August 22, 1996. A person named Gregory Romenski was the initial director of the corporation. The articles of incorporation did not identify any initial officers of the corporation. On January 27, 1997, Skobeltsyn, in his capacity as director, signed a document titled Articles of Amendment to Articles of Incorporation of Cinderella Ice, Inc. That document was filed with the Secretary of State on January 31, 1997. The document states that several amendments were adopted on January 27, 1997. One of those amendments reads as follows: GREGORY ROMENSKI resigned as Director and SERGEY V. SKOBELTSYN was elected Director in his stead. SERGEY V. SKOBELTSYN was also elected President, Vice-President, Secretary, and Treasurer of the corporation and his address is: 3363-5 N. Federal Highway, Ft. Lauderdale, FL 33306. Skobeltsyn's apparent indifference to accuracy is reflected once again in the fact that at the time he signed his personal questionnaire he had not been elected as an officer of either Cinderella Ice or of any of the applicant corporations. Further, at the time he signed his personal questionnaire, Skobeltsyn was not a director of Cinderella Ice and Cinderella Ice had an undisclosed director who has since resigned. Most of these irregularities have since been cleared up, but the statements were false at the time they were made. The DABT has been unable to interview Skobeltsyn because he is legally excluded from entry into the United States. One of the most important steps in any investigation is to provide the applicant with an opportunity to answer questions. Skobeltsyn is in a position to answer many of the questions that were raised during the investigation. The Petitioners offered the DABT an opportunity to go to Latvia to interview Skobeltsyn and Latvian banking officials. The DABT refused to travel abroad because of safety concerns and because the investigator's law enforcement powers, particularly the power to place a witness under oath, did not extend as far as Latvia. The DABT cannot conduct a full investigation of the applications in these cases without an interview of Skobeltsyn taken under oath.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Division of Alcoholic Beverages and Tobacco issue a Final Order in this case denying all three of the applications for alcoholic beverage licenses at issue in these cases. DONE AND ENTERED this 6th day of March, 1998, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 6th day of March, 1998.
Findings Of Fact At all times relevant hereto, respondent, Willie Coachman, was a licensed beer vendor having been issued license number 39-02165 by petitioner, Department of Business Regulation, Division of Alcoholic Beverages and Tobacco (Division). Respondent uses his license at a business known as Willie's Fina Station located at 1312 East Columbus Drive, Tampa, Florida. The license is a Series 1-APS which authorizes Coachman to sell beer by package only for consumption off premises. On August 17, 1988 a Division investigator, Keith B. Hamilton, conducted an investigation of Coachman's licensed premises to determine if respondent was selling beer. He did so since Coachman's license was then under a suspension. After finding the beer coolers sealed with tape, Hamilton left the premises and stood outside the front door. He then observed a black male enter the premises carrying two boxes filled with cartons of cigarettes. The black male gave them to the store clerk, and Hamilton observed the clerk pay the male $80 from the cash register for the cigarettes. The cigarettes were then placed on the floor near Coachman's office. The male was not driving a vendor's truck nor was he dressed in a vendor's uniform. Hamilton telephoned another Division investigator, William P. Fisher, who came to the premises some ninety minutes later. The two entered Coachman's store, identified themselves to a clerk and inspected the stock room. According to Hamilton, Coachman is authorized to buy cigarettes from two area cigarette wholesale distributors, Costco Wholesale Corporation (Costco) and Eli Witt Corporation (Eli Witt). Each wholesaler has a distinctive stamp on its cigarette packages so that an investigator can easily determine from which wholesaler a vendor obtained cigarettes. Upon examining the cigarettes in Coachman's stock room, including the two boxes just sold to the cashier, Hamilton and Fisher noted that approximately 3,137 packs did not have a Costco or Eli Witt stamp. After the clerk could not produce invoices to verify that the cigarettes were purchased from a licensed wholesale dealer, the 3,137 packs were seized and taken to an evidence vault. At that time, the clerk acknowledged that Coachman had authorized her to make cigarette purchases from patrons. Coachman arrived at the premises as the investigators were leaving. He objected to the seizure saying that some of the cigarettes being taken were "good." Coachman was told the cigarettes would be returned if he could produce invoices establishing that they were validly purchased. During the course of the inspection on August 17, investigator Fisher observed nine bottles of Chivas Regal Scotch on a desk in Coachman's office. The bottles were unopened. According to Hamilton, it is unlawful for a beer vendor to have such alcoholic beverages on the premises even for personal consumption. Thus, even though Coachman maintained, without contradiction, that the scotch was for his own use, it was improper for him to store the same on his premises. After the cigarettes were placed in the evidence vault, Coachman produced certain invoices for the Division and also had several wholesalers telephone the Division to confirm various sales to Coachman. This resulted in 540 packs being returned to Coachman. Some 2,502 packs still remain in the Division's custody. At hearing, Coachman indicated that he normally buys some $30,000 to $40,000 of cigarettes monthly from various wholesalers. Also, he offered into evidence various receipts for purchases made in July and August 1988 and documentation verifying that a large quantity of cigarettes was obtained through transfers (exchanges) of cigarettes with other vendors. This latter situation occurs whenever one vendor has a slow-moving brand and exchanges them for a different brand with another vendor. However, each transfer must be documented with paperwork. The Division did not inventory the seized cigarettes by brand or dealer. Its evidence vault receipt, which has been received in evidence as petitioner's exhibit 3, reflected only that 2502 packs of cigarettes were taken. However, by credible testimony it was established that none of the confiscated cigarettes had indicia to show that they were purchased from Costco or Eli Witt. This was not contradicted. On the evening of August 31, 1988 investigator Turner and two informants carried fifteen cases of beer to another licensed premises operated by Coachman. The beer was transported in an unmarked, private vehicle. They offered to sell the beer to Coachman for $4.00 per case but then agreed to sell it for $3.00 per case, which is substantially below the fair and wholesale market value. The sale took place at the house of Coachman's children but Turner was paid with monies from respondent's cash register. Prior to the sale, Division personnel placed special markings on the bottom of the cans for identification purposes so that they could be later identified. On September 6, 1988 investigator Freese went inside respondent's premises and purchased a six pack of Busch beer for $2.69. The package was one of those previously sold to Coachman on August 31. Coachman denied reselling the Busch beer and contended it was purchased for personal consumption and use by his children. However, this testimony is not accepted as being credible. Also, he contended that all cigarettes were legally purchased from wholesalers or by exchange with other dealers and that he had appropriate documentation on hand at all times. However, such documentation was not on hand on the night the cigarettes were taken, and Coachman did not show that any of the cigarettes referred to on the documents supplied at hearing were the same that were seized by the investigators on August 17. Thus, the documentation was not sufficient. Coachman's license has been subject to disciplinary action on two other occasions. It was first suspended for thirty days effective January 6, 1987 for Coachman dealing in stolen property and purchasing cigarettes from other than a wholesale dealer. It was suspended a second time for a twenty day period effective August 9, 1988 for respondent (a) purchasing cigarettes from other than a wholesale dealer, (b) failing to maintain invoices of cigarette purchases on the premises, (c) possessing beverages not permitted to be sold under his license, (d) gambling and possession of gambling paraphernalia, and (e) conducting a prohibited lottery. Under petitioner's policy, as explicated at hearing, a license is revoked after repeat violations occur.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty as charged in the notice to show cause, as amended, and that his APS license number 39-02165 be REVOKED. DONE and ENTERED this 23rd day of March, 1989, in Tallahassee, Florida. DONALD R. ALEXANDER 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 23rd day of March, 1989.
The Issue This case concerns an Administrative Complaint filed by the Petitioner against the Respondent. Count I to the Administrative Complaint accuses the Respondent of violations of Sections 893.03 and 893.13(1)(a) and 561.29, Florida Statutes, by actions of one of its agents, servants or employees, namely: Penny Reid, related to sales of the substance methaqualone, on July 26, 1981, and August 22, 1981. Count II to the Administrative Complaint accuses the Respondent of violations of Sections 893.03 and 893.13 (1)(a) and 561.29, Florida Statutes, by actions of one of its agents, servants or employees, namely: Penny Reid, related to sales of the substance methaqualone, on July 16, 1981, and July 20, 1981, and September 9, 1981. In addition, there are allegations of a sale of lysergic acid diethylamid, on July 16, 1981. 2/ Count III to the Administrative Complaint accuses the Respondent of violations of Sections 893.03 and 893.13(1)(a) and 561.29, Florida Statutes, by actions of one of its agents, servants or employees, namely: "Eve" related to sales of the substance methaqualone, on August 14, 1981, and with the sale of the substance cocaine, on August 15, 1981. Count IV to the Administrative Complaint accuses the Respondent of violations of Sections 893.03 and 893.13(1)(a) and 561.29, Florida Statutes, by actions of one of its agents, servants or employees, namely: "Kitty," related to sales of the substance methaqualone, on August 15, 1981, and with the sale of the substance cocaine on September 26, 1981. Count V to the Administrative Complaint accuses the Respondent of violations of Sections 893.03, 893.13(1)(a) and 561.29, Florida Statutes, by actions of one of its agents, servants or employees, namely: "Orlando," related to sales of the substance cannabis, on July 26, 1981. Count VI to the Administrative Complaint accuses the Respondent of violations of Sections 893.03, 893.13(1)(a) and 561.29, Florida Statutes, by actions of one of its agents, servants or employees, namely: "Julie," related to sales of the substance cocaine on September 26, 1981. Count VII to the Administrative Complaint accuses the Respondent, between July 16, 1981, and October 2, 1981, of maintaining a place, namely the licensed premises, which was used for keeping or selling controlled substances, in particular methaqualone, cocaine and cannabis, in violation of Subsections 893.13(2)(a).5 and 561.29(1)(c), Florida Statutes. Count VIII contends that between July 16, 1981, and October 2, 1981, the Respondent, by actions of its agents, servants or employees and patrons, kept or maintained the building or place which was used for illegal keeping, selling or delivering of substances controlled under Chapter 893, Florida Statutes, and in doing so violated Section 823.10, Florida Statutes, and Subsection 561.29(1)(c), Florida Statutes. Count IX accuses the Respondent of allowing its agent, servant or employee, Annie D. Bryant, to unlawfully possess a controlled substance on the licensed premises, namely, marijuana, in violation of Section 893.13, Florida Statutes, and Subsection 561.29(1)(a), Florida Statutes. Count X accuses the Respondent of allowing its agent, servant or employee, Danita Buchin, to unlawfully possess a controlled substance on the licensed premises, namely, marijuana, in violation of Section 893.13, Florida Statutes, and Subsection 561.29(1)(a), Florida Statutes. Count XI accuses the Respondent of allowing its agent, servant or employee, Barbara Jean O'Rourke, to unlawfully possess a controlled substance on the licensed premises, namely, marijuana, in violation of Section 893.13, Florida Statutes, and Subsection 561.29(1)(a), Florida Statutes. Count XII accuses the Respondent, on April 20, 1981, through its corporate officers, directors, stockholders, employees, agents, or servants, of failing to file a sworn declaration of the transfer of voting stock of the corporate licensee, in violation of Rule 7A-3.37, Florida Administrative Code. Count XIII accuses the Respondent, through actions of its corporate officers, directors, stockholders, employees, agents, or servants, on May 4, 1981, of failing to notify the Petitioner of a change of corporate officers within ten (10) days of that change, in particular, within ten (10) days of the resignation of George and Florrie Pappas, as corporate officers and directors of the corporate licensee, in violation of Rule 7A-2.07(2), Florida Administrative Code.
Findings Of Fact Effective August 18, 1980, Pappas Enterprises, Inc., which trades or does business as Foremost Liquors and Hideaway Lounge, at 1005 East 49th Street, in Hialeah, Dade County, Florida, was licensed by the Petitioner to sell alcoholic beverages. At that time, the sole officers listed for the corporation were George and Florrie Pappas. George Pappas was listed as the sole shareholder. In May, 1981, Miguel Rodriguez purchased the shares in the corporation, Pappas Enterprises, Inc. At that time, in his attorney's office, he executed a personal data sheet and certificate of incumbency for the benefit of the Division of Alcoholic Beverages and Tobacco; however, this personal data sheet proposing Rodriguez as a new officer and shareholder of the subject corporation was not filed with the Division of Alcoholic Beverages and Tobacco until October 14, 1981. Furthermore, the first official request for change of corporate officers, owners and shareholders from the Pappases to Rodriguez was not filed with the Division of Alcoholic Beverages and Tobacco until November 4, 1981. Prior to October 14, 1981, the Respondent corporation, in the person of Miguel Rodriguez, was served with a Notice to Show Cause/Administrative Complaint containing the first eight (8) counts alluded to in the Issues statement in this Recommended Order. The date of this service was October 2, 1981. Subsequent to that time, an amendment was allowed adding the remaining counts to the Administrative Complaint. The Respondent, through actions of Miguel Rodriguez, in his effort to protect his interest in the Respondent corporation, which he had purchased, and in view of the fact that he had effective control of the licensed premises during all times pertinent to the Administrative Complaint, has requested a Subsection 120.57(1), Florida Statutes, hearing, following service of him at the licensed premises as agent in fact for the corporation. The hearing was allowed to go forward upon the request made by Rodriguez because Rodriguez's substantial interests are at stake. The requested transfer of ownership and substitution of officers filed on November 4, 1981, is unresolved pending the outcome of the proceedings herein. See Subsection 561.32(2), Florida Statutes. On July 15, 1981, in the evening hours, Beverage Officer, Louis J. Terminello, went to the licensed premises known as the Hideaway for purposes of conducting an undercover narcotics investigation. Once he had entered the premises, he spoke with one of the employees, Penny Reid, a dancer. Upon his inquiry concerning the subject of narcotics Reid told him that she would sell him methaqualone tablets for $3.00 each and lysergic acid diethylamid (LSD) for $5.00 per dosage. In order to consummate the transaction, she explained that she would need to leave the licensed premises. Around 12:15 A.M. on July 16, 1981, Reid approached Miguel Rodriguez and asked permission to leave the licensed premises. She was granted that permission and Reid and Terminello went to a residence location off the licensed premises where a purchase was made of ten (10) methaqualone tablets and four (4) units of LSD at the unit prices as have been indicated. The Beverage Officer and dancer then returned to the licensed premises around 1:30 A.M. On July 20, 1981, at around 9:45 P.M., Officer Robert Chastain entered the licensed premises and spoke with Penny Reid. This conversation ensued when Reid approached Chastain. The subject of drugs was discussed and subsequent to that time, Reid received permission to leave the licensed premises. (She was still employed by the Respondent.) On the date above, Reid and Chastain went to a residence and purchased ten (10) methaqualone tablets. The price for the tablets was $30.00. When they returned to the bar, while in the premises, Reid removed one methaqualone tablet from the napkins in which they were wrapped and gave Chastain nine (9) tablets. Terminello came back to the licensed premises on the evening of July 25, 1981, and spoke with the dancer Reid. During the conversation methaqualone was discussed and she indicated that she did not have that substance at the time. She said she might have some of the material available to her later that night. Reid left the licensed premises around 11:35 P.M. on July 25, 1981, to return around 11:55 P.M. While in the licensed premises she exchanged five (5) methaqualone tablets at $3.00 per tablet, in return for $15.00 on July 26, 1981. This transaction took place in the hall area near the rest rooms in the licensed premises and no effort was made on the part of Reid to disguise the transaction. On July .26, 1981, during his visit to the licensed premises, at approximately 1:30 A.M., Officer Terminello spoke to a man who identified himself as "Orlando" and who claimed to be a manager at the premises and the son of Miguel Rodriguez. In fact, "Orlando" was not a manager at the licensed premises nor the son of Rodriguez. During this conversation, Terminello asked "Orlando" where he could get coke, meaning the controlled substance cocaine. "Orlando" responded that he might get the cocaine on some occasion but not on that evening. "Orlando" did give Officer Terminello marijuana, also known as cannabis, a controlled substance. This item was given to Officer Terminello as he was departing the premises on July 26, 1981. Terminello returned to the licensed premises on August 14, 1981, around 9:45 P.M. On that evening, he spoke with a dancer identified to him as "Eve" who was later determined to be Eve Mae Carroll. Carroll was employed as a dancer in the licensed premises. While seated at a table near the front door, Carroll told Terminello that she would sell "quaaludes" meaning methaqualone at a price of $2.50 a tablet and a total of three (3) tablets. Terminello paid her the prescribed price and she delivered the substance methaqualone to him while seated at the table. She also indicated that she would sell him cocaine at a later time, in that she was expecting a delivery of that substance. At around 12:30 A.M. on August 15, 1981, a further discussion was held between Terminello and Carroll and while standing at the bar, Terminello purchased cocaine from Carroll. On August 15, 1981, at around 12:45 A.M., Terminello spoke with another dancer employed in the licensed premises who was identified as "Kitty" whose actual name is Kathleen Keddie, who explained to him that she had some "ludes," meaning methaqualone. She wanted $4.00 for each tablet and while seated at a table in the bar area, Terminello purchased two (2) methaqualone tablets from Kitty. On August 22, 1981, Terminello was back in the licensed premises at approximately 9:50 P.M. and was seated at the bar talking to Penny Reid who told him she was going to get some "ludes," methaqualone. This activity was to occur on her next break from dancing as an employee in the licensed premises. She left the licensed premises with a patron and returned at around 10:25P.M. and handed Terminello a paper towel containing five (5) methaqualone tablets for which he paid her $15.00. On September 9, 1981, Terminello was again at the licensed premises and was approached by Penny Reid. He asked her for "ludes or acid" meaning methaqualone or LSD, respectively. She told Terminello that she would have to go to a house to obtain these items. She then asked the manager to leave and Terminello and Reid went to the residence where methaqualone was purchased and suspected LSD as requested by Terminello. (She was still employed by the Respondent.) On September 16, 1981, while pursuing the investigation, Terminello again returned to the licensed premises and spoke with Reid who was still an employee at the premises. She told Terminello that she could go to a residence and obtain narcotics. At this time Terminello was accompanied by another Beverage Officer, Robert Chastain. After entering into a discussion on the evening in question, the two (2) officers went with Reid to an off-premises residence where methaqualone and suspected LSD were purchased. On this occasion, Reid took part of the methaqualone purchased as a "tip" and carried those methaqualone tablets back into the licensed premises when the officers and the dancer returned to the licensed premises. On September 19, 1981, Officer Terminello talked to Reid who remained employed at the licensed premises and the discussion concerned narcotics. Then they left the licensed premises and went to a residence where cocaine and methaqualone were purchased. Reid kept three (3) of the methaqualone tablets as a "tip" and she carried those methaqualone tablets back into the licensed premises when Terminello and the dancer returned to the bar. When they had returned to the licensed premises on September 19, 1981, Terminello was approached in the bar by a Michael Harrington who asked Terminello if he wanted to buy coke, meaning cocaine. Harrington then indicated that they should go out into the parking lot of the premises which they did and in the presence of another patron, Alexis Pagan, Terminello purchased a gram of cocaine. On September 25, 1981, Terminello returned to the licensed premises and spoke to an employee/dancer previously identified as Kathleen Keddie. Keddie told him that her "old man" could bring some cocaine into the premises and make some of it available to Terminello. This conversation took place around 9:45 P.M. on that evening. At approximately 12:05 A.M. on September 26, 1981, while seated at the bar, Terminello purchased approximately one (1) gram of cocaine from Keddie for $75.00. In the early morning hours of September 26, 1981, Terminello was also approached by a Julie Murphy who was employed as a cocktail waitress in the licensed premises and she told Terminello that she could sell him cocaine cheaper, at $55.00 a gram. She indicated she would serve as a go-between, intermediary, and told Terminello to leave the premises and come back later. Terminello left and returned at around 3:00 A.M., and while at the bar, purchased the cocaine from Murphy at the agreed upon price of $55.00. During the course of Terminello's investigation at the licensed premises, on a number of occasions he saw people sniffing what, from his expertise in law enforcement, appeared to be cocaine and, from the appearance and odor, using cigarettes thought to be marijuana. These activities occurred in the bathroom areas, halls and package store area. Augusto Garcia who was employed as a manager in the licensed premises was observed at times in the proximity of the activities referred to immediately above and Garcia was also observed by Officer Terminello in the men's room snorting what appeared to be cocaine. On one occasion Garcia was observed near the front door to the bar and package area where a marijuana type cigarette was being smoked in the presence of Garcia, by an employee who worked in the package store. Reid had also told Terminello that she had been fired as an employee at the licensed premises because she was so "luded" out that she fell off the stage. Nonetheless, she had been rehired. Terminello had observed Miguel Rodriguez in the licensed premises during the course of the investigation, mostly in the package store and on occasion in the bar area. Terminello did not speak with Rodriguez during the investigation. On October 2, 1981, the petitioning agency served the Notice to Show Cause/Administrative Complaint at the licensed premises. Following this service, an inspection was conducted in the licensed premises of the lockers of several dancers, for which the dancers had the keys. These dancers were employees at the licensed premises on that date. The search of the lockers and purses of the dancers led to the discovery of marijuana. The dancers in question were Annie D. Bryant, Danita Buchin and Barbara Jean O'Rourke. (Following the October 2, 1981, service of the Administrative Complaint on Miguel Rodriguez, and with Rodriguez's knowledge of the pendency of narcotics allegations being placed against the dancers, Kathleen Keddie, Annie D. Bryant and Danita Buchin, those individuals were allowed to remain as employees in the licensed premises.) During the time in question by the Administrative Complaint, Augusto Garcia acted as a manager in the licensed premises. He had been hired by Miguel Rodriguez. His normal hours of employment were 6:00 P.M. through as late as 4:30 A.M., except for Fridays and Saturdays when he worked a couple of hours. When he was on duty, Rodriguez was ordinarily at the licensed premises. Rodriguez had instructed Garcia to be cognizant of drug problems in the licensed premises and to keep the bar quiet and peaceful. In particular, Rodriguez had instructed Garcia not to allow drugs in the bar and if someone was found with drugs to throw him out. An individual identified as Hector who is a friend of Garcia's assisted in these matters. Garcia indicated the policy of management at the licensed premises was to check the person of the dancers and their bathroom and dressing area to discover narcotics. Nevertheless, testimony by Kathleen Keddie, a person implicated in these matters for narcotics violations and an employee at the bar as a dancer established the fact that she had never been searched for narcotics. Rodriguez was not told by Garcia about people selling drugs in the licensed premises, Garcia would simply "throw them out." Garcia did tell Rodriguez about people "sniffing" what he suspected to be cocaine. At the time Garcia served as a manager in the licensed premises, one Willie Rolack also was a manager in the licensed premises. Willie Rolack's duties as manager were primarily associated with the package store, in contrast to the bar, area. He would periodically go in the bar to check to see if there were fights occurring and to determine if drugs were being used. Rolack had been instructed by Rodriguez to call the Hialeah Police Department if persons who were using drugs would not depart the premises. At times, the Hialeah Police Department has assisted in removing those patrons. Additionally, some employees at the licensed premises had been dismissed for drug involvement as observed by Rolack. Miguel Rodriguez worked sixteen (16) to eighteen (18) hours in the licensed premises, mostly in the package store; however, he did have occasion to check the bar area while at the licensed premises. Rodriguez had told the dancers that he would not tolerate their involvement with drugs and he had instructed customers who were found with drugs that they should leave and not return. He had a policy of not allowing the dancers to leave the licensed premises except on occasion to go for food at nearby restaurants; however, as has been determined in the facts found, the occasions of the departures of the dancers were fairly frequent and not always for the purposes of obtaining food. Rodriguez, through his testimony, verifies a general policy of checking dancers' lockers and pocketbooks and watching their activities. The lockers as have been indicated before were controlled by the dancers themselves who had keys. Prior to July, 1981, and in particular, in June, 1981, one Alexis Pagan had worked as the bar manager and had been dismissed for drug involvement. Nonetheless, the same Alexis Pagan had been observed in the licensed premises during the times set forth in the administrative charges, to include the instance mentioned before.
The Issue The issues in these cases are whether Respondent, Club Manhattan Bar and Grill, LLC, d/b/a Club Manhattan Bar and Grill (Respondent), committed the acts alleged in the administrative complaints dated September 13, 2010, and December 1, 2010, and, if so, what disciplinary action, if any, should be taken against Respondent.
Findings Of Fact The Department is the state agency charged with the responsibility of regulating persons holding alcoholic beverage licenses. § 561.02, Fla. Stat. Respondent is licensed under the Florida beverage law by the Department. Respondent holds a 4COP/SRX special restaurant license issued by the Department with Alcoholic Beverage License No. 68-04347. Ms. Stokes is the licensee of record for Respondent. Consequently, Respondent is subject to the Department's regulatory jurisdiction. Respondent's series 4COP/SRX is a special restaurant license that permits it to sell beer, wine, and liquor for consumption on the licensed premises. Additionally, the licensee must satisfy seating and record-keeping requirements and must comply with 51 percent of its gross sales being food and non- alcoholic beverages. See § 561.20(2)(a)4., Fla. Stat. Respondent's restaurant is located in Sarasota County, Florida, and, pursuant to the 4COP/SRX license, must have seating and capability to serve 150 customers at any one time. On August 5, 2010, Special Agent Flynn conducted an inspection of Respondent's business premises. He conducted the inspection based on complaints made to the Department that Respondent was operating as an after-hours bar, rather than a restaurant. At this initial inspection, which occurred at 2:30 p.m. on August 5, 2010, Special Agent Flynn found the restaurant did not have any customers or menus. Further, he noticed that the premises had seating for only 92 people and a large dance floor. Further, he observed that the walls had signs advertising drink specials and late-night parties. Special Agent Flynn met Ms. Stokes, Respondent's manager and holder of the license, and informed her that the beverage license required that Respondent be able to serve 150 customers at one time. Also, Special Agent Flynn requested the required business records concerning the purchase of alcoholic beverage invoices from the distributors for a 60-day proceeding period. Ms. Stokes did not have the requested records on the premises. On August 19, 2010, Special Agent Flynn sent Ms. Stokes a written request, requesting alcoholic purchase invoices for a 60-day period before August 19, 2010. The request allowed Ms. Stokes 14 days to compile the records and to provide the records to the Department. The record here showed by clear and convincing evidence that Respondent did not produce records for the audit period. On September 8, 2010, at approximately 3:00 p.m., Special Agent Flynn returned to Respondent's premises. Again, he found that Respondent did not have the required seating number and ability to serve 150 customers at one time. Special Agent Flynn offered credible testimony that, during the September 8, 2010, inspection, he found Respondent had only 106 available seats. Further, consistent with his inspection on August 5, 2010, Special Agent Flynn observed facts showing that Respondent was a late-night bar, as opposed to a restaurant. The evidence showed that on September 8, 2010, Special Agent Flynn observed that Respondent did not have any customers, menus, and very little food in its small kitchen. Special Agent Flynn, however, did observe that Respondent continued to have its large dance floor, disc jockey booth, advertised drink specials, and posters advertising late-night parties. Clearly, Respondent was being operated as a bar, rather than a restaurant as required by its license. At the September 8, 2010, inspection, Special Agent Flynn again requested Respondent's business records that he had previously requested for the 60-day time period before August 19, 2010. Ms. Stokes provided a few invoices for purchases of food and non-alcoholic beverages. These invoices were dated after the August 19, 2010, date that Special Agent Flynn had requested and did not cover the requested 60 days prior to the August 19, 2010, request. These records included food and beverage purchases by Respondent from retailers, but did not contain any records concerning the points of sale at the restaurant. Ms. Nadeau, an auditor for the Department, offered credible testimony concerning the Department's request for business records from Respondent for the audit period of April 1, 2010, through July 31, 2010. On August 27, 2010, Ms. Nadeau set up an audit request for the period of April 1, 2010, through July 31, 2010, based on information provided by Special Agent Flynn. The Department provided Ms. Stokes with an audit engagement letter that requested business records. Ms. Nadeau testified that on September 10, 2010, she was contacted by Ms. Stokes. Ms. Stokes informed Ms. Nadeau that Ms. Stokes had become the owner of the restaurant in June 2010 and that she did not have the required records. Ms. Nadeau informed Ms. Stokes to provide all the records requested in the audit engagement letter that Ms. Stokes had and to try to obtain the prior records from the previous managing member of Respondent. On September 22, 2010, Ms. Stokes mailed to the Department records she claimed met the audit period. The records consisted of guest checks for July and August 2010, which only showed food purchases and no alcoholic beverage purchases. Further, Ms. Nadeau found that the records were not reliable, because the records contained numerous personal items not related to the restaurant, such as baby wipes, cotton swabs, and boxer shorts. Consequently, the record clearly and convincingly shows that Respondent failed to provide the required business records for the audit period of April 1, 2010, through July 31, 2010. Next, based on Respondent's failure to provide any reliable records, the Department was unable to conduct an audit of the business. Records provided by Respondent indicated that the only sales that occurred on the premises were for food. However, the testimony showed that Respondent's business included the sale of alcohol and marketed the sale of alcoholic beverages for late-night parties. Mr. Torres, the senior auditor for the Department, credibly testified that he conducted an independent review of Ms. Nadeau's initial audit findings. Mr. Torres, who has been employed with the Department for 27 years, reviewed the records provided by Respondent. He credibly testified that Respondent's guest checks were very questionable because they showed all food sales, but no alcohol, which was not consistent with Special Agent Flynn's observations. The evidence further showed that Ms. Stokes became the managing member of Respondent in June 2010. Ms. Stokes provided the Department with a change of corporate officers and named herself as registered agent, rather than apply for a new license. This distinction would later become important because, as explained by Ms. Nadeau, in the Department's eyes, there is a continuation of ownership. Under a continuation of ownership, Ms. Stokes was required to have business records for the time period before she became the managing member of Respondent. Ms. Stokes credibly testified that she did not have any records before June 20, 2010; thus, Respondent was unable to provide records for the audit period. Ms. Stokes candidly admitted that her restaurant had been struggling financially, which is why she had worked to catering special events to draw foot traffic.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, enter a final order revoking Respondent's alcoholic beverage license and finding that Respondent violated: 1. Section 561.20(2)(a)4., within section 561.29(1)(a), on September 8, 2010, by failing to provide the required service area, seating, and equipment to serve 150 persons full-course meals at tables at one time as required by its license; 2. Rule 61A-3.0141(3)(a)1., within section 561.29(1)(a), the audit period of April 1, 2010, through July 31, 2010, by not providing the requested business records; and 3. Rule 61A-3.0141(3)(a)1., within section 561.29(1)(a), on September 8, 2010, by not providing the requested business records. It is further RECOMMENDED that the final order find that the Department did not prove by clear and convincing evidence that Respondent violated section 561.20(2)(a)4., within section 561.29(1)(a). DONE AND ENTERED this 23rd day of September, 2011, in Tallahassee, Leon County, Florida. S THOMAS P. CRAPPS 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 23rd day of September, 2011.
The Issue Whether or not on or about the 14th of March, 1976, Pearlie Mae Smith, a licensed vendor, did have in her possession, permit or allow someone else, to wit: Junior Lee Smith, to have in their possession on the licensed premises, alcoholic beverages, to wit: 5 half-pints of Smirnoff Vodka, not authorized by law to be sold under her license, contrary to s. 562.02, F.S.
Findings Of Fact On March 14, 1976, and up to and including the date of the hearing, the Respondent, Pearlie Mae Smith, held license no. 72-65, series 2-COP with the State of Florida, Division of Beverage. The licensed premises is located at 1013 West Malloy Avenue, Perry, Florida. On the morning of March 14, 1976, Officer B.C. Maxwell with the State of Florida, Division of Beverage acting on an informant's information, searched the informant to determine if the informant had monies other than the money that the officer had given him or any alcoholic beverages on his person. Once the informant had been searched and it was determined that the informant was carrying with him only the money that the officer had given him to purchase alcoholic beverages, the informant was sent into the subject licensed premises. The informant returned with a half-pint bottle of alcoholic beverage not permitted to be sold on the licensed premise and indicated that this purchase was made from one Junior Lee Smith. Later in the morning, around 11:30, officers of the State of Florida, Division of Beverage entered the licensed premises and an inspection of those premises revealed a bag containing 5 half-pint bottles of Smirnoff Vodka in the kitchen area of the licensed premises. This bag and contents were admitted as Petitioner's Exhibit #2. The 5 half-pint bottles of Smirnoff Vodka are alcoholic beverages which are not allowed to be sold under the series 2-COP license on the subject premises. When the officers entered, the same Junior Lee Smith was in the licensed premises and indicated that he was in charge of the licensed premises and had been selling alcoholic beverages for "quite some time" together with his wife, Pearlie Mae Smith, the licensee. The bag he indicated, had been whiskey that had been left over from the night before.
Recommendation It is recommended that based upon the violation as established in the hearing that the licensee, Pearlie Mae Smith, have her beverage license suspended for a period of 30 days. DONE and ENTERED this 19th day of December, 1976, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Larry D. Winson, Esquire Staff Attorney Division of Beverage 725 Bronough Street Tallahassee, Florida 32304 Mrs. Pearlie Mae Smith 1013 West Malloy Avenue Perry, Florida
The Issue The first issue presented is whether Respondent failed to derive at least 51 percent of its gross revenue from sales of food and non-alcoholic beverages during the period of September 1, 1999 through October 31, 1999, contrary to Section 561.20(2)(a)4, Florida Statutes, and Rule 61A-3.0141, Florida Administrative Code. The second issue presented is whether during the period of November 1, 1999, through October 31, 1999, Respondent failed to maintain and/or produce separate records of all purchases and gross retail sales of food and non-alcoholic beverages and all purchases of gross retail sales of alcoholic beverages, to wit: numerous register summaries, Z tapes, contrary to Section 561.20(2)(a)4, Florida Statutes, and Rule 61A-3.0141, Florida Administrative Code. The third issue presented is whether during the period of April 1, 1999, through May 31, 1999, the Respondent failed to maintain and/or produce separate records of all purchases and gross retail sales of food and non-alcoholic beverages and all purchases of gross retail sales of alcoholic beverages, to wit: records provided failed to include cash bar sales, contrary to Section 561.20(2)(a)4, Florida Statutes, and Rule 61-3.0141(3) (a)2, Florida Administrative Code.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: Petitioner, the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, is the agency charged with the responsibility of administering and enforcing the beverage law of the State. Chapters 561-568, Florida Statutes. At all times material to this proceeding, Respondent, Dawson, Fabrizzi, & Fletcher, Inc., d/b/a C.J. Oscars, operated a licensed restaurant business located at 1502 Miramar Street, Cape Coral, Florida, 33904. The corporate officers are Charles Dawson, president; Albert N. Fabrizzi, Vice-President; and Jack Allen, manager of C. J. Oscars. At all times material to this proceeding, Respondent applied for and was holding a series SRX4COP Alcoholic Beverage License Number 46-04601, which authorized the sale of beer, wine, and liquor for consumption on the licensed premises of the restaurant business. The designation "SRX" identifies a beverage license issued to a business operating [primarily] as a restaurant. Respondent's SRX license authorized the sale of alcoholic beverages on the premises, so long as at lease 51 percent of the gross revenue is derived from the sale of non-alcoholic beverages and food. Respondent was made aware of the 51 to 49 percent gross revenue requirement when Charles Dawson applied for the SRX license. Indeed, the application for the SRX license,1 signed by Charles Dawson, specifically noted these requirements and the necessity to maintain a record of compliance. Accordingly, Charles Dawson knew, or should have known, that he would need purchase and sale records to show, upon demand, the SRX-imposed percentage requirements were met by the licensee. Required statutory and rule compliance are made known to each SRX license holder and are strictly imposed upon each licensee.2 Section 561.20(2)(a)4, Florida Statutes, and Rule 61A-3.0141, Florida Administrative Code, clearly and unequivocally states that records of all purchases and gross retail sales are required to be kept, in legible English language, by each licensee and are made available upon demand by the DABT. To enforce the above requirements, DABT performs periodic audits of all restaurants holding a special SRX license. As a part of that audit process, Special Agents from DABT conduct undercover visits and announced visits, as is its normal custom and practice. Between May and October 1999, Steven Tompkins, District Supervisor, Fort Myers office, DBAT, testified to making undercover visits to C.J. Oscars Restaurant on five to fifteen different occasions. During one or more of those visits, he observed Monday night drink specials where patrons who spent $5.00 on any combination of food/drink were given a plastic cup along with their initial order. Thereafter, and for the remainder of the evening, drinks were sold to cup holders for $0.25 per drink. On several other occasions, he observed money paid at the bar for cash sales of alcoholic drinks go directly into the pocket of the bartender, Mr. Allen. On other occasions, he observed Mr. Allen ring-up money on the bar cash register for both food and alcoholic drinks. On occasions while he sat at the bar, he observed cash sale money rung up on the cash register and the actual receipt of the sale thrown into an ice bucket under the bar. Mr. Tompkins, based upon his 25 years of experience, his observations, personal purchases and knowledge of the business operation, believed that Respondent was selling more alcoholic beverages than food. Ms. Debra Martin initially visited Respondent's restaurant on or about May 19, 1999, and after identifying herself as an agency employee requested access of food purchase records for April and May 1999 and was informed that the requested records were kept off premises.3 Ms. Martin testified that during September 1999 she requested bank statements and guest checks. Respondent could not provide guest check, and informed Ms. Martin that some guest checks were no longer kept. Ms. Martin's request for "Z" tapes went unanswered at that time. The Agency introduced in evidence Respondent's income statement4 for the four-month period, January 1, 1999, through May 31, 1999, which indicated that Respondent sold 51.20 percent alcohol and 48.80 percent food during that four-month period of time. David Cary (Respondent's bookkeeper) testified that C.J. Oscars had opened the business the third week of March 1999, and Respondent's income statement related to the nine-week period from the third week of March 1999 to May 31, 1999. Mr. Cary testified that C.J. Oscars had met its required sale percentages for the eight-week period of April 1, 1999, through May 31, 1999. Jack Allen, III, manager of C.J. Oscars, and Michael Batson, register expert, both testified that register Z tapes record each register transaction in sequential numbering, with the initials G.T., meaning grand total. Both witnesses testified that the register records a running total of the purchases entered and this information is recorded on the Z tapes of each register. Mr. Allen, regarding missing Z tapes, testified that during a new employee training, the trainee would practice register operation by running a Z tape, and he limited a new employee's training sessions to use of only two Z tapes. Mr. Allen concluded his testimony by stating that cash bar receipts were often thrown into a bucket on the bar, and as bar manager he would check the cash receipts against other records each morning, tally totals by pencil, and throw the cash receipts away. Special Agent, Jim Lanza testified that of the Z tapes provided by Respondent, in response to the Agency demands, he organized into charts.5 The charts showed which Z tapes were missing, to wit: September 2, 1999, beginning with Z tape number 134 which was provided; the following sequentially number tapes were missing, 136, 137, 139, 140, 141. For October 1, 1999, beginning with Z tape number 228 which was provided, the following are examples of missing tapes, 229, 230, 232, 233. Mr. Lanza's charts, using the grand total of the beginning lower-numbered Z tape as the base, subtracted the beginning grand total from the next sequential grand total provided, with the resulting difference reflecting unreported sales. From this charting sequence, Mr. Lanza concluded that Respondent's unreported sales from missing Z tapes was $65,133.08 for the months of September 2, 1999, through October 31, 1999. Charles Dawson testified in agreement with the testimony of his bar manager, Mr. Allen, regarding the use of Z tapes, the training of new employees, and cash receipts having been placed in a water bucket on the bar and later being thrown away. Mr. Dawson's additional reasons for the missing Z tapes, while questionable, demonstrated a persistent and recurring pattern of a lack of diligence or a practiced disregard for consequences. According to Mr. Dawson, he read and signed the SRX license affidavit, but now claims he did not understand, nor did anyone explain to him what "specific type of records" he was required to keep.6 As to cash bar sales receipts, Mr. Dawson testified that they were added together with other sales, stapled to the guest checks for a running total, compared with the Z tapes totals and cash in register totals, and then thrown away. Regarding the missing Z tapes, Mr. Dawson testified that one of his registers had broken down, and was repaired and when back in operation, the Z tape numbering system was sequentially misaligned and returned to zero; thus, the missing Z tapes. On another occasion, lighting struck a register causing it to jam and render two or more Z tapes unreadable; they were thrown away. During the few days the registers were down, either he or Mr. Allen would go to each register drawer, at the end of the business evening, take the cash totals, and give that information to Mr. David Cary, bookkeeper. Charles Dawson, owner, knew of the mandatory requirement to maintain records of all gross sales of food and non-alcoholic beverages, separate records of all gross purchases of alcoholic purchases, and separate records of all gross retail sales of alcoholic beverages. Charles Dawson, by his actual participation in the wrongful destruction of records, permitted, approved, and condoned the continuous destruction by Ray Allen of cash sale receipts of alcoholic beverages and the destruction of register Z tapes resulting from the sale of food and alcoholic beverages by C. J. Oscars.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, and a review of the penalty guidelines in Rule 61A-2.022, Florida Administrative Code, it is recommended that the Department of Business and Professional Regulation enter a final order revoking Respondent's Alcohol Beverage License SRX4COP Number 46-04601. DONE AND ENTERED this 13th day of April 2001, in Tallahassee, Leon County, Florida. FRED L. BUCKINE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of April, 2001.
