Findings Of Fact During 1982 and 1983, Petitioner was licensed as a mortgage broker and real estate broker in the State of Florida. His mortgage broker's license expired in September, 1983. At all times material hereto, Petitioner utilized his mortgage broker's and real estate broker's license to engage in real estate development speculation. He worked closely with Jeffrey Graham, who was also licensed as a mortgage broker and who was a co-owner with Petitioner of Continental Development, Continental Mortgage Company and the Real Estate Spot. They were engaged in buying and selling existing residential properties and constructing new homes for sale. Financing for Petitioner's speculative real estate transactions was provided primarily by The Bank of Florida, located in St. Petersburg, Florida. The Bank provided financing on 80 to 85 percent of his transactions, but at some point in 1982 or 1983, Petitioner and Graham found themselves unable to obtain further construction financing from the Bank. In order to continue receiving financing from the Bank, Petitioner and Graham initiated the use of "stand-in" buyers. A "stand-in" buyer would not have to use any of his own money as a deposit or down payment, even though real estate contracts executed in connection with these transactions would show an earnest money deposit by such buyers. The buyer's role was simply to lend his credit to the transaction and to share in any profits on the eventual sale of the property. On or about March 25, 1983, Petitioner executed, as seller, a contract for sale of real estate and deposit receipt with Norman Tanner, buyer. The transaction involved the sale of real estate in Pinellas County, Florida, and reflects a total purchase price of $25,000, with an earnest money deposit of $5,000 which the contract specified was to be held by Petitioner, as seller, until closing. Petitioner also executed a Settlement Statement on March 29, 1983, in connection with a loan obtained by Tanner from The Bank of Florida which indicated that Tanner had paid an earnest money deposit of $5,000. Based upon the testimony of Norman Tanner at hearing, it is found that he did not provide the earnest money deposit indicated on the sales contract or Settlement Statement which Petitioner executed as seller. Petitioner testified that this transaction was carried out in his individual capacity as a personal investment, and not under the authority of his mortgage broker's license. In fact, Petitioner did not deal directly with Tanner in this transaction. Tanner's dealings were with Petitioner's partner, Jeffrey Graham. Nevertheless, the evidence and demeanor of the witnesses establishes that Petitioner was aware of the fact that Tanner had not paid the deposit reflected on the instruments he executed, and that such instruments were used to induce the Bank to make a mortgage loan to Tanner. Petitioner, as seller, received $19,665.56 cash at settlement from this transaction with Tanner. On or about February 24, 1982, Petitioner executed a contract for sale of real estate and deposit receipt with Joseph Armendinger, buyer. The transaction involved the sale of real estate in Pinellas County, Florida, and reflects a total purchase price of $48,000, with an earnest money deposit of $6,500 which the contract specified was to be held in escrow by The Real Estate Spot, Inc., until closing. Petitioner and Armendinger also executed an Affidavit of Purchaser and Vendor in connection with obtaining financing for this transaction, and said Affidavit also indicated the buyer's purported cash equity of $6,500 in the property. At the time, Petitioner was co-owner of The Real Estate Spot, and Armendinger was an electrician who was doing some work at The Real Estate Spot and became interested in the "stand-in" buyer transactions he observed while doing electrical work at Petitioner's office. On or about October 27, 1982, Petitioner and Armendinger executed another contract for sale and deposit receipt for a second piece of property, which reflects a total price of $85,000 and an earnest money deposit by Armendinger of $5,000. Thereafter, they executed an Affidavit of Purchaser and Vendor and Settlement Statement reflecting Armendinger's purported cash equity of $4,250.00. Petitioner used the proceeds from this transaction to pay off an existing mortgage and judgment on the property, and realized $1,607.46 in cash, which was shared with Jeffrey Graham, co-seller. Petitioner knew that the contracts for sale and Affidavits which he executed with Armendinger were to be presented to The Bank of Florida and used for the purpose of Armendinger obtaining financing for the purchase of these properties. Based upon the testimony of Joseph Armendinger at hearing, it is found he did not provide any earnest money deposit or downpayment in connection with these two transactions with Petitioner. Armendinger relied on Petitioner, a licensed mortgage broker and real estate broker, in these transactions, and was told by Petitioner that he would not have to put any money of his own into these transactions. Petitioner knew that Armendinger had not made any deposit or downpayments concerning these transactions at the time he executed the contracts for sale and deposit receipts, Affidavits and Settlement Statement. On December 16, 1982, Petitioner executed two mortgages in favor of Patricia G. Herren on property he had previously sold to Armendinger. These mortgages totalled $21,793.35, and were recorded in Pinellas County, Florida, on December 28, 1982. These mortgages were used by Petitioner, along with a $10,000 mortgage he executed in Herren's favor, to obtain a satisfaction from Herren of a mortgage she held on a piece of property she sold to Petitioner in October 1982 in St. Petersburg Beach. The $10,000 Herren mortgage was also recorded on December 28, 1982. Having obtained the satisfaction, Petitioner then sold the St. Petersburg Beach property to Juanita Murdaugh and Jeffrey Graham on December 17, 1982, prior to recording the $10,000 Herren mortgage. He did not disclose on the Affidavit of Purchaser and Vendor which he executed that he had an outstanding $10,000 mortgage in favor of Herren on this St. Petersburg Beach property, although this mortgage should have been disclosed as "secondary financing." In each of the Affidavits of Vendor and Purchaser executed by Petitioner in connection with sales of property as described herein, there is the following statement in Item VII: The certifications of this affidavit are for the purpose of inducing the Lender named above or its assignees to make or purchase the first mortgage described by this affidavit.... By signing the Affidavits of Vendor and Purchaser, Petitioner, as the "Property Vendor," made the following certification: The PROPERTY VENDOR hereby certifies that to the extent PROPERTY VENDOR is a party, the Financial Terms, including Total Purchase Price, and the Liens are as set forth in Items III and IV above, [and] hereby acknowledges the inducement purpose of this affidavit as set forth in Item VII above....
Recommendation Based upon the foregoing, it is recommended that Petitioner's application for licensure as a mortgage broker be DENIED. DONE AND ENTERED this 19th of October, 1987, in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of October, 1987. APPENDIX (DOAH No. 87-0033) Rulings on Petitioner's Proposed Findings of Fact: 1. Adopted in Finding of Fact 1. 1.(a) Adopted in Findings of Fact 2, 4. 2.(a) Rejected as not based on competent substantial evidence. 2.(b) Rejected in Findings of Fact 5, 6. 2.(c) Rejected in Finding of Fact 10. 2.(d) Rejected in Findings of Fact 6-10. 2.(e), (f) Rejected in Finding of Fact 11. Rulings on Respondent's Proposed Findings of Fact: 1. Adopted in Finding of Fact 1. 2. Adopted in Findings of Fact 2, 3. 3. Adopted in Finding of Fact 2. 4. Adopted in Findings of Fact 3, 4. 5-6. Rejected as not based upon competent substantial evidence. 7. Adopted in Finding of Fact 5. 8. Adopted in Findings of Fact 5, 6. 9. Adopted in Findings of Fact 7, 10. 10-11. Adopted in Findings of Fact 7, 9, 10. Adopted in Findings of Fact 8, 10. Adopted in Findings of Fact 8, 9, 10. 14-19. Adopted in Finding of Fact 11. Adopted in Finding of Fact 12. Adopted in Finding of Fact 13. Rejected as not based on competent substantial evidence. Adopted in Finding of Fact 11. Rejected as unnecessary and cumulative. COPIES FURNISHED: John Swisher, Esquire Dillinger & Swisher 5511 Central Avenue St. Petersburg, FL 33710 Stephen M. Christian, Esquire Office of Comptroller 1313 Tampa Street Tampa, FL 33602-3394 Honorable Gerald Lewis Department of Banking and Finance Comptroller, State of Florida The Capitol Tallahassee, FL 32399-0350 Charles L. Stutts General Counsel Plaza Level The Capitol Tallahassee, FL 32399-0350
Findings Of Fact At all times material hereto, Respondent John E. LeMieux (Respondent LeMieux) was a licensed real estate broker in the State of Florida, having been issued license numbers 051596 and 0266128 in accordance with Chapter 475, Florida Statutes. The last licenses issued were as a broker in care of Retco Realty, Inc., 5942 SW 73rd Street, South Miami, Florida 33143, and as a broker in care of Retco Kassner, Inc., 7311 SW 59th Court, Miami, Florida 33143. At all times pertinent hereto, the Respondent Retco Realty, Inc. (Respondent Retco) was a corporation registered as a real estate broker in the State of Florida, having been issued license number 0141149 in accordance with Chapter 475, Florida Statutes. The last license issued was at the address of 5942 SW 73rd Street, South Miami, Florida 33143. At all times pertinent hereto, Respondent LeMieux was licensed and operating as the qualifying broker and officer of Respondent Retco. Kenneth and Regina Davis have been married for 12 years and have four children. Both are high school graduates, but neither had been involved in a transaction to purchase real estate prior to the one involved in this proceeding. Ms. Davis is a housewife. Mr. Davis repairs and restores wrecked automobiles. Prior to their dealings with Respondents, the Davises and their four children lived in a rented, two bedroom duplex. In February 1990, Mr. and Mrs. Davis began looking for a house to purchase after their landlord threatened to evict them. The landlord objected to the number of children living in the duplex and to Mr. Davis's practice of parking several cars at the duplex. Because of the threatened eviction, the Davises were anxious to find alternative housing. Mr. and Mrs. Davis saw an advertisement in the Miami Herald for a house located at 14700 South West 104th Place, Miami, Florida. They went to the house on Sunday, February 18, 1990, and, after looking at the house from the outside, decided that they liked the house and called the telephone number listed in the ad on February 18, 1990. In February 1990, Investor's Choice International, Inc., a corporation that was owned and operated by Respondent LeMieux at all times pertinent to this proceeding, owned the house that interested the Davises. Investor's Choice had first acquired the property in 1985 and had subsequently sold the property to Marva Pitter. Respondent LeMieux assisted Ms. Pitter in obtaining a first mortgage on the premises from Savings of America and his corporation took a second mortgage on the premises. Investor's Choice reacquired the property after Ms. Pitter defaulted on the second mortgage and executed a deed to Investor's Choice in lieu of an action to foreclose the second mortgage. Investor's Choice continued to pay the first mortgage to Savings of America, but there was no formal assumption of that first mortgage by Investor's Choice. Respondents had placed the ad for the house, and the number listed was the office of Respondent Retco. Barbara Couret, the Respondents' secretary, answered the Davises's telephone call and promised to have Respondent LeMieux return the call. Later that day Respondent LeMieux talked with Mrs. Davis by telephone, at which time Mrs. Davis gave Respondent LeMieux her and her husband's social security numbers so Respondent LeMieux could check their credit. Mrs. Davis and Respondent LeMieux agreed to meet the following day. The meeting on February 19, 1990, was cancelled when Respondent LeMieux failed to show up and the Davises went home after having waited for him at his office for approximately one hour. That evening Respondent LeMieux called the Davises, apologized for not being able to meet with them as scheduled, and arranged to meet them the following day at Respondent LeMieux's offices. On February 20, 1990, Respondent LeMieux called and changed the location of the meeting to the Pink Flamingo Restaurant on South Dixie Highway, Miami, a location that was mutually convenient. Mr. and Mrs. Davis met with Respondent LeMieux for the first time on February 20, 1990, in the parking lot of the Pink Flamingo Restaurant. At the meeting, Respondent LeMieux told the Davises that he had checked their credit and that he did not believe they would qualify for a FHA loan. Respondent LeMieux told the Davises that his company, Investor's Choice, owned the property and that he would sell it to them for the price of $52,000. The purchase price would be paid as follows: the Davises would pay $2,000 down; they would assume payment of the first mortgage held by Savings of America of approximately $43,000; and they would execute in favor of Respondent LeMieux's corporation a purchase money second mortgage of $7,000. Respondent LeMieux told the Davises that they would have to make an additional payment on the second mortgage of $2,000 around May 1, 1990, when they received their income tax refund. The monthly payment on the first mortgage was to be $367 and the monthly payment on the second mortgage, which was to bear interest at the rate of 12% per annum, was to be $150. One monthly check, in the aggregate amount of $517, was to be paid by the Davises to Respondent Retco Realty. Respondent LeMieux viewed the financing arrangements as a temporary solution to the Davises's credit problems, and he structured the transaction to accommodate those problems. Pursuant to their agreement, the Davises were to live in the house until permanent financing could be arranged. At all times pertinent to this proceeding, Respondent LeMieux was familiar with the terms of the Savings of America first mortgage. He knew that the mortgage was an assumable, variable rate mortgage that provided the borrower with the option of negative amortization in the event the interest rates increased and the borrower wanted to keep his or her monthly payments at a constant level. He knew that the interest rate was tied to an established index and could fluctuate on a monthly basis. He knew that the first mortgage was assumable if the borrower qualified, but otherwise had a "due on sale" clause. The amount of the monthly payment was important to the Davises because of their budgetary constraints. They knew that they would have difficulty paying the $367 first mortgage and the $150 second mortgage, but they felt they could comfortably pay the first mortgage once the second mortgage was paid off. Respondent LeMieux estimated during the meeting of February 20, 1990, that the second mortgage would be paid off around July 1993, assuming that the Davises made the payments to which they agreed, including a payment of $2,000 around May 1, 1990. There is a dispute in the testimony as to what was said about the first mortgage at the meeting between Respondent LeMieux and the Davises on February 20, 1990. From the conflicting testimony, it is found that Respondent LeMieux informed the Davises that the first mortgage was assumable, but that their credit report would not qualify them to assume the mortgage. Respondent LeMieux told them that they would have to clear up their credit problems during the time they were paying off the second mortgage so that they could qualify for a FHA mortgage or, in the alternative, formally assume the Savings America first mortgage, and that title would not be conveyed to them until permanent financing was arranged. As a result of the meeting with Respondent LeMieux on February 20, 1990, Mr. and Mrs. Davis's understanding of the transaction was that the first mortgage payment was fixed, that the interest rate was fixed, and that they would be able to assume the first mortgage (or secure their own mortgage) after they cleared up their credit problems. They would not have entered into the transaction had they known that the interest rate on the first mortgage was variable. Respondent LeMieux asserts that he told the Davises that the mortgage had a variable rate of interest that could fluctuate monthly, and that, because the mortgage permitted negative amortization, the monthly payments could remain constant. This testimony is rejected based on the testimony of Mr. and Mrs. Davis and that of Petitioner's investigator, Hector F. Sehwerert, who testified that Respondent LeMieux told him that he could not specifically recall whether he told the Davises that the first mortgage contained a variable rate. The evidence clearly and convincingly establishes that Respondent LeMieux failed to explain to the Davises that the first mortgage contained a variable interest rate which could cause the monthly payment to fluctuate. Respondent LeMieux knew or should have known that the Davises were relying on his explanation as to the terms of the first mortgage in deciding whether to enter into the subject transaction. He also was aware that the Davises were unsophisticated buyers who were most concerned with the monthly payments they would have to make. His explanation of the terms of the first mortgage misled the Davises into believing that the first mortgage was a fixed rate mortgage and that the payments would remain constant. The Davises did not sign a contract at the meeting of February 20, 1990, but Respondent LeMieux gave them a copy of a contract with the terms of the proposal they had discussed filled out. The Davises took this contract home to think over the transaction. On the evening of February 20, 1990, the Davises gave Respondent LeMieux a check in the amount of $1,000 as a down payment on the house. The following day, the parties executed the contract with the Davises signing as purchasers and Respondent LeMieux signing as president of Investors' Choice International, Inc., the seller, and as president of Respondent Retco Realty, the broker to whom a $2,000 commission was to be paid. The following language appears immediately above the signature line of this form contract: "REALTOR ADVISES BOTH PARTIES TO CONSULT AN ATTORNEY AND FOR THE PURCHASER TO SECURE TITLE INSURANCE." The Davises did not receive the services of an attorney because Ms. Couret told them that an attorney should not be necessary and because they trusted Respondent LeMieux. The contract required a down payment of $2,000 (the receipt of the sum of $1,000 was acknowledged) with the Davises assuming the first mortgage of approximately $43,000 and executing a purchase money second mortgage in the sum of $7,000. The following clauses are found in the contract: 2. ASSUMPTION OF FIRST MORTGAGE: The Purchaser, subject to the lending institution's requirement, including an interest rate of change, if any, agrees to assume an existing First Mortgage of approximately $43,000. Payable at approximately $367 monthly with Homestead Exemption which payment includes principal and interest at existing interest rate on mortgage held by Savings of America. ... * * * 7. NEW PURCHASE MONEY SECOND MORTGAGE: The Purchaser shall execute a purchase money second mortgage and note in favor of (sic) for $7,000.00 payable at $150.00 monthly until paid, including principal and interest at 12% per annum. Said mortgage shall be prepayable without penalty. Documentary stamps, intangible tax and recording mortgage shall be paid by Purchaser. * * * 13. SPECIAL CLAUSES: Purchaser to assume existing 1st mtg. (sic) with Savings of America of approx. (sic) $43,000. Seller to give Buyer a Purchase Money 2nd Mtg. (sic) of $7,000 at 12% per annum, payable $150./mo. (sic) with a $2,000 balloon pmt. (sic) due May 1, 1990. On March 2, 1990, the parties executed an addendum to the contract they had executed on February 21, 1990, which clarified that the Davises were to pay ad valorem taxes and insurance and which contained, in pertinent part, the following: It is understood and agreed that the seller is conveying title at such time as the Purchase Money Second Mortgage of $7,000 is retired; unless that sum is prepaid, the anticipated date of payment in full will occur on or about July 1993. Both parties agree that payment to the first and second mortgages must be made on time, and in the event that these payments or real estate taxes or insurance shall fall into default, that this contract shall be cancelled and all monies forfeited. As an additional incentive for the seller to extend these terms to the buyer, the buyer agrees to make the first and second mortgage payment to the seller's office at 5942 SW 73 Street, Miami, Florida 33143 on or before the first of each month. The aggregate total of these payments will be $517 per month effective April 1, 1990. Both parties understand that the March payment of $367 is now due. Also on March 2, 1990, the Davises paid the Respondents the sum of $1,000, representing the balance of the down payment, paid the sum of $367 representing the March 1990 payment on the first mortgage, and moved into the house. When the Davises received their income tax refund in April 1990, Mrs. Davis went to the Respondents' office to pay the sum of $2,000 on the second mortgage. (This was the payment contemplated by the Special Clauses paragraph of the contract executed February 21, 1990.) At that time Respondent LeMieux informed Mrs. Davis that the sum of $314 was due for insurance on the house and he agreed to accept the sum of $1700 as the lump sum payment on the second mortgage so Mrs. Davis could pay the insurance premium. In addition to the annual insurance premium in the amount of $314 paid by the Davises in April 1990, they paid the annual insurance premium in the amount of $314 in April 1991, and the ad valorem tax bill for 1990 in the amount of $605.89. From March 30, 1990 through April 30, 1991, the Davises made 14 monthly payments in the amount of $517 each by check payable to Respondent Retco Realty. These payments were hand delivered by Mrs. Davis and were always timely made. The Davises and their children liked the house and the neighborhood. During the time the Davises were in the house, they made repairs and improvements worth approximately $500. On May 29, 1991, Mrs. Davis went to Respondents' office to make a regular $517 monthly payment. At that time Respondent LeMieux met with Mrs. Davis and told her that the interest rate on the first mortgage was variable, that the payments on the first mortgage had gone up, and that his second mortgage was not making any money. Prior to this meeting, the Davises did not know that the first mortgage was not a fixed rate mortgage or that the first mortgage payments were subject to change and had changed. At the meeting on May 29, 1991, with Mrs. Davis, Respondent LeMieux prepared a document entitled "Letter of Understanding", and asked Mrs. Davis to sign it on her own behalf and on behalf of her husband. Respondent LeMieux was to sign the Letter of Understanding as president of Investor's Choice International. The Letter of Understanding provided, in pertinent part, as follows: Both parties acknowledge that the existing first mortgage of approximately $43, 500 (sic) held by Savings of America contains a variable interest rate, which is adjusted monthly, and therefore causes the monthly mortgage payments to either increase or decrease by a particular number. Currently the mortgage payment is $477.48. The mortgage also contains a "due-on-sale" clause, and that is why pursuant to the contract dated February 20th, 1990 between the Davises and Investor's Choice, no deed was ever conveyed so as to prevent triggering any "due-on-sale" clause that may cause the mortgage to go into default and subsequent foreclosure. To date, the Davises have made 13 payments of $517 each for a grand total of $6,721. To date, Investor's Choice has paid Savings of America $5,884.69; therefore the difference that was paid to Investor's Choice on that certain second mortgage of $7,000 pursuant to that contract of February 1990 is $836; of which $636 is interest and $200 is principal. Therefore, after the principal reduction that the Davises have made during the course of the last twelve months, namely $1,700 plus $200 by virtue of their monthly installments, the current mortgage balance is $5,100. The parties have agreed that Mrs. Davis will pay $100 toward the principal balance this month, May 1991, leaving a principal unpaid balance due Investor's Choice of $5,000. Said mortgage to be payable at the rate of 12% per annum, interest only monthly, or $50 per month. If Mr. and Mrs. Davis elect to make principal reduction in said mortgage, they will be receipted for same, and the interest payment per month would drop accordingly. Mrs. Davis refused to sign the "Letter of Understanding". After discussing the matter with her husband, the Davises obtained through legal aid the services of attorney Candis Trusty. Ms. Trusty negotiated an agreement with the Respondents' attorney, Robert Korschun, whereby the Davises would be reimbursed the sum of $3,899, they would vacate the premises by September 1, 1991, and they would deposit the sum of $500 into Ms. Trusty's trust account as security for damages to the premises. The Davises did not move out of the premises until September 8, 1991. Thereafter, Respondent LeMieux inspected the premises and informed Ms. Trusty that there were no damages to the premises beyond normal wear and tear, and that he would therefore make no claim on the damages deposit. Respondent LeMieux did assert a claim against the Davises in the amount of $166.67 for unpaid rent for the days they occupied the premises beyond September 1, 1991. Because of the dispute over rent, Ms. Trusty retained, as of the formal hearing, the sum of $166.67 in her trust account. At the formal hearing, Respondent LeMieux continued to assert his entitlement to the rent from the Davises in the amount of $166.67, but he acknowledged that the funds the Davises deposited in Ms. Trusty's trust account were not intended to secure rent and that he had no claim to that particular fund. In October of 1988, Petitioner filed an Administrative Complaint against Respondents which is unrelated to the present proceeding. That Administrative Complaint contained certain factual allegations which charged that Respondents were guilty of "fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction, all in violation of Subsection 475.25(1)(b), Florida Statutes (1988)." This Administrative Complaint was referred to the Division of Administrative Hearings and assigned DOAH Case No. 88-5771. Respondents settled that prior matter and executed a Stipulation which they neither admitted nor denied the allegations of the Administrative Complaint. Respondents were reprimanded and fined in the amount of $400.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding the Respondents guilty of having violated the provisions of Section 475.25(1)(b), Florida Statutes, which assesses an administrative fine in the aggregate amount of $500 against the Respondents, and which places the licensure of both Respondents on probation for a period of six months. DONE AND ENTERED this 15th day of January, 1993, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 15th day of January, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-1906 The following rulings are made on the proposed findings of fact submitted on behalf of the Petitioner. The proposed findings of fact in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 10, 11, 13, 14, 15, 16, 17, 18, 19, and 22 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraph 9 are adopted in part by the Recommended Order, but are rejected to the extent the proposed findings are contrary to the findings made. The proposed findings of fact in paragraphs 12 and 20 are adopted in part by the Recommended Order, but are rejected to the extent the proposed findings are unnecessary to the findings made. The proposed findings of fact in paragraph 21 are rejected as being unnecessary to the conclusions reached. The following rulings are made on the proposed findings of fact submitted on behalf of the Respondents. The proposed findings of fact in paragraph 1 are adopted in material part by the Recommended Order. The proposed findings of fact in the first sentence of paragraph 2 are rejected as being contrary to the findings made. The findings of fact in the last sentence of paragraph 2 are rejected as being unnecessary to the findings made. The remaining proposed findings of fact contained in paragraph 2 are adopted in material part by the Recommended Order or they are subordinate to the findings made. The proposed findings of fact in the first sentence of paragraph 3 are rejected as being unsubstantiated by the evidence or as being unnecessary to the findings made. The proposed findings of fact in the second sentence of paragraph 3 are adopted to the extent that the Respondents's standard form contract contains the advice for the parties to seek the services of an attorney. The proposed findings of fact in the third sentence of paragraph 3 are adopted in material part by the Recommended Order. The proposed findings of fact in the fourth sentence of paragraph 3 are adopted in part by the Recommended Order, but are rejected to the extent that said proposed findings state that Respondent LeMieux was acting to accommodate the Davises. The proposed findings of fact in the fifth sentence of paragraph 3 are rejected since the Davises appeared to understand why the payments on the first mortgage went up after Respondent LeMieux informed Mrs. Davis that the mortgage had a variable interest rate. The proposed findings of fact in the last sentence of paragraph 3 are adopted in part and are rejected in part as being unnecessary to the conclusions reached. The proposed findings of fact in paragraphs 4, 5, and 6 are adopted in part by the Recommended Order or are subordinate to the findings made. The proposed findings of fact in paragraphs 7 and 8 are rejected as being contrary to the evidence or as being unnecessary to the findings made. Both Mr. and Mrs. Davis understood the explanation of the transaction Respondent LeMieux made to them before they signed the contract. That they became confused on cross examination is unnecessary to the conclusions reached in this proceeding. Her confusion as to the meaning of a fixed rate mortgage and the assumability of the mortgage is subordinate to the findings made that Respondent LeMieux did not lie to them about the status of the interest rate on the first mortgage. The statements made by the attorney they consulted during the settlement negotiations are also unnecessary to the conclusions reached in this proceeding. The proposed findings of fact in paragraph 9 consists of argument and are unnecessary as findings of fact. The proposed findings of fact in paragraph 10 are adopted in part by the Recommended Order with the exception of the last sentence, which is rejected as being argument and unnecessary as a finding of fact. The proposed findings of fact in paragraph 11 are rejected as being unnecessary to the conclusions reached. COPIES FURNISHED: Theodore R. Gay, Esquire Department of Professional Regulation 401 Northwest Second Avenue Suite N-607 Miami, Florida 33128 Jorge Gaviria, Esquire 2222 Ponce de Leon Boulevard Mezzanine 200 Coral Gables, Florida 33134-6193 Darlene F. Keller, Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Jack McRay, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact A Quit-Claim Deed was executed the 3rd day of March, 1975, by Bayshore 21, Inc., first party to Marc Broxmeyer an undivided 70 percent interest; Gerald Schefflan and Pearl Schefflan, his wife, an undivided 20 percent interest; and Yetta Young an undivided 10 percent interest. The deed was recorded in Official Records Book of Dade County, Florida. The deed reflects that no documentary stamp taxes were affixed to the deed. At the time of the conveyance there existed upon the property three outstanding mortgages: one in the amount of One Million Four Hundred Fifty Thousand Dollars ($1,450,000) in favor of Washington Federal Savings and Loan; one in the amount of One Million Eight Hundred Eighty Thousand One Hundred Six Dollars ($1,880,106) in favor of Sidney Salomon, et al.; and Twelve Thousand Five Hundred Dollars ($12,500) in favor of Harold Kravitz. The total consideration for the conveyance amounted to Three Million Three Hundred Forty- Two Thousand Six Hundred Six Dollars ($3,342,606). The undisputed facts of the transaction as outlined at the hearing and agreed to by the Petitioners' attorney are as follows: Prior to August 17, 1974, all the outstanding stock of a corporation known as Tepmon of Florida, Inc., (Marvin Glick, presidents and controlling person and Eugene J. Howard, secretary) was held by Sidney Salomon, Jr., Hid Salomon, III, Elliot Stein, the Estate of Preston Estep and John Soult. On or about April 17, 1974, these people entered into an agreement for purchase and sale of corporate stock with Bayshore 21, Inc., pursuant to which Bayshore 21, Inc., agreed to purchase for Three Million Five Hundred Thousand Dollars ($3,500,000) all of the outstanding capital stock of Tepmon of Florida, Inc. At the time, Tepmon of Florida, Inc., had as its only asset a certain parcel of real property known as the Golden Strand Hotel, as shown by suit, Shoprite Air Conditioning, Inc. v. Tepmon, Inc., et al. in the Circuit Court of Dade County, Florida, Case No. 74-29983. Pursuant to the purchase and sale agreement, a closing was to be held in various stages on August 19 and 20, 1974, at which time Sidney Salomon, et al., delivered to Bayshore 21, Inc., all of the capital stock of Tepmon of Florida, Inc. Bayshore 21, Inc., in turn executed and delivered at the closing a chattel mortgage in the amount of One Million Eight Hundred Eighty Thousand One Hundred Six Dollars ($1,880,106), the security for which there was sixty-nine (69) shares of capital stock of Tepmon of Florida, Inc., which stock represented the outstanding stock of Tepmon of Florida, Inc., and carried with it the ownership and control of said corporation. Also given to Sidney Salomon, et al, by Bayshore 21, Inc., at the closing was a purchase money mortgage in the amount of One Million Eight Hundred Eighty Thousand One Hundred Six Dollars ($1,880,106), which mortgage secured the real property known as the Golden Strand Hotel. The reason for the two separate security devices, one the chattel mortgage secured by the outstanding sixty-nine (69) shares of Tepmon of Florida, Inc., stock and the other the real property mortgage secured by the Golden Strand Hotel, was that the parties contemplated that upon Bayshore 21's acquisition of the outstanding Page 3 of 7' pages capital stock of Tepmon of Florida, Inc., Tepmon would be dissolved and completely liquidated. Mindful that such liquidation would render valueless as collateral the capital stock of Tepmon, the parties provided in a collateral security agreement, dated August 20, 1974, that the purchase money real estate mortgage would constitute the substitute collateral security for repayment of the outstanding purchase money obligation owed by Bayshore 21, Inc., to Sid Salomon, et al., effective upon the dissolution of Tepmon of Florida, Inc. Subsequent to acquiring all the capital stock of Tepmon of Florida, Inc., Bayshore 21, Inc., did in fact effectuate a complete dissolution and liquidation of Tepmon of Florida, Inc. Pursuant to such dissolution, the sole asset of Tepmon of Florida, Inc, the Golden Strand Hotel, should have become titled in the name of Tepmon of Florida, Inc.'s sole stockholder, Bayshore 21, Inc., in order to give effect to the validity of the purchase money mortgage. This is not what occurred however, as Sidney Salomon, et al., point out in their Cross-Claim to the aforementioned suit, the truthfulness of which assertions have been admitted by the Petitioners. The September 5, 1974 deed of conveyance of the Golden Strand Hotel from Tepmon of Florida, Inc., to Petitioners (which should have been to Bayshore 21, Inc.) contained only minimum stamps in the amount of eighty-five cents (85). As a result of the Cross-Claim in the aforementioned suit filed by Sidney Salomon, et al., against Petitioners, a stipulation and agreement was entered into resolving the matter in a manner which gave effect to the purchase money real estate mortgage given by Bayshore 21, Inc., to the Salomons. Pursuant to such stipulation, the Petitioners agreed that "the allegations made in the Cross Claim . . . are true and correct and Cross Claimants are entitled to the relief prayed for therein. Cross Defendants [Petitioners] have no defenses thereto, legal or equitable, or any kind whatsoever Pursuant to this stipulation, the Petitioners agreed to execute Quit-Claim Deeds conveying any interest they may have received in the property pursuant to the September 5, 1974 deed of conveyance from Tepmon of Florida, Inc., to Bayshore 21, Inc., the entity which was the sole stockholder of Tepmon of Florida, Inc., at the time of its dissolution and liquidation. By Quit-Claim Deeds dated January 2, 1975, Gerald and Pearl Schefflan conveyed their interest to Bayshore 21, Inc., Yetta Young conveyed her interest back to Bayshore 21, Inc., Marc Broxmeyer conveyed his interest back to Bayshore 21, Inc., and the last Board of Directors of Tepmon of Florida, Inc., comprised of Marvin Glick and Eugene Howard, also conveyed any interest that entity may have retained back to Bayshore 21, Inc. At this point Bayshore 21, Inc., finally held the title it was supposed to have acquired upon the dissolution and liquidation of Tepmon of Florida, Inc. Also at this point the validity of the purchase money real estate mortgage given by Bayshore 21, Inc., to Sidney Salomon, et al., was reestablished and the parties were returned to the posture called for and required by their purchase and sale agreement dated April 17, 1974. When, on March 3, 1975, Bayshore 21, Inc., conveyed title to the Golden Strand Hotel to the Petitioners in this action, by unstamped deed, the conveyance was a voluntary conveyance. At the time of the conveyance, three outstanding mortgages encumbered the real property. Such mortgages were a One Million Four Hundred Fifty Thousand Dollar ($1,450,000) mortgage in favor of Washington Federal Savings and Loan; the One Million Eight Hundred Eighty Thousand One Hundred Six Dollar ($1,880,106) purchase money mortgage in favor of Sidney Salomon, et al.; and a Twelve Thousand Five Hundred Dollar ($12,500) mortgage in favor of Harold Kravitz. When Petitioners took title to this real property, they took title subject to three outstanding mortgages. The Hearing Officer further in summary finds: The transactions related in the foregoing findings of fact ultimately transferred title of real property to Bayshore 21, Inc., pursuant to an agreement dated April 17, 1974. Fee simple title was then transferred from Bayshore, Inc., to Petitioners by Quit-Claim Deed dated March 3, 1975, subject to mortgage liens.
Recommendation Affirm the assessment of documentary stamp taxes made by the Respondent in this cause. DONE and ORDERED this 30th day of March, 1977, in Tallahassee, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Harold F. X. Purnell, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 Eugene J. Howard, Esquire 2212 Biscayne Boulevard Miami, Florida 33137
The Issue The issues in this case are whether Respondent violated Section 475.42(1)(a), Florida Statutes (1995), by operating as a real estate broker without a license and, if so, what, if any, penalty should be imposed.
Findings Of Fact Petitioner is the state agency responsible for regulating the practice of real estate. Respondent is the president of Lenox Investments & Development, Inc. ("Lenox"). Lenox shares office space with Lenox Realty Corporation ("Lenox Realty"). Mr. Richard Fess is the qualifying and managing broker for Lenox Realty. Mr. Carlos Hofle is Respondent's brother, a licensed real estate agent, and an employee of Lenox Realty. Respondent is not licensed to practice real estate and is not an employee of Lenox Realty. In 1993, Respondent practiced real estate without a license by renting and negotiating the sale of a home owned by Herman and Mae Agnes Scott (the "Scotts"). Mr. Scott built the home himself approximately 20 years ago. In November, 1993, Mr. Scott became fatally ill. The Scotts were unable to make the mortgage payments on their home. They were six months in arrears in their mortgage payments. Crown Bank, the mortgagee, began foreclosure proceedings. The Scotts approached Respondent to assist them in avoiding foreclosure through a mortgage assistance program promoted by Lenox. Respondent represented verbally, in the functions he performed, and in the capacity for which he signed relevant documents, that he was a licensed real estate agent. He and the Scotts met and discussed the pending foreclosure proceeding. Respondent advised the Scotts that they should sell their house. Respondent represented that he would obtain a tenant who would purchase the house. The Scotts were in a desperate financial situation and needed cash. Respondent loaned the Scotts $2,000. The loan included a personal loan of $1,250 to the Scotts and a $750 mortgage assistance fee for Respondent. On November 10, 1993, the Scotts executed a management agreement with Lenox. Respondent negotiated and signed the management agreement. The management agreement required Respondent to advertise and show the rental property, pre-qualify the tenant, negotiate the lease, and perform repairs and maintenance. The Scotts were to pay Respondent 12 percent of the gross rent, plus one month's rent, and $750 for a mortgage assistance program to avoid foreclosure. All of the rent earned on the property went to Respondent until the $1,250 loan and $750 mortgage assistance fee were paid. On November 10, 1993, Respondent solicited and obtained an Exclusive Right of Sale Listing Contract from the Scotts on behalf of Lenox Realty. Respondent obtained a tenant who Respondent represented would purchase the Scotts' house. Respondent collected $1,400 from the tenant. None of the rent was paid to avoid or work out the foreclosure. The mortgagee foreclosed on the Scotts' house. They lost their home, their equity, and their credit. Respondent never worked for Lenox Realty. Lenox Realty never authorized Respondent to obtain listing agreements or management agreements on behalf of Lenox Realty. Neither Lenox Realty nor Mr. Fess agreed to list the Scotts' home for sale. Neither authorized Respondent to do so. Mr. Fess never signed the listing agreement with the Scotts. The Scotts dealt only with Respondent. They did not know that Respondent was not licensed. The Scotts never dealt with anyone who was a licensed real estate agent.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondent guilty of violating Section 475.42(1)(a) and imposing an administrative penalty of $5,000. RECOMMENDED this 28th day of April, 1997, in Tallahassee, Florida. DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 28th day of April, 1997. COPIES FURNISHED: Henry M. Solares, Division Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Lynda Goodgame General Counsel Department of Business and Professional Regulation Northwood Center 1940 North Monroe Street Tallahassee, Florida 32399-0792 Daniel Villazon, Esquire Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Edward A. Kerben, Esquire 725 North Magnolia Avenue Orlando, Florida 32803
Findings Of Fact Respondents Phillip A. Banks (Banks) was at all times Material hereto a licensed real estate broker in the State of Florida, having been issued license number 0324865. Banks was the qualifying broker for Respondent, Abode Realty, Inc., which was at all tines material hereto registered as a real estate broker in the State of Florida, having been issued license number 0232550. On August 24, 1985, Respondents received in escrow $2,200 from Patricia Turner, as a deposit on her agreement to purchase a home located at 1300 Westview Drive, Miami, Florida. Pertinent to this case, the agreement was conditioned on Ms. Turner's ability to qualify for and obtain a first mortgage, insured by the FHA or guaranteed by the VA, in an amount not less than $40,837. Ms. Turner's application for the subject mortgage was duly submitted to American International Mortgage Company (American International). That application was, however, denied because the property did not appraise at the contract price. Following the denial of her application for mortgage financing on the first house, Ms. turner entered into an agreement through Respondents, dated November 20, 1985, to purchase another home located at 2501 Northwest 155 Terrace, Miami, Florida. At that time, Respondents returned to Ms. Turner the $2,200 deposit on the first contract, and she in turn deposited such sums with Respondents as a deposit on her agreement to purchase the second home. Pertinent to this case, the agreement was conditioned on Ms. Turner's ability to qualify for and obtain a first mortgage, insured by the FHA or guaranteed by the VA, in an amount not less than $39,867. The agreement further provided: When this contract is executed by the Purchaser and the Seller and the sale is not closed due to any default or failure on the part of the Purchaser, Purchaser shall be liable to Broker for full amount of brokerage fee. The agreed brokerage fee was 7 percent of the purchase price, or $2,800. The second home was owned by Independent Properties, Inc., a corporation owned, at least in part, by Banks. This ownership interest was, however, fully disclosed to Ms. Turner at the time the agreement was executed. Ms. Turner's application for the mortgage on the second home, as with the first home, was processed by American International. While that loan was being processed, Ms. Turner contracted to purchase and purchased, unbeknown to Respondents or American International, a different home (the third home). When a American International discovered this fact, Ms. Turner's application was disapproved because she lacked sufficient resources to afford two homes and because she could not comply with the FHA regulation which required that the buyer reside in the home. But for Ms. Turner's purchase of the third home, she would have qualified for the mortgage contemplated by the second agreement. Ms. Turner entered into the agreement to purchase the third home on or about January 20, 1986, and her application for the mortgage on the second home was disapproved by American International on April 1, 1986. In the interim, on January 30, 1986, Ms. Turner secured a loan of $1,000 from Banks on the pretext that her uncle had been charged with a criminal offense and the monies were needed to secure his release. The proof established, however, that Ms. Turner had no intention of fulfilling her agreement to purchase the second home, and that the pretext she used to secure $1,000 from Banks was but a subterfuge to secure the return of some of her deposit. Ms. Turner made no demand for the return of any of her deposit monies. She did, however, file a civil action in January 1987 to recover such monies. That action was dismissed on motion of Respondents, but faced with the threat of continued litigation Respondents offered to settle with her for $1,100. Ms. Turner rejected Respondents' offer, and commenced a second civil action. That action resulted in the entry of a final judgment in her favor for $1,100 and costs. Respondents are ready, willing and able to satisfy such judgment, and have attempted to satisfy such judgment through Ms. Turner's counsel without success.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final order be entered dismissing the Administrative Complaint. DONE and ENTERED this 11th day of January 1988, in Tallahassee, Florida. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 904/488-9675 FILED with the Clerk of the a Division of Administrative Hearings this 11th day of January 1988. COPIES FURNISHED: James H. Gillis, Esquire Division of Real Estate Legal Section 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Brian M. Berman, Esquire SMITH & BERMAN, P.A. 2310 Hollywood Boulevard Hollywood, Florida 33020 William O'Neil, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Darlene F. Keller Acting Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
Findings Of Fact At all times pertinent to the incidents involved herein, the Respondent, Jerry L. Daniel, was licensed as a real estate broker in Florida under license number 365403. Petitioner, Division of Real Estate (Division), is and was the state agency charged with the responsibility for governing the conduct of real estate brokers in Florida. On August 19, 1984, and for several years prior thereto, Doteileen Mariner owned a three bedroom home located at 1260 Schenly Street, Port Charlotte, Florida. The property was encumbered by a first mortgage held by the First Federal Savings and Loan Association in Punta Gorda, Florida. Sometime during 1983 she decided to sell this property and made inquiries toward that end. She was first contacted by Roger King, a real estate agent, with a view toward purchasing her property and in August, 1984, Mr. King presented her with a contract to buy the property. King and the Respondent, who were purchasing it together, were to assume the existing first mortgage and give her a second, balloon, mortgage in the amount of $23,000.00 for five years with a $5,000.00 down payment and payment of interest only thereafter until the end of the period of the mortgage. Mrs. Mariner agreed to this proposal and signed a contract for sale which reflected a total purchase price of $69,500.00 on or about August 22, 1984. She was not given a copy of the contract at that time, however, and Petitioner's Exhibit 2, which purports to be a contract for the sale of the property, bearing her signature and that of the Respondent, dated August 22, 1984, reflects a total purchase price of $74,900.00 with $18,900.00 paid as deposit, and a new mortgage of $56,000.00. According to Mrs. Mariner, these were not the figures which appeared on the contract she signed. At the same time, Mrs. Mariner also signed an addendum to the original contract, dated August 21, 1984, one day prior to the contract which it purports to supplement, which is also signed by Respondent and Mr. King and which reveals that the existing first mortgage on $29,335.00 was to be paid at closing; that the seller, Mrs. Mariner, was to receive $5,000.00 in cash at closing; and that a second mortgage for $23,000.00 would be held for 60 months with interest payments at 10% per year to be made monthly in the amount of $191.67 each. Mrs. Mariner received the $5,000.00 down payment but did not receive the $18,900.00 deposit and, to the best of her recollection, did not agree to a new first mortgage being substituted for the existing first mortgage she had with First Federal. Respondent, on the other hand, indicates he made very clear to Mrs. Mariner, and the documentation which he admits to signing reflects, that the original first mortgage was to be paid off and a second first mortgage for a larger amount substituted therefor. Examination of the contract shows it has been modified by alteration of the figures thereon. When this is done is not known. Mrs. Mariner moved out of the property the next day after the contract was signed and at the closing, held in September, 1984, was given an envelope with certain documents in it which included a second mortgage on the property in the amount of $23,000.00 signed by both Respondent and Mr. King on September 24, 1984. This second mortgage included a clause which subordinated it to the new first mortgage on the property which was dated July 25, 1985, nine months subsequent to the date of the second mortgage. Mrs. Mariner did not examine the documents at that time but accepted her $5,000.00 down payment and left the area. She assumed the property was transferred and, in fact, received her monthly interest payments on time for several years. However, after a period of time, the payments stopped and after several months of trying unsuccessfully to reach Respondent, she finally contacted him and arranged to come back to Florida to meet with him. When she met with Respondent, he indicated he was having financial difficulties and was unable to make the monthly payments. However, he offered to deed her property back to her and to convey to her two other properties he owned, both of which were encumbered by substantial first mortgages. Both had some equity in them which, he claims, when added to the equity in her original property, would be adequate to make her whole and enable her to avoid any financial loss on her part. On July 10, 1986, Respondent executed a Quit Claim Deed to Mrs. Mariner for the property which she originally owned. This deed showed a first mortgage of $58,000.00 compared to the $29,355.00 first mortgage she originally had. Therefore, as a result of her dealings with the Respondent, she had her property back temporarily, had received $5,000.00 in cash, and had received some monthly payments of $191.67 each. She also had an indebtedness of approximately $30,645.00 more than she had when she met Respondent and because of her inability to make the payments on the new first mortgage, lost the property to foreclosure. Respondent and Mr. King arranged for interim financing on the Mariner property at a high rate of interest with a temporary lender until such time as they could arrange new first mortgage financing. This was done several months later and Respondent encumbered the property with a new mortgage in the amount of $58,400.00. That new first mortgage, dated June 25, 1985, was made payable to Standard Federal Savings and Loan Association and was recorded in the public records of Charlotte Count, Florida on July 2, 1985, prior to the recordation of the original second mortgage, dated September 24, 1984, which Respondent and King had given to Mrs. Mariner. It should also be noted that this second mortgage, dated September 24, 1984, reflects at the bottom of page 1, "subject to and inferior to that certain mortgage to Standard Federal Savings and Loan Association dated June 25, 1985 [sic], filed July 2, 1985 sic; recorded in Official Records Book 823, page 779 of the Public Records of Charlotte County, Florida in the original principal amount of $58,400.00." Respondent has not explained how a mortgage executed on September 24, 1984 can refer to as existing and legitimately be made subordinate to a first mortgage which did not come into existence until 9 months later. He claims total ignorance of how that happened. He assumed that since all documents were turned over to the title company at the time of closing, the second mortgage would be recorded at that time. This testimony is ingenuous and unbelievable. Mrs. Mariner received approximately $3,200.00 in interest payments from Respondent in addition to the $5,000.00 down payment. In the Spring of 1986, she was served with a summons for foreclosure of the first mortgage on her property. She has now lost the property and the difference between her equity in it at the time of sale to Respondent and the Deposit she received. Petitioner has alleged that Mrs. Mariner's loss was approximately $39,000.00. The exact amount of loss is irrelevant. What is pertinent is not the loss to Mrs. Mariner but whether Respondent's conduct here constitutes misconduct and it obviously does. Respondent denies any responsibility for this situation. He claims he was approached by Roger King in 1984 with the opportunity to buy Mrs. Mariner's property. At the time, he was involved in investing in family homes owning two or three at that time and up to twenty to thirty thereafter. At the time of this transaction, he had had only one other deal with Mr. King who had done the negotiations for the purchase of the Mariner property and drafted the documents. Respondent, however, is the only buyer listed on the contract though King appears as a mortgagor on the second mortgage. Mr. Daniel claims he saw Mrs. Mariner first at the closing at Federal Title Insurance Company on September 24, 1984. He relates that the contract for the purchase of the property and the addendum were signed prior to closing and he was not present at the time Mrs. Mariner signed them. He claims not to know who got her to sign them. Respondent claims, however, that he explained all the provisions of the transaction to Mrs. Mariner prior to the closing including the fact that her existing first mortgage would be paid off; that a new first mortgage in a higher amount would be placed on the property; and that the mortgage she was holding would be subordinate to the new first mortgage. She denies this. He asserts that he took out 90 day interim financing arrangement with Family Credit at a higher interest rate for the sole purpose of allowing the deal to close so that Mrs. Mariner could be on her way to Delaware. His assertions of concern for Mrs. Mariner's welfare are not believable. Respondent claims he told Mrs. Mariner at closing that her second mortgage would not be recorded until after permanent financing through a new first mortgage was secured and that the new institutional mortgage would be superior to hers. She does not recall this, however, but her testimony was so indefinite, vague, and unsure, it is difficult to determine what Mrs. Mariner was told. As was found before, his contention is unworthy of belief. Respondent also contends that the rental income from the property was supposed to be between $700.00 and $800.00 per month which would have been sufficient to pay not only the monthly payment on the first mortgage but also the interest payment on the second mortgage. However, these expectations were not realized and he received only rental income of $550.00 per month which was sufficient to pay only the first mortgage. Because of financial reverses he was having at the time with some of his commercial properties, which put him in a poor cash flow position, he stopped making payments on both the first and second mortgages early in 1986 and subsequently lost Mrs. Mariner's property to foreclosure. Respondent overlooks the fact that the lower rental he obtained, $550.00 per month, was more than sufficient to cover the $191.67 per month owed to Mrs. Mariner and still return him a substantial return on his investment of $5,000.00 if he had been a legitimate investor in rental property. It is obvious from the evidence that Respondent had far more in mind than that reasonable return. Respondent contends it was never his intention not to pay Mrs. Mariner. However, Respondent bought a piece of property which had a current first mortgage of $29,335.00. He replaced that with a new first mortgage of $58,400.00 which gave him a cash surplus of approximately $27,000.00. The second mortgage which he owed to Mrs. Mariner was for $23,000.00, well below the amount he had received in cash as a result of the refinancing. It is clear that Respondent took this money and failed to pay Mrs. Mariner even though there were adequate funds available from the refinancing to do so. It is clear that he intended for her to be in a subordinate position and that he intended to make, and did make, a substantial amount of money out of the transaction. He tried to deed Mrs. Mariner's property back to her, along with two other properties in which he had equity, to reduce her loss, but she refused his offer. His financial difficulties resulted in his going into bankruptcy through which he lost his entire financial base. Since his bankruptcy, Respondent has been employed as a broker/manager at the Bee Ridge office of Schlott Realtors and as a part of his duties, is responsible for hiring, training, and supervising sales associates. Larry D. Romito, manager and president of the Florida division of Schlott Realty, learned of the Respondent from two or three of his existing sales associates who spoke highly of him. As a result of their recommendations, Mr. Romito sought Respondent out and spent a substantial amount of time with him before offering him a job with the company. During more than fifteen hours of interview time, Respondent spoke quite frankly about his financial difficulties and their effect on him as well as what led up to them. Since Respondent has come with the company, his performance has been exemplary. He has been involved in excess of one thousand transactions and his leadership has been remarkable. There are nine managers in the company and Respondent is to be recognized as the number one manager of all divisions at the next award period. Mrs. Romito has found Respondent to be very objective and reliable and has had no questions with regard to Respondent's honest or integrity.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Respondent's license as a real estate broker be revoked and that he pay an administrative fine of $1,000.00 but that the revocation be suspended for a period of three years under such terms and conditions as may be prescribed by the Commission. RECOMMENDED this 16th day of March, 1989 at Tallahassee, Florida. ARNOLD H. POLLOCK 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 16th day of March, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-4573 The following constituted my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER; Accepted and incorporated herein Rejected. At the time in issue, Respondent's license was issued c/o Jerry Daniels Realty, not Schlott Of Florida. Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein except for that statement that the new first mortgage was concealed from Federal Savings and Loan Association of Punta Gorda. Rejected as a restatement of testimony which is accurately recited. Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein FOR THE RESPONDENT; Accepted in so far as it indicates the contract was drafted by someone other than Mrs. Mariner and that the contract and addendum were signed at her house. Accepted and incorporated herein Rejected as contra to the weight of the evidence. Mrs. Mariner denies being told recording her mortgage was being withheld. Rejected as a restatement of testimony. Accepted and incorporated herein Accepted and incorporated herein First sentence accepted and incorporated herein. Second sentence not a Finding of Fact but a restatement of the testimony. Accepted and incorporated herein COPIES FURNISHED: Steven W. Johnson, Esquire Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Dana J. Watts, Esquire 700 Sarasota Way Sarasota, Florida 34236 Kenneth A. Easley, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Darlene F. Keller Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
Findings Of Fact At all times pertinent to the allegations herein, the Petitioner, Department of Banking and Finance, (Department), was the state agency in Florida responsible for the regulation and licensing of mortgage brokers in this state, and Respondent, Harriet Ijames, was a licensed mortgage broker. On February 17, 1989, Respondent entered into a Stipulation, Consent Agreement and Final Order with the Department whereby she was placed on probation for 2 years for misconduct relating to the misappropriation of mortgage application fees, with the further requirement that she not act independently but under the supervision of a broker acceptable to the Department. On October 2, 1991, the Department filed a complaint against the Respondent alleging she had violated the terms of the prior Consent Order by conducting business as a mortgage broker without the requisite supervision. Thereafter, on April 29, 1992, Respondent entered into another Stipulation, Consent Agreement and Final Order with the Department regarding the October, 1991 complaint by which she was again placed on probation conditioned upon her operating only under the supervision of an approved broker. This latter Order provided that any violation thereof would be automatic grounds for immediate and summary revocation of her license and also imposed an administrative fine of $2,000.00. The Final Order incorporating that agreement was issued by the Department on July 13, 1992. In May, 1992, Respondent was contacted by Rhudine M. McGhee, a resident of Tampa, who had been referred to her by a mutual acquaintance. Mrs. McGhee indicated she was interested in purchasing another house. Somewhat later, Respondent contacted Mrs. McGhee and told her of a friend who had a house for sale. She also gave Mrs. McGhee the addresses of some other houses in the area which were for sale. Mrs. McGhee did not like any of them. Thereafter, Respondent advised Mrs. McGhee that she was a mortgage broker and not a real estate broker, and that she would have a real estate broker contact her. Respondent also offered to provide Mrs. McGhee with listings of Resolution Trust Corporation foreclosures in the desired price range. Some time later, the broker referred by Respondent showed Mrs. McGhee a house she liked and she signed a contract to buy it. In the interim, Respondent had taken a credit application from the McGhees over the phone and followed up with a visit to the McGhee home. On May 13, 1992, during the visit to the McGhee residence, Respondent had Mrs. McGhee sign a loan application. On that same visit, she solicited and received from Mrs. McGhee a check for $300.00, payable to the Respondent and subsequently endorsed and cashed by her, which reflected the check was the application fee for a loan. She specifically asked that the check be made to her, personally. When Mrs. McGhee asked Respondent about the check, she was told it would be credited to the purchase price at time of closing. This was not done and it was only later, after a complaint was filed with the Department, that Mr. Brigliadora, the mortgage broker with whom she was affiliated, repaid the fee from his company's funds. Though at hearing Respondent denied she took a loan application fee or that the check she received was for that purpose or bore any notation to that effect when received, Mrs. McGhee is quite certain she put that notation on the check at her husband's direction at the time she gave it to Respondent. Respondent claimed the check was for finding the house but Mr. McGhee specifically recalls Respondent indicating the check was to be an application fee to be credited against the purchase price. It is so found. On June 1, 1992, Respondent again returned to the McGhee home to have them sign a second loan application. This time Mr. McGhee was not at home and Respondent suggested to Mrs. McGhee that she sign her husband's name to the application. This was done. Respondent did not give the McGhees copies of the applications they signed but said she would bring them copies at a later date. This was never done. Though Respondent also denies soliciting the second application, her apparent signature appears on both application forms and it is found she did both solicit and sign the forms and the application fee check. The first application was for a loan of $80,000.00 at 8.5 percent. The second was for $36,000.00 at 8.625 percent. At the time of the solicitation, Respondent was employed by Frank Brigliadora, a licensed mortgage broker and owner of the Money Tree Mortgage Co. However, neither Respondent nor Mr. Brigliadora had notified the Department of their arrangement or obtained Departmental approval of the supervisory relationship. Clearly, Respondent knew the taking of an application fee, as the evidence indicates she did here, was inappropriate. Sometime in mid 1992, Respondent approached George Banks, a licensed mortgage broker in Tampa and owner of his own brokerage company, with a view toward working for him. In their conversation about that, they discussed the practice of application fees. Respondent indicated she wanted to take a fee of $200.00 to $300.00 up front, but Banks felt this was not proper, advised her so, and declined to accept her as a broker. Even when she claimed that other brokers took fees of this nature, he demurred, claiming he did not endorse the practice. Respondent worked for Mr. Brigliadora, a licensed mortgage broker, at his firm, Money Street Mortgage, for approximately 3 months during 1992. At the time she went to work for him, Respondent did not tell him she was under sanctions by the Department to have strict supervision and at no time did he agree to the Departmental supervision program. Mr. Brigliadora did not receive the $300.00 check Respondent obtained from the McGhees nor did he ever get the money it represented from the Respondent. It was only just before or at the closing on the property that he first became aware of the deposit. When he refunded the money to the McGhees, Respondent agreed to reimburse him but she never did. Normally, Money Street Mortgage does not take application fees on residential loans, and Mr. Brigliadora denies he ever approved or suggested to Respondent that she solicit them. When Respondent gave him the documentation on the McGhee loan application it did not include the required good faith estimate found in the brokerage agreement nor did the application form or any other document make the required disclosures. The application he got from Respondent does not constitute a brokerage agreement and Mr. Brigliadora never got one from the Respondent on this loan. What he received is no more than an application for a loan. Mr. James, the Department's Area Financial Manager, whose job includes the assignment of examiners and the review of investigations by examiners, knows Respondent as a licensed mortgage broker under Chapter 494, Florida Statutes. He is aware of prior complaints received by the Department about the Respondent in the past. Two of them relate to the Final Orders previously mentioned herein. In the instant case, he recalls receiving a telephone call regarding a deposit of $300.00 given to Respondent and commenced an investigation into the incident. The current Administrative Complaint which resulted in this hearing was the outcome of that investigation. Based on his evaluation of the matters discovered in the investigation, he concluded that Respondent took a fee from a client without having a brokerage agreement with that client; failed to make the required full disclosure to a client; and misappropriated a fee which she received from a client; all of which are violations of various provisions of Chapter 494. In his official capacity with the Department, Mr. James had the duty to approve a supervisory mortgage broker for the Respondent as called for in the two prior Final Orders referred to previously herein. Neither Money Street Mortgage nor Mr. Brigliadora were submitted by Respondent for approval by the Department even though Respondent knew she was required to do so. Respondent claims she made it very clear to Mrs. McGhee that she was a mortgage broker and not a real estate broker. Nonetheless, Mrs. McGhee, she claims, insisted Respondent help her and offered to pay her for her efforts. Respondent claims that all Petitioner's witnesses lied about her and forged documents relating to her alleged activities. She denies she would ever cheat or disobey the rules because she knows she would lose her license if she did. Claiming she is well respected in the community, she asserts the Department did not thoroughly investigate the allegations against her and is, therefore, destroying her reputation over something which did not happen as alleged. Her assertions are not accepted, however.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: Recommended that a Final Order be entered in this case finding her guilty of the offenses alleged in the Administrative Complaint filed herein; revoking Harriett Ijames' license as a mortgage broker in Florida; and imposing an administrative fine of $5,000.00. RECOMMENDED this 24th day of May, 1993, in Tallahassee, Florida. ARNOLD H. POLLOCK 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 24th day of May, 1993. COPIES FURNISHED: Lisa L. Elwell, Esquire Office of the Comptroller 1313 Tampa Street, Suite 615 Tampa, Florida 33602-3394 Harriett Ijames 8341 Paddlewheel Street Tampa, Florida 33617 Gerald Lewis Comptroller State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 William G. Reeves General Counsel Department of Banking and Finance Room 1302 The Capitol Tallahassee, Florida 32399-0350
The Issue Whether Mortgage Broker License No. 3534 should be suspended or revoked under Section 494.05, F.S. At the hearing, the Respondent filed an answer to the charges in the Petitioner's Administrative Complaint, incorporating therein affirmative defenses. Rule 28-5.25(2), Florida Administrative Code, provides that the party may file an Answer which may contain affirmative defenses within 20 days of service of the Petition. Respondent's basis for late filing was inadvertence and neglect of its counsel. The Answer contained a general denial of the allegations and set forth affirmative defenses asserting lack of jurisdiction of the Petitioner to pursue its claims for alleged actions which took place on or before October 19, 1974, which was prior to the issuance of the mortgage broker license to Respondent. Further defenses included the claim that the Administrative Charges and Complaint are vague and ambiguous, that Petitioner had taken written action against Respondent without a hearing and denied it due process of law prior to the filing of the Administrative Charges and Complaint, thereby constituting double jeopardy, that Petitioner has unilaterally and without hearing denied Respondent renewal of its license, therefore denying it due process of law and claiming that petitioner is estopped from proceeding on the ground that it violated Section 494.06(5), in not keeping confidential the examination and investigation of the Respondent by giving press releases designed to influence the outcome of the hearing. The Hearing Officer permitted the late filing of the Answer and Affirmative Defenses at the hearing, over the objection of the Petitioner who claimed lack of notice as to the affirmative defenses. Respondent made a motion at the hearing to quash or abate the charges on the grounds of lack of jurisdiction on the basis set forth in its aforesaid pleading and on the grounds that Section 494.05(1) permits the petitioner only to investigate actions of licensees and not to suspend or revoke such licenses. The motion was denied by the Hearing Officer under the authority granted to deny, suspend or revoke licenses pursuant to Section 494.05, F.S. From statements of counsel at the hearing, it appears that Respondent's application for yearly renewal of its license was denied by Petitioner on September 3, 1975. However premature such a denial might have been, the question is not in issue in the instant proceeding. Nor is any purported violation by Petitioner of Section 494.06(5), concerning confidentiality of its investigations of Respondent. Both parties made opening statements and closing arguments. The Petitioner presented its case through two witnesses and submitted documentary evidence. The Respondent did not call, any witnesses. Petitioner also called Frank H. Roark, Jr. President of Respondent Corporation as a witness. Mr. Roark, after being sworn, declined to testify on the grounds of possible self-incrimination. The Hearing Officer thereupon excused the witness. Upon a showing by the Petitioner that the books and records of Respondent Corporation had been requested by Subpoena Duces Tecum and its request that Mr. Roark be required to identify the corporate books and records in his capacity as an officer of the corporation, over objection of Respondent's counsel, the Hearing Officer permitted Mr. Roark to testify for this limited purpose.
Findings Of Fact The Department of Banking and Finance of the State of Florida issued Mortgage Broker License Number 3534 to Respondent on October 10, 1974 (Petition and Answer). The transactions of the Respondent which are the subject of the Administrative Charges and Complaint, concern the purchase by investors/lenders of corporate promissory notes issued by a land development company which are secured by mortgages on its land. The purpose of selling the note is for the land development company to raise funds for the development of real property. The sales of the notes were made by Respondent to individual investors. Usually these transactions were handled through what was termed a "Master Broker" who was a middle man between the land developer and the Respondent mortgage broker which actually made the individual sales of the notes. Typical of the manner in which Respondent conducted these transactions was to enter into an agreement with an investor termed an "Application To Purchase a Mortgage" for a certain face amount at a specified interest rate with interest payable monthly and with concurrent delivery by the investor to Respondent of the stated sum under the conditions that the note would be executed, the mortgage recorded, and the note and recorded mortgage delivered to the investor-purchaser. In due course, a promissory note issued by the land development corporation (the borrower), was delivered to the investor, along with a mortgage deed to specified real property to secure the note. Some notes were payable on an interest only basis and some on a principal and interest basis. Some involved the issuance of title insurance policies and others did not. In some cases, Respondent remitted funds involved in the transaction to the "Master Broker" and in some cases directly to the land developer, less an amount retained by Respondent, ostensibly for its fees, commissions, and/or other charges. The funds were placed into escrow bank accounts when they were received from the investors by Respondent and then sometimes on the same day or in most cases several days or weeks later, the funds less the amount retained by Respondent, were forwarded on to the "Master Broker" or directly to the developer (testimony of Mr. Hunt, Petitioner's Exhibits 1, 3 & 4). Acting upon a request of the State Comptroller to have all mortgage companies examined, in the latter part of July, 1975, Mr. Lawrence W. Hunt, a Financial Examiner Supervisor of Petitioner's Division of Finance along with three assistants went to the Respondent's office to examine its records and determine from the examination whether or not violations of the Mortgage Brokerage Act had been committed. Utilizing source documents from the company records, Mr. Hunt and his associates prepared a worksheet and listed thereon various items of information gleaned from these records (Petitioner's Exhibit 1). After preparation of the worksheet, overcharges as to the 402 transactions identified in the worksheet were computed by Mr. Joseph Ehrlich, Deputy Director of the Division of Finance, solely from the worksheet obtained by the examiners (Petitioner's Exhibit No. 2). Such overcharges were computed with respect to maximum fees or commissions which a broker could charge in accordance with the provisions of Rule 3-3.08, Florida Administrative Code, in consideration of the amount of funds retained by Respondent, Mr. Hunt is not a state auditor and his examination of records did not go into the depth of an audit such a compilation of financial statements. His work consists basically of an examination which involves obtaining information from corporate records and placing it on worksheets so it can be analyzed. During Mr. Hunt's visit to Respondent's place of business, he received full cooperation of its officers and employees and found the records to be in good order. He also had no reason to question any of the entries in any of the records that he observed. Neither he nor Mr. Ehrlich had received complaints from any individual or organization about Respondent's operations prior to his visit. He did not at any time contact any of the lenders or borrowers involved in Respondent's transactions (Testimony of Mr. Hunt, Mr. Ehrlich, Petitioner's Exhibits 1 and 2). On October 11, 1974, the Division of Finance issued a "Memorandum to all Mortgage Brokers" in which it was stated that it had been brought to the Division's attention that a number of mortgage brokers in transactions (such as those under consideration here), were remitting investors' funds to the land developer rather than placing the funds in an escrow account, and that such funds were being remitted in anticipation of receiving a recorded mortgage and note. The Memorandum warned that this practice could result in substantial losses to the broker in repaying investors should the land developer fail and was also in violation of the Mortgage Brokerage Act and could lead to the suspension or revocation of a license under Section 494.05, (1)(f), Florida Statutes. This section concerns placement of funds received in escrow accounts where they shall be kept until disbursement thereof is properly authorized (Respondent's Exhibit A). The Memorandum was sent to Respondent among others Mr. Hunt, during his examination of Respondent's records, found that Respondent ,had changed its escrow procedures approximately the date that the bulletin was issued and that there were no discrepancies after that date concerning escrow monies. By further correspondence in December, 1974, and May and June of 1975, Respondent's President posed various questions to Mr. Ehrlich to clarify certain aspects of escrow account requirements and received replies thereto (Respondent Composite B - Respondent's Exhibit C, D, F and G. (Note: There is no Exhibit E) In 402 separate transactions conducted by Respondent during the years 1973, 1974, and 1975, the mortgages which were purchased by the investors were delivered to the investor within varying periods from one day from the sale date until almost two months from the sale date. Forwarding of funds by the Respondent to the "Master Broker" or to the land development company was also accomplished in these transactions within varying periods of time from the sale date. These ranged from the same date as the sale to periods of a month or so thereafter, but usually on the date of delivery of the mortgage to the investor. The amounts forwarded by Respondent consisted of the face amount of the note and mortgage, less a certain amount which was retained by the Respondent (Petitioner's Exhibit 1). No effort was made by Petitioner's examiner to determine either the basis for the amount retained by Respondent or its composition. For example, he did not determine whether there were any "points" for service charges or discounts of any sort included in the retained sum. The examination was made solely on the basis of examining the business records of Respondent which did not reflect a breakdown of the retained amount. However, it could be deduced from various documents in individual investor files that certain amounts had been paid by someone unknown for title insurance premiums, recording fees and intangible taxes. The dates of mortgage delivery shown by Mr. Hunt in his worksheet were dates which he assumed were correct but he had not verified by any person the exact dates the mortgage was delivered to the investors. Neither could he ascertain from the records whether or not an investor had authorized Respondent to disburse funds at a particular time. The overcharges were determined in accordance with the formula set forth in Rule 3- 3.08, F.A.C., which is on a "gross proceeds" loan in which the borrower indicates that he wished to borrow a specified amount with all fees and charges to come out of the gross amount, thereby resulting in a reduced amount being provided to the borrower. The overcharges were computed without knowledge of whether the amount retained by the Respondent, as shown in Petitioner's Exhibit 1, included payment for state intangible tax, documentary stamps, and recording fees (Testimony of Mr. Hunt, Mr. Ehrlich, Petitioner's Exhibit 1 and 2). The overcharges set forth in Petitioner's Exhibit 2 were unrebutted by Respondent and are deemed correct. In a transaction between Respondent and Cary G. Anderson, who applied for purchase of a mortgage on May 7, 1974, in the face amount of $3,500.00, the file relating to the transaction did not reflect the amount of any costs to be paid by Respondent in the matter, nor did it reveal a specific figure for brokerage fee or commission charged by Respondent. The file did reflect a bill for title insurance premium in the amount of $45.00 and recording fees in the amount off $22.25, $5.25 documentary stamps, and $7.00 for intangible tax. The amount of overcharge was $175.46. In another $2,500 transaction with Mr. Anderson, the amount remitted to the land developer was $2,075.00. The amount retained by Respondent was $425.00. Petitioner's Exhibit number 2 establishes an overcharge from this transaction of $61.37. There was no copy of the mortgage in the file and therefore no information upon which to determine the payment of intangible taxes, documentary stamps and recording fees (Petitioner's Exhibit 3). In a $5,000 transaction between Walter L. and Thelma T. Beach and Respondent with application for purchase mortgage dated July 30, 1974, a check was written on Respondent's escrow account to Kingsland Development in the amount of $4,100. The maximum allowable brokerage fee or commission under the law would have been $590.90. The amount retained by Respondent was $900.00. The mortgage indicated that documentary stamps in the amount of $7.50 and intangible tax of $10.00 were paid. Assuming that Respondent paid the intangible taxes, and documentary stamps, the excess fee charged according to calculation under Rule 3-3.08, was $281.60 (Testimony of Mr. Hunt, Petitioner's Exhibits 1, 2 and 4). In respect to the above three transactions Petitioner's examiner did not find closing statements in the file, nor did he go to the Florida title ledger or Attorney's ledger of Respondent's records. However, he had, at the outset of his investigation, asked Respondent to make available all records concerning the transactions (Testimony of Mr. Hunt).
