Findings Of Fact At all times relevant hereto, Respondent Charles Randolph Lee was the holder of a Florida real estate license number 0455641 in accordance with Chapter 475, Florida Statutes. The license issued was as a broker, c/o Show-N-Save of West Palm Beach, Inc., 1800 Forest Hill Blvd., West Palm Beach, Florida 33406. Christopher and Lee Ann Germano made a written offer to purchase Lot 41, Block 72, Sugar Pond Manor, Palm Beach County, Florida (the "construction site") from Charles and Ruby Collins (the "owners") by executing a Contract for Sale and Purchase of the construction site on April 14, 1987, and submitting a check for $500 payable to and held in escrow by Hank Keene Real Estate Escrow Account. 1/ On April 15, 1987, the Germanos executed an Agreement for Construction of a house that was to be constructed on the construction site by J. Long Construction, Inc. A check payable to J. Long Construction, Inc., in the amount of $3,755, was submitted by the Germanos with the Agreement for Construction, which was expressly contingent upon the Germanos' purchase of the construction site. The check to J. Long Construction, Inc., was an escrow check to be held in escrow for the Germanos until contingencies in the Agreement for Construction, including the purchase of the construction site, either failed to occur or were satisfied. Carol Pearson and Terry Gallagher, the sales agent for Hank Keene Real Estate, were present with the Germanos in a model home of J. Long Construction, Inc., when the Germanos wrote the check, and it was their collectively stated intent that the check was to be held in escrow pending the completion of the purchase of the construction site. The check for $3,755 was labeled by the maker as an escrow down payment for construction of the house. 2/ J. Long Realty, Inc., and Hank Keene Real Estate were acknowledged in the Agreement for Construction as the exclusive brokers in the transaction with commissions to be paid respectively in the amounts of 3.5 and 1.5 percent. 3/ The Agreement for Construction was executed by J. Long Construction, Inc., on April 15, 1987. The Agreement for Construction was null and void if not executed by both parties on or before April 19, 1987. The Germanos executed the Agreement on April 15, 1987. Their copy of the Agreement is not executed by J. Long Construction, Inc. However, the original Agreement, bearing a date of April 15, 1987, shows the signature of the president of J. Long Construction. The original Agreement was admitted by stipulation as Respondent's Exhibit 2. Insufficient evidence was presented to establish that the original was executed at any other time or by any one other than the purported signatory. 4/ Respondent began functioning as the broker for J. Long Realty, Inc., on or about April 16, 1987, 5/ at the request of the previous broker who resigned due to illness on April 15, 1987. The Contract for Sale and Purchase of the construction site was rejected by the owners on April 16, 1989. 6/ The rejection was communicated to the Germanos telephonically by Terry Gallagher on the same day. 7/ The fact that the purchase of the construction site had failed to occur was communicated to Respondent on April 20, 1987, and return of the check to J. Long Construction, Inc., in the amount of $3,755, was requested at that time. Mr. Germano telephoned Mr. Pearson on April 20, 1989, advised him that the offer to purchase the construction site had been rejected by the owners, and requested return of the check. Mr. Pearson testified that upon receiving a telephone call from Mr. Germano, Mr. Pearson communicated those facts to Respondent. Mr. Pearson further testified that Respondent stated there would be no problem but required the request for refund and reasons to be stated in writing. Respondent first knew of the transaction when he received a telephone call from Mr. Germano asking for a return of the check. Respondent further testified that he opened the file, saw the check, and deposited it. The check was deposited on April 21, 1987, to the account of J. Long Construction, Inc. 8/ Respondent testified that the check was not deposited to any account of J. Long Realty, Inc. 9/ J. Long Construction, Inc., had no escrow account at the time of the deposit. Testimony by Ms. Fischer, and Petitioner's Exhibits 7 and 9 established that J. Long Construction, Inc., had no escrow account at the time of the deposit. There was no evidence that Respondent was an officer or director of J. Long Construction, Inc., or that Respondent was authorized to sign on the account to which the check was deposited. Petitioner's Exhibit 9 established that Respondent was authorized to sign on the account of J. Long Realty, Inc., and on the account of J. Long Companies, Inc. Neither the name or account number of either of those accounts corresponded to the name or account number of the account to which the check was deposited. 10/ Respondent functioned in the capacity of accountant, bookkeeper, and employee of J. Long Construction, Inc., prior to functioning as the broker of J. Long Realty, Inc. Respondent and Mr. Long reviewed each contract submitted by sales agents. Respondent received written notice on April 27, 1987, and on May 1, 1987, that the Germanos' offer to purchase the construction site had been rejected by the owners. Jean Keene, Broker, Hank Keene Real Estate, advised J. Long Construction, Inc., by letter dated April 24, 1989, that the Germanos' offer had been rejected and that the $500 in escrow had been returned to the Germanos. 11/ The Germanos also wrote a letter to J. Long Construction (sic) on April 24, 1987, asking for return of the deposit because their offer to purchase the construction site had not been accepted by the owners. The Germanos' letter was by return receipt which was dated May 1, 1987. A letter dated May 11, 1987, from Robert E. Zensen, President, Zensen Homes, Inc., formerly J. Long Construction, Inc., 12/ advised the Germanos that they were in default under the Agreement for Construction. The letter stated the "default has been established by the contingency not being met," but in the next paragraph required documentation that the contingency had not been met. 13/ On May 8, 1987, Carol Pearson removed his license from J. Long Realty, Inc. 14/ Evidence suggests some acrimony between Mr. Pearson and Respondent concerning the conduct of business transactions at J. Long Realty, Inc. 15/ Mr. Pearson testified that deposits were not being returned to customers who were entitled to return of their deposits. On May 16, 1987, Mary E. Bartek, citing ill health, resigned from J. Long Realty, Inc., as Broker-Salesman and as shareholder, and resigned her position as Vice-President, director, shareholder, officer, or agent from J. Long Companies. 16/ On June 15, 1987, Respondent resigned as "Broker of Record" for J. Long Realty, Inc. 17/ The Germanos made numerous requests to Respondent to return their check in the amount of $3,755. Mr. Pearson received at least 3 or 4 calls from the Germanos. Each time Respondent and Mr. Long agreed that the Germanos were entitled to have their check; except the last time when Mr. Long told Mr. Pearson to "forget about it." Mr. Pearson testified that it was his impression that Mr. Long prevented Respondent from returning the check. The Germanos made numerous requests to Mr. Pearson for return of their check. Each time Mr. Pearson stated that Respondent had said he would return the check. On one occasion, Lee Germano met with Respondent to request that the money be returned, but the money was not returned.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent be found guilty of: culpable negligence and breach of trust in violation of Subsection 475.25(1)(b); failure to account and deliver nonescrowed property upon demand of the person entitled to such property in violation of Subsection 475.25(1)(d); and failure to place a check in escrow in violation of Subsection 475.25(1)(k). Since this was apparently Respondent's first offense, involving a single act, it is recommended that Respondent be reprimanded. Since the offense involved the misuse of funds, disregard of the entitlement to funds, and Respondent offered no evidence of restitution, it is recommended that Respondent be fined $1,000 for each violation. In order to enhance Respondent's regard for the entitlement to funds in business transactions and in order to facilitate due care in his future transactions, it is recommended that Respondent be placed on probation for a period not to exceed one year. The conditions of probation may include any of those prescribed in Florida Administrative Code Rule 21V-24.001(2)(a) except those that would require the Respondent to submit to reexamination and to be placed on broker-salesman status. In the event that Respondent fails to pay any fines imposed or to complete the terms of any probation imposed, it is recommended that Respondent's license be suspended for two years. DONE and ENTERED this 19th day of June 1989, in Tallahassee, Florida. DANIEL MANRY 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 19th day of June, 1989.
The Issue The issue in this case is whether the allegations of the Administrative Complaints are correct and, if so, what penalties should be imposed.
Findings Of Fact At all times material to this case, Respondent Tailormade Management, Inc. ("Tailormade"), was a corporation registered as a licensed real estate broker in the State of Florida, license #0259180, located at 12811 Kenwood Lane, #218, Fort Myers, FL 33907. The president of Tailormade was R. C. Hendrickson ("Hendrickson"), an unlicensed person. At all times material to this case, Respondent Comprehensive Management, Inc. ("Comprehensive"), was a corporation registered as a licensed real estate broker in the State of Florida, license #0268646, located at 12811 Kenwood Lane, #218, Fort Myers, FL 33907. Until approximately January 30, 1991, the president of Comprehensive was Hendrickson. On or about January 30, 1991, Hendrickson resigned and relinquished her ownership and control to her son, Jay Coffing, an unlicensed person. The rental escrow account for each company was maintained by Hendrickson and the company bookkeeper. On direction of Hendrickson, the bookkeeper did not disclose information regarding rental escrow accounts to the licensed broker-salespersons. All accounts were reconciled by the bookkeeper who would provide the reconciliation data to the broker. The licensed broker- salespersons did not actually reconcile any accounts, but relied on the bookkeeper's data. At all times material to this case, Linda Futch ("Futch") was a licensed real estate broker in the State of Florida, license #0334770. The most recent license issued to Futch was as a broker-salesperson for Rawlings Realty, Inc., 1642 Colonial Boulevard, Fort Myers, FL 33907-1150. From approximately February 20, 1989 through approximately November 16, 1989, Futch was licensed and operating as qualifying broker and officer for Tailormade. On October 10, 1989, Hendrickson issued check #RE-1895 in the amount of $10,000 from the Tailormade rental escrow account to the Tailormade operating account. A check notation indicated that the funds were "advance management fees". Hendrickson admitted to the company bookkeeper that the funds were to be used to pay the outstanding balance owed to the previous co-owner of Tailormade, from whom Hendrickson had purchased the business. At no time during the period Futch acted as qualifying broker and officer for Tailormade did Futch prepare or sign written monthly escrow account statement reconciliations. Futch did not balance escrow liabilities with the escrow assets. Futch failed to make appropriate entries in monthly reconciliation statements which would note whether a shortage existed and whether corrective action had been taken. Futch maintained no records and was unable to provide any account documentation to the Petitioner's investigator. Futch resigned as Tailormade broker-salesperson effective November 16, 1989. Futch was apparently succeeded by Bette K. Potts. In November of 1990, Jeffrey C. Cooner met with a representative of Tailormade and leased a condominium unit, providing a deposit totaling $1,125 of which $350 was a pet and security deposit. Cooner eventually vacated the unit, 2/ and attempted to obtain a refund of the security deposit. By such time, the Tailormade office was vacant and closed. Cooner has received neither an accounting nor a refund of all or part of the security deposit paid to Tailormade. According to the bookkeeper, as of December, 1990, approximately $35,000 of rental escrow funds had been removed from the Tailormade rental escrow account by Hendrickson and had not been replaced. At all times material to this case, Janet Lynn Coffing ("Coffing"), Jay Coffing's wife, was a licensed real estate broker in the State of Florida, license #0268647. Coffing's most recent license was as a broker in limbo, listing her home address as 5410 Ashton Circle, Fort Myers, Florida, 33907-7828. From approximately February 21, 1991 through approximately May 28, 1991, Coffing was licensed and operating as qualifying broker and officer for Tailormade. From approximately February 14, 1991 through approximately June 14, 1991, Coffing was licensed and operating as qualifying broker and officer for Comprehensive. Coffing was aware, almost immediately after taking over as qualifying broker and officer for the companies that the escrow funds were short. She spoke to Hendrickson (her mother-in-law) and Jay Coffing about the situation, but apparently received no assistance from them. Coffing utilized operating funds to cover escrow shortages when escrow refunds were necessary, and continued to do so until all funds were depleted. On March 18, 1991, Charles W. Pease met with a representative of Comprehensive and leased a condominium unit at 13040 Tall Pine Circle in Fort Myers, Florida, providing two checks totaling $1,650 of which $500 was a security deposit. Upon vacating the unit, 3/ Pease attempted to obtain a refund of the security deposit but the Comprehensive office was vacant and closed. Pease has received neither an accounting nor a refund of all or part of the security deposit paid to Comprehensive. At some time in 1991, 4/ Debra and Kevin Campbell met with Coffing and leased a condominium unit located at 5418 Harbor Castle Drive. At the time the lease agreement was signed, the Campbells paid a $500 security deposit to Tailormade through Coffing. Upon vacating the unit, the Campbells attempted to obtain a refund of the security deposit but were unable to locate Coffing, and the Tailormade office was vacant and closed. The Campbells have received neither an accounting nor a refund of all or part of the security deposit paid to Tailormade. At no time during the period Coffing acted as qualifying broker and officer for either Tailormade or Comprehensive, did Coffing prepare or sign written monthly escrow account statement reconciliations. Coffing did not balance escrow liabilities with the escrow assets. Coffing failed to make appropriate entries in monthly reconciliation statements which would note whether a shortage existed and whether corrective action had been taken. Coffing maintained no records and was unable to provide account documentation to the Petitioner's investigator. On several occasions beginning on July 2, 1991, an investigator from the Department of Professional Regulation visited office location identified as the registered offices of the Respondent Tailormade and Comprehensive companies. The offices were vacant and closed. The investigator contacted Hendrickson and Jay Coffing, and attempted to obtain information from them, but was unable to maintain contact with them. The companies are apparently not operational.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Professional Regulation, Division of Real Estate, enter a Final Order determining Linda Futch guilty of the violations set forth herein and providing for a fine of $1,000, and a suspension of 90 days, to be followed by a probationary period of two years. During the probationary period, Futch shall complete 60 hours of continuing education, including a 30 hour management course for real estate brokers, and shall provide to the Florida Division of Real Estate all written monthly escrow account reconciliation statements for which she is responsible. That the Department of Professional Regulation, Division of Real Estate, enter a Final Order determining Janet Lynn Coffing guilty of the violations set forth herein and providing for a fine of $1,000, and a suspension of 180 days to be followed by a probationary period of three years. During the probationary period Coffing shall complete 60 hours of continuing education, including a 30 hour management course for real estate brokers, and shall provide to the Florida Division of Real Estate all written monthly escrow account reconciliation statements for which she is responsible. That the Department of Professional Regulation, Division of Real Estate enter a Final Order revoking the licensure of Respondents Tailormade Management, Inc., and Comprehensive Management, Inc. DONE and ENTERED this 15th day of July, 1992, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM 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 July, 1992.
Findings Of Fact Based upon the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made. At all pertinent times, Respondent, Karen A. Mason, was a licensed real estate broker in the State of Florida having been issued license no. 0432242 in accordance with Chapter 475, Florida Statutes. The license issued to Respondent was as a broker t/a Mason Realty and Mortgage Company, 4538 Gardenette, West Palm Beach, Florida 33406. Respondent's real estate office was a small operation that handled strictly rental properties. Respondent established her real estate office to handle rentals as a sideline to a property maintenance business that she owned. In 1987, there were two other people who worked in Respondent's real estate office. One of the employees, Linda Bennett, received a $2,200 deposit with respect to a lease agreement for certain property owned by Chris Jimenez on Scottdale Road in West Palm Beach, Florida. That lease agreement was evidenced by a Receipt for Deposit and Contract to Lease (the "Contract") that was signed Mr. Jimenez and by Frank Kontis on behalf of the lessee, Angelo Geragonis. The $2,200 deposit was paid by check from Mary Kontis, the wife of Frank Kontis who was related to the lessee, Mr. Geragonis, and was acting as his agent. Mr. Geragonis did not sign the Contract. The $2,200 deposit was placed in an escrow account maintained by Respondent at Barnett Bank on January 13, 1987. The Contract called for the lease term to run from February 1, 1987, to February 1, 1988, at a monthly rental of $850.00 per month. By checks dated January 14, 1987, part of the deposit ($850.00) was distributed to Respondent and Linda Bennett. On January 30, 1987, another $550.00 of the deposit was distributed to Chris Jimenez. The basis for these disbursements is not clear. The evidence did not establish that the distributions were unauthorized. In any event, as of January 30, 1987, only $800 of the deposit remained in escrow. Shortly after the contract was executed, Mr. Kontis died. Mr. Geragonis traveled to Florida and decided not to rent the Scottdale Road property and requested a return of the deposit. Mr. Jimenez, the owner of the property, had already moved out of the house and rented a new residence in reliance upon the Contract. He claimed that he was entitled to all or a portion of the deposit. By letter dated January 23, 1987, the Respondent requested instructions from the Florida Real Estate Commission (the "Commission") regarding how to handle the dispute and the conflicting claims to the deposit. Respondent also discussed the matter by phone with employees of the Commission. By letter dated February 10, 1987, Jack King, Chief Investigator for the Florida Real Estate Commission, advised Respondent of her options. In his February 10, 1987 letter, Mr. King advised Respondent that she had to either (1) arrange for arbitration, (2) place the matter before a civil court or (3) request an Escrow Disbursement Order from the Florida Real Estate Commission. By letter dated February 17, 1987, the Respondent requested an Escrow Disbursement Order from the Florida Real Estate Commission. By letter dated June 17, 1987, Manuel Oliver, an attorney for the Florida Real Estate Commission, wrote to Respondent and advised her that, because of the existence of factual disputes between the parties, the Florida Real Estate Commission would not issue an Escrow Disbursement Order. Respondent was advised to use one of the other alternatives described in Mr. King's February 10, 1987 letter. Respondent denies ever receiving the June 17, 1987 letter. No further action was taken on the matter until the fall of 1988. On September 2, 1988, an attorney for Mr. Geragonis contacted the Respondent and inquired as to the status of the money being held in escrow. By letter dated September 16, 1988, Respondent inquired of Mr. King as to the status of her request for an Escrow Disbursement Order. By letter dated October 27, 1988, Manuel Oliver advised Respondent of the June 17, 1987 letter and also advised her that, because of her failure to promptly implement one of the other alternatives outlined in Mr. King's letter of February 10, 1987, he was going to refer the matter to the Complaint Section of the Florida Real Estate Commission for investigation of a possible violation of the licensure law. In December of 1988, Respondent resolved the dispute by paying $1100.00 to Mr. Geragonis and $550.00 to Chris Jimenez. The money to settle the dispute was paid from a new escrow account opened by Respondent at Carney Bank in October of 1987. The evidence did not establish when the Barnett Bank escrow account was closed and/or how much money was transferred from that account to the new escrow account at Carney Bank. In the meantime, in February of 1987, Respondent was involved in a business dispute with her employee, Linda Bennett. Ms. Bennett ended up leaving the company. In the process, she took some of the office equipment, files and other paperwork including ledgers. She also caused two unauthorized checks to be written on the Barnett Bank escrow account. The unauthorized disbursements from the escrow account totaled at least $1100. In January of 1989, an investigator from the Department attempted to conduct an audit of Respondent's business pursuant to the referral from Mr. Oliver as set forth in Findings of Fact 12 above. Respondent objected to the tactics and approach of the investigator and complained to the Department. The audit of Respondent's records was halted pending a review of the Respondent's complaints. In October of 1989, another investigator from the Department met with Respondent to review her records. By the time this audit was conducted in October of 1989, Respondent's real estate office had essentially closed. The only business activity being conducted by the office was the management of certain properties owned by the Respondent. The Department's investigator requested to see all of the Respondent's records regarding her escrow accounts. Respondent produced her records regarding the escrow account at Carney Bank. However, because that account was not opened until October of 1987, there were no records regarding the Geragonis Contract. The Department's investigator specifically inquired as to the records regarding the escrow deposit on that Contract. Respondent investigated her records in an attempt to determine how that deposit had been handled. Because the office had essentially been shut down, all of the records were in storage and were not readily accessible. Initially, Respondent informed the Department's investigator that the money had been deposited into a Merrill Lynch money market account that she used for a variety of personal and business purposes. Respondent provided the investigator with some of the statements related to that money market account. However, upon further review and investigation, the Respondent determined that the deposit had actually been deposited in the escrow account at Barnett Bank. The records regarding that deposit at Barnett Bank were introduced at the hearing in this case, but had not previously been provided to the Department's investigator. Because the records of the Barnett Bank account were not previously provided to the Department's Investigator, no audit of those records has been conducted. At the hearing, the bank statements for the Barnett Bank escrow account were provided from December of 1986 through April of 1987. As noted above, there were certain unauthorized disbursements made from the Barnett Bank escrow account by one of Respondent's employees. Thus, it is difficult to draw any conclusions regarding the balance in the Barnett Bank Escrow Account during the period ending April, 1987. A review of those bank statements indicates, that, except for March 4, 1987 when a $1350.00 check was returned unpaid and again on March 23 when the balance of the account dipped to $685.00 following the return of an unpaid check in the amount of $275.00 on March 13, there was always at least $800 in the account. Respondent has not provided any records regarding the Barnett Bank account subsequent to April of 1987. The Carney Bank escrow account was not opened until October of 1987. It is not clear where or if the remainder of the Geragonis deposit was held in escrow during the period from April of 1987 through October of 1987. Moreover, Respondent has not produced any records demonstrating that the remaining deposit was being held in escrow at Carney Bank subsequent to October of 1987. While Respondent apparently believes that the remainder of the Geragonis deposit was stolen by her former employee, Respondent did not provide any documentation regarding the money that remained in the escrow account and failed to produce any evidence that she attempted to reconcile that account with the various claims on those funds. Respondent argues that, given the lapse of time between the events in question and the filing of the Administrative Complaint, she can not realistically be expected to have records on these matters. However, it is clear that the dispute over the Geragonis Contact was not resolved until December of 1988. When the Department's investigators conducted their audit in October of 1989, Respondent should have had available any and all records related to that Contract including documentation regarding the remaining escrow funds. While Respondent contends that some of her business records and ledgers were stolen by her former employee, the evidence indicates that the employee in question left around February of 1987. The absence of records subsequent to April of 1987 can not be attributed to theft by this former employee. The Department's investigators testified that the records of the Carney Bank escrow account indicated that on a couple of occasions that escrow account was overdrawn. The circumstances and specific facts surrounding those instances were not established in this proceeding. The records of Respondent's escrow account at Carney Bank reflect a number of disbursements made from the escrow account to her or her company. Respondent contends that those disbursements were for commissions and other monies owed to her. Insufficient records were provided to document these transactions. There is no indication that any client or other member of the public lost any money and/or that Respondent was unable to timely disburse money from her escrow account as required in connection with a particular transaction. There is no indication that Respondent ever used the escrow account for improper purposes or withdrew money from the escrow account for her own personal or business use. No persuasive evidence was presented that Respondent's own funds were commingled with escrow funds in either of her escrow accounts. While one of the Department's investigators claimed that Respondent told him that she was depositing money from another business that she owned into one of her accounts, any such reference would appear to have been to the money market account and not the escrow accounts. No persuasive evidence was presented to establish that the Respondent commingled personal funds with the money in the Barnett Bank or Carney Bank escrow accounts.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Petitioner enter a Final Order finding Respondent not guilty of the allegations contained in Counts II and III of the Administrative Complaint, finding Respondent guilty of Counts I and IV, and reprimanding her, suspending her license for a period of three months and imposing a fine of $500.00. RECOMMENDED in Tallahassee, Leon County, Florida, this 16th day of May, 1991. J. STEPHEN MENTON 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 May, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-5966 Both parties have submitted Proposed Recommended Orders. The following constitutes my rulings on the proposed findings of fact submitted by the parties. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. Rejected as unnecessary. Adopted in substance in Findings of Fact 1. Rejected as unnecessary. 4.(a) Adopted in substance in Findings of Fact 3. Adopted in substance in Findings of Fact 13. However, the evidence established that there was a prior escrow account at Barnett Bank. Rejected as not established by competent substantial evidence. The subject matter is addressed in Findings of Fact 18. Rejected as irrelevant. See Findings of Fact 18. Rejected as irrelevant. See Findings of Fact 18. Rejected as irrelevant. See Findings of Fact 18. Rejected as irrelevant. See Findings of Fact 4 and 18. Adopted in substance in Findings of Fact 24. The Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. Rejected as a mischaracterazation of the evidence. The audit conducted by the Department's investigator was not limited to the Escrow Disbursement Order Request. Rejected as constituting legal argument rather than a finding of fact. Rejected as constituting legal argument and as irrelevant. Rejected as irrelevant. This subject matter is addressed in Findings of Fact 8 and 9. Rejected as irrelevant. This subject matter is addressed in Findings of Fact 14. Rejected as constituting legal argument rather than a finding of fact. Rejected as irrelevant. Rejected as irrelevant. This subject matter is addressed in Conclusions of Law 12. Rejected as constituting legal argument rather than a finding of fact. Subordinate to Findings of Fact 22. Rejected as constituting legal argument. Rejected as irrelevant. COPIES FURNISHED: James H. Gillis, Esquire Department of Professional Regulation Division of Real Estate Legal Section 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Karen Mason 4538 Gardnette West Palm Beach, Florida 33406 Darlene F. Keller Division Director 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0792
The Issue The issue in this proceeding is whether the Respondents' real estate brokers licenses should be suspended, revoked or otherwise disciplined.
Findings Of Fact Respondent, Barbara Odom, is a licensed real estate broker in the State of Florida, holding license number 0189819. Ms. Odom is the owner of and the qualifying broker for Respondent, Odom Realty, Inc., located in Pensacola, Florida. Respondent, Odom Realty, Inc. is a corporation registered as a real estate brokerage company in the State of Florida, holding license number 0226080. Ms. Odom has been licensed since 1982 and has been the owner of Odom Realty, Inc., since 1983. Rita Leonard has been the corporation's bookkeeper since Ms. Odom's acquisition of the company. Previous to her employment with Odom Realty, Ms. Leonard was the financial manager in charge of a large bank's accounting and bookkeeping department. Ms. Leonard was and is highly qualified as an accountant/bookkeeper. In addition to Ms. Leonard's bookkeeping services, Ms. Odom also has Odom Realty's books and records, including the various escrow account books and records, annually audited and reviewed by her CPA. Early in the company's history Ms. Odom entered into the rental property management business. Initially, Ms. Leonard was paying clients' repair bills on that client's rental property out of the corporation's operating account. The CPA questioned whether it was appropriate to pay those bills out of the corporation's operating account and indicated that the bills should be paid out of the corporation's rental property management escrow account, #11823890431. The CPA was not sure what the appropriate bookkeeping practice should be and indicated that Ms. Leonard should check with the Florida Real Estate Commission to discover what the appropriate procedure was. Ms. Leonard called the Florida Real Estate Commission to inquire about the proper method of paying clients' repair bills. Her impression of that conversation was that client repair bills should be paid out of the escrow account regardless of whether the individual had the money in the account. After this conversation with the Florida Real Estate Commission, Ms. Leonard began paying all the clients' repair bills out of the rental property management escrow account. All such client bills were paid promptly upon the repair bill's presentation, whether or not the individual client had the money available in the escrow account. Each client was later billed for the amount not covered by the balance in that individuals' escrow account. The client billings occurred on at least a monthly basis and the majority of the rental clients remitted their payments on a monthly basis. Occasionally, one of Respondent's clients was permitted to carry a negative balance for more than a month. These carry- overs occurred in the off-season and were paid when rentals picked back up during the areas main tourist season. As a consequence of this practice, some of Respondents' clients would have negative escrow balances on their individual escrow ledger account. Respondents were under the impression that such a practice was all right as long as the corporation had money available to cover those negative balances. In fact, the corporation always had such money available, although the actual transfers of funds were never made from the corporation's operating account to the rental property management escrow account. Respondents believed this practice was tantamount to loaning the respective clients money to cover the client's negative balance until that client corrected the deficit. No client ever complained about this practice. In fact, most of Respondents' clients wanted the repair bills paid promptly so that good repair service could be maintained on that client's property. On March 15, 1990, Elaine Brantley, Petitioner's investigator, conducted an audit of all of Respondents' escrow accounts. The only account she found a problem with was the rental property management account. During that investigation, Ms. Brantley found that Respondents had a trust liability of $10,081.71 and a bank balance of $9,480.97, leaving a shortage of $600.74. Respondents, the same day and prior to Ms. Brantley leaving, transferred the amount of the shortage from the corporation's operating account to the escrow account. Ms. Brantley then explained to Ms. Odom and her bookkeeper her opinion of how the Commission wanted escrow accounts maintained. Since that time, Respondents have maintained the escrow accounts in the manner prescribed by Ms. Brantley and no longer follow their policy of maintaining negative balances on the individual ledger sheets of their clients. They now make the actual transfer of funds from the operating account to the escrow account prior to paying any bill which would take an individual client over the amount of money that client has in the escrow account. The Respondents' books and records for the rental property management account were meticulously kept and both total and individual reconciliations were completed on a monthly basis by Respondents. All the records, including the monthly reconciliations reflected the appropriate negative balances if a particular client should have such a balance. As a consequence of this method of bookkeeping, there were no discrepancies, as opposed to a total shortage, between the total reconciliations and the escrow account's bank statement. Likewise, there were no discrepancies on the individual ledger accounts. There were no discrepancies because everything was added and subtracted out according to the records being kept and the bookkeeping method used in maintaining those records. Importantly, Respondents' CPA never criticized or commented on Respondents' method of accounting and maintenance of negative balances in Respondents' escrow account. As indicated earlier, the temporary negative balances were maintained for the convenience of the customer in order to obtain better service from repairmen. In reality, Respondents' clients probably never thought about the intricacies and inner workings of the trust account in which that client's money was maintained. Given the desires of Respondents' customers, such payments and the maintenance of a negative balance on behalf of that individual client were impliedly authorized by those respective customers. However none of the clients expressly authorized Respondents to use that client's money to pay another client's repair bills. The clients' general desires on getting prompt payment of repair bills is, by itself, insufficient to establish express authorization for one client to use another client's escrow money. Without such express authority Respondents made improper disbursements from the property management escrow account in violation of Section 475.25 (1)(k), Florida Statutes. However, because of the client's general desires regarding their repair bills, the record keeping utilized by Respondents, the manner of billing and the obvious lack of any intent to defraud on the part of Respondents, there was no evidence of any fraud, misrepresentation, trick, scheme or device, or breach of trust or culpable negligence on the part of Respondents in the maintenance of their property management escrow account.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that the Florida Real Estate Commission enter a final order that Respondents are guilty of one violation of Section 475.25(1)(k), Florida Statutes, and issuing a letter of guidance to Respondents for the violation. It is further recommended that the Florida Real Estate Commission enter a final Order dismissing the Counts of the Administrative Complaint charging Respondents with violations of Section 475.25(1)(b), Florida Statutes. RECOMMENDED this 28th day of December, 1990, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER 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 28th day of December, 1990.
Findings Of Fact At all times relevant to the charges brought against the Respondent, Jimmy D. Hill, he was a licensed real estate broker in the State of Florida, holding license number 0144888. On June 20, 1983, a contract for the purchase of Unit 219 in Polynesian Village in Bay County, Florida, was signed by Margaret Gorshi and Glenn Coker. The buyers paid a total of $3,000 as an earnest money deposit which the Respondent deposited into his escrow account at Bay Bank and Trust Company in Panama City. This real estate transaction was subject to the buyers obtaining 90 percent financing, and it was scheduled to close on or before September 15, 1983. The transaction did not close because the buyers were not able to obtain the necessary financing, and in September of 1984 the buyers requested that their earnest money deposit be returned. On September 27, 1984, the Respondent's office manager forwarded a check for $3,000 dated September 24, 1984, to the buyers. This check was drawn on the Respondent's escrow account at Bay Bank and Trust Company in Panama City. This check was presented for payment in November of 1984, but it was not paid by the bank, and was returned because of insufficient funds in the Respondent's escrow account. The Respondent's escrow account was closed in July of 1985 without this check having been honored. Sometime prior to the issuance of the check to refund the buyer's deposit, another check in the amount of $5,400 was cashed at Bay Bank and Trust Company, drawn on the Respondent's business checking account at First National Bank. When this check was not honored by First National Bank due to insufficient funds, it was returned to Bay Bank and Trust Company. Upon receipt of this dishonored check, Bay Bank and Trust Company departed from its standard banking policy by charging the full amount thereof against the Respondent's trust or escrow account. As a result, the Respondent's escrow account became out of balance by $5,400. The Respondent's escrow account balance was at least $3,000 from June, 1983, through July, 1984. This balance was $1,600 on August 31, 1984; $1,600 on September 30, 1984; $600 on October 31, 1984; and from November 1984, through July, 1985, when the account was closed, the escrow account balance was $585. Without the unauthorized debit of $5,400, the balance was sufficient to enable the refund check to the buyers in the amount of $3,000 to clear. Although the Bay Bank and Trust Company issued a debit memo reflecting the charge of $5,400 to the Respondent's escrow account, the Respondent did not receive it. He testified that it must have been intercepted or diverted from him, by office personnel. The Respondent learned that his $3,000 check to the buyers had bounced in November or December, 1984. On February 25, 1985, the Respondent issued a replacement check for $3,000 to purchase a cashier's check which he intended to forward to the buyers. This check was given to an office employee to purchase the cashier's check, but the employee did not do so. Approximately three months later, in May of 1985, the Respondent was notified by an attorney for the buyers that they had not received the refund. The buyers had retained this attorney to obtain their refund from the Respondent, and after two or three discussions with the attorney, the Respondent finally forwarded his check for $3,400 plus, to counsel for the buyers in August of 1985. Although the Respondent's first refund check was caused to bounce by the bank's unauthorized charge of another check to his escrow account, the Respondent was negligent in not reviewing his escrow account statements so as to be informed of the bank's charge to his escrow account. The Respondent also failed to follow-up to assure that the buyers received the first replacement check when it was written in February, 1985. He did not regularly review the balances in his escrow account monthly after July of 1984, and only when he was contacted by the Real Estate Commission's investigator did he perform a thorough reconciliation of his escrow account in July, 1985. The Respondent also failed to supervise his employees and establish policies pertaining to review and verification of the balances in his escrow account.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Respondent, Jimmy D. Hill, trading as Jim Hill Associates, be assessed an administrative fine of $1,000. THIS RECOMMENDED ORDER entered this 25th day of September, 1986 in Tallahassee, Leon County, Florida. WILLIAM B. THOMAS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 FILED with the Clerk of Division of Administrative Hearings this 25th day of September, 1986. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 86-1067 Department of Professional Regulation, Division of Real Estate vs. Jimmy D. Hill, t/a Jim Hill Associates Case No. 86-1067 Rulings on Petitioner's Proposed Findings of Fact: 1-10. Accepted. 11. Rejected because not a factual finding. 12-17. Accepted. Rulings on Respondent's Proposed Findings of Fact: (Paragraphs not numbered, but referred to in order.) Accepted. First sentence accepted. Second, third and fourth sentences rejected as not supported by corroborating evidence and thus are self-serving. Fifth, sixth and seventh sentences accepted. First sentence accepted. Second and third sentences rejected as not supported by corroborative evidence and thus are self-serving. Accepted. Accepted. First sentence accepted. Second and third sentences rejected as irrelevant. COPIES FURNISHED: Arthur R. Shell, Jr., Esquire Department of Professional Regulation Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 Michael C. Overstreet, Esquire 225 McKenzie Avenue Panama City, Florida 32401 Fred Roche Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Wings S. Benton, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Mr. Harold Huff Executive Director Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802
Findings Of Fact At all times relevant hereto, Phyllis A. Crosby, Respondent, was registered as a real estate broker by the Florida Board of Real Estate, and was qualifying broker for Crosby Realty Corporation, a corporate real estate broker (Exhibit 4). Crosby had actual knowledge of the hearing scheduled to be heard September 3, 1986, and failed to appear. William Nolte and Marilyn Nolte owned a duplex in Tampa, Florida that they desired to sell. They talked with Wade Black and Dale Peterson, real estate salesmen with American Realty Company, and agreed to give American Realty Company an exclusive right of sale agreement, a listing agreement to list the property for rent before sale, and to pay a $100 commission for each tenant. The exclusive listing agreement dated February 26, 1985 was attached to Exhibit 2, deposition of Marilyn Nolte, as Exhibit 2. Pursuant to these agreements, tenants for each of the apartments were obtained and a buyer for the property was subsequently found. In March 1985, Crosby purchased American Realty's assets which included the Nolte agreements. Salesmen licenses of Black and Peterson were transferred to Crosby Realty. Rental and deposit checks from the two tenants, totalling $1,130.00, were obtained by Black and/or Peterson and delivered to Respondent. This money was never deposited into Respondent's escrow account. The Noltes demanded remittance of the $1,130.00 minus $200 (commission), or $930.00 from Respondent on numerous occasions and made numerous phone calls to the Crosby Realty Company office to obtain this money without success. On March 13, 1985, a buyer for the Nolte property was secured by Tam- Bay Realty, and the property was sold with the closing taking place June 9, 1985. Prior to the closing, Nolte wrote to the American Title Company, who closed the transaction, regarding the $930.00 owed Nolte by Respondent and this $930.00 was deducted from the commission paid Respondent. At the closing, Respondent appeared, took the check representing Crosby Realty's Commission less the $930.00 deducted to pay Nolte, and left before the final papers were signed. No commission for the rentals of the sale was ever paid by Respondent to Black or Peterson. Respondent, during 1985, had three accounts in the Citrus Park Bank in Tampa. One was the Crosby escrow account, one was the Crosby Realty general account, and one was the Phyllis A. Crosby personal expense account. Numerous overdrafts were drawn on the general account and personal expenses account and the bank notified the Respondent that these overdraft charges would be deducted from her escrow account as a set-off to keep the bank from losing money because of these overdraft charges. During June 1985, the bank debited the escrow account $88.50 (debit memo Exhibit 1), the July statement contained a debit memo of $283.00, and in August, debit memos of $126.76 and $62.88 appeared. In September 1985, Citrus Park Bank closed all of Respondent's accounts. On April 29, 1985, Respondent leased office space and a townhouse from Carlton Properties in Tampa. She signed a three-year lease effective May 1, 1985, which provided for two months free rent for the office, with tenant to make a security deposit in the amount of $817.79 (which equals one month rent) due June 1, 1985. This deposit was never made and she was evicted in July. The townhouse lease provided for two weeks free rent with the security deposit due May 15, 1985. Respondent made this payment and one additional payment, but the check for the second payment was returned marked insufficient funds. She was evicted July 22, 1985. Respondent leased office space on July 9, 1985, from Ayers-Siera Insurance Association in the Carrolwood Village Center for a broker's office. She gave the lessor a check for $842.00 for the August rent and a security deposit. She moved into the office space and the check, written on the Crosby Realty general account, bounced. It was returned for collection twice, marked insufficient funds. When run through a third time, the check was returned marked "account closed." Eviction proceedings were instituted and Respondent's furniture was moved out of the office by the Sheriff in early October. The lessor has never received any monies from Respondent. In September or early October 1985, Respondent entered into a three year lease agreement with Paramount Triangle to lease office space commencing November 1, 1985. She moved her offices into that space and occupied the premises until April or May 1986 when she departed. During the period that Respondent occupied this office space, only one rental check from her was honored by the bank. Numerous checks given to Paramount Triangle for rent were not honored by the bank. Finally, the last check from Respondent dated March 6, 1986, which Paramount Triangle tried to deposit, was returned showing the account on which the check was drawn was closed on March 4, 1986. Pamela Glass was employed as a secretary by Respondent from July 6, 1986 through August 6, 1986. During this period, Respondent refused to accept certified mail and became very angry with Glass when she once signed for a certified letter addressed to Respondent. Glass received numerous phone calls from people complaining about not being paid for billing sent to Respondent. When her pay was not forthcoming at the end of the month, Glass quit. Glass also testified, without contradiction, that Respondent held accounts for utilities under various aliases she used for this purpose. Frank Maye, investigator for Petitioner, failed to get escrow account records from Respondent when requested and made appointments with her to audit her escrow accounts which were not kept by Respondent. Failing to obtain the records from Respondent, Maye subpoenaed the records from the bank.
The Issue Whether the Respondents committed the offenses alleged in the Amended Administrative Complaint and the penalties, if any, that should be imposed.
Findings Of Fact Petitioner is the agency of the State of Florida charged with the responsibility and duty to administer the statutes and rules regulating the real estate profession in Florida. At all times pertinent to this proceeding, the Respondent, Jose A. Queipo, Jr., was licensed by the Petitioner as a real estate broker, having been issued license numbers 0415475 and 3001474. At all times pertinent to this proceeding, the Respondent, Queipo International Realty, Inc. (REALTY), was licensed by the Petitioner as a real estate brokerage corporation, having been issued license number 0271997. At all times pertinent to this proceeding, Mr. Queipo was the sole corporate officer, sole owner, and sole broker of record for REALTY. At all times pertinent to this proceeding, until January 27, 1995, REALTY's offices were located at 2320 Red Road, Miami, Florida. In 1994, Mr. Queipo made the business decision to form Queipo International Realty Group, Inc., (GROUP) as a separate corporation and, through GROUP, to open a real estate office on Crandon Boulevard, Key Biscayne, Florida. Andrew Marrero, a licensed real estate broker had been a long term friend of Mr. Queipo and had worked with him at REALTY. Mr. Queipo gave Mr. Marrero 50 percent ownership interest in GROUP and had Mr. Marrero act as the qualifying broker of record for GROUP. In December, 1994, Mr. Queipo became ill. On medical advice, he took an extended vacation, leaving Mr. Marrero in charge of REALTY and GROUP. Mr. Queipo and Mr. Marrero agreed that the REALTY offices on Red Road would be closed and that all pending transactions for which REALTY was responsible (15 to 20 in number) would be closed by GROUP. The GROUP office was thereafter opened on Key Biscayne. Before he left on his vacation, Mr. Queipo signed a number of blank checks on REALTY's various trust and operating bank accounts and he signed several sheets of stationery with REALTY's letterhead. Mr. Queipo turned these signed blank checks, signed sheets of stationery, and all books and records of REALTY over to Mr. Marrero. Mr. Queipo also pre-signed checks on GROUP's bank accounts and executed a corporate document that allowed Mr. Marrero to change those accounts so that only Mr. Marrero's signature was necessary. On January 27, 1995, Mr. Queipo was still out of state on his vacation. On that date, Mr. Marrero closed the REALTY offices without advance notification to the sales persons and other personnel employed at that office. Mr. Marrero took possession of all equipment, furniture, files, and corporate records and moved these items either to the GROUP office on Key Biscayne or to his personal residence. Between the time he left on his vacation in December 1994, and March 1995, Mr. Queipo returned to Miami only for a day to attend the closing of the sale of the REALTY office building on Red Road. While he was away from Miami between December 1994 and March 1995, Mr. Queipo stayed with relatives in New York and rested. During this period, Mr. Marrero was in control of REALTY and GROUP. Mr. Queipo did not return to Miami permanently until March 1995. When he returned to Miami in March 1995, Mr. Queipo sought an accounting from Mr. Marrero as to the status of REALTY and GROUP. Mr. Marrero responded by locking Mr. Queipo out of the offices of GROUP. Mr. Queipo filed suit in circuit court in Miami against Mr. Marrero in May 1995. In June 1995, Mr. Marrero was ordered by the presiding circuit judge to turn all books and records of GROUP and of REALTY to the Century 21 Regional Offices so that an accounting could be performed. It was not until August 1995 that Mr. Queipo regained control of REALTY and of GROUP. Petitioner determined that it would be appropriate to audit the escrow accounts and other books and records of REALTY in January 1995, prior to the abrupt closing of the REALTY offices on January 27, 1995. Two of Petitioner's investigators, Kenneth Rehm and Roberto Castro, went to the REALTY office during regular business hours prior to January 27, 1995, for the purpose of conducting the audit. The investigators asked to see Mr. Queipo and were told by a receptionist that Mr. Queipo was not available. The investigators were unable to conduct the planned audit. Shortly after the REALTY office on Red Road was closed on January 27, 1995, the Petitioner was notified of this fact by sales persons who had worked at that office. REALTY never maintained or operated an office at any other location after January 27, 1995. Petitioner's investigators made diligent efforts to subpoena the REALTY records so that they could perform an audit and they attempted to communicate with Mr. Queipo through his brother-in-law and through Martha Lara, a secretary who worked for REALTY. 1/ Petitioner's investigators were unable to perfect the service of a subpoena for REALTY's records until Mr. Rehm served Mr. Queipo in person at the Dade County Courthouse on May 30, 1995. Mr. Queipo was at the Courthouse for a hearing pertaining to the litigation he instigated against Mr. Marrero. This subpoena required Mr. Queipo to produce the following records of REALTY: . . . brokerage records for the period January 1, 1994 to present including: All listing agreements. All sales/purchase agreements/rental/ lease agreements. All escrow account monthly bank state- ments, bank deposit slips and cancelled checks. Operating account bank statements, deposit slips, and cancelled checks. Monthly reconciliations showing broker's total trust liability. In response to that subpoena, counsel for Mr. Queipo responded by letter dated June 12, 1995, that stated, in pertinent part, as follows: Please be advised that the undersigned represents Jose Queipo, broker, owner of a corporation no longer in business called Queipo International Realty, Inc. Mr. Kenneth Rehm personally served a subpoena . . . upon Mr. Queipo in relation to Queipo International Realty, Inc. . . . * * * . . . all matters contained within the body of the subpoena are presently lodged with and or controlled by Queipo International Group, Inc. and Mr. Andrew Marrero. As Mr. Kenneth Rehm knows, Queipo Inter- national Group Inc. has been controlled by a Mr. Andrew Marrero since a dispute arose with Mr. Queipo. As of this date Mr. Marrero retains all of the relevant records of Queipo Inter- national Realty Inc. that were taken by him in January of 1995 to Queipo International Group, Inc.'s new headquarters on Crandon Blvd. as part of the merger and formation of the new company . . . . As of the time of the formal hearing, the Respondents had not provided Petitioner with records that would enable Petitioner to audit the REALTY escrow accounts. At the times pertinent to this proceeding, REALTY had more than one escrow account. One of these escrow accounts was account number 0024012750 at the Interamerican Bank. Petitioner established that as of January 31, 1995, the account liability (at least $28,200) exceeded the account balance ($13,794.41). This discrepancy was detected after Mr. Queipo had given Mr. Marrero control of the escrow accounts and had given him signed, blank checks that enabled him to make withdrawals from the escrow accounts. Although Respondents established that REALTY had more than one escrow account, that fact does not explain the apparent discrepancy in account number 0024012750 at the Interamerican Bank. At all times pertinent to this proceeding, Respondents knew that the records of REALTY were subject to audit by the Petitioner. REALTY's records had been routinely audited on three separate occasions prior to 1995 with no errors having been detected. Prior to October 1994, REALTY had a listing agreement for the sale of property owned by Wilma Sue Lawton. The REALTY sales persons for this transaction were Ann Freeman and Yolanda Rocabado. On October 19, 1994, a contract for the sale of the Lawton property was executed between Ms. Lawton as seller and Mario N. and Elisa V. Machin as buyers. This contract provided for REALTY to receive a six percent commission when the sale closed. Since the sales price equalled $100,000, the amount of the real estate commission was $6,000. In connection with this transaction, the Machins paid to REALTY a deposit in the amount of $10,000, which was placed in account number 0024012750 at the Interamerican Bank. After REALTY closed its office on January 27, 1995, Ms. Freeman became associated with a real estate company named Vision International Realty (VISION) and Ms. Rocabado became associated with GROUP. On January 31, 1995, REALTY's listing agreement with Ms. Lawton expired. On February 3, 1995, Ms. Lawton executed a listing agreement with VISION. This listing agreement provided for VISION to receive the six percent real estate commission. On February 3, 1995, Ms. Lawton and Mr. and Ms. Machin executed a "Release on (sic) Deposit Receipt" that released the $10,000 deposit that had been placed in escrow by REALTY pursuant to the contract dated October 19, 1994. By an instrument executed by the Machins on February 3, 1995, and by Ms. Lawton on February 8, 1995, the parties entered into a second contract for the purchase and sale of the Lawton property. There were no material differences between the contract executed in February 1995 and the contract dated October 19, 1994. This second contract provided that VISION and GROUP would evenly split the six percent commission. The closing for this transaction was scheduled for on or before March 4, 1995. Approximately two weeks prior to the scheduled closing, VISION asked that REALTY transfer the $10,000 escrow deposit to a VISION escrow account so that the funds would be available for the closing and provided a copy of the "Release on Deposit Receipt". At the time REALTY received the "Release on Deposit Receipt" and the request to transfer those funds, Mr. Marrero was in de facto control of both REALTY and GROUP. Thereafter, a REALTY check that had been pre-signed in blank by Mr. Queipo and an unsigned cover letter on REALTY letterhead were sent to the attorney who as acting as the closing agent for the transaction. The amount of the check sent to the closing agent was $7,000. The unsigned transmittal letter referenced the Lawton to Machin transaction and provided, in pertinent part, as follows: Receipt is hereby acknowledged in the amount of $6,000 (Six Thousand Dollars) as a professional fee for the above referenced property. Please be advised that the [sic] $3,000 of the above captioned in dispute is being forwarded to the title agent as agreed until this matter is settled among the brokers. The closing agent correctly understood the cover letter to mean that REALTY was keeping $3,000 of the $10,000 that had been deposited as part of its commission and that REALTY was also claiming it was entitled to receive an additional commission of $3,000 from the $7,000 check it forwarded to the closing agent. There was no dispute that the total commission, in the amount of $6,000, was to be paid from the $10,000 deposit that had been placed in REALTY's escrow account in October 1994. There was also no dispute that either REALTY or GROUP was entitled to $3,000, representing one half of the total real estate commission. The other half of the commission was in dispute and was forwarded by REALTY as part of the $7,000 it forwarded to the closing agent. Since Mr. Marrero was in control of REALTY and GROUP, it is concluded that REALTY's claims to the entire commission effectively waived any claim GROUP may have had to half of the commission. As a result of the commission dispute between REALTY and VISION, the closing agent treated $3,000 of the $7,000 as being in dispute and not available for use in closing the transaction. VISION objected to the transaction closing without it being paid the $3,000 commission it was claiming. The transaction closed because the buyers paid into the closing agent's escrow account an additional sum of $3,000, which was used to pay VISION's commission. The sum of $3,000 remains in the closing agent's escrow account pending resolution of the dispute over this part of the commission. Depending on the resolution of REALTY's commission claim, the sum belongs to either REALTY or to the Machins. No formal action has been taken to resolve the dispute over this commission. The sum of $3,000 remained in the closing agent's escrow account at the time of the formal hearing. In conjunction with a transaction involving a seller named Sergio Rodriguez and a buyer named Aristomanis Atheras, REALTY received an escrow deposit in the amount of $15,500. Respondents thereafter received conflicting demands for that deposit. On November 17, 1994, REALTY filed an interpleader action in Dade County Circuit Court. REALTY was represented in this matter by an attorney named Raymond Albo. On June 6, 1995, REALTY was ordered by the circuit court to deposit the escrowed funds into the registry of the court "forthwith". Respondents did not comply with that order. Mr. Queipo testified, credibly, that Mr. Albo failed to advise him of that order. On October 19, 1995, the circuit court entered an "Order to Show Cause" which ordered Mr. Queipo to show cause at a hearing scheduled for November 9, 1995, why he should not be held in contempt of court for failing to comply with the order if June 6, 1995. On November 8, 1995, Mr. Albo contacted Mr. Queipo for the first time in a year and told him about the Order to Show Cause. Mr. Queipo determined that the remaining REALTY escrow account had a balance of $11,000. He withdrew the sum of $11,000 from the escrow account, added $4,500 of his personal funds to that figure, and paid into the registry of the court the sum of $15,500 on November 9, 1995, thereby avoiding the contempt proceeding. i 33. Jorge Areces was acting as the general counsel for Respondents in November 1994. It was Mr. Areces who recommended that Mr. Albo be retained to represent REALTY in the interpleader action. Both Mr. Areces and Mr. Queipo made repeated efforts to contact Mr. Albo about the status of the interpleader action, but they were unable to locate him. Respondents relied on the advice of their attorneys in dealing with the interpleader action.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order that incorporates the findings of fact and conclusions of law contained herein, that finds Respondents guilty of the offenses alleged in Counts XIII, XIV, XVII, and XVIII, and that dismisses the remaining counts of the Amended Administrative Complaint. It is recommended that for the violations found herein, Respondents be fined in the total amount of $4,000 and that their respective licenses be placed on probation for a period of five years. DONE AND ENTERED this 21st day of October, 1996, in Tallahassee, Florida. CLAUDE B. ARRINGTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 21st day of October, 1996.
The Issue Whether Respondent committed the offenses set forth in the Notice to Show Cause and, if so, what action should be taken.
Findings Of Fact Petitioner is the state agency charged with regulating yacht and ship brokers and salespersons pursuant to Chapter 326, Florida Statutes. At all times material hereto, Respondent was a licensed yacht and ship broker salesman. He has been licensed since 1990. In December 1990, Respondent was issued license number 1322, as a yacht and ship broker salesman for Seafarer Brokerage, Inc. (Seafarer). In October 1998, he renewed his license, which had an expiration date of October 28, 2000. On July 31, 1997, Lorraine Woods, the President of Seafarer, wrote to Peter Butler, section head of the yacht and ship section of the Department of Business and Professional Regulation, notifying him that Respondent was the broker of record for Seafarer. Ms. Woods' license had been suspended, and Respondent knew that her license had been suspended prior to his becoming broker of record for Seafarer. As the broker of record, Respondent knew that he was solely responsible for safeguarding the money of all clients in the brokerage's escrow account. Respondent did not know the details involving the suspension of Ms. Woods' license. He was not aware that Ms. Woods had abused the control of Seafarer's escrow account for her own benefit by taking client funds from the escrow account to pay for Seafarer's operating expenses. Mr. Butler was very concerned with the abuse of Seafarer's escrow account committed by Ms. Woods. He demanded assurance from Respondent that Ms. Woods would not have access to the escrow account, and Respondent provided that assurance. On August 4, 1997, Respondent wrote to Mr. Butler confirming that he (Respondent) was the broker of record for Seafarer. In his written communication, Respondent confirmed certain details of the escrow account of Seafarer, including that he was broker of record and that the account was located at First Union National Bank of Florida, with the address and account number listed. Moreover, Respondent indicated that, as of July 30, 1997, he became the sole signatory on the account. Respondent personally provided the signatory card, showing that he was the sole signatory on the account, to the bank. Even though the bank did not have a record of such a signatory card, the undersigned is persuaded that Respondent's testimony is credible and that he provided the signatory card to the bank. Even though Respondent was the broker of record for Seafarer, Respondent looked upon Ms. Woods as the employer and himself as the employee, resulting in an employer-employee relationship. Seafarer consisted of two persons, Respondent and Ms. Woods. If Respondent was unavailable for a situation in which a check had to be written and executed, he would prepare a blank check with his signature on it and give it to Ms. Woods. She continued to maintain the business records. Ms. Woods maintained all the operating and escrow records, checks, and bank statements in a locked drawer for which she had the only key; Respondent did not have free and unobstructed access to these documents even though he was Seafarer's broker of record. Respondent and Ms. Woods continued this procedure for over a year without incident. On April 2, 1999, Warren Scott made an offer on a 1974 CAL2-46, a 46-foot yacht, with Seafarer. He placed a $6,000.00 deposit on the yacht. Mr. Scott's dealings, regarding the yacht, were with Ms. Woods. He had dealt with Seafarer and Ms. Woods on a prior occasion, had made a deposit, and had his deposit refunded. As a result, Mr. Scott felt comfortable dealing with Seafarer and Ms. Woods even though he had not purchased a yacht from Seafarer. On April 5, 1999, Mr. Scott's check was deposited in Seafarer's escrow account. On April 5, 1999, check numbered 1144, made payable to cash for $4,305.00, bearing Respondent's signature was written. The check bore the notation at the bottom left corner at the "FOR" space: "CAL2-46 (illegible) Enterprises." This check cleared Seafarer's escrow account on April 7, 1999, leaving a balance of $2,512.34. Respondent had signed the check and left it for Ms. Woods to fill-in the details. The check was signed by Respondent in March 1999 for a closing that was taking place at the end of March, but the check was not used at the closing in March. Ms. Woods had written the check to pay the rent for Seafarer. Even though Respondent had signed the check, the undersigned is persuaded that he did not know that Ms. Woods was going to use the check for a purpose other than for what it was written. On April 27, 1999, Respondent signed a check for $100.00, payable to Complete Yacht Service for engine repair to the CAL2-46. This check cleared Seafarer's escrow account on April 30, 1999, leaving a balance of $5,796.36. After a sea trial and survey, Mr. Scott wrote to Ms. Woods on April 30, 1999, indicating that he had decided not to purchase the 1974 CAL2-46 pursuant to their arrangement of April 2, 1999. On May 3, 1999, Mr. Scott again wrote to Ms. Woods that his offer to purchase the 1974 CAL2-46 for $55,000.00 in the conditional acceptance of vessel agreement, dated April 29, 1999, was expiring on May 3, 1999, at 9:00 p.m. Mr. Scott went to Seafarer on May 4, 1999, to obtain a refund of his deposit from Ms. Woods. Respondent informed him that Ms. Woods was out and that they would have to wait for her return, which was going to be in about an hour. Mr. Scott was unable to wait. He left Fort Lauderdale, returning to Nevada, with the understanding that his deposit, less $100.00 for the engine survey, would be returned to him. Mr. Scott expected the monies within a week to ten days. On May 5, 1999, a deposit of $4,700.00 was made to Seafarer's escrow account, leaving a balance of $9,136.36. On May 5, 1999, Seafarer's escrow account contained sufficient monies to give Mr. Scott a full refund of his deposit, less the $100.00. Respondent left for a vacation to the United Kingdom on May 17, 1999, with his return on June 15, 1999. Prior to his leaving, Respondent signed two blank checks, numbered 1153 and 1154, from Seafarer's escrow account. The checks were written for an upcoming business transaction during his absence, regarding a closing and Respondent's commission on the closing. On May 18, 1999, Seafarer's escrow account balance fell to $5,192.21, after three checks cleared the account. Two of the three checks, signed by Respondent, were payable to Seafarer in the amount of $1,360.00 for "comm.-37'Irwin." During May 1999, checks totaling $6,900.00, which were signed by Respondent, cleared Seafarer's escrow account. Mr. Scott made several telephone calls to Seafarer regarding the return of his deposit. Each time Mr. Scott spoke with Ms. Woods and he was not provided with a satisfactory response from her. On June 16, 1999, Mr. Scott received a check, check numbered 1153, for $5,900.00 from Seafarer. He also received a telephone call that same day from Ms. Woods requesting him not to deposit the check until the end of the month; Mr. Scott agreed. Respondent was not aware that check numbered 1153 was going to be used to refund Mr. Scott's deposit. Respondent was unaware that the check was used for a purpose other than for what it was intended. On June 17, 1999, check numbered 1154, made payable to Seafarer for $1,000.00 for "petty cash" cleared Seafarer's escrow account. The check was used by Ms. Woods to pay Seafarer's telephone and utility bills. Respondent was unaware that check numbered 1154 was going to be used for a purpose other than for what it was written. When Respondent returned from his vacation, he was contacted by Mr. Scott who advised Respondent of the problem with the return of his refund. Respondent checked the bank statements for Seafarer's escrow account and discovered that Ms. Woods had not used the checks for their intended purpose and that she had used funds from the escrow account for improper purposes. On June 25, 1999, Mr. Scott deposited the check that he received from Seafarer. The check, payable to Mr. Scott, was posted to Seafarer's escrow account on June 29, 1999, leaving a negative balance of $2,667.22. For 67 days, between April 5, 1999, when Mr. Scott's deposit of $6,000.00 was deposited in Seafarer's escrow account, and June 29, 1999, the date Mr. Scott's refund of $5,900.00 cleared, Seafarer's escrow account did not have sufficient funds to pay the refund. The period between May 5, 1999, and May 17, 1999, was the only time period, during the 67-day period, that Seafarer's escrow account had sufficient funds to pay the refund. Mr. Scott indicates that his refund was received in his account in July 1999. Respondent remained with Seafarer long enough to ensure that Mr. Scott received his refund. On July 8, 1999, Respondent notified Mr. Butler that he was no longer the broker for Seafarer. Respondent has no prior disciplinary action.
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 Florida Land Sales, Condominiums, and Mobile Homes, enter a final order: Sustaining the Notice to Show Cause and finding that John Scales violated Subsections 326.002(1) and 326.005(1), Florida Statutes (1997). Suspending Respondent's license for three years. Imposing a civil penalty of $5,000.00. DONE AND ENTERED this 14th day of February, 2001, in Tallahassee, Leon County, Florida. ERROL H. POWELL 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 14th day of February, 2001. COPIES FURNISHED: Janis Sue Richardson, Esquire Department of Business and Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-2202 Tracy J. Sumner, Esquire 1307 Leewood Drive Tallahassee, Florida 32312 Ross Fleetwood, Director Division of Florida Land Sales, Condominiums, and Mobile Homes Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Barbara D. Auger, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
