The Issue Is Respondent, Peter H. Myers, guilty of the allegations contained in the Administrative Complaint issued by Petitioner and, if so, what is the appropriate penalty.
Findings Of Fact Petitioner is the state agency charged with the responsibility and duty to prosecute administrative complaints pursuant to Section 20.165 and Chapters 120, 455, and 475, Florida Statutes. Respondent Myers is a licensed real estate broker, having been issued license number BK-0646846. Ocean Village Sales & Rentals, Inc. (Ocean Village) is a real estate broker corporation and Respondent is the qualifying broker for said corporation. Background Petitioner and Respondent were involved in earlier disciplinary cases in 1998 and 1999. On or about December 7, 1999, Petitioner and Respondent entered into a Stipulation which resolved DBPR Case Nos. 98-81236 and 99-80423. The Stipulation placed Respondent on probation for a period of one year from the effective date of the Final Order of the Florida Real Estate Commission (FREC), which adopted the stipulation and was issued on or about January 19, 2000. The Stipulation read in pertinent part as follows: Respondent agrees not to hold or maintain any escrow, trust or real estate related escrow or trust funds for the one(1) year probationary period. Respondent is permitted to be a signatory on the operating and payroll accounts for his brokerage firm only. Respondent shall place all escrow, trust or real estate related funds with a title company, attorney, or other proper depository as permitted under Chapter 475, Fla. Stat., and Fla. Admin. Code r. 61J2. Respondent further agrees not to be a signatory on any escrow, trust or real estate related account with the exception of the operating and payroll accounts for his brokerage firm for the one (1) year probationary period. In compliance with the terms of the stipulation, Respondent placed his escrow account with Joseph Roth, a certified public accountant and licensed real estate broker in the State of Florida. In the Stipulation, Respondent admitted to, among other things, failure to prepare the required written monthly escrow statement reconciliations in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code, and, therefore, in violation of Section 475.25(1)(e), Florida Statutes. Escrow accounts audit Gail Hand is an Investigation Specialist II with the Department of Business and Professional Regulation (the department). She has approximately 16 years of regulatory and investigative experience with the department. When she started working with the department, she conducted from 20 to 30 trust account audits per month. She routinely conducts audits and inspections of the records of real estate brokers. When reviewing escrow accounts, Ms. Hand's review of escrow accounts has two components. First, she reviews the bank statement reconciliations which compares the statement balance to the checkbook balance. Next she reviews a comparison of the bank statement reconciliations with the broker's total trust liability. The broker's total trust liability is the total of all the money that the broker is holding in his trust or escrow account. On or about January 26, 2001, Ms. Hand conducted an office inspection and escrow account audit of Respondent's business, Ocean Village. Respondent and his daughter were present. During this inspection and audit, Ms. Hand requested to inspect financial documents of the company. Respondent and his daughter provided all documents requested and were very cooperative during the course of the audit. Ms. Hand inspected the November and December 2000 bank reconciliation statements from the escrow trust account of Ocean Village and determined that they were properly prepared. However, Ms. Hand determined that the determination of the broker's trust liability was not properly prepared in that she could not identify the broker's total trust liability from a review of the documents provided by Respondent. The calculations in Respondent's financial records included broker's money, bank fees, and negative owner balances. According to Ms. Hand, the reconciled checkbook to bank statement balance should be compared to a balance that does not include broker's money, bank fees or negative owner balances. Because of this, she could not identify the total broker's trust liability. She normally does not have trouble identifying a broker's total trust liability when conducting an audit. During the audit, Respondent could not identify the total broker's trust liability. Respondent deferred to his accountant, Mr. Roth. Ms. Hand did not discuss the financial documents which she reviewed as part of the audit with Mr. Roth because, "Mr. Myers was responsible." License renewal Respondent's renewal fees for his corporate registration and his individual broker's license became due in March 1999. Respondent renewed his corporate registration in March 1999 but failed to renew his individual broker's license. Respondent did not renew his individual broker's license until February 2001. At that time, he paid for the time period in which he was in arrears and for another 24 months in the future, as well as a late fee or penalty. Respondent continued to conduct real estate transactions during the period of time that his individual broker's license was in involuntary inactive status.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, the evidence of record and the demeanor of the witnesses, it is RECOMMENDED: That a final order be entered by the Florida Real Estate Commission finding the Respondent, Peter H. Myers, guilty of violating Sections 475.25(1)(e) and (o), and 475.42(1)(a), Florida Statutes, and imposing a fine of $2,500.00. DONE AND ENTERED this 4th day of September, 2002, in Tallahassee, Leon County, Florida. BARBARA J. STAROS 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 4th day of September, 2002.
The Issue The issue is whether Respondent failed to maintain his trust account properly, failed to examine and sign monthly reconciliation statements for his trust account, and failed to respond appropriately to disputes concerning escrow deposits that he held. If so, an additional issue is the penalty to be imposed.
Findings Of Fact Since 1994, Respondent has been a licensed real estate broker, at all times serving as the broker of record for Castles By The Sea (Castles). The Arnston transaction involves a contract dated August 30, 2000, in which Michael Arnston is the buyer, Advanced Builders is the seller, and Castles is the real estate broker. The contract contains a financing contingency that gives Mr. Arnston 20 days to obtain financing, acknowledges that Mr. Arnston has paid $42,800 in earnest money to Castles, calls for a closing on October 1, 2000, and provides Advanced Builders with 30 days from post-closing notice to cure any title defects. As pleaded by Petitioner and admitted by Respondent, on September 11, 2000, Mr. Arnston's attorney wrote a letter to Advanced Builders, with a copy to Jennifer McCrary, who is an employee of Respondent. In the letter, Mr. Arnston's attorney withdrew Mr. Arnston's offer to purchase and demanded the return of his earnest money. The stated reason is that the offer was never accepted by the owners of record, who were Michael Mucha, as owner of a two-thirds interest in the property, and Carolyn Kline, as owner of a one-third interest in the property. Although Mr. Mucha signed the contract, apparently in an individual capacity, Ms. Kline never signed the contract. As pleaded by Petitioner and admitted by Respondent, on September 14, 2000, Advanced Builder's attorney wrote a letter to Mr. Arnston's attorney stating that Ms. Kline was a beneficial owner of Advanced Builders, Ms. Kline had authorized Advanced Builders to enter into the Arnston contract, and Ms. Kline, Advanced Builders, and Mr. Mucha were prepared to convey good title to Mr. Arnston at closing. Treating the September 11 letter as an anticipatory breach, the September 14 letter, a copy of which was furnished Castles, demands the $42,800 earnest money deposit. As pleaded by Petitioner and admitted by Respondent, on September 25, 2000, Mr. Arnston filed a complaint with Petitioner concerning Respondent's handling of the earnest money deposit. This complaint led to the office audit in 2000 described below. The Sims transaction involves a contract dated March 26, 2000, in which Stephen and Claire Sims are the buyer, Jacqueline Bardach is the seller, and Castles is the real estate broker. The contract contains a financing contingency that runs through closing, defines the contingency in part as the buyers' ability to acquire 75 percent financing, acknowledges that the Simses have paid $10,000 in earnest money to Castles, calls for the Simses to pay Castles an additional $20,000 in earnest money within 10 days, and calls for a closing within 90 days. As pleaded by Petitioner and admitted by Respondent, on May 2, 2000, Stephanie McCauley, an agent of Castles, wrote Ms. Bardach and informed her that the Simses had been unable to acquire the 75 percent financing and were withdrawing from the contract and requesting the return of their earnest money. As pleaded by Petitioner and admitted by Respondent, on May 8, 2000, Ms. Bardach's attorney wrote Ms. McCauley and the other broker at Castles, with a copy to the Simses, and stated that the cancelation of the contract and release of the escrow money was premature. In the letter, the attorney informed Castles and the Simses of alternative financing sources for 75 percent of the contract price consisting of a lender for 60 percent and the seller holding a purchase money note and mortgage for the remaining 15 percent. On May 18, 2000, Ms. Bardach's attorney wrote another letter to Ms. McCauley and the other Castles broker formally declaring a default on the part of the Simses for their failure to exercise due diligence to obtain financing and demanding the $30,000 in earnest money. The letter offers Castles the option of interpleader in circuit court. On July 20, 2000, Ms. Bardach's attorney wrote a letter to Respondent stating that Castles had taken no action since his letter of May 18 and authorizing him to submit the dispute to circuit court or the Florida Real Estate Commission. On November 29, 2000, Petitioner received a complaint from Ms. Bardach concerning Castle's handling of the earnest money deposit. Since early 1996, Respondent had employed Chris McMahel as a comptroller/bookkeeper in his real estate office. Prior to employing Ms. McMahel, who was a licensed real estate salesperson, Respondent had been acquainted with her from her employment in an ERA office in Boynton Beach and as the executive vice-president of the local Board of Realtors. At the time of the events described below, Ms. McMahel had had 20 years' experience in real estate. Each month while employed by Respondent, Ms. McMahel, who had placed her real estate license with Castles, prepared the reconciliation statements for the Castles escrow account. For some time prior to the events described below, Respondent was not signing these reconciliation statements. With Respondent's consent, and presumably at his direction, Ms. McMahel stamped the monthly statements with Respondent's facsimile signature. Ms. McMahel had similar authority to stamp Respondent's facsimile signature on trust account checks, and she routinely exercised this authority. The last monthly reconciliation statement that Respondent saw was for July 2000. Petitioner's investigator had conducted an office audit in August 1999 and had met with Ms. McMahel. Although the investigator had found the real estate records poorly kept, he did not find anything in violation of applicable law and did not attempt to communicate directly with Respondent about the audit or the audit findings. The investigator's findings and actions were identical with respect to the 1998 audit. On October 23 or 24, 2000, Respondent received a telephone call from a title insurance company informing him that a Castles trust account check in the amount of $54,000 had failed to clear. Respondent called Ms. McMahel, who assured him that there had been some sort of mistake and she would call the bank to clear up the problem. Ms. McMahel later called Respondent back and told him that she had given the title insurance company a new check. However, this check also failed to clear. Upon learning that the second check had failed to clear, Respondent immediately approached Ms. McMahel and told her to produce the books and records. She did so, and Respondent found that the books and records were in disarray. Respondent demanded an explanation from Ms. McMahel, but she remained silent and offered no excuse. Respondent also contacted SunTrust, which held the trust funds, and confirmed that the account balance was insufficient to pay the trust account check. Upon learning of this shortage, Respondent contacted a representative of the Division of Real Estate and was told to document the problem and deposit sufficient money into the account as soon as possible. Respondent immediately borrowed $50,000 from a friend and deposited it into the trust account, so that the twice- dishonored check could be paid. The next day, Respondent went to Ms. McMahel's home to discuss the matter, but found that she had fled. Neither Respondent nor Petitioner was able to find her subsequently. Respondent formally fired Ms. McMahel at this time. Eventually, Respondent pieced together much of what had happened. The ultimate shortage in the trust account was about $658,000. Ms. McMahel had paid herself, as payee on numerous trust account checks, almost $400,000. She had used additional trust account funds to pay off her obligations, such as credit card debts, although it is unclear if these fraudulent transactions account for the remaining $258,000. By October 30, 2000, Respondent sold 25 percent of Castles, which he owned, for $250,000, and he deposited the sale proceeds into the trust account. Still needing over $350,000 to eliminate the shortfall, Respondent offered for sale the remaining interest in Castles. At the same time, Respondent decided not to file a police report against Ms. McMahel because he believed that such an action would reduce the price for which he could sell the company. Pending the sale of Castles, Respondent borrowed $200,000 personally and deposited this money into the trust account to pay off outstanding trust account liabilities. In late November 2000, Respondent found a buyer for Castles. Following a closing in January 2001, Respondent deposited sufficient funds into the trust account to eliminate any shortage. Respondent continued to work with Castles for a month after the closing, at which time the new owners fired him. Respondent filed a police report in April or May 2001. However, the Delray Police Department, with which Respondent filed the complaint, never found Ms. McMahel. Respondent never filed suit against Ms. McMahel or SunTrust. At the time of these events, Castles was closing 35-50 sales per month. With respect to contracts for which Castles held the escrow money, all closings took place as scheduled without delays, and no one lost any money due to the theft from Respondent's trust account.
Recommendation RECOMMENDED that the Florida Real Estate Commission enter a final order finding Respondent guilty of one violation of Section 475.25(1)(k), Florida Statutes; one violation of Section 475.25(1)(e), Florida Statutes, by virtue of a violation of Florida Administrative Code Rule 61J2-14.012(2); and one violation of Section 475.25(1)(e), Florida Statutes, by virtue of a violation of Florida Administrative Code Rule 61J2-10.032(1)(a); and imposing a penalty of one year's suspension and a fine of $3000. DONE AND ENTERED this 23rd day of June, 2005, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 23rd day of June, 2005. COPIES FURNISHED: Juaan Carstarphen Watkins, Acting Director Division of Real Estate Department of Business and Professional Regulation Hurston Building, North Tower Suite N801 400 West Robinson Street Orlando, Florida 32801 Leon Biegalski, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202 Gary J. Nagle, Esquire 14255 U.S. Highway 1, Suite 223 Juno Beach, Florida 33408
The Issue The issues in this case include whether Respondent is guilty of having committed culpable negligence in a business transaction or failed to maintain trust funds in a proper account until disbursement was authorized and, if so, the appropriate penalty.
Findings Of Fact Respondent has been a licensed real estate broker in the State of Florida since 1983 and holds license number 0405933. His most current license was as a broker trading as Realty Trend. Respondent started Realty Trend in 1985 for the primary purpose of managing rental properties. Although he had little or no training or experience in accounting, Respondent retained considerable responsibility for the day-to- day bookkeeping associated with his business, though at times he employed a bookkeeper. Respondent maintained one account for sales transactions, in which he participated as the broker, and one account for property management activity. Respondent participated in few sales transactions and is phasing out of that part of the business. All escrow monies held by Respondent were kept in interest-bearing accounts. Although Respondent retained the interest, he disclosed this fact to the parties through the sales contract. Within about 18 months, Respondent had acquired about 100 properties to manage. Respondent decided to automate the bookkeeping and purchased a computer program that would write checks, track income and expenses, generate reports, and generally handle all aspects of bookkeeping. The program was designed to assist in property management operations. Emphasizing service to property owners, Respondent had always tried to send his checks for rent collected the past month between the tenth and fifteenth of each month. By August, 1989, Respondent had been warned by Petitioner that he had to allow two or three weeks for tenant's checks to clear and determine what emergency maintenance expenses might be incurred. Through a combination of ignorance about bookkeeping, his responsibilities as a broker holding escrow monies, and the property management computer program, Respondent mishandled his trust account. His repeated bookkeeping errors and failure to take corrective action allowed a sizable shortage to accumulate by the time Petitioner conducted a routine office audit on November 17, 1989. Respondent cooperated fully with the audit and promptly provided Petitioner's investigator with a box full of bank statements. His account was reaudited on January 8, 1990. Poor bookkeeping prevents a precise determination of the shortage, but it exceeds $10,000. It is difficult to understand how Respondent's books became so confused as to become nearly worthless. There was no evidence of fraudulent intent. It appears as likely that Respondent overpaid property owners as that he overpaid himself. Respondent's ongoing ignorance of his serious trust account shortages or, in the alternative, repeated failure to solve recognized trust account shortages represents culpable negligence. Even by the time of hearing, Respondent candidly admitted that he could not provide an accurate figure for the shortage and had not yet been able to repay the deficiency, although he intended to do so.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Florida Real Estate Commission enter a final order reprimanding Respondent; imposing an administrative fine of $500; requiring Respondent to complete an approved 60-hour course; suspending his license for a period of six months, commencing retroactive to the date on which Respondent cease operations due to the emergency suspension; and placing his license on probation for a period of three years following the conclusion of the suspension, during which time Respondent shall file escrow account reports with the Commission or other person designated by the Commission at such intervals as the Commission requires. DONE and ORDERED this 8 day of October, 1990, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8 day of October, 1990. COPIES FURNISHED: Darlene F. Keller Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, FL 32801 Attorney Steven W. Johnson Division of Real Estate Florida Real Estate Commission 400 W. Robinson St. Orlando, FL 32801-1772 Thomas I. McIntosh 13542 N. Florida Ave. Tampa, FL 33613 Attorney Neil F. Garfield Envirwood Executive Plaza, Suite 200 5950 West Oakland Park Blvd. Lauderhill, FL 33313 Kenneth E. Easley General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792
The Issue Whether respondent committed the acts alleged in the Administrative Complaint, and, if so, whether respondent's license should be revoked, suspended or otherwise disciplined.
Findings Of Fact At all times pertinent to the charges, Reynold Diaz was a licensed real estate broker in the State of Florida, having license number 0379909. The respondent was registered under the trade name of "Progressive Developers" from August 20, 1983 to July 25, 1986. Respondent, in his capacity as a real estate broker, managed four rental units owned by John H. Stephen located at 3405-3407 Nebraska Avenue, Tampa, Florida. Mr. Stephen initially met Mr. Diaz when Mr. Stephen purchased the rental properties from him in 1984, and Mr. Stephen retained respondent to manage the properties at a fee of ten percent of the monies collected. At the end of April, 1985, respondent rented one of the units owned by Mr. Stephen to Ms. Roslyn Thompson. During the course of Ms. Thompson's tenancy, the respondent received from Ms. Thompson a total of $630.00, which represented two months rent and a security deposit of $180.00. None of this money was returned to Ms. Thompson and none of it was delivered to Mr. Stephen by respondent. When Mr. Stephen inquired about the rental money from the unit, in June or July of 1985, Mr. Diaz advised Mr. Stephen that the tenant had not paid her rent for a couple of months. Thereafter, Mr. Stephen went to the rental unit to talk to Ms. Thompson about her payments. Ms. Thompson advised Mr. Stephen that she had paid her rent and produced receipts for the $630.00 which she had paid to respondent. Mr. Stephen terminated respondent's services in June of 1985. In September of 1985 Mr. Stephen met with Mr. Diaz in an attempt to obtain an accounting of the monies received by respondent from Mr. Stephen's tenants. Although respondent had provided monthly statements and payments to Mr. Stephen throughout 1984, respondent stopped providing statements in 1985. Thus, Mr. Stephen had not received a statement in April, May, or June of 1985. When Mr. Stephen met with respondent in September, respondent failed to provide a full accounting of the money he had received from Mr. Stephen's tenants and failed to deliver the money he had received. However, subsequent to the meeting, Mr. Stephen did receive from respondent the amount he was owed on two of the rental units. However, respondent failed to deliver the money he had received from Ms. Thompson. Respondent contends that of the $630.00 he received from Ms. Thompson, he paid Mr. Stephen $225.00 in September and then paid the $405.00 balance in two installments. However, the evidence does not support this contention, and I accept Mr. Stephen's testimony that he never received any rent payments on the Thompson unit. Further, although the evidence does show that respondent paid Mr. Stephen $405.00 in two checks, these payments were for the money owed on the other rental units. Mr. Diaz has failed to account for or deliver to Mr. Stephen the $630.00 received from Ms. Thompson. Respondent, in his capacity as a real estate broker, also managed rental property owned by Sandra K. Nelson located at 1208 East Chelsea Street, Tampa, Florida. Ms. Nelson first met Mr. Diaz when she purchased the rental property, and she retained respondent to manage the property at a fee of ten percent of the monies collected. In August of 1984, the respondent rented the Nelson property to Joseph Ira Pasco. At the time of renting the unit, the respondent received from Mr. Pasco a security deposit of $325.00. However, Mr. Diaz advised Ms. Nelson that Mr. Pasco had not paid his security deposit, and withheld $275.00 from a rental payment to hold as a security deposit. Subsequently, after Ms. Nelson started eviction proceedings, she discovered that Mr. Pasco had a receipt signed by Mr. Diaz for a $325.00 security deposit. However, despite Ms. Nelson's demands, the respondent failed to deliver to Ms. Nelson the $325.00 security deposit or any portion thereof. Further, the security deposit was not returned to Mr. Pasco. However, respondent did ultimately deliver to Ms. Nelson the $275.00 that he had retained from the rental payment. Respondent maintained an escrow account at the Hay Gulf Federal Credit Union from August 8, 1984 until November 26, 1984, when the account was closed. When petitioner's investigator, Leo Huddleston, requested of the respondent all documentation associated with the Stephen and Nelson transactions, respondent produced the carbon copies of three deposit slips and twenty checks drawn on the Bay Gulf account. The documents covered only the months of September and October of 1984, and none of the documents appear to be connected to the Stephen and Nelson transactions. The respondent failed to produce his real estate brokerage escrow account statements, his business records, leases, contracts or other documentation required to be kept by the respondent and produced to the petitioner upon request. At no time did respondent place or maintain the $325.00 security deposit on the Nelson property in an escrow or trust account. Further, since respondent's escrow account was closed at the times respondent collected the rent money and deposit from Ms. Thompson, it is apparent that none of the $630.00 was placed in an escrow or trust account. Respondent admitted that he did not properly handle the funds received from the Nelson and Stephen properties, stating that he managed the properties on the basis of friendship rather than a professional basis. However, he did admit retaining ten percent of all the money collected. From August 20, 1983, until July 25, 1986, the respondent was registered with the Real Estate Commission under the trade name "Progressive Developers." However, at various times during this period, the respondent transacted business both as "Progressive Real Estate Developers" and "Progressive Real Estate Developers, Inc." These names were not registered with the Real Estate Commission.
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 suspending respondent's license for a period of two (2) years and imposing an administrative fine of $1,150 to be assessed as follows: Counts I and VI, $200 for each count; Counts II and VII, $200 for each count; Counts III and VIII, $100 for each count; Count IV, $100; and Count V, $50. Respectfully submitted and entered this 9th day of March, 1987, in Tallahassee, Florida. DIANE A. GRUBBS 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 9th day of March, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3775 Petitioner's Proposed Findings of Fact: Accepted in paragraph 1. Accepted in paragraph 2. Accepted in paragraph 3. Accepted in paragraphs 5 and 6. Accepted in paragraph 7. 6-7. Accepted in paragraph 8. Accepted generally in paragraphs 6 and 8. Accepted in paragraph 10. Accepted in paragraph 9. Accepted in paragraph 11. Respondent's Proposed Findings of Fact: Accepted that respondent managed Mr. Stephen's property. Second sentence rejected as irrelevant; further, the evidence established that Mr. Stephen first met Mr. Diaz when Mr. Stephen purchased the subject property from Mr. Diaz and retained him to manage it. Third sentence accepted in paragraph 10. Fourth sentence rejected as to the money received from Ms. Thompson, but accepted that money was delivered to Mr. Stephen in paragraph 6. Last sentence rejected as not a finding of fact. Accepted that $275 was paid to Ms. Nelson in paragraph 8; however, reject by contrary finding that the $275 payment was partial payment on the $325 security deposit. Reject, for lack of any evidence that improper name registration was computer error. Remainder rejected as not findings of fact. COPIES FURNISHED: James R. Mitchell, Esquire Harold Huff, Executive DPR - Division of Real Estate Director 400 West Robinson Street DPR - Division of Real Estate Orlando, Florida 32802 400 West Robinson Street Orlando, Florida 32802 Reynold Diaz 7908 N. Florida Avenue Tampa, Florida 33604
Findings Of Fact The Respondent was, at the time of the hearing and at all times material to this proceeding, registered with the Real Estate Commission as a real estate broker. During the period of the transactions involved in this proceeding the Respondent was operating and registered as an active broker and President of Fortiner Realty Company, which was a corporate real estate broker registered with the Commission. In Count One of the Complaint, the Respondent is charged with failing to maintain a security deposit in his trust account in connection with a real estate transaction involving Phillip E. Andrews and Betsy K. Andrews, as sellers, and Joseph T. Lyons and Marion C. Lyons, as purchasers. In Count Two of the Complaint the Respondent is charged with converting the deposit in the Andrews-Lyons transaction to his own use. During March, 1976, Claude I. Allen was employed at the Respondent's real estate office as a salesman. Allen negotiated a transaction between the Andrewses and the Lyonses. On March 17, 1976, the Lyonses made an offer to purchase the Andrews property and submitted a $1,000.00 deposit to Allen. On March 18, 1976 the $1,000.00 was deposited in the Respondent's trust account at the Palmer Bank of Ft. Myers. On March 22, 1976 the Andrewses accepted the offer and the Lyonses provided an additional $2,000.00 deposit to Allen. On that same date the $2,000.00 was deposited in the Respondent's trust account. The transaction closed on May 11, 1976. It was a smooth transaction. On May 110, 1976 $3,000.00 was withdrawn from the Respondent's trust account as a part of the transaction. During the entire time from March 17 through May 11, 1976, the monies deposited by the Lyonses remained on deposit in the Respondent's trust account. There is no evidence to support a finding either that the Respondent failed to maintain the $4,000.00 in the trust account, or that he converted any part of the deposit for his own use. In Count Three of the Complaint the Respondent is charged with failing to maintain a deposit in his trust account in connection with real estate transactions between Mac-Nel Ltd. and M & N Ltd. as sellers, and Stanley G. Courtney, as purchaser. In Count Four the Respondent is charged with converting all or part of the security deposit to his own use. The Respondent was one of several partners in Mac-Nel Ltd. and M & N Ltd. On august 28, 1976, Stanley G. Courtney entered into separate contracts to purchase all of the property owned by the two partnerships. Through six separate checks Courtney made a deposit of $13,500.00 to the Respondent to be placed in the Respondent's trust account. The evidence is unclear as to when or in what manner the deposit was placed in the trust account, or whether all of it was in fact placed in the trust account. The bank records reflect that $17,600.00 was placed in the Respondent's trust account on August 30, 1976, and it is possible that the Courtney checks formed a part of that deposit. During August and September, 1976, the Respondent's financial condition became grave. He had apparently defaulter on several notes to the Palmer Bank in which he had his trust account. The bank sued on the notes, and put a hold on the Respondent's accounts. In order to allow the Courtney transactions to close, the Respondent was able to withdraw allow a portion of the deposits made by Courtney form his trust account. He transferred his interest in the property to a Mr. Blankenship, so that Mr. Blankenship could close the transaction unfettered by the Respondent's financial plight. After he withdrew the money from his trust account, and forwarded it to Blankenship, the Respondent took no further part in the Courtney transaction either as a party to the transaction or as a broker. The closing of the transaction was delayed due in part to the Respondent's bankruptcy, however, it did close on October 29, 1976. Courtney was credited with the full amount that he had deposited with the Respondent. It is clear that the Respondent did not maintain all of the monies deposited by Courtney in the trust account. His reason for failing to do that was to permit the transaction to close even though the Respondent had gone bankrupt. The evidence would not support a finding that the Respondent converted any portion of the Courtney deposit to his own use. In Count Five of the Complaint the Respondent is charged with failing to maintain a deposit in his trust account in connection with a transaction involving Charles and Margaret Lathrop as sellers, and William and Jeannette Whitacre as purchasers. In Count Six the Respondent is charged with converting all or part of the deposit in that transaction to his own use. On or about June 29, 1976, the Whitacres entered into a contract to purchase property from the Lathrops. The transaction was negotiated by Mary E. Bishop, a saleswoman who was employed by the Respondent in his real estate company. The Whitacres delivered a $6,500.00 check to Mrs. Bishop as a deposit on the transaction. The bank records received into evidence do not clearly reveal when or in what manner the Whitacre's deposit was placed in the Respondent's trust account. The bank statements do show a $7,000.00 deposit made into the Respondent's trust account at the Palmer Bank of Ft. Myers on July 1, 1976, and it is possible that the Whitacre's check was a part of that deposit. Bank records from other trust accounts maintained by the Respondent such as that at the Cape Coral Bank do not reveal any deposit that could have been the Whitacre's check. The Lathrop/Whitacre transaction closed successfully on August 18, 1976, and the Whitacres were credited with the $6,500.00 that they had submitted to the Respondent's firm. It is apparent from the bank records that $6,500.00 was not on deposit at all times in the Respondent's trust account between July 1 and August 18, 1976. During most of that period the Respondent's balance in his trust account was less than $6,500.00. No evidence was offered from which it could be concluded that the Respondent made any specific use of the money deposited by the Whitacres. It is apparent, however, that the money was not used as intended, i.e., it was not maintained in the Respondent's trust account. In Count Seven of the Complaint the Respondent is charged with fraud, misrepresentation, and dishonest dealing in connection with his handling of the business of a partnership known as 27 Oaks Ltd. The Respondent was the general partner in 27 Oaks Ltd. He was responsible for carrying on the business of the partnership for the benefit of eight limited partners. The partnership owned property which it was seeking to develop and sell in small parcels. On November 19, 1975, a mortgage payment in the amount of $21,300.00 was due from the partnership. In accordance with the partnership agreement, the Respondent solicited funds from the limited partners so that the mortgage payment could be made by letter dated October 15, 1975. The evidence does not reveal whether the Respondent received sufficient contributions from the limited partners to pay the mortgage payment. The evidence reveals only that he received $9,997.00 from the limited partners in response to his solicitation. The Respondent did not make the mortgage payment when it was due, but instead received a ninety-day extension. The new date was February 19. The principal payment on the mortgage was not made on that date, but instead, the Respondent made payments on the interest due. Ultimately the payment was made in a manner satisfactory to the mortgagee by early June, 1976. The Real Estate Commission has charged that the Respondent received funds sufficient to make the mortgage payment in November, 1975, but that he applied the money to some other purpose. This contention is not supported by the evidence. The evidence does not reveal that the Respondent received sufficient money to make the mortgage payment. The bank records reveal that there was sufficient money in the 27 Oaks Ltd account to make the mortgage payment in November, and that the Respondent withdrew most of that money. The evidence does not establish that the Respondent improperly withdrew the money, or that the Respondent improperly withdrew the money, or that he put it to any but a valid partnership purpose. The Commission has also contended that the Respondent failed to maintain the monies he received from the limited partners in a trust account. Nothing in the partnership agreement requires that such monies be kept in a trust account, and the Respondent's failure to do so could not, therefore, constitute fraud or misrepresentation. Even if the contract were construed arguably to require that funds be placed in a trust account, certainly there are equally valid arguments that is does not. In Count Eight of the Complaint the Respondent is charged with fraud, misrepresentation, and dishonest dealing in connection with his handling of the affairs of a Florida limited partnership know as Randag Properties Ltd. During 1976 the Respondent was the sole general partner of Randag Properties Ltd. The partnership owned property which it was seeking to develop into apartments. The Respondent was responsible for carrying on the partnership business. The property consisted of more than 40 acres on a river and a navigable canal. Part of the property was a small appendage which contributed little to the development potential of the property. In order to raise money to prepare the property for development, the Respondent sold the appendage to an ajoining property owner. That transaction closed on or about May 28, 1976. The Respondent had contributed more than $30,000 of his own money to the partnership in order to prepare the property for development. These expenditures included attorneys fees that he had incurred; a boundary survey, a high tide location survey, and a topographical survey; fees to the Florida Secretary of State's office; real estate taxes; land clearing expenses; and various miscellaneous expenditures. The Respondent had also made an advance to one of the limited partners. The Respondent applied most of the proceeds from the sale of the appendage to compensate himself for the expenditures that he had incurred. The Respondent had a disagreement with one of the limited partners, Mr. Swartz, as to whether the proceeds of the sale should be applied to compensate the limited partners for their initial investment or the Respondent for his expenditures. The Respondent's applying the proceeds to compensate himself does not appear to be contrary to the partnership agreement and it does appear that he had validly incurred expenses on behalf of the partnership to which he was entitled to be compensated. The Respondent ultimately resigned as the general partner on October 12, 1976, in order to save the partnership from the consequences of his bankruptcy, and was replaced by Swartz. Early in October, 1976, the Respondent issued a promissory note to the partnership, but there was no showing that this promissory note was the consequence of any fraud, but rather that it was for the purpose of placing the partnership in a favorable position in relation to the Respondent's bankruptcy. The Respondent ended up losing money through his participation in the partnership while the limited partners ended by making a substantial profit. All of the limited partners were advised of the sale of the appendage either prior to the sale or shortly after. There is no requirement in the partnership agreement that they be advised in advance of the sale, or that they assent to it. The Respondent is charged in Count Nine of the Complaint with fraud, misrepresentation, and dishonest dealing in connection with a business transaction that he had with William K. Gamble and Dorothy V. Gamble. The allegations in essence are that the Respondent received loans from the Gambles, and that he pledged certain property as security for the loans. He was required under the terms of the promissory notes and the collateral assignment that accompanied them to provide other adequate security in the event that he sold any of the property that served as collateral for the loans. It is alleged that the Respondent sold the property, did not advise the Gambles, and did not substitute any other property as security for the promissory notes. The only testimony offered to establish that the property that served as collateral was sold was the testimony of Mrs. Dorothy V. Gamble. Mrs. Gamble had no direct knowledge that the property was in fact sold. It is apparent from the evidence that the Respondent has defaulted on the promissory notes. In Count Ten of the Complaint it is alleged that the Respondent failed to maintain a deposit in his trust account in connection with a real estate transaction involving Herbert J. Haase and Katherine M. Haase, as trustees, the sellers, and Loyal H. Tingley as purchaser. In Count Eleven it is alleged that the Respondent converted all or part of the deposit to his own use. On or about August 6, 1976, Tingley entered into a contract to purchase property from the Haases. Herbert Haase was a real estate salesman employed in the Respondent's real estate firm, and he held title to the subject property in trust. The Respondent was the actual owner. Tom Carpenter, another salesman employed in the Respondent's firm, was the sales man in the transaction. Tingley delivered a $5,000 check to Carpenter as a deposit on the transaction. Another real estate broker, a Mr. Himmelrick, had negotiated mortgage modifications in connection with the sale. He and the mortgage bank insisted that the deposit be placed in Himmelrick's trust account. Accordingly, the Respondent deposited the $5,000 check from Tingley into his trust account, and delivered a $5,000 check from his trust account to Himmelrick. Carpenter advised Tingley that Himmelrick and the bank insisted upon having the $5,000 deposited in Himmelrick's trust account prior to the time that the check was forwarded from the Respondent's trust account to Himmelrick. Tingley consented to that arrangement. While it is true that the Respondent did not keep the $5,000 deposit in his trust account, his failure to do so was with the consent of the purchaser, and resulted only in the deposit being placed in the trust account of a participating realtor. The evidence would not sustain a finding that the Respondent converted any part of the deposit to his own use. In Count Twelve of the Complaint it is alleged that the Respondent issued over 22 checks drawn on his trust account wherein said checks were not honored for payment for the reason of insufficient funds; that the Respondent placed funds in his trust account that did not come from valid trust account sources; and that the Respondent caused his account to have a negative closing balance on May 13, 1876. The evidence would not sustain any finding that the Respondent issued checks which were not honored for payment. It is apparent from the bank records that several checks issued by the Respondent drawn on his trust account were not covered by the balance in the trust account. Bank records indicated a "OC" next to such withdrawals on the ledger sheets. The bank witnesses testified, however, that frequently such entries are honored by the bank and are not returned due to the insufficient funds. The evidence would not sustain a finding that the Respondent placed money in his trust account that came from sources there were not proper for placing in a trust account. Nothing in the bank records offered into evidence demonstrates which deposits may not have been valid trust account deposits. The deposit slips merely show the payor of the checks. The bank records do reveal that the Respondent's trust account balance in the Palmer Bank of Ft. Myers on May 13, 1976 was a negative balance of $732.60. On September 29, 1978, the Florida Real Estate Commission entered its final order finding the Respondent guilty of a of a violation of the Real Estate License Law. The Respondent's registration as a real estate broker was suspended for a period of ninety days. The Real Estate Commission Case Number was Progress Docket Number 3130. All of the events involved in the instant proceeding occurred prior to the time that the final order was entered in Case Number 3130 and indeed prior to the time that the Complaint was issued in Case Number 3130. The Respondent has enjoyed a very good reputation in his community for fair dealing, truthfulness and competence. None of the acts which the Respondent committed that led to the instant proceedings show that the Respondent has engaged in a course of conduct or in practices which demonstrate that he is so incompetent, negligent, dishonest and untruthful that the money, property, transactions and rights of others may not safely be entrusted to him. The Administrative Complaint in Case Number 3130 before the Florida Real Estate Commission was issued on January 14, 1977. In included twenty-seven counts. All of the allegations related to the Respondent's dealings with various real estate salesman, and his alleged failure to share real estate commissions with the salesmen. In connection with the transactions involved, it was asserted in several counts that the Respondent failed to place deposits properly in his trust account. None of the charges in the first administrative complaint are grounded upon the facts alleged in the instant Administrative Complaint. The facts involved in the instant proceeding did, however, all occur at about the same time as the facts alleged in the first complaint, and all occurred prior to the date that the Administrative Complaint was filed in Case Number 3130. New facts came to the attention of the Commission due in part to comments made to one of the present real estate commissioners by a Ft. Myers resident. With diligent inquiry it is possible that the Commission could have discovered the facts which have resulted in the instant proceeding and included them as additional counts in the complaint in Case Number 3130. It has not, however, been shown that the Commission had reason to believe that it should make such diligent search and inquiry. B
Findings Of Fact Edward D'Alesio, Jr., is a registered general contractor with the Board and holds license no. RG00A3370. Pursuant to an agreement signed on January 26, 1976, between Respondent and Mr. Wernley, Respondent agreed to construct a home for Mr. Wernley for a price of $39,500.00. On April 21, 1975, Mr. Wernley gave Respondent a check for $2,000 made payable to "D.R.G. Builders Trust Fund Account" which was deposited in the account of D.R.G. Builders. According to the terms of the agreement entered into by Mr. Wernley and Respondent, construction of the home was to be completed within 120 days. Evidence reveals that substantial progress was made toward construction of the Wernley home during August and September, 1975, however, little if any progress was made during late 1975. Mr. Wernley registered complaints to Respondent about the progress of construction Inasmuch as he (Wernley) had secured permanent financing at a favorable Interest rate which was due to expire during January or February, 1976. On March 11, 1976, Mr. Wernley demanded the return of his $2,000 security deposit which Respondent advised, by letter dated March 23, that he was unable to return due to financial difficulties. (See Petitioner's Exhibit #5) However, Respondent advised Mr. Wernley that he "would like to offer [him] the model home which was similar ... at the purchase price we had agreed upon." Respondent also agreed to assist in securing a competitive mortgage. Mr. Wernley was allowed five days to signify his acceptance of the model home which he (Mr. Wernley) rejected. Mr. Crass, Secretary-Treasurer for D.R.G. Builders, Inc., testified that the deposit monies used as mortgage commitments were issued and that at no time were monies diverted from one project to complete construction for other projects. Evidence reveals that during November, 1976, the Board through its investigator, Mr. Wallace Norman, issued a warning to Respondent for his failure to qualify D.R.G. Builders, however, Respondent took no action to correct this because at this juncture, the corporation had been dissolved by the State of Florida. Respondent also testified that the project was abandoned inasmuch as he was unable to secure additional financing from Southeast Mortgage Company. He testified that he had approximately 13 houses under construction and Southeast Mortgage Company shut off funds and demanded full payment of a $420,000 construction loan obligation. He testified that he needed approximately $60,000 to complete the houses under construction but was unable to secure additional financing. He testified further that the Wernley home was completed except the trim work during January of 1976. He advised Mr. Wernley during January, 1976, of the firm's cash flow problems and in an effort to amicably settle their differences, offered the model home which, according to his testimony, was equal or better, in all respects, than the home he contracted to build for the Wernleys. Respondent testified that he recently filed bankruptcy which should be final on June 20, 1977. Respondent takes the position that since he converted none of the money deposited by the Wernleys, it is D.R.G. Builders, Inc. that owes the Wernleys $2,000. However, it was noted under the bankruptcy proceeding liability list, that Wernley was a possible business obligation. Respondent testified further that he was advised by the Board's predecessor investigator that it was permissible to pull permits as an owner- builder and that Cooper City, the locality which issued the permits, through its building department, advised that the procedure which D.R.G. had utilized for at least 18 months was proper and acceptable.
Recommendation Based on the foregoing findings of fact and conclusions of law, I hereby recommend that the administrative complaint filed herein be dismissed in its entirety. RECOMMENDED this 30th day of June, 1977, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Barry Sinoff, Esquire 1010 Blackstone Building Jacksonville, Florida 32202 F. F. Mallard, Chief Investigator Florida Construction Industry Licensing Board Post Office Box 8621 Jacksonville, Florida 32211 Mr. Edward D'Alesio, Jr. 3760 North 55th Avenue Hollywood, Florida 33010 ================================================================= AGENCY FINAL ORDER ================================================================= BEFORE THE FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD, Petitioner,
The Issue In this disciplinary proceeding, the issues are whether Respondents, who are licensed real estate brokers, failed to preserve and make available certain records relating to trust accounts and real estate transactions, and/or obstructed or hindered Petitioner's investigators in an official investigation, as alleged by Petitioner in its Administrative Complaint. If Petitioner proves one or more of the alleged violations, then an additional question will arise, namely whether disciplinary penalties should be imposed on Respondents, or either of them.
Findings Of Fact The Parties Respondent Nestor G. Mendoza ("Mendoza") is a licensed real estate broker subject to the regulatory jurisdiction of the Florida Real Estate Commission ("Commission"). Respondent Diamonds Realty of Miami Beach, Inc. ("Diamonds Realty") is and was at all times material hereto a corporation registered as a Florida real estate broker subject to the regulatory jurisdiction of the Commission. Mendoza is an officer and principal of Diamonds Realty, and at all times relevant to this case he had substantial, if not exclusive, control of the corporation. Indeed, the evidence does not establish that Diamonds Realty engaged in any conduct distinct from Mendoza's in connection with the charges at issue. Therefore, Respondents will generally be referred to collectively as "Mendoza" except when a need to distinguish between them arises. Petitioner Department of Business and Professional Regulation ("Department"), Division of Real Estate, has jurisdiction over disciplinary proceedings for the Commission. At the Commission's direction, the Department is authorized to prosecute administrative complaints against licensees within the Commission's jurisdiction. On January 15, 2008, Veronica Hardee, who was then employed by the Department as an investigator, conducted an audit of Mendoza's records at Mendoza's real estate brokerage office, which was located in Miami Beach. Ms. Hardee was accompanied by her supervisor, Brian Piper. Ms. Hardee knew Mendoza because, in the latter part of 2007, she had investigated a consumer complaint against him, which arose from a transaction that had taken place in the fall of that year. In the course of that investigation, which focused on the period from August 20, 2007 through November 30, 2007, Mendoza had provided Ms. Hardee with business records, including bank statements and documents relating to the brokerage's escrow account. Ms. Hardee's previous investigation had not resulted in charges of wrongdoing being brought against Mendoza. During the audit, Ms. Hardee asked to review some of Mendoza's business records. She testified about this on direct examination as follows: Q. All right. Did you tell [Mendoza] what he would need to bring——or what he could expect from an audit? A. I don't remember, but usually procedure [sic], I would tell them we need to see older escrow accounts, older operating accounts, deposit slips, deposit checks, anything that has to do with their financial matters. Final Hearing Transcript ("TR.") 40-41 (emphasis added). On cross examination, Ms. Hardee elaborated: Q. (BY MR. MENDOZA) . . . I remember quite well that you did not ask me for the whole year of——for instance, of 2004, you never asked me for whole year, you asked me for a certain month; is that correct? * * * THE WITNESS: During the investigation I requested certain documents, yes. You're correct, I asked you for certain months, you had different issues with the Department that I was looking at. . . . * * * You didn't provide all the months requested and we came to the audit, you didn't provide——at that time, we asked you to see all of your accounts, it just wasn't for the investigation, we wanted to see your escrow account so you should have had for——I don't remember the——we wanted 1-15-08, we would have done from January of '08 to six months prior, let's just say. I don't remember what dates we gave you at the time. But then you would have a file with those documents in your escrow reconciliation statement, with all of your checks, all of your deposits with the bank statement attached, you know, organized. But it wasn't so and you said that you wanted to organize it properly and that's why we allowed you to organize it. So the question, did you provide me documents, yes, you provided me documents in the investigation but not all of the documents requested. TR. 58-60 (emphasis added). The undersigned attempted to elicit from Ms. Hardee a more detailed description of the materials requested during the audit, giving rise to the following exchange: THE HEARING OFFICER: Okay. And can you describe for me what it was in particular that you did request on that day in January of 2008? What did you ask [Mendoza] for? THE WITNESS: Yeah. We asked him for his escrow documents, reconciliation statements, such as the one that you see in [Petitioner's Composite] Exhibit 3. We asked about those months that were missing. We asked him——I don't know if we asked him for six months or one year. I don't remember the time frame we gave him, but pretty much when we go in to do an audit, we get the last six months, usually the months that are particularly discussed, the checks or the deposits that we're looking into for an investigation. * * * So pretty much that's what we asked, all of his escrow operating account that we had for the company, which includes the reconciliation statement, bank statement, deposit checks, as the statute statues here. THE HEARING OFFICER: Okay. You're standard procedure would have been you say in an audit like this, to have asked for the last six months of records right? So you're nodding your head, that's a yes? THE WITNESS: Yes. In this case we asked for the months that I was missing and plus I wanted to do a whole——we were going to do a whole audit. I don't remember right now if I asked him for six months or twelve months, I don't remember that part, but usually we ask for all the documents. THE HEARING OFFICER: And if I could just ask you to clarify do there's no mistake about this, when you say the months that are missing, what months are you referring to? THE WITNESS: I'm sorry, November of '04 and December of '04. TR. 73-75 (emphasis added). The Department did not, at the time of the audit, reduce its request for records to writing, which is unfortunate for the Department because, as the above-quoted testimony shows, Ms. Hardee's memory of specifically what Mendoza had been asked to produce was spotty. Although Ms. Hardee did identify two particular months——November and December of 2004——for which contemporaneous records were sought, this detail is practically random (because no context was given to explain the description of these periods, which predated the audit by more than three years, as "missing" months) and, in any event, fails to make the testimony as a whole explicit or distinctly remembered. The undersigned finds that Ms. Hardee's testimony was insufficiently precise to constitute clear and convincing evidence concerning the particular items that the Department wanted to see. Even if Ms. Hardee's testimony were sufficient on the previous point, however, the proof regarding Mendoza's alleged failure to produce records, which is a separate issue, is less compelling. Ms. Hardee's testimony was that Mendoza made available some but not all of the documents she and Mr. Piper wanted to see. (Actually, a fairer characterization of Mendoza's relative compliance, accepting Ms. Hardee's testimony as true, would be that he produced most of the documents requested, namely six-to-12 or 13 months' worth, failing only to make available documents associated with the last two or three months of 2004.) Mendoza then requested, and was given, additional time to assemble the rest of the materials. For some reason, Mendoza never contacted the Department thereafter to produce the items he could not locate on January 15, 2008, which caused the Department to initiate the instant proceeding. The undersigned largely credits Ms. Hardee's testimony regarding this overview of the events, with the qualification that Mendoza's compliance, while less than 100 percent, was nevertheless substantial. (He might, after all, have produced satisfactorily as much as 13 months' worth of documents, according to Ms. Hardee's testimony.) Given that Mendoza is alleged to have failed only to produce specific documents relating to the particular period from October through December 2004, the undersigned infers that he produced everything else that the Department wanted to see. The Department did not, however, at the time of the audit (or later), prepare an inventory of the records Mendoza made available (or failed to produce), take copies of the materials Mendoza produced, or otherwise reduce to writing the particulars of his noncompliance (e.g. by sending him a letter, soon after the audit, reminding him of the obligation to produce the materials that were not accessible on January 15, 2008, and listing or describing those materials). The absence of a contemporaneous written record of Mendoza's alleged failure to make documents available at the audit is unfortunate for the Department because, on the question of what Mendoza did and did not produce, Ms. Hardee testified as follows: THE HEARING OFFICER: All right. And when you went back in January of 2008 to see the ——Mr. Mendoza at his office and audit his books and records, he produced nothing to you and your supervisor whatsoever on that date in response to the things that you requested to see? THE WITNESS: He may have provided certain documents but were incomplete. I do not remember which documents he provided. * * * I'm not saying he didn't provide me with anything. He didn't provide us with all of the documents we requested. TR. 71-72 (emphasis added). In sum, the evidence against Mendoza consists of the testimony of Ms. Hardee, who in a nutshell says that, while she cannot clearly remember exactly what the Department asked Mendoza to produce, she knows that she requested documents relating to November and December of 2004, and that, while she cannot remember what documents Mendoza made available, she is sure he did not produce everything associated with the fourth quarter of 2004. Assuming for argument's sake that the Department requested the specific documents Mendoza is charged with failing to produce (which is not entirely clear), and accepting that Mendoza did not produce everything that the Department asked to see, the Department's evidence is still too conclusory to support disciplinary action, in view of Ms. Hardee's testimony that the temporal scope of the Department's request for documents was not limited to the three-month period comprising the fourth quarter of 2004 and indeed might have covered 15 months or more. Because, as found above, Mendoza did produce a substantial, albeit indeterminate, amount of documentation, and because there is no clear proof regarding the contents of the records that Mendoza made available, the undersigned is unable to find, based on clear and convincing evidence as the law requires, that Mendoza failed to produce the documents he has been accused of failing to produce. The Charges In Counts I and V of the Administrative Complaint, the Department alleges that Mendoza and Diamonds Realty are guilty of failing to preserve and make available to the Department all deposit slips and bank statements associated with the broker's trust account(s), in violation of Florida Administrative Code Rule 61J2-14.012(1), which is a disciplinable offense under Section 475.25(1)(e), Florida Statutes. In Counts II and VI, it is alleged that Mendoza and Diamonds Realty failed to prepare written monthly statements comparing the broker's total trust liability to the bank balance(s) in the broker's trust account(s), in violation of Florida Administrative Code Rule 61J2-14.012(2)-(3). This alleged violation is a disciplinable offense under Section 475.25(1)(e), Florida Statutes. In Counts III and VII, the Department accuses Mendoza and Diamonds Realty of having failed to preserve and make available to the Department books, accounts, and records pertaining to the brokerage business, in violation of Section 475.5015, Florida Statutes. This alleged violation constitutes a disciplinable offense under Section 475.25(1)(e), Florida Statutes. In Counts IV and VIII of its Administrative Complaint, the Department asserts that Respondents obstructed or hindered the enforcement of Chapter 475, Florida Statutes, in violation of Section 475.42(1)(i), Florida Statutes, which is a disciplinable offense under Section 475.25(1)(e), Florida Statutes. Ultimate Factual Determinations As found and explained above, the evidence is insufficient to prove, clearly and convincingly, that Respondents failed to make available the specific records they are alleged to have withheld. At most the evidence establishes that Respondents were unable, on January 15, 2008, to produce an imprecisely identified (and not clearly proved) subset of the universe of documents that the Department's investigators sought to examine during the audit. This is insufficient to prove, much less clearly and convincingly to demonstrate, that Respondents failed to keep or preserve any particular documents. There is no persuasive evidence that Respondents obstructed or hindered the Department's audit. To the contrary, the evidence shows that Mendoza cooperated with the Department's investigators and substantially complied with their demands. Ultimately, therefore, it is found that Respondents are not guilty of the offences charged in Counts I through VIII of the Administrative Complaint.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order finding Mendoza and Diamonds Realty not guilty of the offenses charged in the Administrative Complaint. DONE AND ENTERED this 30th day of June, 2009, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 30th day of June, 2009. COPIES FURNISHED: Patrick J. Cunningham, Esquire Department of Business and Professional Regulation 400 West Robinson Street Hurston Building-North Tower, Suite N801 Orlando, Florida 32801 Nestor G. Mendoza Diamonds Realty of Miami Beach 12501 Southwest 26th Street Miami, Florida 33175 Thomas W. O'Bryant, Jr., Director Division of Real Estate 400 West Robinson Street, Suite 802, North Orlando, Florida 32801 Reginald Dixon, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact At all times material hereto Respondent Marvin M. Kornicki has been a licensed real estate broker in the State of Florida, having been issued License Nos. 0265344 and 0252335. The last license issued was as a broker for Waterway Properties, Inc., t/a Waterway Properties. At all times material hereto, Respondent Waterway Properties, Inc., t/a Waterway Properties, has been a corporation registered as a real estate broker in the State of Florida, having been issued License No. 0265344. At all times material hereto, Respondent Kornicki was licensed and operating as the qualifying broker and an officer of Respondent Waterway Properties, Inc. On January 7, 1990, Respondents solicited and obtained an offer in the amount of $155,000 from Alda Tedeschi and John Tocchio, buyers, to purchase real property, to-wit: Unit 422 at Mariner Village Garden Condominium, Aventura, Florida, from Arthur Goldstein and Myra Goldstein, sellers. The buyers' offer reflected a $1,000 deposit to be held in trust by the Respondent Waterway Properties, Inc. The offer reflected that if the offer was not executed by and delivered to all parties, or fact of execution communicated in writing between the parties, on or before January 10, 1990, the deposit would be returned to the buyers and the offer would be withdrawn. The offer also reflected that "time is of the essence." On January 8, 1990, Respondents sent the buyers' offer to the sellers in New Jersey by air express. On January 10, 1990, the sellers signed the offer but made it a counteroffer by requiring the buyers to furnish an additional deposit of $14,500 by January 12, 1990, and requiring the buyers to sign a condominium rider and an agency disclosure form. The sellers returned the counteroffer with condominium rider and agency disclosure form to the Respondents. On January 12, 1990, Respondents sent the counteroffer, condominium rider, and agency disclosure form, together with a letter dated January 11, 1990, to the buyers for the buyers' initials and signatures. Although the buyers could not have received the counteroffer until after its expiration date, they advised Respondents by telephone that they had in fact initialed the counteroffer and mailed it back to Respondents. Respondents never received from the buyers that accepted counteroffer. The buyers subsequently verbally demanded the return of their $1,000 deposit, but Respondents wrote to the buyers on February 9, 1990, advising the buyers that they were in default. On February 8, 1990, Respondents had already disbursed the $1,000 deposit to Respondents' operating account since the sellers had told the Respondents to use the deposit to cover the costs incurred advertising the sellers' property. Since he was uncertain as to whether he had "conflicting demands upon an escrow deposit" Respondent Kornicki telephoned the Florida Real Estate Commission and discussed the matter with one of the Commission's attorneys. Because Respondent Kornicki believed that the buyers were "in default," Respondents failed to notify the Florida Real Estate Commission in writing that they had received conflicting demands. No explanation was offered as to why Respondent Kornicki believed the buyers were in default when the counteroffer could not have been signed by the buyers prior to its expiration and when Respondent Kornicki had never seen a fully executed document. Further, no explanation was offered as to why the sellers believed they were entitled to the money. Since that transaction, Respondents have experienced other transactions where conflicting demands were made. In those subsequent instances, they have timely notified the Florida Real Estate Commission in writing as to those conflicting demands. On June 18, 1990, Petitioner's investigator conducted an office inspection and escrow/trust account audit of Respondents' office and escrow/trust account. That audit revealed that Respondents wrote a trust account check on September 1, 1989, in the amount of $369.15, which was returned on October 3, 1989, for insufficient funds. A second trust account check in the amount of $800 was also returned for insufficient funds on October 3, 1989. Respondents had received rental monies from a tenant by check. Respondents had written checks out of those monies for the mortgage payment on the rental property, not knowing that the tenant's check would fail to clear. The worthless check written by the tenant caused these checks written by Respondents to be returned for insufficient funds. Respondents have changed their office policies so that they no longer accept checks from tenants except before tenants move into rental properties and the checks must clear before the tenants are allowed to take possession of the leased premises.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered: Finding Respondent Kornicki guilty of Counts I, III, V, VII, IX, and Finding Respondent Waterway Properties, Inc., guilty of Counts II, IV, VI, VIII, X, and XII; Dismissing Counts XIII and XIV; Ordering Respondent Marvin M. Kornicki to pay a fine of $1,000 to the Division of Real Estate within 60 days and revoking Respondents' licenses should such fine not be timely paid; Placing Respondents on probation for a period of one year if the fine is timely paid; Requiring Respondent Kornicki to complete and provide satisfactory evidence of having completed 60 hours of approved real estate post-licensure education for brokers, 30 hours of which shall include the real estate broker management course, during the probationary period; Establishing terms for the probationary period except that such probationary terms shall not require Respondent Kornicki to retake any state licensure examinations and Requiring Respondent Kornicki to appear before the Commission at the last meeting of the Commission preceding the termination of Respondents' probation. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 13th day of February, 1991. LINDA M. RIGOT 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 13th day of February, 1991. APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 90-5863 Petitioner's proposed finding of fact numbered 1 has been rejected as not constituting a finding of fact but rather as constituting a conclusion of law. Petitioner's proposed findings of fact numbered 2-4, 6-14, and 16-19 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed finding of fact numbered 5 has been rejected as being unnecessary for determination of the issues herein. Petitioner's proposed finding of fact numbered 15 has been rejected as not being supported by the weight of the credible evidence in this cause. COPIES FURNISHED: Darlene F. Keller, Division Director Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Jack McCray, Esquire Department of Professional Regulation Legal Division 1940 North Monroe Street Tallahassee, Florida 32399-0792 James H. Gillis, Esquire Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Marvin M. Kornicki Waterway Properties, Inc. 16560 Biscayne Boulevard North Miami Beach, Florida 33160
The Issue Whether Petitioner is entitled to licensure as a real estate salesperson.
Findings Of Fact Respondent is the agency of the State of Florida responsible for the licensure of real estate professionals. On October 19, 1993, Petitioner submitted to Respondent his application for licensure as a real estate salesperson. In his application, Petitioner disclosed that he had been disbarred as a member of the Florida Bar by decision of the Florida Supreme Court. The actions for which Petitioner was disbarred were described in detail by the Florida Supreme Court's decision in The Florid Bar v. Ellis S. Simring, 612 So.2d 561 (Fla. 1993). The Florida Supreme Court found that there was clear and convincing evidence that Petitioner had repeatedly and intentionally violated trust accounting procedures, had commingled trust and personal funds, and had misappropriated client funds for his personal use. The Florida Supreme Court further found that the Petitioner had violated the Court's order that temporarily suspended him from practice. Petitioner denied that he misappropriated funds from any client, but he admits the other major violations found by the Supreme Court. Petitioner testified that he was suffering from chronic fatigue syndrome and flu-like symptoms when the trust account violations occurred during 1988 and 1989. As a result of a recommendation from an acquaintance, he took large doses of Vitamin C, which aggravated his hemorrhoidal condition and resulted in bleeding. Petitioner testified that his ability to practice law was limited by his medical condition and that his income from his practice suffered as a consequence. Petitioner testified that his secretary acted as his administrative assistant during that period of time and that she was responsible for maintaining his trust account, but he did not attempt to blame her for the admitted deficiencies pertaining to his trust account. Petitioner failed to keep or retain appropriate trust account records, caused the proceeds from the sale of his personal property and from loans he had taken out to be deposited in the trust account, and caused office expenses and personal expenses to be paid out of his trust account. Petitioner settled a personal injury action in which he represented a minor child by the name of Barnett. The proceeds of the settlement in the amount of $45,000 was transferred from his trust account to that of another lawyer who was a non-practicing retired lawyer and friend of the Petitioner. The purpose of that transfer was to hide those funds from the Internal Revenue Service. The Florida Supreme Court found that Petitioner misappropriated a portion of these funds. Petitioner disputes that finding. The misconduct to which Petitioner admitted at the formal hearing and his disbarment from the practice of law by the Florida Supreme Court create a presumption, pursuant to Section 475.17(1)(a), Florida Statutes, that he is not qualified for licensure as a real estate professional. Petitioner did not offer any competent, substantial evidence which would establish that he is honest, truthful, trustworthy, and of good character or that would otherwise rebut the presumption of disqualification.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner's application for licensure as a real estate salesperson should be denied. DONE AND ENTERED this 6th day of September, 1994, 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 6th day of September, 1994. COPIES FURNISHED: Ellis Stewart Simring, pro se 3785 Westminister Street Hollywood, Florida 33021 Manuel E. Oliver, Esquire Assistant Attorney General Office of the Attorney General Suite 107 South Tower 400 West Robinson Street Orlando, Florida 32801 Darlene F. Keller, Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Jack McRay, Acting General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
