The Issue The issue presented is whether the Respondent violated Section 475.25(1)(a) and Secton 475.25(3), Florida Statutes, as alleged in the administrative complaint.
Findings Of Fact The Respondent, Nettie Byer, was employed by Continental Marketing Services from November 3, 1975, until March 31, 1976, as a broker salesman. The deposition of Maureen Palloti was received into the record subject to the objections ruled on in the Hearing Officer's Order heretofore entered in the record. The testimony of Edward Nadelman was received. Nadelman stated that he was contacted by telephone by a person who represented that she was Nettie Byer. The caller stated that she was with Continental Marketing Services, a real estate sales organization. The caller further represented that if Nadelman paid a $350 advance fee, Continental Marketing Services would list Nadelman's property advertising it widely within the United States and abroad, selling it for several times what Nadelman paid for the property. Nadelman subsequently received a copy of that advertisement for his property. Nadelman's property was not sold. The deposition of Maureen Palloti reflects that Mrs. Palloti and her husband were contacted by a caller who identified herself as Nettie Byer. The caller made representation similar to those made to Edward Nadelman. As a result, the Pallotis entered into a listing agreement with Continental Marketing Services, paid an advance listing fee, and subsequently received a proof of an advertisement of their property. Evidence was presented that Nadelman's and the Pallotis' property was not worth the price suggested by the caller as the price at which the property could be sold. However, no guarantees of sale were made by the caller. No evidence was introduced that the individual who called Edward Nadelman or that the individual who called the Pallotis was the Respondent, Nettie Byer. No evidence was introduced that the Respondent had any knowledge of the business activities of Continental Marketing Services. No evidence was introduced that Continental Marketing Services did not perform in accordance with the listing contracts with the Pallotis or with Nadelman.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer recommends that the Florida Real Estate Commission take no action against the license of Nettie Byer as a broker salesman. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 16th day of March, 1979. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings Room 530,Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Robert D. KIlausner, Esquire 28 W. Flagler Street, Suite 804 Miami, Florida 33130 Mark A. Grimes, Staff Attorney Florida Real Estate Commission Post Office Box 1900 Orlando, Florida 32802
The Issue Whether Respondents committed the violations alleged in the Administrative Complaint dated February 19, 2004, and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency charged with the duty to prosecute administrative complaints pursuant to Section 20.125 and Chapters 120, 455, and 475, Florida Statutes, and the rules promulgated thereto. Its powers and duties more broadly include the licensing, regulation, and discipline of individuals licensed as real estate brokers, as well as corporations which provide real estate brokerage services to the public. Spill is at all relevant times a licensed real estate broker subject to Petitioner's regulatory jurisdiction. Spill was the holder, at all relevant times, of Florida real estate license number BK 0627838. Network is at all relevant times a corporation registered as a Florida real estate broker and, like Spill, subject to Petitioner's regulatory jurisdiction. Network, at times relevant to this case, held a state corporate license number CQ-1007295. At all relevant times Spill owned and operated Network under the trade name Exquisite Properties. Spill marketed himself and Network to members of the public as real estate brokerage service providers. Spill and Network were both licensed at relevant times to conduct brokerage business at 1680 Michigan Avenue, Suite 915, Miami Beach, Florida 33139. As Network's owner and operator, Spill, had at all relevant times, exclusive control over Network as to all matters which are the subject of this case. Spill was entirely responsible for Network's compliance, as well as his own, with Florida law governing the conduct of real estate brokers. Brokers have particular legal obligations with reference to the maintenance, safekeeping, and eventual disbursement of funds entrusted to them by clients in connection with real estate transactions. In partial fulfillment of such obligations, Spill at all times material to this case maintained at Miami's City National Bank an escrow account bearing the number 2001684438 (the escrow account). Spill had full control of this account on his own and Network's behalf at all material times. On or about June 16, 2003, Petitioner, acting through its duly authorized investigator, Jason Fiedler (Fiedler), conducted an audit of Spill's business records, including the escrow account (the audit). In connection with the audit, Fiedler properly requested Spill to produce documentation which Respondents were required by law to prepare on at least a monthly basis, and to make available to authorized individuals, including Petitioner's investigators. Such documents include, but are not limited to, monthly bank statements and other documents relating to the reconciliation of the escrow account. Spill stated at the time of the audit, and the evidence established, that Spill failed to prepare monthly reconciliation statements for the escrow account for the six- month period prior to the audit. The audit revealed a shortage of $2,875.00, when bank balance and trust liabilities were reconciled. On or about the date of the audit, Spill transferred $7,086.00 from his operating account to his escrow account. This sum was an estimate by Spill of the amount necessary to correct shortages. On or about January 31, 2003, Spill received a $2,000 deposit from a client in connection with a transaction the parties referred to as the Lincoln Road transaction. Spill did not deposit this sum into his escrow account, as he was required to do. Rather, he deposited the funds to his operating account. On or about September 19, 2002, Spill received a $1,000 deposit from a client named Rolando Martinez in connection with a transaction the parties referred to as the Martinez transaction. Spill did not deposit this sum into his escrow account until the date of the audit, some nine months later. On or about February 26, 2003 Spill received a $10,000 lease deposit from a client named Tracy Shellborne in connection with a transaction the parties referred to as the Grand Bay transaction, which deposit has not been accounted for. On or about June 6, 2003, Spill was named escrow agent in a real estate contract which the parties referred to as the Coad contract. The Coad contract provided for a $5,000 deposit to be placed with Spill. Spill could only account for $3,000 of that sum. On or about November 19, 2002, Spill received an $1,800 security deposit, in cash, from an unidentified client. The cash was not deposited into Spill's escrow account. On or about December 18, 2002, Spill received a 2,500 rent payment, in cash, from an unidentified client. The cash was not deposited into Spill's escrow account. Spill knowingly commingled personal and escrow funds, making deposits to his operating account and withdrawals from the escrow account without appropriate client authorization. Spill's failure to balance his escrow account on a monthly basis, and to maintain records documenting same, are, standing alone, serious violations of Florida law governing brokers.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order that: a) dismisses Counts I and VI; b) finds Respondents guilty as charged in Counts II, III, IV, V, VII, VIII, IX, and X.;(c) suspends Spill’s real estate license for one year; and (d) imposes an administrative fine of $8,000 against Respondents, jointly and severally. DONE AND ENTERED this 25th day of May, 2005, in Tallahassee, Leon County, Florida. S FLORENCE SNYDER RIVAS 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 25th day of May, 2005. COPIES FURNISHED: Steven W. Johnson, Esquire Steven W. Johnson, P.A. 100 South Bumby Avenue, Suite B Orlando, Florida 32803 Alfonso Santana, Esquire Department of Business and Professional Regulation 400 West Robinson Street, Suite 801N Orlando, Florida 32801-1757 Guy Sanchez, Chairman Florida Real Estate Commission Department of Business and Professional Regulation 400 West Robinson Street, Suite 801N Orlando, Florida 32801 Leon Biegalski, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202
Findings Of Fact By Prehearing Stipulation entered into by the parties on August 30, 1990, the parties agreed, and it is so found, that: Petitioner, Edward T. Strehlau, is President and control person of Deerfield Securities, Inc. On or about February 3, 1989, Petitioners filed an application, (Form BD), for registration as a broker/dealer, which was signed by Mr. Strehlau. On or about March 15, 1989, Petitioners filed with the Division an amendment to that Form BD. On or about April 19, June 22, and July 20, 1989, Petitioners filed additional amendments to the Form BD initially signed and submitted on behalf of the Petitioners by Mr. Strehlau. All of the Forms BD and amendments filed by Petitioner, Strehlau, with the Division were represented by him as true and complete. On February 3, 1989, Petitioner, Strehlau, also filed the Articles of Incorporation of Deerfield Securities, Inc., with the Florida Secretary of State. These Articles listed Edward T. Strehlau, Patericia O'Dell, William Manger, and Patricia Strehlau as Directors. The Division of Securities requires the filing of the Articles of Incorporation along with the dorm BD. This requirement is outlined in Section 517.12, Florida Statutes. Neither William Manger nor Patricia Strehlau were listed as Directors of Deerfield Securities, Inc., on the Form BD or on any amendments thereto which were filed with the Division. Mr. Manger is the subject of a complaint relating to securities violations committed by Eiffel Securities, Inc., Mr. Manger, a Mr. Riddle, and a Mr. Ashbee, in the State of Tennessee. On or about February 23, 1989, Mr. Strehlau, as President of Deerfield, withdrew the application for registration of Deerfield Securities, Inc., as a broker dealer with the State of Tennessee, and further agreed not to reapply for registration as a broker/dealer in that State, and not to sell Deerfield Investments, Inc.'s investment units in Tennessee. Deerfield Securities, Inc. is a wholly owned subsidiary of Deerfield Investments, Inc. Edward T. Strehlau is a control person and President of Deerfield Investments, Inc. The principal place of business of Deerfield Securities, Inc. is Sarasota, Florida. William Manger, at all times pertinent hereto, was President and a control person of the aforementioned Eiffel Securities, Inc., a Tennessee corporation. Petitioner, Edward T. Strehlau, was a control person of Eiffel Securities, Inc., during the period June 1, 1988 through September 21, 1988. Eiffel Securities, Inc. was a wholly owned subsidiary of Tennessee Investments Marketing Enterprises, (TIME), and Edward T. Strehlau was vice-president of TIME between June, 1988 and September, 1988. On February 3, 1989, Petitioner Strehlau paid $200.00 in filing fees for Deerfield Securities, Inc. with the Florida Division of Securities. On February 10, 1989, The Division of Securities notified Deerfield of several deficiencies in its application for registration as a securities dealer. These deficiencies included a requirement for: the officer or partner names of the parent firm; registration as a foreign corporation or a legal opinion indicating no need therefor;+ a clearing agreement from a dealer in Florida signed by both firms; Articles of Incorporation or partnership agreement; proof of securities effectiveness and compliance with SIPC (Securities Investors Protection Corporation). Thereafter, on February 27, March 16, April 20, June 22, and July 18, 1989, Mr. Strehlau sent letters to the Division of Securities in which he attempted to convince the Division of his compliance with the requirements set forth in the February 10, 1989 deficiencies letter. The Petitioner's efforts, however, were not supported by facts in some particulars. For example, the clearing agreement with OTRA, to be signed by both parties, was signed only by Petitioner Strehlau as President of Deerfield Securities, Inc., and attested by Patericia O'Dell of the firm. No signature from any responsible party of OTRA appears on the document. By letter dated December 2, 1988, Mr. Strehlau submitted this unilaterally executed clearing agreement. By letter dated February 22, 1989, the vice- president for finance of the SIPC attested that Deerfield Securities, Inc. was, as of that date, registered with the Securities and Exchange Commission, (SEC), as a securities broker under Section 15(b), of the 1934 Securities Investor Protection Act, and by operation of that Act, the corporation would be a member of SIPC unless its business consisted exclusively of various activities which are not pertinent to this hearing. It would appear, therefore, that Deerfield Securities, Inc. was, at the time of application at least, a member of SIPC. It is also found, however, that the application for registration submitted by Mr. Strehlau on behalf of himself and Deerfield Securities, Inc. contained what appears to be a material misrepresentation of fact in that it did not list Mr. Manger and Mrs. Strehlau as Directors. Mr. Manger had a disciplinary history in the industry in Tennessee and his omission was material. Article VI of Deerfield Securities' Articles of Incorporation filed with the Florida's Secretary of State's office listed Mr. Manger as one of the original Directors of Deerfield Securities, Inc. as of February 3, 1989. However, when Mr. Strehlau submitted the application for registration for Deerfield, (Form BD), neither that form nor any of the subsequent amendments listed Manger as a Director or affiliated person even though the form required that all Directors be listed. Mr. Strehlau contends that Manger and Mrs. Strehlau were omitted because neither were to take an active part in the management of Deerfield's operations. The Division, however, considered the omission to be a false material statement since the Directors of an applicant are considered to be pertinent to its operation. In this, the Division is correct. The Division also took the position that the pending Tennessee disciplinary action against Mr. Manger was significant. It surmised that Manger, seeing he could not be licensed in Florida on his own, was attempting to achieve this end through Mr. Strehlau, and the Department was concerned there was still a relationship between Manger and Deerfield. There is no evidence, direct or otherwise, to support that suspicion. When an application form is sent to an applicant, upon the applicant's request, an instruction sheet is sent with it which outlines the basic requirements for filing. These instructions are not, however, all inclusive or controlling. The statutes and Rules of the Department, pertinent to criteria for application and registration, constitute the ultimate guidelines over who is approved for registration. When Division analysts review an application, they check it against a requirements check list to insure that all requirements are met. If required information is not included with the application, the Division must notify the applicant of the omitted information within 30 days. If the requested information is received within 60 days, the Division then has an additional 90 days in which to rule on the application. If the omitted information is not timely received, however, the Division can deny the application for incompleteness or approve it if appropriate. On the other hand, when all required information is received timely, if the Division does not act on the application within 90 days, the application is automatically approved and if a discrepancy is thereafter noted, corrective action must be through disciplinary action rather than denial. The Division's denial action here was based on two grounds. The first was the failure to list Mr. Manger as a Director on the original Form BD or any of the amendments thereto. The second was Mr. Manger's prior and pending disciplinary record. Even if the pending action were not considered, the Division would still have denied the Petitioner, Deerfield's, application based on the prior, completed disciplinary actions against Mr. Manger in Tennessee. Petitioner claims that the Division did not request a second time those items listed on the initial deficiency letter and which were not thereafter provided by him. It is the Division's policy that once the initial deficiency letter is sent, calling for additional information, if the applicant submits only a part of those items identified, it will not send out another notification reminding the applicant of the still- missing items. It is not required that such follow-up notification be sent. If, however, the applicant calls and inquires if its application is complete, the Division will advise the applicant which of the previously noted deficiencies have not yet been corrected. Here, no such inquiry by the Petitioner was made. In this case, the Division took the position that Petitioner's application was never complete since there was no clearing agreement signed by the required parties prior to approval. Further, Mr. Strehlau's application as a principal failed to include a proper copy of his personal disciplinary history regarding a dismissed charge of felonious pointing a fire arm in Oklahoma in 1981. Under Florida law, every securities dealership must have a registered principal and Mr. Strehlau was to fill that capacity for Deerfield. Since his application could not be deemed complete because of the failure to provide all the required information, neither could Deerfield's be deemed complete. The State of Florida will not approve the application of a broker/securities dealer without approval of the National Association of Securities Dealers, (NASD). It is normal practice for NASD and Florida approval to be at the same time. There is an attempt at coordination, but Florida cannot approve a dealer for registration without the approval of the SEC and NASD. As of March 8, 1989, the state had been advised that NASD was prepared to approve Deerfield Securities, Inc., though it had some reservations about the firm which were insufficient to support denial. Even had NASD granted approval, however, NASD registration and membership does not guarantee Florida registration. The standards for registration are different. No doubt Mr. Strehlau made many phone calls to the Division in an effort to get approval of these applications. Without question he submitted numerous amendments to the Form BD in an effort to provide that information that the Division asked for in a timely and proper manner. His claims that neither Mr. Manger nor Mrs. Strehlau were listed as Directors on any of the forms because they were not involved in the operation of the business, and that had it been intended for them to work in an operational capacity, they would have been listed are not persuasive, however. Notwithstanding his argument that if the Division had any questions about that, it should have inquired, clearly, that is not the Division's responsibility to do.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore recommended that the application of Deerfield Securities, Inc. to be registered as a broker/dealer, and the application of Edward T. Strehlau to be registered as an associated person/principal of Deerfield Securities, Inc., in Florida be denied. RECOMMENDED this 5th day of October, 1990, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of October, 1990. COPIES FURNISHED: Edward T. Strehlau, pro se 13122 Woodington Drive Houston, Texas 77038 R. Beth Atchison, Esquire Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 The Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350 William G. Reeves General Counsel The Capitol Plaza Level, Room 1302 Tallahassee, Florida 32399-0350
Findings Of Fact Petitioner filed application for registration with respondent a a securities agent with First Florida Securities Inc., Pompano Beach, Florida, on March, 1977. Although he met the various statutory and regulatory procedural requirements for registration, on or about May 19, 1977, he was advised by the Director, Division of Securities, of intended denial of his application and advised of his right to petition for an administrative hearing. Petitioner did so request a hearing on June 2, 1977. The stated ground for the proposed denial of the application in accompanying "Administrative Charges and Complaint" was as follows: "The license application of respondent was refused or denied by the Division of Securities, Department of Banking and Finance, State of Florida, by stipulation and consent on February 18, 1976. Said denial constitutes prima facie of unworthiness to transact the business of a securities salesman In the State of Florida." The above-mentioned "Stipulation and Consent" resulted from a prior application denial by respondent of an application by MFP Petroleum Exploration and Investment, Inc., its officers and salesman, including petitioner. The grounds for denial of petitioner's application in that instance were that he had sold unregistered securities in the form of shares in oil drilling ventures in violation of Section 517.07, F.S., while not registered as a securities salesman in further violation of Section 517.12(1), F.S. The various parties in that administrative proceeding consented to the denial of their applications by stipulation without admitting the allegations of respondent. (Exhibits 1, 2, 4, 5) Petitioner has never been registered with respondent as a securities dealer, agent or salesman. He testified that when he joined MFP sometime in 1974, its president, Mark F. Preddy, led him to believe that one selling interests in oil drilling ventures need not register as a salesman in Florida. Consequently, he sold such interests to clients for several months before he learned that it was necessary for him to be so registered. Some nine months after commencing employment with MFP, he went to Shreveport, Louisiana, to take securities examinations for Florida and the NASD. After waiting approximately three months more to obtain the results of the MFP application for registration, he resigned from the firm. He admitted selling during the entire nine-month period in which he had been associated with MFP, even though he knew during a substantial portion of that period that registration was required. After his resignation, he authorized an attorney to execute the "Stipulation and Consent" which authorized respondent to deny his application for registration. (Testimony of Weber, Exhibits 2, 3, 5) A client of petitioner testified as to the latter's honesty and conscientiousness. (Testimony of Hansis) Respondent's Assistant Director, Division of Securities, stated the Division's position that although it felt justified in denying petitioner's current application, it would be amenable to reevaluate any application submitted one year from the final order in this proceeding and, if petitioner's record was clear and he otherwise met requirements for registration, it would issue the same on a supervised basis for a period of one year. (Testimony of Brandi)
Recommendation That petitioner Paul Anthony Weber be issued a certificate of registration as a securities salesman pursuant to Chapter 517, Florida Statutes. DONE and ENTERED this day of August, 1977, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Ryland Terry Rigsby, Esquire Assistant General Counsel Office of the Comptroller Legal Annex Tallahassee, Florida 32304 Paul Anthony Weber 1745 Northeast Fifty-Second Street Ft. Lauderdale, Florida 33308
The Issue The issue for consideration in this case is whether Petitioner should be granted registration as an associated person by the Department of Banking and Finance, or whether his application should be denied because of alleged misconduct outlined in the letter of denial.
Findings Of Fact At all times pertinent to the issues herein, the Petitioner, Richard Graibus, was either a registered associated person associated with a security firm or an applicant for registration as an associated person in Florida, and the Respondent, Department of Banking and Finance, Division of Securities and Investor Protection, (Department), was and is the state agency charged with the responsibility of regulating the sale of securities in this state. On August 19, 1988, Mr. Graibus filed an application to be an associated person of Finnet Securities, Inc., (Finnet), with the Department. On March 3, 1989, by letter, the Department notified Mr. Graibus of its intent to deny his application on the basis that prior disciplinary action taken against him by other states was prima facie evidence of his unworthiness to act as a securities dealer in Florida. Specifically, the bases for denial were: A Minnesota Cease and Desist Order in December, 1977. A Securities and Exchange commission suspension order in May, 1983. The denial of Petitioner's application for registration as an associated person with J. W. Gant and Associates by 10 states. Three judgements against Petitioner. His termination for cause from employment with American Western Securities. Petitioner was employed by American Western Securities in Denver, Colorado from November, 1977 to July 1980 when he left feeling a change would be beneficial to his career. No evidence was presented to support the Department's allegation that Petitioner was terminated for cause from that period of employment and that allegation is found to be unsupported. In December, 1977, the State of Minnesota issued a Cease and Desist Order against Petitioner alleging that he offered to sell, and did sell, unregistered securities while neither he, the firm, nor the securities were registered in that state as required by state law. Petitioner did not dispute the allegations of fact outlined in the Minnesota Order. The actual sale was made to a father and son who Petitioner had inherited as customers from his stepfather. The trades were unsolicited and were approved by petitioner's supervison who had many years experience in the securities trade. On May 23, 1983, the Securities and Exchange Commission, (SEC), found that Mr. Graibus had, at an unspecified time, wilfully violated and aided and abetted in violations of the anti-fraud and anti-manipulation provisions of the United States security law, and had failed to reasonably supervise others under his control to prevent violations of the same law. Petitioner engaged in cross trading, manipulation of stock prices, and fraudulent representations to customers regarding two stocks. These findings were incorporated in a Findings and Order Imposing Remedial Sanctions which were drafted and adopted from an offer of settlement submitted by Mr. Graibus. In its Order, the SEC took the following disciplinary action: It suspended Petitioner from association with any broker/dealer for 60 days; It barred Petitioner from acting in a supervisory capacity as a principal, officer, director or employee for 12 months; and It stipulated that Petitioner was not to act in a supervisory position without prior approval from the Commission, after the expiration of the previously mentioned 12 month period. Mr. Graibus has twice previously been granted registration as an associated person in Florida. Specifically, on May 9, 1984, he was approved as an associated person with Chesley and Dunn; and on January 28, 1985, he was approved as an associated person with J. W. Gant and Associates. In both cases, the Department had knowledge of the Minnesota Order and the SEC action since Petitioner disclosed both on each application. In 1984, while Petitioner was a principle of the brokerage firm of Chesley and Dunn, Inc., the Securities and Exchange Commission revoked the firm's registration for violations of various net capital and financial reporting regulations. There was no charge against the Petitioner. As a result of his association with this firm, and his having signed notes on behalf of the firm in his personal capacity, Mr. Graibus incurred a substantial liability for obligations of the firm, which are memorialized by three default judgements against him. The initial loan totaled $150,000.00. While manager of the firm's Sarasota office, Petitioner also invested approximately $175,000.00 of his own money which was lost. All his private obligations were fully disclosed to prospective creditors when he borrowed the money for the firm. In 1985, Mr. Graibus submitted applications to several states for registration as an associated person with J. W. Gant and Associates. These applications fully disclosed the entry of the Minnesota Order and the results of the SEC action. His applications were approved in twenty-two states, but as a result of the aforementioned SEC action, were denied by the states of Pennsylvania, Nebraska, Ohio, and Tennessee. He protested the denial by Tennessee and on November 22, 1985, that state entered a Final Order confirming its denial of his application for registration, finding that he had failed to disclose the adverse finality of the Minnesota Cease and Desist Order claiming Instead that the order had been resolved by corporate counsel. This comment is also made- in Mr. Graibus's Gant application in Florida which granted his application. Mr. Graibus did not protest the entry of the Final Order In Tennessee. Mr. Peter Maftieu is a registered securities dealer in four separate classifications. He has worked for J. W. Gant and Chesley and Dunn since January, 1983. Petitioner trained him when he first started in the industry. Incorporated as a fundamental part of Petitioner's training [pg was the insistence on full disclosure of material facts to clients and the need to insure that he, as a salesman, educated himself as to his client's situation by a full and detailed questioning to insure the securities recommended were suitable for and consistent with the client's needs. As a part of his training, Petitioner showed Mr. Maftieu the SEC and Minnesota orders as examples of what can happen if there is not full compliance with the rules. Due to increasing instances of misconduct within the securities industry in this state, none of which was shown to relate to Petitioner, in 1985 the Florida Comptroller created a task force to study the problem and come up with recommendations for efforts to combat fraud in the securities industry in Florida. In March, 1986, the task force submitted its report which, in part, recommended that the Department tighten up its review of applications for registration as securities dealers to eliminate or disqualify applicants with a disciplinary record within the industry. As a result of this recommendation, the Department altered its policy in exercising its discretionary approval authority. Petitioner has, for many years now, practiced full disclosure in the conduct of his business and it has been in excess of six years since the last findings of any violations of securities laws, rules or regulations by Petitioner. Nonetheless, in this case, the Department's denial of Mr. Graibus' application, which was based on his disciplinary history in other states, was consistent with its policy against granting registration to "unworthy" persons, as outlined in the Department's rules, and the intent of the Legislature as outlined in Section 517.1205, Florida Statutes.
Recommendation Based, on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Petitioner's application for registration as an associated person with Finnet Securities, Inc., be granted. RECOMMENDED this 5th day of January, 1990, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of January, 1990. COPIES FURNISHED: Edward W. Dougherty, Jr., Esquire Mang, Rett & Collette, P.A. 660 D. Jefferson St. Post Office Box 11127 Tallahassee, Florida 32301-3127 M. Catherine Green, Esquire Paul C. Stadler, Esquire Department of Banking and Finance Suite 1302 The Capitol Tallahassee, Florida 32399-0350 Hon. Gerald Lewis Comptroller State of Florida The Capitol Tallahassee, Florida 32399-0350 Charles L. Stutts General Counsel Department of Banking and Finance Suite 1302 The Capitol Tallahassee, Florida 32399-0350
The Issue Whether petitioner's application for registration as a principal with Monvest Securities, Inc., should be granted by the Department of Banking and Finance, Division of Securities (Department).
Findings Of Fact The petitioner was registered with the Department as an associated person pursuant to Chapter 517, as follows: DATE COMPANY 9/22/82 to 9/19/83 Blinder, Robinson & Co. 11/23/83 to 6/26/84 First Interwest Securities Co. 9/4/84 to 12/27/84 Wall Street West, Inc. 3/11/85 to 10/3/85 R. H. Stewart & Co., Inc. 9/25/85 to 12/3/85 Allied Capital Group, Inc. Petitioner has not been registered with the Department in any capacity since December 3, 1985. The Department uses the forms adopted and approved by the National Association of Securities Dealers (N.A.S.D.) and filed with the Central Registration Depository (C.R.D.). Customarily, the registration application, Form U-4, is filled out by the applicant and given to the Broker-Dealer with whom the applicant is to be licensed. The Broker-Dealer then completes the form with the information concerning that Broker-Dealer and sends the completed form to the C.R.D. After Form U-4 has been filed with the C.R.D., the information is transmitted to the Department. The Broker-Dealer is advised when the applicant has been approved, and the Broker-Dealer informs the applicant that he can begin selling securities. It generally takes between one and two weeks for an applicant to be approved. No license or other paper is transmitted to the applicant from the Department to inform the applicant of his registration. However, the applicant can telephone the Department and determine his status. When an individual leaves the employ of a Broker-Dealer, the Broker- Dealer is required to send a Form U-5 to the C.R.D. within 30 days of termination. The individual never receives a copy of this form from either the C.R.D. or the Department or knows when it has been sent or received. Again, the associated person relies on the Broker-Dealer to advise him of his status. There is a procedure whereby an individual registered with one Broker- Dealer can transfer to another Broker-Dealer. This procedure, known as T.A.T., allows the individual to sell securities for 30 days while his application for registration with the new Broker-Dealer is pending. However, this procedure applies only to individuals who transfer their affiliation. It does not apply to individuals who terminate their affiliation with one company and then apply for registration with another company. Petitioner's registration as an associated person with Allied Capital terminated on December 3, 1985, and petitioner was advised by Allied Capital of his termination around December 1, 1985. Petitioner was terminated by Allied Capital due to insufficient business. On or about December 16, 1985, petitioner traveled to New York and spoke with representatives of Monvest Securities, Inc. (Monvest), regarding his registration through that company to open a branch office in Apopka, Florida. The same day he filled out a portion of a Form U-4 and gave it to the company for them to complete and send on to the C.R.D. Monvest also agreed to prepare the necessary documents to register the branch office in Apopka. Generally, the Broker-Dealer submits the application for the branch office. The application was submitted by Monvest on January 8, 1986. According to the application, petitioner was to be employed with Monvest in their office at 116-C East 5th Street, Apopka, Florida. There is no branch office of Monvest registered with the Department at that address. Petitioner stated in the employment history section of the application that from September of 1984 through November of 1984 he was unemployed. However, from September 4, 1984, until December 27, 1984, petitioner was registered as an associated person with Wall Street West. Petitioner made this error because he merely copied the employment history section from the previous application submitted for registration with Allied Capital. However, there was not a satisfactory explanation given as to why Wall Street West was omitted from the employment history listed on the Allied Capital application. Petitioner also stated in his employment history that he worked for R. H. Stewart & Company as a branch manager from December 1984 until August 1984. Petitioner was actually registered with R. H. Stewart from March 11, 1985 until October 3, 1985. However, because of the way the registration and termination systems work, it is not surprising that an individual's employment dates might be somewhat different from the dates of his official registration. When petitioner filled out the application form and left it with Monvest, he though that the application would be routinely processed, as all his others had been, and that approval would be forthcoming. In the meantime, petitioner had been involved in another business venture known as Global 2000 along with two other individuals. The group retained a law firm in Miami versed in securities regulations which prepared a document called "Confidential Private Placement Memorandum, Global 2000, Inc., and Global 2000 Securities Company" and a "Supplement to Private Offering". Petitioner is a principal in Global 2000, Inc., and Global 2000 Securities Company (collectively known as the Global 2000 Group). The number of investors in the Global 2000 Group is limited to no more than thirty-five, and the total offering is less than $500,000.00. Petitioner testified that the offering was a "Regulation D" offering, and therefore formal registration was not required. At the time of the hearing, petitioner was unaware of any sale of Global 2000 Group stock. On January 1, 1986, the Global 2000 Group published a "Supplement to Private Offering Memorandum, Global 2000, Inc., and Global 2000 Securities Corporation." The supplement had been sent to the printers on or about December 1, 1986, but was dated January 1, 1986. The last page of this supplement contains a picture of Woerz and the following: Melvin W. Woerz President Global 2000 Securities Company (Age 55) Licensed General Securities Principal and Registered Representative with the Division of Securities, Department of Banking and Finance, State of Florida; Securities and Exchange Commission, Washington, D.C.; NASD (National Association of Securities Dealers . . . In the bottom right corner of this page was the following: Global 2000 Securities Company 116-C East Fifth Street Apopka, Florida 32708 1-800-782-7710 This supplement was sent to all individuals who received the Private Placement Memorandum for Global 2000, Inc., and ten or fifteen other individuals. The Private Placement Memorandum and supplement were mailed shortly after January 1, 1986. At the time the supplement was mailed, petitioner was not registered with the Department nor was Global 2000 Securities Company. On or about January 22, 1986, petitioner mailed to forty or fifty individuals copies of a three page publication entitled "Our Recommendations." This publication advocates the purchase of various over the counter securities. The bottom of page three of this publication reads as follows: WE ARE WAITING TO HEAR FROM YOU!!! TAKE CARE MEL WOERZ AND ART BESCH SECURITIES BROKERS 116-C East Fifth Street Apopka, Florida 32703 PHONE: (305) 886-2288 COLLECT (800) 782-7710 IN FLORIDA (800) 423-0219 OUTSIDE FLORIDA There was no Broker-Dealer registered with the Department by the name of Mel Woerz and Art Besch. When "Our Recommendations" was mailed, petitioner was not sure whether his application for registration with Monvest had been approved in Florida. However, since Monvest had notified petitioner of his approval in six states, but not Florida, petitioner should have known that his application had not yet been approved in Florida. "Our Recommendations" was sent to prior clients of petitioner and Art Besch. Both Besch and petitioner stated that the intent of the communication was merely to keep in touch with their customers while awaiting approval. Petitioner has not sold any securities since leaving Allied Capital. On the application filed with the Department, petitioner agreed "to abide by, comply with, and adhere to all the provisions, conditions, and covenants of the statutes . . . and rules and regulationns of the states. "
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered denying petitioner's application for registration pursuant to Section 517.161(1)(a), Florida Statutes, in that petitioner has violated Sections 517.12(1) and 517.311(2), Florida Statutes, and pursuant to Section 517.161(1)(b), Florida Statutes, in that petitioner's application contains a material false statement. It is also recommended that petitioner's application be denied because it designates as petitioner's place of employment a branch office that has not been registered. DONE and ORDERED this 15th day of October 1986 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 15th day of October 1988. APPENDIX TO RECOMMENDED ORDER IN CASE No. 86-1785 Petitoner's Proposed Findings of Fact and Conclusions of Law 1 & 2. Accepted in Paragraph 3. Accepted in Paragraph 7. Accepted in Paragraph 3. Accepted in Paragraph 4. Accepted in Paragraph 3. Accepted in Paragraph 5. 8 & 9. Accepted that petitioner's employment history did not correlate with his registration in Paragraph 10. Remainder rejected as unnecessary. 10-12. Rejected as unnecessary. Accepted as stated in Paragraph 6. Accepted in Paragraph 1. Accepted, Paragraph 7. 16-18. Accepted in Paragraph 8. 19. Accepted in Paragraph 11. 20-22. Accepted generally in Paragraphs 12 and 13, last sentence and date of mailing rejected as not supported by competent evidence. Accepted generally in Paragraph 14. Accepted generally in Paragraph 17'. Accepted in Paragraph 15. Accepted in Paragraph 1. First sentence accepted in Paragraph 9, second sentence rejected for reason stated in Paragraph 9, last sentence rejected as irrelevant and not supported by credible evidence. Respondent's Proposed Findings of Fact and Conclusions of Law 1-3. Accepted in Paragraph 8, except date changed to January 8th because that is when Monvest signed application. Accepted in Paragraph 1. Accepted generally in Paragraph 13. 6 & 7. Accepted in Paragraph 1. 8. Accepted generally in Paragraphs 14 and 16. 9. Accepted in Paragraph 15. 10. Accepted in Paragraph 1. 11. Accepted in Paragraphs 9 and 10. 12. Accepted in Paragraph 1. 13. Accepted in Paragraph 3. 14. Accepted in Paragraph 5. 15. Accepted generally in Paragraphs 1 and 3. COPIES FURNISHED: Robert W. Kieffer, Esquire Post Office Box 2021 Orlando, Florida 32801 Robert K. Good, Esquire Office of the Comptroller 400 W. Robinson Street Suite 501 Orlando, Florida 32801 Honorable Gerald Lewis, Comptroller Department of Banking and Finance The Capitol Tallahassee, Florida 32301 Charles Stutts, Esquire General Counsel Department of Banking and Finance The Capitol Tallahassee, Florida 32301
The Issue The issues are whether the respondents violated Subsection 494.004(1), Florida Statutes (2001),1 by failing to file a written report with Petitioner that Bill Negron’s (Mr. Negron) real estate license had been permanently revoked for fraud and dishonest dealing, and, if so, what penalties, if any, should be imposed against the mortgage broker licenses of Mr. Negron and First American Mortgage & Financial Center, Inc. (First American).
Findings Of Fact Petitioner is the state agency charged with the responsibility for enforcing and administering the provisions of Chapter 494. Mr. Negron is licensed as a mortgage broker in the state. First American was licensed as a mortgage brokerage business in the state, but First American terminated its license on April 29, 2008. Mr. Negron is president, principal broker, and 100 percent owner of First American. First American is subject to disciplinary action for any statutory violations committed by Mr. Negron. On April 17, 2002, the Florida Real Estate Commission (FREC) found Mr. Negron guilty of fraud; dishonest dealing by trick, scheme or device; culpable negligence; or breach of trust in any business transaction in Final Order BPR-2002-01624. The Final Order found the licensee had failed to account or deliver funds and failed to maintain trust funds in the real estate brokerage escrow account. The FREC Final Order permanently revoked Mr. Negron’s real estate license. The Final Order found that the licensee was guilty of a course of conduct or practices that show the money, property, transactions, and rights of investors may not be safely entrusted to the licensee. Each of the respondents had a statutory duty to notify Petitioner of the revocation order issued by FREC. The duty ensures that Petitioner will have an opportunity to make an independent determination of whether a licensee is continuously qualified for licensure as a mortgage broker. Neither of the respondents notified Petitioner of the revocation order by FREC. Mr. Negron had been licensed as a mortgage broker from December 22, 2003. Professional training included specific training pertaining to the requirement to report regulatory actions for fraud, dishonest dealing, and moral turpitude to Petitioner. The licensee knew, or should have known, from pre-licensing and continuing education courses, of the requirement to notify Petitioner of the revocation of his real estate license. Petitioner did not have actual knowledge of the disciplinary action against Mr. Negron from other public records. Petitioner does not share databases with FREC. Testimony from Petitioner’s witness that it would have been virtually impossible for Petitioner’s employees to unilaterally uncover the existence of the revocation order was credible and persuasive to the trier of fact. Mr. Negron testified that he dictated a notification letter to his secretary and assumed she mailed it to Petitioner. The trier of fact finds that testimony to be neither credible nor persuasive. The record of the FREC proceeding evidences multiple offenses over a period of time that represent prior disciplinary history which preceded the revocation order by FREC. The prior disciplinary history on which FREC relied is evidenced in this record. However, no finding is made based on that evidence because the prior disciplinary history is not alleged as a factual basis for the proposed agency action in this proceeding in either the Administrative Complaint or the Amended Administrative Complaint. The only relevant finding in this proceeding, based on the prior disciplinary history in the FREC proceeding, is that neither of the respondents notified Petitioner of the prior disciplinary history with FREC. The failure to notify Petitioner of the prior disciplinary action by FREC is consistent with the failure of the respondents to notify Petitioner of the entry of a revocation order by FREC and is considered solely for the purpose of determining the credibility of the testimony presented by the respondents.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order permanently revoking the mortgage broker’s license of the two respondents. DONE AND ENTERED this 30th day of October, 2009, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of October, 2009.
The Issue The issue is whether the Petitioner's application for registration as an associated person of Koch Capital, Inc. should be denied.
Findings Of Fact Petitioner, Glenn D. Whaley submitted a Form U-4, Uniform Application for Securities Industry Registration, seeking registration as an associated person of Koch Capital, Inc. One of the states in which Petitioner sought registration was the State of Florida. The Department of Banking and Finance (Department) is the Florida agency charged with the administration and enforcement of Chapter 517, Florida Statutes, the Florida Securities and Investor Protection Act (the Act), and its implementing rules. The Department denied Mr. Whaley's application for registration as an associated person in a letter dated August 27, 1990, based upon its determination that he had violated the Act, that he had filed an application for registration which contained a material false statement; and that his disciplinary history within the securities industry constituted prima facie evidence of his unworthiness to transact the business of an associated person. Mr. Whaley has been employed in the securities industry since approximately 1984, and has been employed with several different securities dealers, including Rothschild Equity Management Group, Inc. (Rothschild), Fitzgerald Talman, Inc., and H. T. Fletcher Securities, Inc. The effective date for Mr. Whaley's registration as an associated person of Rothschild in the State of Florida was April 18, 1985. In October 1985, Department examiner Michael Blaker, conducted an examination of the books and records of Rothschild. The examination revealed violations of the provisions of the Act, including the sale of securities by unlicensed representatives. The commission reports and sales journals prepared by Rothschild revealed that Mr. Whaley, while unregistered with the Department, had effectuated approximately sixteen (16) sales of securities during the period of April 1 through 17, 1985. On May 15, 1989, the State of Missouri Commissioner of Securities issued a cease and desist order against Fitzgerald Talman, Inc. and Glenn D. Whaley. The order found that Mr. Whaley had offered for sale and sold securities on behalf of Fitzgerald Talman, Inc. in the State of Missouri without benefit of registration for himself or the securities. On or about November 8, 1989, the Department issued an Administrative Charges and Complaint against Mr. Whaley seeking revocation of his registration as an associated person of H. T. Fletcher Securities, Inc. based on his failed to timely notify the Department of the Missouri Cease and Desist Order, as required by Rule 3E-600.010(1)(a), Florida Administrative Code. The Administrative Charges and Complaint were served on November 13, 1989. On or about December 12, 1989, the Department issued a Default Final Order revoking Mr. Whaley's registration with H. T. Fletcher Securities, Inc., based upon his failure to request a hearing regarding the Administrative Charges and Complaint. The Form U-4 requires the applicant to swear and affirm that the information on the application is true and complete to the best of his knowledge and that false or misleading answers will subject him to administrative penalties. The Form U-4 application contains no disclosure of the Department's December 1989, revocation of Petitioner's registration with H. T. Fletcher Securities, Inc., as required by Question 22E.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Banking and Finance enter a Final Order denying the application of Mr. Whaley for registration as an associated person of Koch Capital, Inc., in the State of Florida. RECOMMENDED this 25th day of January, 1991, at Tallahassee, Florida. WILLIAM R. DORSEY, JR. 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 25th day of January, 1991. COPIES FURNISHED: Margaret Karniewicz, Esquire Department of Banking and Finance The Capitol, Legal Section Tallahassee, Florida 32399-0350 Glenn D. Whaley 5400 Northwest Fifth Avenue Boca Raton, Florida 33487 Honorable Gerald Lewis, Comptroller Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0350 William G. Reeves, General Counsel Department of Banking and Finance The Capitol Plaza Level, Room 1302 Tallahassee, Florida 32399-0350
Conclusions The Office of Financial Regulation ("Office") issued a denial of Petitioner’s application to become licensed as an “associated person”. Petitioner in turn filed a Petition for Administrative Hearing, which the Office referred to the Division of Administrative Hearings ("DOAH"). The assigned Administrative Law Judge ("ALI") held a formal administrative hearing, and entered a Recommended Order thereon. That Recommended Order of November 17, 2604, is attached to this Final Order, and incorporated herein by reference.
