Findings Of Fact Respondents were licensed real estate brokers at all times relevant to this proceeding. Robert M. Hall, Respondent LaRossa's nephew, gave LaRossa an $18,000 bank draft around January 1, 1982, toward purchase of an apartment building. LaRossa was to acquire the property in partnership with Hall. The deal fell through and Hall sought return of his $18,000. However, Respondents had not placed the funds in a trust or escrow account but had diverted them to other uses. As a result, LaRossa was not able to return the funds on demand by Hall. Hall then accepted LaRossa's promissory note to be discharged by June 2, 1982. However, when the debt remained unpaid, Hall filed a civil suit in Dade County and obtained a judgment for $22,145 on March 23, 1983. LaRossa finally paid this amount plus interest to the satisfaction of Hall on May 1, 1984. Hall, who was the complaining witness in this proceeding, stated that he "had no trust arrangement" with LaRossa in his letter acknowledging receipt of the funds. However, Hall had turned over the $18,000 to LaRossa with an expectation of investment or return and was distressed at LaRossa's failure to return the funds on demand. Although Hall and LaRossa are related and planned to enter a joint business venture, Hall relied on LaRossa to arrange the purchase of the commercial property in his capacity as a broker. There was no legitimate reason for Respondents to divert Hall's deposit, which was held by them in a trust capacity.
Recommendation Based on the foregoing, it is RECOMMENDED: That Petitioner enter a Final Order suspending the real estate brokers licenses held by Respondents for a period of 90 days. DONE and ENTERED this 14th day of August, 1984, in Tallahassee, Florida. R. T. CARPENTER 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 14th day of August, 1984. COPIES FURNISHED: Fred A. Langford, Esquire Department of Professional Regulation Post Office Box 1900 Orlando, Florida 3202 Monroe Gelb, Esquire GELB and SPATZ 3400 Southwest 3rd Avenue Miami, Florida 33145 Mr. Harold Huff, Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 Mr. Fred M. Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 =================================================================
Findings Of Fact At the time of the hearing, and at all times pertinent to the proceeding, Respondent, Ronald F. Burth, was registered with FREC as a real estate broker and Respondent, Ron Burth and Associates, Inc., was registered as a real estate broker corporation. On or about October 17, 1977, Mrs. Shelby P. Gray (hereafter Gray) entered into an exclusive right of sale contract with Burth for the sale of Gray's property located at 732 Wood Valley Way, Orange County, Orlando, Florida. On or about January 7, 1978, Burth and Gray agreed to terminate the exclusive right of sale contract and Burth verbally agreed to purchase the subject real estate from Gray. In exchange for title to the property Burth agreed to assume the existing mortgage and to pay any overdue mortgage payments. A tentative closing date was established for January 13, 1978, and Burth ordered a title search which revealed that certain clouds on the title would have to be cleared prior to closing. Subsequent to January 7, 1978, Burth entered an advertisement in the newspaper offering the subject real estate for rent. On January 9, 1978, one James J. Provost (hereafter Provost) gave Burth a $50.00 check payable to "Ron Burth" as a deposit for the lease of the subject property which Burth had shown Provost on that day. On January 10, 1978, Provost signed a lease for the subject property and paid an additional $325.00. Both checks received by Burth were deposited in his personal investment account. Burth specifically told Provost that someone from out of town actually owned the house which he was leasing. Burth and Provost discussed the terms and conditions of a possible sale of the premises, but Provost was, in his words, in "no position" to make a downpayment. Accordingly, there was no offer to purchase the premises. Between the time Provost signed the lease, January 10, 1978, and the time Gray returned to Orlando, January 14, 1978, Provost prematurely moved into the house. Burth had not advised Gray of the lease at this time, but Gray's sister discovered Provost in occupation when she went to check on the premises. That same evening, Burth telephoned Gray to tell her that the "papers" were ready and that they should "get together." There was no testimony to show what the "papers" were. Burth did not mention Provost's lease until Gray's sister demanded to know who was in the house. Burth then acknowledged that the house was leased and that he was coming over to the house to discuss it further. However, when Burth arrived, Gray refused to talk with him, referring instead to the fact that her lawyer would handle the matter from that point forward. All monies received by Burth were subsequently turned over to that attorney.
Findings Of Fact Frank Arata, Jr., is a vice president of The Keyes Company, the manager of The Keyes Company Miami Beach Office, a real estate broker registered by the Board of Real Estate and has been so registered for some fifteen years. He was so registered at all times here relevant. The Keyes Company is a corporate real estate broker registered by the Board of Real Estate and was so registered at all times here relevant. John Arata, Lauri Rutkin and Sophie Farkas are registered as salesmen by the Board of Real Estate and were so registered and employed by The Keyes Company at all times here relevant. John Arata and Sandra Spolter, another salesman of The Keyes Company, obtained a listing (Exhibit 5) on 9/20/77 on an apartment building owned by Bernard Wachtel and Linda Wachtel located at 1121 Pennsylvania Avenue, Miami Beach, Florida. Wachtel was about to lose the building due to an inability to meet current expenses and was anxious to sell before the mortgage on the building was foreclosed. John Arata had no further connection with any event later occurring involving this property. Several weeks after the property had been placed in the multiple listing service and further advertised for sale without success, the seller became even more anxious to get rid of the property and it became known in the Miami Beach Office of The Keyes Company that the owner would sell at a price he could walk away from without further cost. Another Keyes salesman, Leon Kaplan, called Gilbert Sens, an investor in properties in the area, to advise Sens about the availability of this property. At this time apparently both Kaplan, and certainly Sens, were unaware that the mortgage on the property was a wraparound mortgage held by the former owner which contained a provision requiring a pay-down of $25,000 in the mortgage principal upon sale of the property. This provision made the mortgagee essential to any negotiation, particularly if a purchaser wanted to negotiate for a lower or no pay-down. After viewing the property and learning of the straits of the owner, Sens concluded that he could acquire this property with a very small cash investment but would have to pay the broker's fee. In a letter dated 8 November 1977 (Exhibit 3) from Sens to Kaplan, Sens stated an intent to purchase the property at 1121 Pennsylvania Avenue, Miami Beach, Florida, by assuming the existing mortgage, paying taxes and real estate commission, all subject to the formal contract to be prepared by his attorney. Sens also contacted the mortgage holder, Regina Halperin, or her son, Morris Mulhrad, who acted as his mother's agent in many transactions, and learned the pay-down was negotiable. In further efforts to acquire the property with a minimum cash investment, Sens induced The Keyes Company to agree to defer the payment of the commission, if Sens bought the property, for one year with Sens executing a second mortgage for this commission (Exhibit 4). This document, dated 16 November 1977, was signed by Frank Arata, Jr., for The Keyes Company and by Sens (for corporation) as prospective purchaser. At this time Sens did not have a corporation formed to take title but expected to form one before the transaction closed. Also on 16 November 1977, Sens executed an offer to purchase the property (Exhibit 6) for the amount of the first mortgage with the purchaser "Gilbert Sens, his Assignees or Corporate Designees." Specific provisions of this offer included the buyer would pay the real estate sales commission and contained a provision that the offer was contingent upon purchaser entering into a mortgage modification agreement with Mrs. Halperin satisfactory to the purchaser to modify or eliminate the $25,000 mortgage pay-down requirement. This offer was presented to Wachtel by Kaplan but was never accepted, nor was a counteroffer made by the seller. On 22 November 1977 a meeting was held in the offices of Eugene Weiss, an attorney who had represented Sens in many real estate transactions but who also had represented Mrs. Halperin. Present at the meeting were Mrs. Halperin, Morris Mulhrad, Sens, Weiss and Wachtel. Mrs. Halperin expressed reservations about having a corporate purchaser of the property, about no pay-down of the mortgage as proposed by Sens, and about Sens' refusal to commit himself to a specific sum to repair and/or replace fixtures that were in disrepair. Mr. Mulhrad testified that he and his mother had no intention of letting Sens "steal" this property by getting title for only a $3,000 cash outlay and the offer made by Sens was totally unacceptable. On the other hand, Sens and Weiss both testified that they understood an agreement was reached and the contents of that agreement were dictated by Weiss to be prepared for signature the following day. However, Weiss' calendar for 23 November 1977 (attached to Exhibit 1) had no time scheduled for such a signature meeting. Sens' practice was to acquire investment property in the name of a corporation wholly owned by him or a family trust. He often would form such a corporation, the sole assets of which would be investment property acquired. None of the principals here involved were novices; all had considerable experience in buying and selling real estate. Mrs. Halperin had been involved in buying and selling real property in the Miami area for many years, as had Sens. Eugene Weiss, the lawyer who was representing both the buyer and the mortgagee at the 22 November 1977 meeting, specializes in the field of real estate. When he dictated his understanding of the offer being made by Hens at that meeting, he knew, as the other parties surely did, that what he was dictating was an offer to purchase under certain terms and conditions that could develop into a contract only after acceptance by the mortgagee of the modification of the mortgage agreement and by the seller. All parties certainly were aware that no oral agreement to purchase real property could be enforced in view of the statute of frauds, Section 725.01, Florida Statutes. All parties also knew that the seller had no money with which to pay the broker or to pay bills owed for taxes, overdue mortgage payments, utilities, etc., due at the apartment building and that the offer to purchase must make provisions for those debts. Before the offer dictated by Weiss was reduced to writing, he was advised that Mrs. Halperin would not accept the provisions proposed by Sens, would not release the mortgage pay-down provision and that there was no contract. He passed this information to Sens on 23 November 1977. Meanwhile, Frank Arata was being called frequently by Wachtel to get the property sold. At the weekly sales meeting on 22 November 1977, Arata inquired about the status of Kaplan's negotiations on behalf of Sens but Kaplan had little to report since Sens had been doing most of his own negotiations. Kaplan apparently did not know about the meeting between the parties on 22 November 1977 until long after that meeting. At this sales meeting it became known that the mortgage pay-down could be modified by the mortgage holder and Frank Arata mentioned to Sophie Farkas and Lauri Rutkin that they might be interested in buying this property. When Kaplan protested, Arata told him that he would hold off one more day to give Kaplan an additional 24 hours to get a binding offer from Sens. No such offer was obtained by Kaplan. Farkas and Rutkin visited the property and on 25 November 1977 made an offer to purchase the apartments at 1121 Pennsylvania Avenue (Exhibit 8). In this offer the buyers agreed to pay back taxes, pay a $10,000 commission to The Keyes Company, bring the mortgage payments current, pay past due bills for utilities, exterminating, garbage, etc., and the mortgage holder agreed to enter into a mortgage modification agreement. This offer was apparently prepared by Weiss and accepted by the seller on 25 November 1977. Morris Mulhrad testified that these buyers made a $10,000 pay-down on the mortgage but the documents attached to Exhibit 1, the deposition of Weiss, does not confirm such pay-down was required by the mortgage holder or paid by the buyers. These buyers did submit an offer more beneficial to the seller than the offer submitted by Sens.
The Issue The issue in this case is whether the Florida Real Estate Commission should discipline Respondent, Michael J. James (James), for the reasons set forth in the Administrative Complaint filed against him by Petitioner, Department of Professional Regulation, Division of Real Estate (Department). Count I of the Administrative Complaint alleges that James is guilty of fraud, misrepresentation, concealment, false promises, false pretense, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida Statutes (1983), in connection with his handling of an escrowed real estate purchase deposit. Count II of the Administrative Complaint alleges that James failed to account and deliver the $5,000 deposit to the rightful owners in violation of Section 475.25(1)(d), Florida Statutes (1983). Finally, Count III of the Administrative Complaint alleges that James, while licensed as a salesman, operated as a broker or as a salesman for someone not registered as his employing broker in violation of Sections 475.42(1)(b) and 475.25(1)(a), Florida Statutes (1983).
Findings Of Fact Respondent, Michael J. James (James), has been at all relevant times a licensed real estate salesman having been issued license number 0361739. On or about November 6, 1983, James solicited and obtained two $2,500 earnest money deposits from Skarian M. Kakkanatt and K. Thomas Idiculla, as purchasers, who entered into two different sales contract offers to purchase two separate motel properties, one in Kissimmee and the other in Osceola County. The total deposits of $5,000 were placed in the escrow account of International Marketing and Manufacturing Services, Inc. (International), by its registered broker, Harold C. Jacobsen, who was also James' registered employing broker. On or about November 14, 1983, being dissatisfied with the inspection of the financial records of the two motel operations, the purchasers, sent a telegram to International and all interested parties providing notice that the two sales contract offers were cancelled under the terms of the contracts and that all monies deposited by the purchasers should be refunded. On December 8, 1983, the purchasers reiterated their demand for a refund of all deposits by letter to James. Between November 1983 and April 1984, Jacobsen became increasingly seriously ill. To a greater and greater extent, James assumed Jacobsen's responsibilities to International under the increasingly general supervision of Jacobsen. Jacobsen and James agreed that International was entitled to the deposit under the contracts as brokerage commission, rationalizing that the purchasers were not entitled to cancel the contracts because their two checks in the amount of $22,500 each for additional deposits were returned unpaid because of insufficient funds. Jacobsen and James therefore agreed to disburse the $5,000 from escrow and did so over the course of time through January 1984. The contracts negotiated by James on behalf of International for the purchase of the two motel properties clearly entitled the purchasers to inspect the financial records of the two motel operations and to cancel the contracts on or before November 15, 1983. Payment of the deposits was not a condition precedent to their entitlement to cancel. Having exercised their option to cancel, the purchasers were no longer obligated to make any deposits. The contracts having been cancelled, no brokerage commission was due to International. While Jacobsen was James' employing broker, both c James and Jacobsen worked for International. International, in turn, was wholly owned by American Paper Company, which was wholly owned by James. Under Jacobsen's employment contract with International, Jacobsen was entitled to only 2% of any broker's commission earned by James. The balance of such broker's commissions would go to International or, in effect, to James. James, therefore, had a greater pecuniary interest in the $5,000 deposit than Jacobsen. Between November 1983 and April 1984, James hoped the purchasers would not vigorously assert their rights to the $5,000 deposit. The purchasers resided in New York, and assertion of their rights was not easy. James obtained from the selling broker a waiver of any interest of the seller or the selling broker to the deposit. By April 1984, it became evident to James that the purchasers were indeed going to assert their rights to the deposit. Concerned that the escrowed deposit already had been disbursed, James decided to redeposit $5,000 in escrow, using a $5,000 broker's commission he had earned on behalf of International on another sale. By this time, Jacobsen was only coming into the office approximately once a week to sign checks and look over sales contracts and bank records. By this time, James was handling the matter of the deposit on his own, with Jacobsen's consent and trust. On May 8, 1984, James notified the Department of Professional Regulation that a dispute had arisen with the purchasers concerning the $5,000 deposit but that James would be filing an interpleader action on behalf of International according to the instructions of Jacobsen. On or about May 14, 1984, James filed against the purchasers a complaint for interpleader in the Osceola County Circuit Court on behalf of International seeking half of the $5,000 deposit. James signed the complaint and used a signature stamp to ascribe Jacobsen's signature as broker for International. Jacobsen had authorized James to use the signature stamp in his absence because of his illness. James had the $5,000 deposit transferred into the depository of the Circuit Court in and for Osceola County, Florida, when the complaint was filed. On June 11, 1984, Jacobsen died. On June 23, 1984, James filed a voluntary dismissal of the interpleader action, in part because of Jacobsen's death. The clerk of the court returned the $5,000 deposit to International on June 22, 1984. On June 25, 1984, James reopened International's escrow account at the Community National Bank in Kissimmee by depositing the 55,000 in that account. On or about July 11, 1984, James requested an escrow disbursement order from the Department of Professional Regulation regarding the disposition of the $5,000. Between June 25 and July 27, 1984, the Community National Bank deducted amounts from the escrow account to reimburse the bank for overdrafts on James' personal checking account. James complained about this, and some of the amounts were reinstated in the escrow account. However, the bank requested that James remove all accounts. On July 27, 1984, James withdrew the balance of the account and redeposited the $4,809.48 balance in International's real estate escrow account with the Barnett Bank of Kissimmee on or about August 31, 1984. However, James soon began writing checks on the account, and by September 10, 1984, the balance was down to $2,775. On September 10, 1984, James reiterated his request to the Department for an escrow disbursement order and indicated that he was scheduled to meet with one of the purchasers to resolve the deposit dispute. On September 12, 1984, the Florida Real Estate Commission advised James that it would not be issuing an escrow disbursement order. On September 24, 1984, the Department's investigator, Charles E. Kimmig, Sr., wrote James to inquire whether a settlement had been reached with the purchasers. Respondent did not reply to Kimmig's letter. By October 3, 1984, James had spent all but $298.11 of the escrow account. James never has returned to the purchasers any of the $5,000 deposit to which they are entitled.
Recommendation Based upon the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that the Florida Real Estate Commission hold Respondent, Michael J. James, guilty of Counts I and II of the Administrative Complaint in this case and revoke his real estate salesman's license, to be automatically reinstated after a one year suspension if James makes restitution to Skarian M. Kakkanatt and K. Thomas Idiculla within one year in the amount of $5,000 plus simple interest at the rate of 12% per year from November 14, 1983. RECOMMENDED this 18th day of April, 1986, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of April, 1986. COPIES FURNISHED: Arthur R. Shell, Esq. Department of Professional Regulation 400 W. Robinson Street Orlando, Florida 32801 Michael J. James P. O. Box 3801 Longwood, Florida 32750 Harold Huff, Executive Director Division of Real Estate Department of Professional Regulation 400 W. Robinson Street Orlando, Florida 32801 Salvatore A. Carpino, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Fred Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
The Issue The issues are whether Respondent is guilty of violating a lawful order of the Florida Real Estate, in violation of Sections 475.42(1)(e) and 475.25(1)(e); committing fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction, in violation of Section 475.25(1)(b) (two counts); failing to account for or deliver funds, in violation of Section 475.25(1)(d)1; failing to maintain trust funds in a real estate brokerage escrow bank account or some other proper depository until disbursement is authorized, in violation of Section 475.25(1)(k); failing to provide a written agency disclosure, in violation of Section 475.25(1)(q); being found guilty for a second time of any misconduct that warrants suspension or of a course of conduct or practices that show such incompetence, negligence, dishonesty, or untruthfulness as to indicate that Respondent may not be entrusted with the property, money, transactions, and rights of investors or others with whom Respondent may maintain a confidential relation, in violation of Section 475.25(1)(o); and failing to preserve and make available to Petitioner all books, records, and supporting documents and failing to keep an accurate account of all trust fund transactions together with such additional data as good accounting practice requires, in violation of Rule 61J-14.012(4) and Section 475.25(1)(e).
Findings Of Fact At all material times, Respondent has been a licensed real estate broker, holding license numbers 0489551 and 3000384. Respondent is the qualifying broker for Buyers Realty of Naples, Inc., of which Respondent was a principal. Respondent has been disciplined once previously. On December 8, 1994, the Florida Real Estate Commission entered a final order, pursuant to a stipulation, ordering Respondent to pay an administrative fine of $500 and complete 30 hours of professional education. In late 1993, Respondent, Armand Houle, and Svein Dynge formed DSA Development, Inc. (DSA). Respondent, Houle, and Dynge were directors of the corporation. On December 1, 1993, Respondent, Houle, and Dynge formed Gulf Southwest Developers, Ltd. (GSD). DSA served as the sole general partner of GSD, whose original limited partners included Houle and several foreign investors represented by Dynge, but not Respondent or Houle. The investors formed GSD to assemble a vast tract of land in Collier County, through numerous purchases, for purposes of mining, development, and speculation. The initial investors contributed or agreed to contribute over $4 million to GSD. Respondent's role was to find suitable parcels of land and negotiate their purchase by GSD or its agent. GSD agreed to pay Respondent $1000 weekly for these services. GSD also authorized Respondent to take a broker's commission of 10 percent of the sales price for each fully executed contract presented to the closing agent. This is the customary broker's commission in the area for transactions of this type. Respondent's claim that he was entitled to a commission of 20 percent is rejected as unsupported by the evidence. There is some dispute as to whether the seller or the buyer was to pay the commission. The contracts provide that the commission was to be deducted from the seller's proceeds. However, regardless of the source of the commission, Respondent was entitled only to 10 percent, not 20 percent. Respondent knew that he was not entitled to 20 percent when he took the additional sum from GSD funds. Thus, the act of taking the funds constituted no less than concealment (due to his failure to disclose his withdrawals), dishonest dealing, culpable negligence and breach of trust, if not actual fraud. There is some evidence that Respondent took substantial sums from GSD without authorization. Without doubt, part of these sums represented the additional ten percent commission described in the preceding paragraph. Petitioner has attempted to prove that Respondent took sums in excess of the extra ten percent commission without authorization. However, as to such sums in excess of the additional ten percent commission, Petitioner has failed to prove by clear and convincing evidence either that Respondent took such additional sums or, if he did so, that these withdrawals were not authorized or at least ratified. As agent for GSD, Houle entered into numerous contracts in the second half of 1994 and first half of 1995. In each of these contracts, Respondent signed the contract below printed language stating that he, as broker, and Buyers Realty of Naples, Inc. had received the initial escrow deposit under the conditions set forth in the contract. At no time did Respondent or Buyers Realty of Naples, Inc. hold the escrowed funds in an escrow account under the name of Respondent or Buyers Realty. Respondent maintains that he transferred the funds to the title company to hold in escrow. The record does not permit a finding, by clear and convincing evidence, that he did not do so, although there is some evidence indicating that the title company did not hold such funds. However, it is sufficient that Petitioner has shown by clear and convincing evidence that neither Respondent nor Buyers Realty held these escrow funds, despite clear misrepresentations by Respondent in each contract that he or his company held these escrowed funds. Respondent's misrepresentations constitute fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing, and breach of trust. Petitioner failed to prove by clear and convincing evidence that Respondent did not make the required agency disclosures in a timely fashion or that Respondent did not make available to Petitioner's investigator the books and records that he is required to maintain. Likewise, Petitioner did not prove by clear and convincing evidence that Respondent failed to complete the education required by the prior final order or participated in the fraudulent endorsement of Houle's signature on checks by a secretary, who later obtained Houle's consent to the act.
Recommendation It is RECOMMENDED that the Florida Real Estate Commission enter a final order suspending Respondent's license for five years. DONE AND ENTERED this 4th day of September, 1997, in Tallahassee, Leon County, Florida. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 4th day of September, 1997. COPIES FURNISHED: Geoffrey T. Kirk, Senior Attorney Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32802 James H. Gillis James H. Gillis & Associates, P.A. Law Offices of Gillis & Wilsen 1415 East Robinson Street, Suite B Orlando, Florida 32801-2169 Henry M. Solares Division Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802-1900
The Issue In this disciplinary proceeding, the issues are: (1) whether Respondents, who are licensed real estate brokers, failed within a reasonable time to satisfy a civil judgment relating to a real estate commission; (2) whether Respondents failed to maintain trust funds in an escrow account as required; and (3) whether disciplinary penalties should be imposed on Respondents, or either of them, if Petitioner proves one or more of the violations charged in its Administrative Complaint.
Findings Of Fact The Parties Respondent Marlene Montenegro Toirac ("Toirac") is a licensed real estate broker subject to the regulatory jurisdiction of the Florida Real Estate Commission ("Commission"). Respondent Home Center International Corp. ("HCIC") 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. Toirac is an officer and principal of HCIC, and at all times relevant to this case she had substantial, if not exclusive, control of the corporation. Indeed, the evidence does not establish that HCIC engaged in any conduct distinct from Toirac's in connection with the transactions at issue. Therefore, Respondents will generally be referred to collectively as "Toirac" except when a need to distinguish between them arises. Petitioner Department of Business and Professional Regulation, Division of Real Estate, has jurisdiction over disciplinary proceedings for the Commission. At the Commission's direction, Petitioner is authorized to prosecute administrative complaints against licensees within the Commission's jurisdiction. The Veloso Judgment Toirac and Elena Veloso ("Veloso") did business together and wound up as opponents in court. Veloso got the better of Toirac, obtaining, on June 5, 2001, a judgment in the amount of $4,437.60 against her and HCIC from the Dade County Court. The judgment liquidated a real estate commission that Veloso claimed the defendants owed her. On June 12, 2001, Toirac filed a Motion to Set Aside Final Judgment, wherein she asked the county court to (a) vacate its judgment in favor of Veloso, on the ground that the defendants had not been served with process and (b) consolidate Veloso's county-court proceeding with an action then pending in circuit court, which Toirac had brought against Veloso.1 As of the final hearing in this case, Toirac's motion, after four years, had not been heard or decided. As of the final hearing in this case, Toirac had not satisfied the judgment in favor of Veloso. The Escrow Account Shortfall On January 24, 2002, Tibizay Morales, who was then employed by Petitioner as an investigator, conducted an audit of Toirac's records. (The impetus for this audit was Petitioner's receipt, on or about June 20, 2001, of a complaint from Veloso.) Pursuant to the audit, Ms. Morales determined that the balance in Toirac's escrow account was $4,961.05. Ms. Morales determined further that Toirac's trust liability, i.e. the total amount of money that she should have been holding in escrow on her clients' behalf, was $12,242.00. Thus, there existed a shortfall of $7,280.95 in Toirac's escrow account. Toirac was not able, at the time of the audit, to explain the shortfall. A few weeks later, however, by letter dated February 13, 2002, Toirac informed Ms. Morales that the shortfall had been caused by the issuance, "in error," of a check in the amount of $7,345.00, which was drawn on HCIC's escrow account and payable (evidently) to HCIC; HCIC had deposited the funds into its operating account, thereby creating, according to Toirac, an "overage" of $7,345.00 in the latter. To correct the problem, Toirac had arranged for the transfer of $7,345.00 from HCIC's operating account to its escrow account, which was accomplished on or about February 1, 2002. The Charges In counts I and IV, Petitioner charges Respondents with failing to account for and deliver trust funds, in violation of Section 475.25(1)(d)1., Florida Statutes.2 Petitioner's position is that Respondents failed within a reasonable time to satisfy the county-court judgment in favor of Veloso. In counts III and V, Petitioner accuses Respondents of having failed to maintain trust funds in the real estate brokerage escrow account until disbursement was properly authorized, in violation of Section 475.25(1)(k), Florida Statutes. Petitioner's position is that the escrow account shortfall identified on January 24, 2002, is proof that funds held in escrow had been disbursed without proper authorization. Ultimate Factual Determinations There is no dispute (for Toirac admitted at final hearing) that the judgment debt owed by Respondents to Veloso relates to a real estate commission. It is also undisputed that, as of the final hearing, the county-court judgment had not been satisfied. The undersigned determines that Respondents have failed to satisfy the civil judgment in Veloso's favor within a reasonable time.3 Therefore, the undersigned finds Respondents guilty of violating Section 475.25(1)(d)1., Florida Statutes.4 It is determined that the erroneous transfer, via check, of funds from HCIC's escrow account to its operating account constituted an unauthorized disbursement of funds entrusted to Toirac by others who had dealt with her as a broker. While this might have resulted from the simple mistake of an incompetent bookkeeper, as Toirac maintains, nevertheless the disbursement was unauthorized and substantial——amounting to approximately 60 percent of Toirac's total trust liability. Therefore, the undersigned finds Respondents guilty of violating Section 475.25(1)(k), Florida Statutes. In view of the foregoing, Petitioner has established the charges set forth in counts I, III, IV, and V of its Administrative Complaint, by clear and convincing evidence.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order that: (a) finds Respondents guilty as charged in counts I, III, IV, and V of the Administrative Complaint; (b) suspends Respondents' respective real estate licenses for 90 days; and (c) imposes an administrative fine of $2,500 against Respondents, jointly and severally; and (d) places Respondents on probation for a period of at least 3 years, subject to such lawful conditions as the Commission may specify. DONE AND ENTERED this 14th day of September, 2005, in Tallahassee, Leon County, Florida. S 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 14th day of September, 2005.
The Issue In this disciplinary proceeding, the issues are whether Respondents, who are licensed real estate brokers, committed acts of dishonest dealing or culpable negligence in a business transaction; failed to account for and deliver trust funds; failed to maintain trust funds in an escrow account as required; intermingled personal funds with trust funds; obstructed or hindered Petitioner's investigator in an official investigation; or committed any of these offenses, 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 Marlene Montenegro Toirac ("Toirac") is a licensed real estate broker subject to the regulatory jurisdiction of the Florida Real Estate Commission ("Commission"). Respondent Home Center International Corp. ("HCIC") 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. Toirac is an officer and principal of HCIC, and at all times relevant to this case she had substantial, if not exclusive, control of the corporation. Indeed, the evidence does not establish that HCIC engaged in any conduct distinct from Toirac's in connection with the transactions at issue. Therefore, Respondents will generally be referred to collectively as "Toirac" except when a need to distinguish between them arises. Petitioner Department of Business and Professional Regulation, Division of Real Estate, has jurisdiction over disciplinary proceedings for the Commission. At the Commission's direction, Petitioner is authorized to prosecute administrative complaints against licensees within the Commission's jurisdiction. The Ramirez Transaction On or about September 9, 2003, Toirac, in her individual capacity, entered into a Sale and Purchase Contract (the "Contract") with Andres Ramirez ("Ramirez"), whereby Toirac agreed to sell, and Ramirez to buy, certain real estate then owned by Toirac. The Contract called for Ramirez to make several deposits toward the purchase price. Accordingly, Ramirez tendered to Toirac a total of $14,000 in pre-closing payments. Toirac accepted these payments, which were deposited in HCIC's operating account. At some point, Toirac withdrew Ramirez's deposits from HCIC's operating account, taking the money in cash. She brought the $14,000 in cash to her attorney, Alix Montes, who agreed to hold the money in escrow pending the closing of the sale to Ramirez. Mr. Montes placed the cash in a safe located in his home. The sale to Ramirez fell through after Ramirez failed to obtain acceptable financing and exercised his right to cancel the Contract in consequence thereof. Ramirez requested that his deposits be returned. Within a short time (not more than about two weeks), Toirac gave Ramirez his money back——in cash. The parties dispute whether Toirac properly handled Ramirez's deposits. Petitioner asserts that the $14,000 should have been held in an escrow account maintained at a financial institution such as a bank or title company. Toirac responds that she complied with a "Financing and Deposit Addendum" (the "Addendum") to the Contract. The Addendum, which is part of the Contract that Petitioner offered into evidence (as Petitioner's Exhibit 4), provides in pertinent part as follows: Seller acknowledges that in the event that the Buyer is not approved for a mortgage loan or the terms and conditions of said mortgage loan are not acceptable to Seller, Seller within thirty (30) days from the date Seller receives Buyer's written request for the return of its deposit, shall refund Buyer's deposit in full. Upon Seller's refund of the deposit, this contract will terminate and all parties will be relieved from the obligations and liabilities. Buyer acknowledges that the Seller herein is a licensed Real Estate Broker in the state of Florida and That Home Center International Corp. will not be the "Escrow Agent" in this transaction nor will Home Center International Corp. or any of its affiliates, officers, directors, agents and/or employees will receive a Real Estate Brokerage fee in connection with this transaction. Buyer authorizes Home Center International Corp. to place any and all deposits herein in its operating account. Buyer further authorizes Home Center International Corp, at any time to withdraw and/or transfer Buyer's funds from the operating account. In the event a transfer of any and all funds is effected, such funds shall be held by Alix J. Montes, Esq., Attorney for the Seller. This Addendum supercedes the provisions of paragraph 2 (A)2(B)(1), 16(A)(B)(C), 17, 18, and 19 of the "As Is" Sale and Purchase Contract signed by all parties herein. (In the original, the text is written in all capital letters.) The Addendum is dated September 9, 2003, and bears the purported signatures of Ramirez and Toirac. Petitioner alleged in its Administrative Complaint that Ramirez had denied executing the Addendum. At hearing, however, Petitioner failed to offer any proof——such as Ramirez's testimony or the testimony of an expert disputing the authenticity of Ramirez's purported signature on the Addendum—— to establish this allegation. In contrast, Toirac testified that both she and Ramirez had, in fact, signed the Addendum. As a result, on this record, the undersigned is not clearly convinced that the Addendum is fraudulent. Moreover, the Addendum and Toirac's testimony, taken together, are sufficiently persuasive (in the absence of evidence to the contrary) to prevent the undersigned from being clearly convinced that Toirac mishandled Ramirez's deposits or otherwise dealt dishonestly or improperly with him. The January 2004 Audit On January 20, 2004, Tibizay Morales, who was then employed by Petitioner as an investigator, conducted an audit of Toirac's records. (The impetus for this audit was Petitioner's receipt of a complaint from Ramirez.) During the audit, Toirac reported to Ms. Morales that she no longer maintained an escrow account but instead relied upon her attorney to act as escrow agent for funds entrusted to her. Toirac also told Mr. Morales that Ramirez's deposits initially had been held in HCIC's operating account, before being handed over to Mr. Montes for safekeeping. Toirac was not able, at the time of the audit, to produce bank statements for HCIC's operating account, and apparently a listing agreement that should have been in the broker's file was not there. Toirac agreed to provide the missing documentation. By letter dated January 20, 2004, Toirac informed Ms. Morales that she would forward requested documentation within 10 days. For reasons unknown, Toirac failed to follow through with this, prompting the instant disciplinary action. The Charges In Counts I and VII, Petitioner alleges that Respondents are guilty of culpable negligence or breach of trust in any business transaction, either of which is a disciplinable offense under Section 475.25(1)(b), Florida Statutes. Petitioner's position is that Respondents mishandled Ramirez's deposits and misled him into believing that the money would be held in trust by HCIC as an escrow agent.1 In Counts II and VIII, Petitioner charges Respondents with failing to account for and deliver trust funds, in violation of Section 475.25(1)(d)1., Florida Statutes. Petitioner's position is unclear. What is clear, however, is that Respondents returned Ramirez's deposit money within a reasonable time after his demand therefor. In Counts III and IX, Petitioner accuses Respondents of having failed to maintain trust funds in the real estate brokerage escrow account until disbursement was properly authorized, in violation of Section 475.25(1)(k), Florida Statutes. In Counts IV and X of its Administrative Complaint, Petitioner accuses Respondents of having intermingled personal funds with funds being held in escrow. Petitioner's position is that by initially depositing Ramirez's deposits in HCIC's operating account, Respondents failed to comply with Florida Administrative Code Rule 61J2-14.008(2), and hence violated Section 475.25(1)(e), Florida Statutes. In Counts V and XI, Petitioner asserts that Respondents obstructed or hindered the enforcement of Chapter 475, Florida Statutes, in violation of Section 475.42(1)(i), Florida Statutes, and therefore in violation of Section 475.25(1)(e), Florida Statutes. Petitioner's position is that Respondents willfully interfered with Morales's investigation by failing to provide documentation as promised.2 Ultimate Factual Determinations Toirac handled Ramirez's deposit money in accordance with the unambiguous terms of the Addendum. Petitioner failed to prove that the Addendum is fraudulent. Thus, the Addendum, when considered in conjunction with Toirac's unrebutted testimony that she and Ramirez signed the instrument, is fatal to Counts I, III, IV, VII, IX, and X of the Administrative Complaint. Respondents are not guilty of the offenses charged therein. Toirac did, in fact, return Ramirez's deposit money within a reasonable time after he demanded a refund. Respondents therefore are not guilty of the offenses charged in Counts II and VII of the Administrative Complaint. When Ms. Morales interviewed Toirac in January 2004 in response to Ramirez's complaint, Toirac admitted most, if not all, of the material facts pertaining to the circumstances under which Ramirez's deposits had been held. Further, the documents that Toirac neglected to provide Ms. Morales, i.e. HCIC's bank records and a listing agreement that had gone missing, were claimed by Toirac to be corroborative of her statements to the investigator. Toirac's failure to produce such documents cost Toirac an opportunity to bolster her credibility——and enabled Petitioner to draw adverse inferences against Toirac, e.g. that the questioned listing agreement did not exist after all.3 Given these facts, the undersigned is not convinced that Respondents obstructed or hindered Petitioner's investigation. Consequently, Respondents are not guilty of the charges set forth in Counts V and VI 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 Respondents not guilty of the offenses charged in the Administrative Complaint. DONE AND ENTERED this 14th day of September, 2005, in Tallahassee, Leon County, Florida. S 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 14th day of September, 2005.
The Issue Whether the respondent committed the acts alleged in the Administrative Complaint dated June 21, 1996, and, if so, the penalty which should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department of Business and Professional Regulation is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to chapters 120, 455, and 475, Florida Statutes. The Florida Real Estate Commission operates within the Department and is the entity directly responsible for licensing and disciplining those licensed under chapter 475. Section 475.02, Fla. Stat. The Division of Real Estate operates within the Department and assists the Commission in carrying out its statutory duties. Section 475.021, Fla. Stat. Prudencio Garcia is now and was at all times material to this proceeding a licensed Florida real estate broker, having been issued license numbered 0203682. He is currently licensed as a broker-salesperson with Hamilton Realty, Inc. At all times material to this proceeding, Continental Landmark Realty, Inc., was Mr. Garcia's registered employer. Mr. Garcia has been licensed as either a real estate salesperson or a real estate broker for eighteen years, and he has not previously been the subject of a license disciplinary action. Either on or about November 1, 1994, or on or about December 1, 1994,1 a Residential Lease, an Option to Purchase, and a Contract for Sale and Purchase were executed whereby Sergio Montero and Mayte Rosabal agreed to lease real property owned by Ramon and Gladys Rodriguez for a term of six months and to purchase the property subject to the terms of the Option to Purchase. and the Contract for Sale and Purchase. Mr. Garcia solicited Mr. Montero and Ms. Rosabal for this transaction on behalf of Mr. and Mrs. Rodriguez, who needed to sell their house as soon as possible because they had purchased and moved into another home and were having trouble paying two mortgages. Mr. Garcia was acquainted with Mr. and Mrs. Rodriguez and Mr. Montero and Ms. Rosabal. The lease, option, and contract were signed at the offices of Continental Landmark Realty. Mr. Garcia signed the option and the contract on behalf of Continental Landmark Realty, which was his employer at the time. Both the option and the contract provided that Continental Landmark Realty would receive a $6,000 commission upon the sale of the property. Neither Continental Landmark Realty nor Mr. Garcia were to receive any fee or commission in connection with the lease of the subject property. Mr. and Mrs. Rodriguez expected to receive $4,000 at the time the lease, option, and contract were executed.2 Mr. Montero gave them $700 in cash at the time of execution and $800 in cash the day after the documents were executed. Mr. Montero gave Mr. Garcia the remaining $2,500 owed to Mr. and Mrs. Rodriguez, in cash. Mr. Garcia did not promptly deliver these monies to Continental Landmark Realty for deposit in the company’s escrow account. He did not promptly deliver the $2,500 to Mr. and Mrs. Rodriguez, despite their repeated requests that he do so. Rather, he claimed that he was robbed and the money taken from him.3 After Mr. and Mrs. Rodriguez threatened to take legal action against him, Mr. Garcia gave them $2,425 of the $2,500 he had received on their behalf.4 The broker of record for Continental Landmark Realty was not aware of the transaction between Mr. and Mrs. Rodriguez and Mr. Montero and Ms. Rosabal until Mrs. Rodriguez went to her office and complained about not having received the $2,500 from Mr. Garcia. The evidence is sufficient to establish that Mr. Garcia was acting as an agent of Continental Landmark Realty in connection with the subject real estate transaction, that he received monies in connection with the transaction and failed to deliver them promptly to Continental Landmark Realty, and that he committed a breach of trust by failing to deliver the monies promptly to Mr. and Mrs. Rodriguez, the parties to the real estate transaction entitled to receive them.
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 finding Prudencio Garcia guilty of violating section 475.25(1)(b), (e), and (k), Florida Statutes (1995), and rule 61J2-14.009, Florida Administrative Code, and Suspending Mr. Garcia’s real estate broker’s license for a period of one (1) month; Following the suspension, placing Mr. Garcia on probation for a period of one (1) year with a condition of probation that he successfully complete a thirty-hour broker management course during the term of probation; and Imposing an administrative fine in the amount of $1,000. DONE AND ENTERED this 18th day of March, 1997, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 18th day of March, 1997.
