The Issue By a four count Administrative Complaint, Petitioner alleges that Respondent is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction in violation of Section 475.25(1)(b), F.S.; guilty of having failed to account and deliver advance fees in violation of Section 475.452, F.S. and therefore in violation of Section 475.25(1)(e), F.S.; guilty of having failed to maintain trust funds ($22,066.25) in the trust account or some other proper depository until disbursement thereof was properly authorized in violation of Section 475.25(1)(k), F.S.; and having violated the provisions of a prior Final Order of the Florida Real Estate Commission in violation of Section 475.25(1)(e), F.S. BACKGROUND, PROCEDURE, AND PRELIMINARY STATEMENT All of the allegations of the Administrative Complaint herein arise from Respondent's performance under a prior settlement Stipulation and resultant Final Order of the Florida Real Estate Commission, requiring, among other matters, restitution by Kevin S. Hawkins, Respondent herein. Although the Department of Professional Regulation (DPR) initiated the instant proceeding by the above-referenced four count Administrative Complaint which had been referred to the Division of Administrative Hearings for evidentiary hearing pursuant to Section 120.57(1), F.S., DPR then moved to relinquish jurisdiction to the Florida Real Estate Commission upon grounds that the Stipulation in the prior case covered the contingency of non-performance of the required restitution and further provided, under such circumstances, for Respondent's appearance by informal hearing before the Commission. The prior Hearing Officer on the case denied that motion by an order entered June 2, 1988. At formal hearing, DPR renewed its motion to relinquish jurisdiction which the undersigned took under advisement for resolution within this Recommended Order. The motion is here denied and the reasons there for are addressed within the Conclusions of Law, infra. At formal hearing, Respondent's responses to Petitioner's Request for Admissions were recognized without objection. In anticipation that there might be no transcript, these admissions were admitted as Petitioner's Exhibit 1, for clarity of the record. Petitioner presented the oral testimony of Respondent Kevin S. Hawkins, James Mitchell, and Frederick Wilsen, and had eight exhibits admitted into evidence. Respondent presented the oral testimony of Margaret Tripp and Grant Bartells and testified on his own behalf. Respondent had four exhibits marked for identification, none of which were admitted in evidence. A transcript of the proceedings has been provided, and each party has submitted proposed findings of fact and conclusions of law outside the 10 day period stipulated/imposed at formal hearing. Because each party's proposals were late-filed and since each party filed formal proposals prior to completion of this Recommended Order, the respective proposals have been considered by the undersigned and the findings of fact therein are ruled upon in the Appendix to this Recommended Order, pursuant to Section 120.59(2), F.S. Likewise, the undersigned has not sua sponte struck Petitioner's proposals due to their submittal on the wrong size paper, in violation of Rule 22I-6.003(8), F.A.C.
Findings Of Fact Petitioner Department of Professional Regulation, Division of Real Estate is the state licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints pursuant to the laws of the State of Florida, in particular, Section 20.30 and Chapters 120, 455, and 475, F.S., and the rules promulgated pursuant thereto. Respondent is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0200419 in accordance with Chapter 475, F.S. The last license issued to Respondent was issued as a nonactive broker with a home address of P.O. Box 650488, Vero Beach, Florida 32965. The Florida Real Estate Commission rendered a Final Order filed April 24, 1987 which adopted a Stipulation entered into by the Respondent and the Commission. The Stipulation was drafted by Respondent's prior attorney and Mr. Mitchell, who at that time was the attorney for the Department of Professional Regulation, Division of Real Estate (DPR). The Stipulation terminated prosecution of Respondent on several cases by the DPR. Mr. Mitchell acknowledged that as DPR attorney he was the prime draftsman of the Stipulation, and that the restitution contemplated therein was a pro rata return of all time share auction monies held by Respondent or Resort Condominium Resales, a company owned and controlled by the Respondent, which company had also been named as a Respondent in the previous cases resulting in the Stipulation, but that full repayment to each investor of all monies invested by him/her with Respondent or with Respondent's company was never contemplated by the terms of the Stipulation. The Stipulation, in pertinent part being paragraph 7 provided as follows: Respondents agree to make restitution to all owners entitled to restitution of those advance fees being maintained by the Respondents. The Respondents shall make restitution within six (6) months of the filing of the Final Order of the Stipulation. Should restitution not be made as agreed herein, the Respondent shall appear before the Florida Real Estate Commission at a Section 120.57(2), F.S. informal hearing for the violation of failing to abide by a lawful order of the Commission pursuant to Section 475.25(1)(e), F.S. The Stipulation contained no mention of any specific amount of restitution to be made and the DPR staff in general had no prior experience with the handling of time share auction cases of similar nature, so in order to facilitate and ensure the Respondent's compliance with the Stipulation/Final Order, DPR provided an investigator, Grant Bartells, to monitor the Respondent's efforts at compliance. DPR and its several attorneys interpreted the Stipulation/Final Order to require that a bank account of several commingled funds totalling upwards of $300,000 should be reduced to a zero balance by October 25, 1987. Contrariwise, Respondent and the DPR investigator, Bartells, interpreted it to mean that by that date all restitution checks should be mailed out to those persons who had been determined by Respondent and Bartells to be owed any restitution. Mr. Bartells and an associate travelled to Respondent's office in Vero Beach and spent several days going over his books. Respondent provided Margaret Tripp to assist them in their review of his affairs. Approximately, May 31, 1987, the sum of $211,357.81 was agreed between Bartells and his associate and Respondent to be the opening or beginning balance of funds available from auction proceeds for purposes of the agreed pro rata restitution of advance fees. In reaching this amount, Bartells subtracted the amounts owed by Respondent for the expenses attendant upon holding two time share auctions he had held previously. The Administrative Complaint herein does not address this use of the funds, and, indeed, Mr. Mitchell and Mr. Wilsen conceded that it was appropriate for Bartells and the Respondent to have made such a deduction before commencing the restitution process. The Respondent issued or caused to be issued between June 22, 1987 and July 28, 1987 approximately 715 checks as pro rata restitution to investors. Before this was done, the DPR investigators checked, reviewed, and audited the amounts. Although this check, review, and audit were not of the same quality as a certified public accountant might have performed, and although Mr. Bartells relied in large part on the cooperation and candor of Respondent and Miss Tripp to show him the account these monies were from and to explain the amounts, nature, and sources of those monies, Bartells' methods were in accord with DPR standard operating procedure for analogous cases. On or about June 22, 1987, the Respondent also issued or caused to be issued and delivered check #1136 in the amount of $21,647.25 made payable to Resort Condominium Resales. On or about June 26, 1987, the Respondent also issued or caused to be issued and delivered check #1137 in the amount of $419.00 also made payable to Resort Condominium Resales. Before making these payments/withdrawals against the $211,357.81 res established by consent and cooperation between the DPR investigators and Respondent, the Respondent represented orally to Mr. Bartells that the amounts reflected in the two checks were earned commissions and asked what he should do with them. It was Respondent's position that these amounts had been inadvertently and improperly commingled in the restitution account as part of the $211,357.81 when they should not have been because they were never part of the time share auction deposit proceeds (advance monies). Mr. Bartells responded, "If you had a deal and a contract and it is completed; both parties are satisfied, I don't see how anybody can tell you you can't take your commissions but you never should have put them in there." Mr. Bartells readily admitted that he had no actual, explicit authority delegated by DPR or the Commission to render legal opinions, but every element of this case bespeaks his apparent authority to bind the agency in all matters regarding the restitution process. In reliance on Mr. Bartells' statement and apparent authority, Respondent paid to his company the two checks totalling $22,066.25. Except for the testimony of Mr. Mitchell that in drafting the original Stipulation he did not contemplate that any monies would be taken out of the escrow account or otherwise retained for Respondent's use, there is no record evidence to suggest that the total $22,066.25 was not earned commissions as represented by Respondent. At the time of entering into the Stipulation, no one totalled what was in the Respondent's existing account which started at upwards of $600,000, and in the course of drafting the Stipulation, there was never any discussion as to the amount of money remaining in the account. In the course of the restitution process, the monitor for DPR, Mr. Bartells, relied largely on Respondent's representations, and no one from DPR reviewed any underlying documentation of the amounts and accounts voluntarily offered up by Respondent. No one at DPR seems to have questioned how $600,000 became $300,000, and the further reduction to a starting figure of $211,357.81 was both contemplated by the original Stipulation and was retroactively authorized by Mitchell's and Wilsen's testimony at formal hearing. Although Mr. Mitchell conceded that the Respondent would be entitled to any commissions the Respondent had earned, Mitchell did not find the Respondent's representations to be credible. Because the prior cases against Respondent which had been settled by the Stipulation/Final Order had included counts involving failure to account for funds, Mitchell did not believe that the two check amounts Respondent paid to his company were, in fact, Respondent's earned commissions on purchase money. However, Respondent's testimony that he created the $211,357.81 reimbursement account in question after the Stipulation/Final Order was entered into and accidently commingled the funds then in his haste to comply with the Stipulation/Final Order is credible and unrefuted. The foregoing finding in no way reflects unfavorably on Mr. Mitchell's credibility, but never having audited or had hands-on experience with the specific monies, as did Bartells and Respondent, Mitchell's impressions alone cannot refute the fact evidence of the other witnesses. Mitchell merely felt that these amounts constituted advance monies which were covered by the restitution Stipulation, but there is no clear, affirmative proof that such is, in fact, the case. At some point before or after October 24, 1987 (six months after the Final Order), Respondent learned that some of the checks which he had sent to parties who had been determined to be entitled to pro rata restitution had not cleared the bank. Some checks were returned to Respondent as unclaimed mail; some were not returned but nonetheless never were cashed. As of February 23, 1988, the balance in the account established for restitution remained at $10,079.33, so Respondent, in responding to DPR inquiries, requested the assistance of the DPR by two letters of that date. The tone of these letters suggests nothing other than an effort on Respondent's part to comply with the spirit of the Stipulation and Final Order. For instance, in one letter he states: Please find my statement regarding compliance with paragraph 7e. Current balance is 10,079.33. I'll await directions as how you want me to handle these funds. Enclosed you'll find the restitution records your [sic] asked for. In the other letter, the Respondent states: All checks were mailed & some did not get delivered. I complied with the stipulation to the best of my ability. I would like to turn the remaining funds over to the state and be done with this matter, as I am know [sic] longer acting as a salesman or broker, and have found employment elsewhere. The Stipulation is silent as to what Respondent should do under the circumstances. Mr. Mitchell acknowledged that no discussions preliminary to the drafting of the Stipulation either covered or anticipated that mailed checks might be returned to the Respondent. Respondent telephoned the Commission requesting information as to what to do with the $10,079.33 and was given no definitive answer. Respondent did not request an informal hearing before the Commission because he believed he had made complete pro rata restitution under the terms of the Stipulation/Final Order (see Findings of Fact 6-8, supra), and because he feared that under the terms of the Stipulation/Final Order making a request for an informal hearing before the Commission would constitute an admission that he had "violated" the Stipulation by "failing to abide by a lawful order of the Commission." Frederick Wilsen, Senior DPR attorney, described himself as "in a quandary" over what to do when he received the Respondent's letters since an informal hearing before the Commission had not been requested and since the account was not reduced to zero. Therefore, the Administrative Complaint herein was initiated.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that the Florida Real Estate Commission enter a Final Order dismissing the four counts of the Administrative Complaint against Respondent and including an advisory paragraph, as is appropriate within its agency expertise, setting forth a method for Respondent to follow in disbursing the $10,079.33 balance of the account. DONE and RECOMMENDED this 19th day of December, 1988, at Tallahassee, Florida. ELLA JANE P. DAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of December, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-2272 The following constitute specific rulings upon the parties' respective proposed findings of fact (PFOF) pursuant to Section 120.59(2), F.S. Petitioner's PFOF 1-11 Accepted, but not necessarily adopted. Where not adopted, the proposals have been modified to eliminate subordinate and unnecessary material. 12-13 Address mixed questions of law and fact as set forth in the COL of the Recommended Order, and are rejected in part as conclusions of law (COL), not findings of ultimate fact. To the extent they may contain any assertion of fact over law they are rejected as not supported by the greater weight of the record evidence as a whole. See all FOF and COL. Respondent's PFOF 1 Covered in the introductory material. 2-3 Accepted. 4-6 Accepted except where subordinate and unnecessary. Addresses a mixed question of law and fact as set forth in the RO's COL, and is rejected in part as a COL, not a finding of ultimate fact. To the extent it contains assertions of fact over law, it is accepted as modified within the Recommended Order (RO) so as to conform to the greater weight of the credible record as a whole. Accepted as modified in FOF 11 to reflect an ambiguity in the record. Rejected as a COL or mere argument of counsel; also cumulative Rejected as a COL; covered in the COL of the RO. 11-15, and 17-20 Except where accepted within the RO, these proposals are rejected as subordinate, unnecessary, and/or cumulative. 16 Accepted. 21-22 Rejected as merely argument of counsel or recitation of testimony. COPIES FURNISHED: Darlene F. Keller, Executive Director Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 James H. Gillis, Esquire 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 John Joseph McHugh, Esquire 333-17th Street, Suite U Vero Beach, Florida 32960 Bruce D. Lamb, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 =================================================================
Findings Of Fact The Respondent, Joseph J. Kowitt, is now a licensed real estate broker-salesman, having been issued License No. 0048987. At all times pertinent to this proceeding the Respondent was registered and licensed by the Florida Real Estate Commission or the Board of Real Estate, respectively, as a non- active real estate broker. The Respondent's registration certificate bore an effective date of October 1, 1978 and an expiration date of September 30, 1980. Some time prior to October 9, 1979, Mrs. Frieda Frank of Silver Spring, Maryland, was contacted by Mr. Douglas Bradshaw, a broker-salesman in the employ of Powis Properties, Inc., a corporate real estate broker of Boca Raton, Florida, to ascertain her interest in selling two unimproved lots in Palm Beach County, Florida. Mrs. Frank, the owner of the property, indicated to Mr. Bradshaw that he should coordinate activities involved in effecting a sale through her cousin, the Respondent. Mrs. Frank had previously instructed the Respondent to attempt to sell the two lots for her for a certain minimum price. The Respondent was contacted by Mr. Bradshaw either shortly before or shortly after he contacted the seller of the property, Mrs. Frank, but after the Respondent had placed signs on the property indicating it to be for sale by the owner, with the Respondent's telephone number depicted thereon. Upon being contacted by Mr. Bradshaw or Powis Properties, Inc., the Respondent explained that he was not the owner of the property, but that he represented his cousin, Mrs. Frank, who lived in Maryland. The result of the conversation was that the Respondent agreed to give Mr. Bradshaw an "open listing" and the Respondent requested that he be reimbursed for any expenses born personally in preparing for and effecting a sale, indicating that this was his cousin's wish also. There is no evidence to reflect the precise amount of expenses incurred by the Respondent in attempting to sell his cousin's property, his testimony simply consisting of statements to the effect that he had erected four or five signs on the property during the course of the year preceding the sale and had incurred gasoline expenses traveling between the property in Palm Beach County and his home in north Dade County. On approximately October 9, 1979 Powis Properties, Inc. secured an offer to purchase the subject property in the amount of $27,000 and communicated that offer to the seller. She indicated to Mr. Kowitt that a $30,000 sales price would be acceptable, including a 10 percent brokerage fee for Powis Properties who had secured the prospective buyer. At approximately this point in time an agreement was reached between Mr. Kowitt, the Respondent, and Powis Properties, Inc. whereby Mr. Kowitt would receive $500 for his services rendered in effecting the sale and which would he paid to him at the closing of the sale of the two subject lots. This arrangement is reflected in the Respondent's own Exhibit 2, although the Respondent maintained the fee arrangement agreed upon was merely for reimbursement of his expenses incurred in preparing the property for sale and was not a referral fee, as Mr. Stingene of Powis Properties had represented in the letter which is Exhibit Two. The Respondent, however, in the face of the Petitioner's showing that a flat fee of $500 was paid with the understanding of the Petitioner's chief witness that it was for a referral or for "services rendered," offered no concrete evidence to establish what his alleged expense items consisted of nor their respective amounts. A purchase offer was redrawn at the required price of $30,000 in accordance with the seller's wishes and accepted by the seller. The transaction proceeded to closing on October 28, 1980. Approximately three days prior to the closing date, Powis Properties, Inc. inquired of the Registration Division of the Board of Real Estate regarding the status of Mr. Kowitt's registration as a realtor and was informed that he held an inactive status at that time. Powis Properties, Inc. communicated this information to Mr. Kowitt who indicated that his registration renewal application was in process and apparently such was not yet reflected in the records of the Board of Real Estate. Powis Properties, through Mr. Powis or Mr. Stingene, then requested that he evidence his valid registration at the closing in order to receive the subject $500 fee. Powis Properties then drew a check of $500 payable to Mr. Kowitt and authorized its sales agent who would be present at the closing to deliver the check to Mr. Kowitt upon his establishing proof of his registration or otherwise inform him that the fee would have to be held in escrow until he could establish the fact of his active registration. At the closing Mr. Kowitt delivered to the salesman representative of Powis Properties, Inc. a photocopy of registration Certificate No. 0048987 indicating on its face the status of "active broker" and based upon that representation, the sales agent delivered to Mr. Kowitt the $500 check which he later negotiated. Petitioner's Exhibit 7, which was unrefuted, reveals that the Respondent held Certificate No. 0048987 which is a non-active broker's certificate issued October 21, 1976 with an expiration date of September 30, 1980. Petitioner's Exhibit 8 was not contradicted and reveals that the Respondent applied for a renewal as a broker-salesman on October 27, 1979, the day prior to the subject closing. After amending his application to that for a broker-salesman certificate, since he did not maintain an office, a broker- salesman certificate was issued to the Respondent with an effective date of November 6, 1979, although with a date of issuance of December 20, 1979 (Exhibit 9). The dates reflected on Exhibit 9 corroborate the Petitioner's showing (in Exhibit 5) that it is the policy of the Board that a registration certificate reflect the effective date to be the date the request was received by the Board in proper form, as opposed to the date of mailing. At the closing the Respondent represented that he was an active broker by the display of a xerox copy of his registration certificate with the above number and expiration date of September 30, 1980. Be acknowledges and admits that he altered the copy of the certificate to remove the prefix "non" from his ostensible designation as an active broker, but the Respondent contends that he informed the representative of Powis Properties at the closing that he had been assured by "someone" with the Board of Real Estate that he could consider himself an active broker upon posting of his renewal application and fee. Shortly after the closing, Mr. Powis or his agent examined the ostensible broker certificate copy supplied them by the Respondent. Upon the belief that the copy of the broker certificate was irregular when compared to other broker certificates which simply state "broker" rather than "active broker" (as the subject one did after the alteration) inquiry was made by phone to the Registration Division of the Board regarding the Respondent's true status. The Board informed Powis Properties that Mr. Kowitt at that time continued to be a non-active broker. Powis Properties then immediately notified Mr. Kowitt of the circumstances and made demand that he return the $500 fee. After a period of days or weeks had elapsed without satisfactory response from Mr. Kowitt, the subject complaint initiating these proceedings was filed by Powis Properties with the Board of Real Estate. Finally, a meeting was held on November 19th between the Respondent and Powis Properties or its agent or representative, at which time the Respondent could not yet supply concrete evidence of his registration as an active broker or broker-salesman, although the application for active status remained pending. Thus, Powis Properties, Inc. continued to maintain its claim against the Respondent for return of the $500 fee and the Petitioner initiated these proceedings.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence in the record, as well as the candor and demeanor of the witnesses, it is RECOMMENDED that the Respondent, Joseph J. Kowitt, be found guilty of a violation of Section 475.25(1)(b) Florida Statutes (1979), as well as Section 475.42(1)(a), Florida Statutes (1979), and that the penalty of a public written reprimand be imposed on the Respondent. DONE AND ENTERED this 18th day of May, 1981 in Tallahassee, Leon County, Florida. P. MICHAEL RUFF, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18ths day of May, 1981. COPIES FURNISHED: Ralph Fetner, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Joseph J. Kowitt 2030 South Ocean Drive Apartment No. 1227 Hallandale, Florida 33009
Findings Of Fact Respondent Theodore Dorwin is a registered real estate broker, registration certificate number 0022474, 561 N.E. 79th Street, Miami, Florida. He also is now and was at all times alleged in the Administrative Complain the president and active firm member of Respondent Intermart, Inc., a registered corporate broker located at the same address. As broker with Intermart, Respondent holds registration certificate number . 0157090. Intermart is registered under certificate number 0157081. The registrations of both Dorwin and Intermart were suspended by Petitioner on July 21, 1976, for a period of ninety (90) days. By order, dated December 16, 1976, Petitioner denied Respondents' petition for reactivation and return of registration certificates. (Petitioner's Composite Exhibit 1) Intermart, Inc. was formed in the middle of 1975, but did not commence active operations until February, 1976. Prior to 1975, Dorwin had been a general real estate broker for various land companies in Florida. In 1975, he became associated for a brief period of time with a firm called Property Resales Service, Inc., of Miami, an organization that solicited listings for the resale of property. During the period February, 1975, until 1976, Dorwin was connected successively with International Land Brokers, Inc. (hereinafter "International") and Florida Landowners Service Bureau (hereinafter "Service Bureau"), both of which firms engaged in the solicitation of advance fees from out of state property owners for listing agreements whereby they undertook to advertise and sell the property for a ten percent commission. The listing agreements of these firms provided that the advance fee would be credited against the commission. In February, 1976, Intermart, Inc. was activated and began operations at the same office and with the same salesmen who had been used by Dorwin in his activities for the Service Bureau. It used virtually the identical "Listing and Brokerage Agreement" and promotional material as had the other firms. The change was brought about by the fact that commission checks received from the Service Bureau had "bounced." (Testimony of Dorwin, Petitioner's Exhibits 2,5,6,7,23,26,27,28) Respondents operated the advance fee business in the following manner: Lists of primarily out of state owners of land in large developments in Florida and other states were purchased by Respondents from individuals who sold such lists "on the street." In like manner, lists of prospective purchasers of such land were purchased. Information was placed on cards containing the name, address and phone number of the landowner, together with information as to the development where the land was located. A staff of some fifteen to twenty real estate salesmen were utilized to solicit listings from the prospective sellers over the telephone. Each salesman had a cubicle in a small office with a .telephone. These individuals worked in two shifts, six days a week, during the evening hours. Each salesman averaged about twenty to twenty-five telephone calls a night. When Intermart succeeded Dorwin's operation for the Service Bureau, there was little or no change in any of the above procedures. The average, listing fee was $350 , of which the soliciting salesmen received approximately one-third. The salesmen were provided a "script" or "opening statement" by Dorwin to use as a selling "pitch." The persons called were asked if they were interested in reselling their property. They were told that foreign investors around the world were interested in buying blocks of land in Florida and were quoted a sale price that usually was somewhat in excess of the current market value of the property. If the property owner expressed interest in listing his land for sale, literature was mailed to him which consisted of information about Intermart and the experience and qualifications of its officers, together with a form "Listing and Brokerage Agreement," and reprints of newspaper and other articles concerning the interest of foreign investors in land in the United States, and similar subjects. About two weeks later, the salesman would call the individual again to urge that he send in his advance fee, along with the signed listing agreement. The proposed selling price was fixed by the salesman from a large chart in the office that showed sample original purchase prices and amounts to be quoted as selling prices based on the number of years since purchase of the property. These amounts were used in all cases, regardless of where the property was located. The only deviation from the standard selling price was in cases where water or canal front property, golf course or business property was involved, in which case, $500 to $1,000 was added to the quoted figure. During the initial call, the salesman asked for the legal description of the lots in question and, if a listing was obtained, a copy of the agreement for deed or warranty deed was also requested. However, no efforts were made to check the legal descriptions of the property nor were any visits made to the property by Dorwin or other personnel of the firm. The sales man had nothing to do with actual sales of the property and did not contact prospective purchasers. Neither Dorwin nor one of his former salesmen who testified at the hearing was aware of any actual sales of listed property made by Intermart or the Service Bureau. No credible evidence was submitted that the property was ever checked for zoning restrictions or that prospective purchasers were contacted by anyone. Respondents did occasionally send a form letter to those listing property stating that Intermart "had the opportunity to present your property" to a named individual and that they would "endeavor to interest the prospect further." However nothing ever came of these supposed contacts. During the telephone conversations with sellers, the alesmen made statements to the effect that Intermart was making sales, and that the land would usually be sold within eight to nine months. In one case, a seller was told by one of Respondents' salesmen that Intermart had sold all of the property that had been listed with it. Further representations were that Argentine buyers loaded with money" wanted to invest in American real estate. One salesman represented that Respondents advertised all over the world in all foreign countries and in every state in the Union. A letter enclosed with promotional materials stated that Respondents advertised or had proposed advertising pending in a number of countries via major magazine and newspaper publications, and in Miami, Los Angeles, New York City, Boston and Chicago. Another landowner was told that the company had been in business for a period of ten years. It was also represented that Intermart had a computer printout on the latest market values of land and that this was used in determining their estimate of a selling price. In one instance, the salesman told the seller that they had identified a buyer for his land which would be part of a large block package to be sold to the individual and that a rapid decision had to be made whether or not to list. the property so that he could participate in the deal. He was further told that it would take about three months to close the sale with a Venezuelan investor. Attempts by the property owners to obtain copies of the listing agreement signed by Respondent proved to be futile, in spite of promises from its representatives to provide the same. In one instance, to induce a listing, the sales man told the landowner to cross out the amount shown on the listing contract that previously had stated a sale price and to pencil in an increased sales price. He also told him to make pencil corrections on the proposed agreement to indicate that the purchaser rather than the seller would pay the ten percent commission of the sales price. (Testimony of Judkins, Ladabauche, Nicholas, Burke, Petitioner's Composite Exhibit 2, Petitioner's Exhibits 5,6,7 [depositions]) Respondents' promotional literature and information that was sent to prospective sellers of property contained various promises and representations that were not kept, as follows: Respondents stated that it would "analyze" the property to arrive at a correct selling price by reviewing the status of development and zoning in the immediate area of the property. In fact, the selling price was based solely on an arbitrary figure selected from a chart on the wall that did not take into consideration the precise location of the property or zoning considerations. Respondents stated that "Your property legals are checked thoroughly." In fact, any legal description of the property was obtained solely from copies of agreements for deed or warranty deeds supplied by the owner , and were not further checked in any manner. Respondents stated "In order for us to successfully merchandise and receive the highest offer for your property (ies) considerable expense is involved because a great deal of time is put forth on your behalf and many of the property(ies) are being offered for sale sight unseen." In fact, only a small amount of money and little or no time was expended to sell the property. After the property owner had submitted his advance fee and listing agreement to Respondents, no further efforts were made on his be half nor was he ever contacted thereafter by the firm. (Testimony of Lewis, Judkins, Ladabauche, Nicholas, Petitioners' Composite Exhibit 2, Petitioners' Exhibits 57, 23) In the "Listing and Brokerage Agreement," Respondents a greed to use its "efforts to secure a purchaser for the property" and to include the property in its directory of "available properties, to be distributed to other real estate brokers." It also contained A the following pertinent undertakings: "4. In consideration of this listing, you agree: To cause said property to be included in your listing directory and in two successive issues of said directory within a period of one year. Contemporaneously with the appearance of said listing in the directory, you agree to direct the efforts of your organization to bringing about a sale of my property; To advertise said property as you deem advisable in magazines or other mediums of merit: I understand that this agreement does not guarantee the sale of my property, but that it does guarantee that you will make an earnest effort pursuant to the aforementioned provisions." (Petitioner's Composite Exhibit 23) Respondent Dorwin testified that he planned to issue a catalog of listed properties in June, 1976 to be distributed to various investors and brokers in the United States and foreign Mailings this depend 7 countries. of catalog were to on responses to .advertisements placed in newspapers around the world and in the United States in April. No action toward any of these goals was taken until March, 1976 when Intermart entered into an agreement with Currency Control Advertising, Miami, Florida, to act as an advertising agency for brochures, printing, copy, layout, typesetting, art, newspaper and magazine advertising, public relations, radio and television. Under this contract, small, one insertion newspaper ads were placed in approximately seven newspapers of various foreign countries and Canada, and in newspapers in Chicago, Los Angeles and New York, costing approximately $500. These ads read as follows: "U.S. Investments Catalogue . . . $9.95 U.S. Complimentary to Investors and to the Trade." Property listings for the catalog were not provided to the advertising agency until the last half of July, 1976. It was not published until August 20th but has not been mailed due to Respondents' current suspension by Petitioner. A few responses were received as a result of the newspaper advertisements but Dorwin testified that nothing was done to follow-up such inquiries because he was waiting for the catalog to be published. Five thousand copies of the catalog were printed at a cost of some $4,500. At the present time, Intermart owes the advertising firm about $2,500 for its work. Dorwin testified that he planned to distribute the catalog to several thousand investors and brokers listed in the International Real Estate Federation, of which he was a member, but that he was unable to do so because of his suspension by Petitioner in July. During the period January-June, 1976, Intermart's records reflected a gross income from the advance fee business of approximately $190,000. About forty-eight per cent of this amount was paid to salesmen for commissions on listing fees, twenty-eight per cent for officers salaries, and about one and one-half per cent was paid for advertising. (Testimony of Dorwin, Weinstein, Stowe, Leader, Petitioner's Exhibits 4, 825) During the last half of June, 1975, Intermart, upon advice of Counsel, in anticipation of a new state law regulating advance fee contracts, stamped on their listing agreements a statement that the parties agreed the advance fee did not constitute trust funds and that the monies therefrom could be expended for expenses. Listing fees received after July 1, 1976, were placed in an Intermart, Inc. trust account of the Capital Bank of North Bay Village, Florida, Account 10452, and as of December 31, 1976, this account showed a balance of $5,083.35 that is being retained by Respondents pending the outcome of present proceedings. (Testimony of Dorwin, Petitioner's Dorwin testified that, although he was aware the other advance fee firms with which he had been associated did not follow through on listings to attempt to make sales, he planned to do so by his newspaper advertisements and issuance of the catalog. However, he admitted that no information was ever sent to any prospective purchaser, that no advertisements were ever placed that described individual parcels of property, and that the only contact ever made with prospective purchasers was by telephone calls. He further admitted that no one from the firm ever checked public records involving the property listed for sale to assure the accuracy of information provided by the owners, and only token visits were ever made to view the listed properties by any member of the firm. He maintained that salesmen were not given a "script" to use but merely an "opening statement" and that they were free to deal with property owners as individuals. He was unaware of where the chart showing sample property values had been obtained and stated that such a chart was not used during Intermart's operations but had been used only during the previous operation at the same address. He denied ever telling salesmen to inform expected sellers that the firm was selling blocks of land but acknowledged that in monitoring telephone conversations of the salesmen, they did exaggerate at times. (Testimony of Dorwin) In view of the totality of the evidence, it is found that the operations of Intermart, Inc. were designed and carried out with the sole intention of extracting monies from landowners with no intent to carry out the stated promises of "earnest efforts" to sell the property.
Recommendation That the certificates of registration of Theodore Dorwin and Intermart, Inc. be revoked pursuant to subsection 475.25(3), F.S. DONE and ENTERED this 11th day of February, 1977, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 COPIES FURNISHED: Richard J. R. Parkinson, Esquire Florida Real Estate Commission 2699 Lee Road Winter Park, Florida 32789 Louis B. Guttmann, Esquire 2699 Lee Road Winter Park, Florida 32789 Harold Mendelow, Esquire Manners and Amoon, P.A. 4349 N.W. 36th Street, Suite 106 Miami, Florida 33166
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer recommends that no action be taken against the real estate license of Keith Allen. DONE and ORDERED this 2nd day of September, 1977, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Frederick H. Wilsen, Esquire Florida Real Estate Commission 2699 Lee Road Winter Park, Florida 32789 Allan M. Parvey, Esquire Goldberg, Rubinstein & Buckley, P.A. Post Office Box 2366 Fort Myers, Florida 33902
The Issue The issues are whether Respondent is guilty of issuing checks from his escrow account without sufficient funds so as to constitute culpable negligence, breach of trust, misrepresentation, or concealment, in violation of Section 475.25(1)(b), Florida Statutes; failing to reconcile escrow accounts, in violation of Section 475.25(1)(e) and (k), Florida Statutes, and Rule 61J2-14.012, Florida Administrative Code; employing an unlicensed person, in violation of Section 475.42(1)(c), Florida Statutes; failing to maintain business records, in violation of Section 475.5015, Florida Statutes; and violating a lawful order of the Florida Real Estate Commission by failing to pay a citation within the required time, in violation of Section 475.25(1)(e), Florida Statutes. If Respondent is guilty of any of these allegations, an additional issue is the penalty that should be imposed.
Findings Of Fact Respondent became a licensed real estate salesperson in 1987. The following year, he became a licensed real estate broker, and he has remained a broker continuously since that time. From September 30, 1996, through January 30, 2000, Respondent was the qualifying broker of Express Realty and Investments, Inc. (Express Realty). At no time relevant to this case was Novellete Faye Hanse a Florida-licensed real estate broker or real estate salesperson. At all relevant times, Ms. Hanse was the office manager of Express Realty. Respondent formed Express Realty in 1995. Respondent was the sole director and president. Ms. Hanse's son was an officer of Express Realty from the time of its formation. Respondent met Ms. Hanse in 1991. She informed Respondent that she was a licensed mortgage broker. Respondent and Ms. Hanse agreed in late 1991 to form a joint real estate/mortgage broker operation in a single office. However, when Hurricane Andrew struck in 1992, Respondent, who has been a licensed general contractor since 1978, engaged exclusively in construction until 1995. Respondent formed Express Realty to pursue the prior plan of a joint real estate/mortgage broker operation. The two businesses occupied an office building owned by Ms. Hanse, who did not charge Respondent's business any rent. The address was 6306 Pembroke Road in Miramar. Express Realty served as an escrow agent in a contract dated May 9, 1999, for the sale and purchase of real property located at 6360 Southwest 23rd Street in Miramar. In this capacity, Express Realty, held various funds in escrow for the closing. For the closing, Express Realty issued two checks payable to the closing agent, totaling $19,169.08, and drawn on its escrow account. The checks, which are dated July 15, 1999, and signed by Ms. Hanse, bear the name, "Express Realty & Investments, Inc. Escrow Account" and bear the address 6306 Pembroke Road in Miramar. The bank failed to pay these checks due to insufficient funds. After receiving a complaint that Express Realty had failed to produce these escrow funds at the closing, Petitioner's investigator conducted an audit of Respondent's escrow account. At the audit, which took place the day prior to the day scheduled, the investigator found Ms. Hanse, but not Respondent, at the Express Realty office. Despite repeated requests on and after the day of the office visit, the investigator could not obtain relevant records from Ms. Hanse or Respondent concerning the real estate transaction for which Express Realty had issued escrow checks with insufficient funds. On August 23, 1999, the Florida Real Estate Commission issued a citation to Respondent at 6306 Pembroke Road in Miramar. The citation was served on Respondent within one week of the date of issuance. The $100-citation was for the failure to give the required disclosure or notice in a real estate transaction. The citation gave Respondent 30 days to contest the citation or 60 days to pay the citation. After the deadline, the investigator contacted Respondent and asked him about the citation. Respondent stated that he had forgotten about it. When Respondent still failed to pay the citation, the investigator called again, and Respondent stated that he had mailed the money, but it had been returned due to a faulty address. Respondent paid the citation approximately four months after it had been served on him. Shortly after Respondent belatedly paid the citation, Petitioner received another complaint concerning a contract for the sale and purchase of real property located at 850 Southwest 9th Avenue in Hallandale. In this transaction, Ms. Hanse represented herself to be a licensed real estate broker, showed the property to prospects, and accepted $5000 in escrow on behalf of Express Realty. In July 2000, Petitioner's investigator conducted an audit of Express Realty's escrow account. Again, the investigator was unable to find any documents by which he could undertake an independent reconciliation of the account or otherwise document the role of Express Realty in the subject transaction. At the hearing, Respondent claimed that he was unaware that Ms. Hanse had been conducting real estate business without his authority in the name of Express Realty. Although he admitted that she was an employee of Express Realty, he disclaimed any knowledge that she had removed him from the escrow account and otherwise taken over the management of the real estate broker company. However, Respondent could not explain why, after his claimed discovery of these misdeeds in the summer of 1999, he did nothing to prevent Ms. Hanse from continuing to use Express Realty as the means by which to conduct unlicensed real estate activities, as she did a few months later. Under the circumstances, Petitioner proved that Respondent was at all times aware that Ms. Hanse was conducting unlicensed real estate activities through Express Realty.
Recommendation It is RECOMMENDED that the Florida Real Estate Commission enter a final order finding Respondent guilty of the allegations contained in Counts I-IV and VI of the Amended Administrative Complaint, imposing a $5000 administrative fine, and suspending his license for three years; provided, however, if Respondent fails to pay the fine in full within 180 days of the final order, his license shall be revoked without further notice. DONE AND ENTERED this 9th day of July, 2002, 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 (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 9th day of July, 2002. COPIES FURNISHED: Jack Hisey, Deputy Division Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Dean Saunders, Chairperson Florida Real Estate Commission Division of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Hardy L. Roberts, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202 Juana Carstarphen Watkins Senior Attorney Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32801 Wayne Wagie 11900 North Bayshore Drive, Unit No. 5 Miami, Florida 33181
Findings Of Fact The testimony revealed that during late December, 1975, Land Re-Sale Service, Inc., a Florida Corporation, filed application with the Florida Real Estate Commission seeking registration as a corporate real estate broker. The application revealed that Defendant Frank Viruet (FREC Progress Docket 2856) was to become the Active Firm Member Broker, and Vice President of the company; that Carol Bauman was to become Secretary-Treasurer and Director of the company; that Lee Klein was to become President and Director of the company. Testimony shows that Carol Bauman is the wife of Defendant Bernard Bauman (Progress Docket 2857); that Lee Klein is the sister of Carol Bauman and that Jeffrey Bauman (FREC Progress Docket 2858) is the son of Bernard Bauman. Subsequent to filing said corporate application For registration with the Commission, evidence reveals that the name was changed to Noble Realty Corporation and shortly thereafter to Deed Realty, Inc. and that along with each change, a new application For corporate registration was later filed with the commission. It was noted that the stated officers and active firm members broker remain as stated in the initial corporate application For registration. Thus, it can be concluded For all legal purposes that the above corporate entities are one and the same. Count I of the Administrative Complaint filed herein, reveals that according to the certificate filed with the Commission's chairman dated December 3, which was offered into evidence by Plaintiff and admitted, during the period November 1, 1975 to the date of said certificate, i.e., December 3, 1976, which covers all dates material to the complaint herein, no registration was issued to or held by either of said corporations, Land Re-Sale Service, Inc., Noble Realty Corporation or Deed Realty, Inc. This was further confirmed by the testimony of Bernard Bauman who was to have become a salesman associated with the above entities and by Frank Viruet, who was to have become the active firm member broker For the above entities. Approximately December 2, 1975, Land Re-Sale Service, Inc. entered into a written lease For office premises known as Room 212, Nankin Building, 16499 N.E. 19th Avenue, North Miami Beach, Florida For the period January 1 through December 31, 1976 (A copy of the lease was entered into evidence by stipulation.) The unrebutted testimony of Plaintiff Reagan reveals that he observed during his investigation of this cause a building directory on the ground entrance floor to the Nankin Building displaying the name Noble Realty, Inc., Room 212 and a similar display on the building directory which was located on the second floor. Plaintiff's witness Peter King, a representative of and For Southern Bell Telephone Company testified that on December 27, 1975, three phones were installed in Room 212 of the Nankin Building in the name of Land Re-Sale Service, Inc. and that from January 2 to January 16, approximately 575 calls were made from the stated phones all during evening hours to out-of-state numbers. Jeffrey Bauman admitted to having made phone calls to out-of-state numbers For purposes of soliciting real estate sales listings, but failed to recall specifically the number of calls nor did he have records to substantiate this fact. Bernard Bauman testified that from such solicitations, approximately 4 listings were obtained accompanied by an advance fee of $375.00 For each listing. When he was advised by the Commission's Investigator that the operation they were conducting was in violation of the licensing law by reason that no registration had been issued to the company and that all who are engaged in real estate activities therein were in violation of the license law (Chapter 475, F.S.) the premises were closed and all real estate activities ceased. This was further confirmed and unrebutted by plaintiff Reagan. As to Count II, the evidence established that, as stated above, the Defendants Bernard and Jeffrey Bauman had solicited real estate sales listings with representations to out-of-state property owners that listings would in fact be published and disseminated to brokers nationwide. Both Jeffrey and Bernard Bauman admitted that their listings were never published or otherwise disseminated to brokers. Bernard Bauman's testimony reveals that no monies received were returned to senders. There is no evidence introduced to show that Defendant Jeffrey Bauman knew, at the time of soliciting, that no bona fide efFort would be made to sell the property so listed with Noble Realty Corporation. As to Count III, plaintiff alleges that the above acts as set Forth above established a course of conduct by defendant upon which his revocation or registration should issue.
The Issue The issues for determination in this proceeding are whether Respondent violated Section 475.25(1)(b) Florida Statutes, 1/ by committing the acts alleged in the Administrative Complaint and, if so, what, if any, penalty should be imposed.
Findings Of Fact Petitioner is the governmental agency responsible for issuing licenses to practice real estate and for regulating licensees on behalf of the state. Respondent is a licensed real estate broker under license number 0478560. The last license issued to Respondent was issued as a broker t/a Concord Financial Realty Co. ("CFR"), 495 E. Semoran Boulevard #115, Casselberry, Florida 32708. Respondent is the sole owner of CFR. CFR carries on regular business activities that include apartment rentals and sales of real estate. On January 31, 1992, Respondent and Mr. Charles Wallman, Respondent's husband, owned all of the stock of C.L. Wallman Associates, Inc ("CWA"). 2/ Respondent's husband owned Concord Financial Services, Inc. ("CFS"). CFS was formed to sell insurance and securities. Respondent and her husband operated CFR, CWA, and CFS out of shared office space. Respondent performed bookkeeping and secretarial duties for CWA and CFS. In January, 1992, Respondent's husband (the "seller") verbally agreed ("agreed") to sell 35 percent of the stock of CFS to Mr. John Topercer (the "purchaser") for $35,000. The seller and purchaser agreed to operate the company as "partners." The sale proceeds were to be invested in the company in which the seller and purchaser were to be partners. The purchaser paid the $35,000 purchase price in five installments from January 31, 1992, through March 12, 1992. During that time, the seller agreed to sell an additional 14 percent of the stock of CFS for an additional $13,000. The purchaser paid the additional $13,000 in three installments from April 14, 1992, through May 13, 1992. In May, 1992, the purchaser and seller agreed to another stock acquisition for $20,000. The seller would merge CFS, CWA, and CFR into a new company to be known as Concord Financial Centre ("CFC"). All of the business activities carried out by the separate companies would be consolidated into CFC. The purchaser would receive 49 percent of the stock of CFC in exchange for his 49 percent stock ownership in CFS. The seller and purchaser would operate CFC as "partners" in the same manner as originally contemplated for CFS. The sale proceeds were to be invested in the company in which the seller and purchaser were to be partners. The purchaser paid $20,000 in five installments from June 2 through June 22, 1992, and tendered his stock in CFS. However, the purchaser never received any stock in CFC. CFC was never formed. The seller never tendered any stock in CFC to the purchaser. The seller used some of the sale proceeds to operate CFS. However, approximately $30,000 of the sale proceeds were misappropriated and used by Respondent and her husband for personal purposes including a down payment on a house and a car. On January 6, 1993, the purchaser filed a civil complaint against Respondent and her husband alleging fraud, recision, and mismanagement of corporate funds. On August 8, 1994, the purchaser received judgment against Respondent and her husband in the amount of $30,000. Respondent and her husband have not satisfied the judgment. Neither has paid any money toward the judgment, and the purchaser has been unable to satisfy the judgment. Respondent knew of the negotiations and business transactions between her husband and Mr. Topercer. Respondent performed the duties of bookkeeper and documented all of the payments made by Mr. Topercer. Respondent was present during some of the discussions between her husband and Mr. Topercer. Respondent agreed to the merger of CFR into CFC. Respondent participated in the misappropriation of the purchase proceeds for her own personal use. When considered in their totality, the acts committed by Respondent constitute fraud and dishonest dealing by trick, scheme, or device within the meaning of Section 475.25(1)(b). Those acts were repeated and continued for more than six months. The amount misappropriated by Respondent is significant. During the three and a half years since June, 1992, Respondent has made no attempt at restitution.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondent guilty of violating Section 475.25(1)(b) and revoking Respondent's real estate license. RECOMMENDED this 9th day of January, 1996, in Tallahassee, Florida. DANIEL MANRY, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of January 1996.
Findings Of Fact The parties stipulated to facts set forth in paragraphs 1-8, below. Stipulated Facts The Petitioner is the Division of Real Estate of the Department of Professional Regulation. As such, Petitioner acts as the licensing and regulatory agency for real estate broker licensees. The Respondent is Harriet M. Arndt, holder, at all times pertinent to these proceedings, of license number 0002216 issued by Petitioner. Her address of record is One South Ocean Boulevard, Suite 322, Boca Raton, Florida 33431. On January 28, 1987, Respondent received in trust an earnest money deposit in the amount of $39,000 from a buyer for a piece of property listed with another realtor, Merrill Lynch Realty, Inc. At closing of the sales transaction on February 25, 1987, Respondent delivered a check drawn on her trust account in the amount of $15,600 and made payable to Merrill Lynch Realty, Inc. This payment represented payment of one half of the $31,200 real estate brokerage commission. The check was subsequently returned to Merrill Lynch Realty, Inc. due to "non-sufficient funds." On March 27, 1987, Respondent delivered a cashier's check in the amount of $15,600 to Merrill Lynch Realty, Inc., to replace the February 25, 1987, check. The Respondent's real estate brokerage trust account was overdrawn from January 8, 1987 through March 4, 1987, by amounts ranging from $12,991.39 to $14,306.53 on various days during that period. The Respondent failed to maintain the $39,500 earnest money deposit in her trust account from February 2, 1987 until February 25, 1987, because the trust account's daily balance was less than that amount during that period. The Respondent subsequently failed to maintain the $15,660 due to Merrill Lynch Realty Inc., in the trust account from February 25, 1987, through March 25, 1987, because the trust account's daily balance was less than $15,600. From March 19, 1987, through October 29, 1987, Petitioner's investigator requested Respondent to produce for inspection and copying those books and papers relating to Respondent's trust account which are maintained in connection with Respondent's real estate activities. The Respondent failed to make the requested trust account books and records available at any time. Other Facts The Respondent offered mitigating testimony establishing that she was initially licensed in 1978 and has never been censured by Petitioner for any professional violations. She is 57 years of age and her real estate license is her sole source of support. Further, Respondent has borrowed money from her children to make up the deficit in her trust account. The testimony of Respondent also established that she was introduced to a gentleman named Robert H. Lajoie by another realtor in December of 1986. Subsequently, on or about December 8, 1986, Respondent entered into a nefarious arrangement with Lajoie. Under terms of the arrangement, Lajoie gave Respondent a check for $25,500 as a deposit to purchase a property listed with Respondent. In turn, Respondent gave Lajoie back a cash deposit of $10,000 from her trust fund in connection with a contract between the two of them whereby Respondent was to purchase a property of Lajoie's. The closing of the sale of Lajoie's property to Respondent would not take place until May, 1987. Lajoie returned to his native Canada shortly after receiving the $10,000 cash payment from Respondent and died. Shortly thereafter, payment on Lajoie's $25,500 check to Respondent was stopped. The Respondent is not sure whether this action was taken by Lajoie prior to his death or by his estate subsequent to that event. It is Respondent's contention that the loss of the $10,000 cash deposit to Lajoie resulted in a negative net balance in her trust account and eventually all of her financial difficulties in this case. The Respondent was sent an overdraft notice by her bank on January 8, 1987, stating that her trust account was overdrawn by $13,500 and that a check for $25,500 had been returned. Subsequent overdraft notices dated January 13, 1987 and January 21, 1987, were received by Respondent noting the rejection of two of Respondent's checks; one in the amount of $294.90 and the other in the amount of $34.35. The notice of January 13, 1987, indicated a hold on the account in the amount of $2,862.94 against the account's balance of $3,006.19. The January 21, 1987, notice continued this hold on the account's balance of $2,891.45. The Respondent related a series of personal matters at hearing that had prevented her from keeping appointments with Petitioner's investigators to inspect her records. She agreed to make access to those records immediately available.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered finding Respondent guilty of the offenses charged in the administrative complaint, imposing an administrative fine of $1,000 and suspending her license for a period of six months. DONE AND RECOMMENDED this 22nd day of July, 1988, in Tallahassee, Leon County, Florida. DON W. DAVIS 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 22nd day of July, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-1472 The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's Proposed Findings 1-2. Included in finding 1. 3-8. Included in findings 3-8 respectively. Respondent's Proposed Findings 1. Included in finding 2. 2-5. Included finding 10. Included in finding 3. Included in finding 4, 5, and 10. Included in finding 8 and 12. 9-10. Rejected. 11. Included in finding 9. COPIES FURNISHED: Steve W. Johnson, Esquire Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802 Robert E. Gordon, Esquire 2601 Tenth Avenue North Suite 314 Lake Worth, Florida 33461-3197 William O'Neil, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Darlene F. Keller, Acting Director Department of Professional Regulation Division of Real Estate 130 North Monroe Street Tallahassee, Florida 32399-0750
Findings Of Fact In July 1976 Berger was working as a salesman for Property Resales Services when he and Tritsch decided to set up a similar advance fee listing operation. Berger was knowledgeable of the operation and Tritsch held a broker's license. Both had been engaged for several years in land sales in Florida and at one time both worked for the same land developer selling land to mostly out of state investors. Each put up $1,000 to get the corporation formed and in operation. Stock was equally split between Berger's son Albert and Tritsch with two shares unissued. Shortly after the business became operational Berger and Tritsch repaid themselves $750 of their investment/loan. Berger was to supervise the obtaining of listings and Tritsch was to set up the resale operation. Shortly before the beginning of operations Berger suffered a heart attack and was hospitalized For some two and one half weeks. Following his release from the hospital he was able to spend only limited time in the office. However, script for the telephone salesmen had been prepared as well as listing contracts and brochure to be sent to those customers indicating a desire to sell their land. The business opened as scheduled in a rented office with WATS lines installed. Similar to other advance fee operations the salesmen worked from about 6 P.M. until 10 P.M. making phone calls to out of state owners of Florida land. Most of the owners contacted were those who had earlier bought land in the developments of Rotunda, Royal Highlands, and Port Charlotte with which Tritsch and Berger were familiar. Lists of owners were purchased from a company in Miami providing such information and copies of the Charlotte County tax records were obtained. NPS joined the National Multiple Listing Service (NMLS) and the listings obtained were to be published in that publication. They also indicated in their sales pitch and on the listing contract that advertising would be placed in local newspapers. Salesmen were paid $125 for each listing received with the $350 advance listing fee obtained from the property owner except Egan who was paid $175 for each listing. Shortly after Berger became well enough to devote time to the affairs of NPS, Tritsch broke a shoulder in a motorcycle accident and was limited in his movements by a cast for some six weeks. This was followed by an operation on his nose also injured in the accident. Berger did little, if any, telephone solicitation. His function appeared to be that of supervisor and consultant. His son, Albert Berger, was given the job of secretary, bookkeeper and keeper of the records which the son, a fifty percent shareholder in the corporation, had no idea what happened to following his departure in December, 1975. Exhibit 6 shows checks were made payable to Annette Berger, presumably a daughter, as wages. Berger and Tritsch were paid $300 to $500 per week (net) for their services depending upon availability of funds, Albert Berger received $250 per week (net) and Annette Berger received $100 to $225 per week (net). Net wages are normally the salary left after the deduction for withholding and FICA taxes. Since no check stubs showed payment to the Internal Revenue Service the withheld portion of the salaries apparently was not remitted. Additionally Berger and Tritsch were reimbursed for travel expenses, but no testimony was adduced that Berger did any traveling on the business of the company. Nevertheless Berger was paid travel expenses and one check was made payable to an airline for nearly $300. Respondents Egan and Resnik as well as several other salesmen, not named as Respondents here, manned the telephones during the operating hours of 6:00 to 10:00 P.M. They generally followed the script given to them and no evidence was presented that any known false representation was made by either Egan or Resnik. Neither Egan nor Resnik attempted to sell property. However, Egan testified that if a customer was happy with his land and didn't want to sell, he would ask if the customer would like to buy more. No evidence was presented that either salesmen advised customers that contractors and other brokers were being transported to the property or that they suggested the customer could obtain an inflated price for his property. No sales of the listings so received was ever made by NPS. If the customer indicated a willingness or desire to sell his property when first called he was advised that literature would be mailed to him to more fully explain the services offered by NPS. The salesman then turned the name in to the office and a blank contract (Exhibit 3) and brochure (Exhibit 4) were mailed to the customer. After the customer received the material the salesman would again call and go over the provisions of the contract with the customer and attempt to induce the customer to sign the contract and forward it with his $350 listing fee for services NPS were to perform in selling the property so listed. The customers were told that the advance fee was used to advertise the property and to cover office expenses, however the fee would be deducted from the commission when the property was sold, and, in effect, refunded to the property owner. Both Resnik and Egan were led to believe that a sales office was being set up on the west coast, near the property for which listings were being solicited, however, no such office was ever opened. No advertising of any property was ever placed in newspapers or in any other media than the National Multiple Listing Services. As a matter of fact, no evidence was presented that any property for which NPS was paid an advance listing fee was ever advertised for sale in NMLS. Exhibit 6 indicates that NPS paid a total of $62.50 to NMLS before going out of business near the end of 1975. During the four to five months NPS remained in operation in excess of $52,000 was received from customers as advance listing fees and no sales of any of these listings was made. Respondents Tritsch and Berger both blamed their respective accident and illness for their failure to consummate sales of the properties for which listing fees were obtained.
Findings Of Fact Respondent is licensed as a real estate broker and was so licensed at all times relevant hereto. He has taught real estate salesman courses at Hillsborough Junior College for about eight years. In February, 1982, Thomas E. Webb and Johnnie M. Webb, husband and wife, signed an offer to purchase real estate owned by Ruby Carline (Exhibit 1). This document was prepared by Respondent as broker and signed by him as witness and escrow agent. The offer was not accepted by the seller. Respondent had a listing agreement (Exhibit 6) on property owned by Ruby Carline in Seffner, Florida, giving him exclusive right to sell this property until June 12, 1982, at a price of $65,800, with buyer assuming an existing mortgage of $27,000 at ten (10) percent. There was also a second mortgage on the property in the amount of $10,000 at eighteen (18) percent. Shortly after Exhibit 1 was not accepted by Carline, the Webbs' trailer burned and they needed a residence quickly. Respondent inquired of Carline how much she would take to move out of her house and she told him $10,000, but needed $2,000 to actually relocate her furniture. On March 5, 1982, Respondent acknowledged receipt of $2,000 from Webb (Exhibit 7). Shortly thereafter, this money was paid to Carline and she vacated her house. Webb moved in during the latter part of March and commenced paying rent. Following this, Respondent prepared an updated contract for sale and purchase which was signed by Thomas Webb and Ruby Carline in early May (Exhibit 3). This contract provided for a purchase price of $59,900, with 7,000 deposit held in escrow by Respondent, and the balance of the purchase price comprising the existing first mortgage of $27,000 to be assumed by the buyer; a purchase money mortgage in the amount of $15,900 to be obtained; and the second mortgage in the amount of $10,000. Special Clause XII provided: Buyer shall rent property for $560 per month with an option to purchase by June 12, 1982, which shall be extended an additional 90 days at time of purchase. Buyer shall assume first mortgage and pay balance to seller. At the time this contract was executed Webb had paid Respondent $7,000. The additional $5,000 cashier's check was given to Respondent by Webb on April 27, 1982 (Exhibit 7) and Exhibit 3 was thereafter prepared. The $5,000 was not placed in escrow but in Respondent's operating account. By check dated May 1, 1982, Respondent disbursed $2,666 to Carline from the proceeds of this down payment plus some rent moneys collected from Webb and claimed the balance of $3,594 as commission on the sale of the property. Carline testified that she received only $1,000 from Respondent in the form of a check when she moved out of the house. Respondent actually paid her $2,000, of which $1,000 was in cash. In her letter to Respondent dated January 1, 1983 (Exhibit 11), Carline acknowledged the $2,000 as a gratuitous payment to her vacating the property and resettling elsewhere. Webb was expecting fire insurance money on his trailer which was to provide funds necessary to pay off the second mortgage. They expected to get additional financing either from a bank or from the seller, or both. When it became evident Webb was experiencing difficulty obtaining financing, Respondent prepared Exhibit 2, another contract for sale and purchase, executed by seller October 22, 1982, which, in Special Clause XII stated: This is a lease option contract, buyer has 30 days to close on property. Rent shall be $560 per month until property is transferred. Property is being purchased "as is". Commission has been paid by seller. This contract also provided for purchase price of $59,900. Deposit (paid to owner-seller Ruby Carline) of $7,000, buyer to assume existing first mortgage of $27,000, the second mortgage to General Finance Corporation in the amount of $10,000 to be paid off and balance to close of $25,900. Clause III provided that if any part of the purchase price is to be financed by third party loan, the contract is contingent upon the buyer obtaining a firm commitment for said loan within 30 days at a rate not to exceed 18 percent for 15 years in the principal amount of $25,000. At the time this contract was signed, all parties knew the buyer needed additional financing to close. While the Webbs occupied the house, Respondent collected the rent, usually in cash, and remitted same to Carlile in the manner received. By the time the closing date of September 12, 1982, arrived, it became evident Webb was having difficulty obtaining financing and would be unable to close. Webb demanded return of the $7,000 deposit from Respondent and Carline. Carline demanded Respondent pay her all of the moneys received by him from Webb; and Respondent claimed a set-off of fees paid by him for appliance repairs, for the institution of eviction proceedings against Webb and for services in collecting the rent for Carline. Respondent paid Webb some $1,200 and attempted to get Carline to release him from liability for further payment to Carline (Exhibit 15). Carline reported the incident to the Real Estate Commission.
