Findings Of Fact The Parties. The Department is a state agency charged with the administration and enforcement of Chapter 494, Florida Statutes, the Florida Mortgage Brokerage Act, and the rules promulgated thereunder. Financial Funding is a corporation. Eric Schwartz is the sole director, officer and shareholder of Financial Funding. Mr. Schwartz has been licensed by the Department as a mortgage broker continuously since 1983. Between 1983 and 1988 Mr. Schwartz acted as broker for a wholly-owned mortgage brokerage business. From 1988 until October 1, 1991, Mr. Schwartz was licensed as a self-employed mortgage broker. Mr. Schwartz has also held a real estate broker's license since approximately 1978. Financial Funding was created by Mr. Schwartz in order to comply with newly enacted requirements of Chapter 494, Florida Statutes. Effective October 1, 1991, licensed mortgage brokers in Florida were required to be employed by a mortgage brokerage business. Mr. Schwartz was, therefore, required to create a business entity or work for someone else's mortgage brokerage business in order to continue as a mortgage broker. Financial Funding's Application. On or about December 12, 1991, Financial Funding filed an application with the Department for licensure as a mortgage brokerage business (hereinafter referred to as the "Application"). It was revealed in the Application that Mr. Schwartz was the President of Financial Funding. By letter dated April 24, 1992, the Department denied Financial Funding's Application. The Department denied the Application because of its conclusion that Mr. Schwartz, an officer of Financial Funding, had violated Chapter 494, Florida Statutes and had a disciplinary history. Financial Funding timely challenged the denial of its Application. The Eason Complaint. Between approximately 1984 and 1987, Mr. Schwartz was the sole owner and president of Paramount Finance Corporation (hereinafter referred to as "Paramount"). Mr. Schwartz was the principal mortgage broker for Paramount and utilized Paramount as the vehicle for his practice as a mortgage broker. On or about November 5, 1985, Agnes Eason filed a complaint against Mr. Schwartz and Paramount (hereinafter referred to as the "Eason Complaint"), in the Circuit Court of the Eleventh Judicial Circuit, In and For Dade County, Florida. A Final Judgment was entered on the Eason Complaint on or about February 17, 1987. The court found that Mr. Schwartz had initiated contact with the Plaintiff, Agnes Eason. The court also found that Mr. Schwartz had represented to Ms. Eason that the Small Business Administration (hereinafter referred to as the "SBA"), was about to foreclose a lien on her home. The court also found that "[t]he Small Business Administration, in fact, was not foreclosing on Plaintiff's property [and had no plans to institute foreclosure proceedings in the near future.]" The language in brackets was struck from the Final Judgment. Therefore, no determination was made as to whether foreclosure proceedings might have been instituted in the future. The striking of this language, however, does not prove that the SBA was considering possible foreclosure proceedings on Ms. Eason's property. Nor was Mr. Schwartz's testimony persuasive enough to reject the findings of the court on the Eason Complaint. The court concluded that Mr. Schwartz told Ms. Eason that "the only way to save her home from foreclosure" would be to execute notes and mortgages in favor of Paramount. Ms. Eason executed the suggested notes and mortgages and they were recorded. Although the notes and mortgages were executed on terms which Ms. Eason accepted, the court concluded that "no consideration" passed from Paramount to Ms. Eason for the notes or mortgages. The court also concluded that Ms. Eason executed the notes and mortgages because of the misrepresentation concerning the SBA by Mr. Schwartz. The court found that when Ms. Eason notified Mr. Schwartz that her payments on the note she had executed to Paramount were more than she could afford, the notes and mortgages were cancelled and a satisfaction was recorded. The court also found that after cancelling the notes and mortgages, Mr. Schwartz incorrectly told Ms. Eason that "the only way left to save her home from imminent foreclosure by the Small Business Administration" would be to execute a Warranty Deed conveying the fee simple interest in Ms. Eason's home to him. Mr. Schwartz also told Ms. Eason that, pursuant to a document titled a "Disclosure", he would grant Ms. Eason and her mother a life estate in the property. Mr. Schwartz was also to pay Ms. Eason $1,000.00 and to pay real estate taxes on the property pursuant to the Disclosure. Ms. Eason executed a Warranty Deed and the Disclosure on June 18, 1985. The Warranty Deed was recorded June 19, 1985. The Disclosure was recorded, but not until September 13, 1985. Although the transaction was explained by Mr. Schwartz to Ms. Eason and she accepted it, the court concluded that Mr. Schwartz's representation that foreclosure by the SBA was imminent was incorrect and that Mr. Schwartz failed to tender the sum of $1,000.00 agreed to in the Disclosure. Although Mr. Schwartz testified that he did attempt to tender the $1,000.00 (less $175.00 in recording fees), he did so after the Eason Complaint had been filed and it was rejected because of the litigation. Therefore, although the Disclosure agreement was executed June 18, 1985, Mr. Schwartz did not attempt to tender the $1,000.00 until some time after the Eason Complaint was filed on November 5, 1985. The court also found that Mr. Schwartz had not paid real estate taxes on the property as promised in the Disclosure. Mr. Schwartz explained, however, that the taxes had not been paid because the first real estate taxes due on the property had not become due until after the litigation had been instituted. The court concluded as a matter of law, among other things, the following: That the Defendant, ERIC SCHWARTZ, on behalf of Defendant PARAMOUNT FINANCE CORPORATION [fraudulently] misrepresented a material fact to the Plaintiff, AGNES EASON, for the purpose of inducing Plaintiff to execute the aforementioned notes and mortgages. That the Defendant, ERIC SCHWARTZ [fraudulently] misrepresented a material fact to the Plaintiff, AGNES EASON, for the purpose of inducing Plaintiff to execute the aforementioned Warranty Deed and "Disclosure." That the Warranty Deed executed by Plaintiff in favor of Defendant was procured by Defendant SCHWARTZ through the exercise of coercion and duress upon Plaintiff. That no consideration passed from Defendant SCHWARTZ to Plaintiff for any of the instruments executed by Plaintiff. That the purported promises made by Defendant SCHWARTZ in the "Disclosure", to the effect that certain debts of the Plaintiff will be paid by SCHWARTZ "if necessary", are illusory promises and impose no obligation upon the Defendant SCHWARTZ. Such promises are therefore unenforceable and do not constitute consideration in support of the subject conveyance. The court ordered the promissory notes, Warranty Deed and the Disclosure cancelled and declared them null and void. The Department's Awareness of the Eason Complaint. There were employees of the Department that were aware of the Eason matter at the time that an administrative action against Mr. Schwartz, which is discussed, infra, was being investigated by the Department. Prior to the action of the Department in this case, the Department has not taken disciplinary action against Mr. Schwartz's individual mortgage broker license as the result of the judgment on the Eason Complaint. The weight of the evidence failed to prove why the Department did not take action against Mr. Schwartz as a result of the judgment on the Eason Complaint until this case arose. The evidence also failed to prove, however, that the Department ever represented to Mr. Schwartz that it would not take any action against his license as a result of the Eason matter. 1990 Administrative Action. At some point during 1987, Mr. Schwartz decided to begin business as a mortgage broker with Mr. Stephen Hertz. Mr. Schwartz intended to discontinue operating through Paramount. Mr. Schwartz and Mr. Hertz intended to operate their business as Dollar Mortgage Company (hereinafter referred to as "Dollar"). In June of 1987 Mr. Schwartz prepared an application to register Dollar as the mortgage broker. Mr. Schwartz also prepared an endorsement transferring his individual license as principal mortgage broker to Dollar. These documents (hereinafter referred to as the "Dollar Applications"), were provided to Mr. Hertz to file with the Department. Mr. Schwartz, having been advised by Mr. Hertz that the Dollar Applications had been filed, believed that the Dollar Applications had been filed with the Department. Before being informed by the Department that the Dollar Applications had been approved or that his individual license had been renewed, Mr. Schwartz engaged in several mortgage brokerage transactions in the name of Dollar. Engaging in the transactions in the name of Dollar, therefore, constituted acting as a mortgage brokerage business without a license. At some point after the Dollar Applications were filed, Mr. Schwartz contacted Mr. Paul Richman of the Department's Miami office to determine what the status of the applications was. Mr. Schwartz was informed that the Department was in the process of changing the manner in which applications were processed and the process was causing a delay. Mr. Richman advised Mr. Schwartz to check with the Department's Tallahassee office in November, 1987, if the Department had not acted on the Dollar Applications by then. In November, 1987, Mr. Schwartz contacted the Department's Tallahassee office and was informed that the Dollar Applications had never been received. Mr. Schwartz submitted new applications at that time. As a result of the fact that Mr. Schwartz had transacted business before his license had been renewed and had acted in the name of Dollar before receiving approval of Dollar to transact such business, the Department filed an Administrative Complaint, Number 1154-F-5/88 (hereinafter referred to as the "Complaint"), against Mr. Schwartz. The Complaint was entered August 29, 1988. On or about January 23, 1990, the Department and Mr. Schwartz entered into a Stipulation and Consent Agreement (hereinafter referred to as the "Stipulation"), settling the Complaint. Mr. Schwartz admitted in the Stipulation to the following: 3. Eric S. Schwartz admits that he acted as a mortgage broker with an inactive license, and that Dollar acted as a mortgage brokerage business without a valid registration but denies intentional wrongdoing as more fully set forth in Mr. Schwartz's affidavit dated May 30, 1989 which is referenced as if fully set forth at length herein. Pursuant to the Stipulation, Mr. Schwartz was required to pay an administrative fine of $2,500.00 for his violation of Chapter 494, Florida Statutes. It was also agreed that the Dollar application would be withdrawn and it was. Mr. Schwartz's individual license was, however, renewed. The Stipulation also provided that the Department would make at least one examination of Mr. Schwartz's mortgage brokerage activities during each six month period during the next twenty-four months from the date of the Stipulation. Audits were in fact conducted by the Department. No further charges were brought against Mr. Schwartz as a result of these audits. Additionally, the following agreement was contained in the Stipulation: 13. The Department agrees that, upon execution of this Stipulation, payment of the administrative fine, payment of the restitution ordered, and faithful compliance hereafter by Eric S. Schwartz with all of the terms and conditions of this Stipulation, the Department will take no further action against Eric S. Schwartz for violations of the Act and the rules of the Department as set forth in the Complaint. However, should the Department, in its exercise of its discretion, deem it necessary to take action against Eric S. Schwartz for violations of the Act and rules of Department occurring after the time period set forth in the Complaint, then, in that event, all such allegations and charges may be used against Eric S. Schwartz in any such subsequent proceeding, if relevant. Eric S. Schwartz understands that there is no order, administrative or judicial, sealing these proceedings in the event of a future administrative complaint regarding activities alleged to occur subsequent to the final date of the timeframe of the investigation of the affairs of Eric S. Schwartz' activities as set forth in the Complaint. See the second paragraph number "13" on page 4-5 of the Stipulation. In March of 1990, the Department entered a Consent Final Order incorporating the Stipulation. The Department has not brought any charges against Mr. Schwartz subsequent to the execution of the Stipulation. The Department has continued to renew Mr. Schwartz's mortgage broker's license.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order denying Financial Funding's application for licensure as a mortgage brokerage business. DONE AND ENTERED this 21st day of January, 1993, in Tallahassee, Florida. LARRY J. SARTIN 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 21st day of January, 1993. APPENDIX The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. Financial Funding's Proposed Findings of Fact Accepted in 6 and 8. Accepted in 9. Accepted in 3. Accepted in 4. Accepted in 5. Although the Department offered no such evidence, the weight of the evidence failed to prove that there is "no difference." Hereby accepted. See 8. Accepted in 34. Accepted in 10-11 and 28-29. Accepted in 30, 32-33 and 37. Accepted in 31 and 34. Whether Mr. Hertz advised Mr. Schwartz to start doing business in the name of Dollar is not relevant. The evidence failed to prove that Mr. Schwartz "had no reason to operate improperly." What Mr. Hertz noted in his letter of May 18, 1988 is hearsay. The evidence failed to prove when the documents "had been previously provided . . . ." The weight of the evidence also failed to prove that Mr. Schwartz "was not at fault." Hereby accepted. See 37 and 38. The weight of the evidence failed to prove that Mr. Schwartz had "nothing to hide." The evidence also failed to prove that the Department's audits were "extremely thorough. What the Department did during their audits of Mr. Schwartz is based upon hearsay. Accepted in 37. Accepted in 39. Not relevant. Hereby accepted. Accepted in 12 and 25. See also 17-19 and 21. The weight of the evidence failed to prove the second sentence. The fifth sentence through the end of this proposed paragraph is not relevant. The evidence also failed to prove that Ms. Eason was "initially pleased." 20 See 14-15, 19, 21 and 22. 21 See 25-27. The weight of the evidence failed to prove that the Department was aware of the Eason matter for "seven years." The weight of the evidence also failed to prove the third sentence.. The Department's Proposed Findings of Fact Accepted in 1. Accepted in 12. Hereby accepted. Accepted in 13, 21 and 23 and hereby accepted. Accepted in 34. Accepted in 35. The Stipulation was executed in January, not December. Accepted in 36. Accepted in 37. Accepted in 38. Accepted in 40. Accepted in 6. Accepted in 3 and 7. Accepted in 8. COPIES FURNISHED: Harold F. X. Purnell, Esquire Highpoint Center, Suite 1200 106 East College Avenue Tallahassee, Florida 32301 J. Ashley Peacock Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, FL 32399-0350 William G. Reeves General Counsel Room 1302 The Capitol Tallahassee, FL 32399-0350
The Issue The issue in this case is whether the Petitioner’s application for licensure as a mortgage broker should be granted.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED: A Final Order be entered denying Petitioner's application for licensure as a mortgage broker. DONE AND ENTERED this 6th day of January, 2009, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of January, 2009. COPIES FURNISHED: David L. Fleming 1653 Bass Avenue Seville, Florida 32191 Robert H. Schott, Esquire Office of Financial Regulation Post Office Box 8050 Tallahassee, Florida 32314-8050 Alex Hager, Acting Commissioner Office of Financial Regulation 200 East Gaines Street Tallahassee, Florida 32399-0350 Robert Beitler, General Counsel Department of Financial Services 200 East Gaines Street, Suite 526 Tallahassee, Florida 32399-0350
The Issue The issue presented for decision herein is whether or not Respondent unlawfully refused to honor a subpoena issued by Petitioner as is more particularly set forth hereinafter in detail.
Findings Of Fact Respondent, ASPEC, Inc., is a Florida Corporation engaged in the business of Mortgage Brokerage in Florida. Shanker S. Agarwal is President of ASPEC, Inc. Mr. Agarwal has been licensed by the Department as a Mortgage Broker since May 24, 1985 and currently holds License No. HB-0016435 which expired, by its terms, August 31, 1986. On February 14, 1986, the Department received a consumer complaint about ASPEC, Inc., and pursuant to its investigation of Respondent's brokerage activities, the Department sent a certified letter to ASPEC, Inc., on March 21, 1986, to the attention of President Agarwal requesting that an appointment be scheduled with its Area Financial Manager, Division of Finance, Paul Richman. The returned service of the referenced letter was postmarked April 14, 1986. President Agarwal, or an officer from Respondent failed to schedule an appointment with Paul Richman as requested. On May 22, 1986, the Department served Respondent a subpoena duces tecum on May 23, 1986, by its then Financial Examiner Analyst I, Kevin J.C. Gonzales. (Petitioner's Exhibit 1, pp 9-10.) The subpoena issued to President Agarwal requested that the custodian of records, an officer, director, employee or member of ASPEC, Inc. appear before Paul Richman on May 30, 1986, at 9:00 a.m. at the Department's Miami Office and produce all books, papers and documents (of ASPEC, Inc.) from its inception to April 29, 1986, so that the Department could determine ASPEC's compliance with Chapter 494, Florida Statutes. President Agarwal, or a representative on behalf of ASPEC, Inc., failed to appear at the date and time specified on the subpoena, or thereafter, at the designated place to produce the requested documents. Respondent has challenged on constitutional and other procedural grounds, the Department's authority to conduct an investigation of Respondent as a licensee under the Mortgage Brokerage Act. Respondent's challenges were determined to be either beyond the authority of the Hearing Officer or lacked merit, and rulings to this effec were made during the course of the hearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED: Petitioner enter a Final Order suspending the Mortgage Brokers License No. HB-0016435 issued to Respondent for a period of (1) year. RECOMMENDED this 8th day of May 1987, in Tallahassee, Florida. JAMES E. BRADWELL 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 8th day of May 1987. COPIES FURNISHED: Miles J. Gopman Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399 Mr. Shanker S. Agarwal, President ASPEC, INC 6912 Stirling Road Hollywood, Florida 33024 Ronald P. Glantz, Esquire 320 Southeast 9th Street Fort Lauderdale, Florida 33316 Hon. Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0305 =================================================================
The Issue The following issues are presented for disposition in this proceeding: The effect, if any, of the repeal of Section 494.05, F.S. prior to the filing of the administrative complaint. Whether Respondent committed the violations of Chapter 494, F.S., with which he is charged. What disciplinary action, if any, should be taken against Respondents mortgage broker's license.
Findings Of Fact Robert F. Potts is a licensed mortgage broker, having been issued license number HB0011700 by the Department of Banking and Finance (Department). At the time of hearing his license was in inactive status. Potts incorporated Florida Mortgage Equity Corporation (FMEC) in December 1983. Prior to that time he had worked as a mortgage broker for several companies, including State Capitol Corporation. When employed by State Capital Corporation Potts solicited investors for "equal dignity mortgages". State Capital's investment program offered eighteen percent interest per annum for a fixed period, generally five years. The Department investigated State Capital Corporation in 1982, and filed suit against the corporation, its officers, directors and several named employees, charging them with violations of the Securities Act and Mortgage Brokerage Act. The case was resolved with stipulations for final judgment, and Final Judgment was entered on April 11, 1983. Potts was not part of the investigation or suit. He left State Capital in late 1983 because he felt uneasy with the company. Around the time he left State Capital and incorporated FMEC, Potts solicited individuals with whom he had dealt at State Capital. /1 He sent a form letter on FMEC stationary, including the notation, "Robert F. Potts Licensed Mortgage Broker", as part of the printed letterhead. The letter informed potential investors of his new venture: * * * As you can see, the company is Florida Mortgage Equity Corporation, address and phone listed below. I [sic] pay you an interest check monthly, based on the rate of 18%. All investments are secured with property which is located in the Central Florida area. The terms of investment and amounts are to be discussed individually along with other pertinent information. (emphasis added) * * * (Petitioner's Exhibit 11) When individuals invested in FMEC, they were given a "Trust Account Deposit Receipt", reflecting the amount of deposit and stating that the deposited funds were to be used for purchase of a bond earning 18% for a fixed term, generally five years. The trust deposit receipt also stated that the investor would receive the following documents in approximately forty-five (45) days: - A copy of the Florida Mortgage Equity Corporation Bond. - Verification of full insurance on all corporate properties. - Copy of Appraisal on all corporate properties. - Copy of Financial Statement on Florida Mortgage Equity Corporation. (Petitioner's Exhibit #12) Approximately thirty investors invested in excess of $381,000 in FMEC. (Admitted in Response to Notice dated September 2, 1987.) With the exception of a Potts family friend and one individual referred by another investor, all FMEC's investors were people with whom Potts had recently had business through his mortgage broker activities at State Capital. Five of the investors testified at the final hearing. None had extensive investment experience and most were elderly retired individuals. None received the documents listed in the trust account deposit receipt except for the bond, but they were unconcerned so long as the monthly interest payments were being sent. When one investor inquired about the documents, he was asked to wait until Potts got a computer and could get up to date. He never asked again. Although the FMEC letterhead and Potts' business cards indicated that he was a licensed mortgage broker, Potts was not actually selling mortgages through that company, in contrast to his activity through State Capital. This distinction was lost on his unsophisticated investors, as the schemes both promised the same high yield for the same fixed period. The term, "mortgage", was a prominent part of the company name. He touted his status as a licensee, and the investors had seen his mortgage license when he visited their homes under the auspices of State Capital. To these individuals, Potts' promises of security were backed by his professional license. Potts' activity with FMEC consisted in soliciting funds from investors. These funds were then invested in a separate corporation, Roundtree Development Corporation. In return for its investments in Roundtree, FMEC received an unsecured corporate bond paying eighteen percent interest. The interest was paid back to FMEC's investors. In addition, Potts received a ten percent commission from Roundtree. Potts met Michael Deriemaecker, the president and sole director of Roundtree, in 1982 or early 1983. He learned that Deriemaecker was successfully involved in condominium conversions. After a series of casual meetings over a period of months, Potts decided to "join forces," in his words, with Deriemaecker. Potts never considered placing his investors' money in another investment. Potts felt that Deriemaecker was honest and successful in his ventures and Potts did not consider himself knowledgeable in real estate. Roundtree purchased the properties and conducted the actual work of development and renovation; hired and paid the contractors and completed the projects. Potts, through FMEC, raised the funds. Potts mentioned Roundtree Development Company to some investors, but did not explain to them the relationship between the two companies. The investors understood that their funds were being used for certain real estate projects. At least one investor, J. Daniel Johnson, thought he was supposed to get a mortgage for his investment. Another investor, Evelyn Foley, did not know the difference between a mortgage and a bond but had a clear understanding that her funds were going to be invested in nursing homes, condominiums and apartment buildings - property that was being liquidated - and that the property would be repaired and sold at a profit. The Department's investigation of Potts and FMEC included a review of subpoenaed bank records. These were incomplete, according to Investigator Alice Hampton, as some of the bank's microfilm was faulty. Ms. Hampton determined from the available bank records that approximately $169,450 was disbursed to Roundtree Development Corporation from investor monies in FMEC's accounts from 1983 to 1986. Bonds supplied to Ms. Hampton by Potts' attorney in response to a subpoena indicated that Roundtree/Deriemaecker received $285,000 from FMEC from September 1983 through October 1984. In an interview with Ms. Hampton, Deriemaecker said that Roundtree received approximately $236,000 from Potts/FMEC. At the hearing, Potts said he did not know exactly how much he loaned Deriemaecher. Michael Deriemaecher did not testify at the hearing. However, the account of his interview on April 14, 1987, found in Ms. Hampton's Report of Investigation (Petitioner's Exhibit #9), is consistent with, and corroborates Potts' testimony with regard to the relationship of the two companies, the use of the funds, and the fact that Roundtree stopped making payments to FMEC in January 1985, when a series of projects failed. By April 1986, all interest payments by FMEC to its investors ceased. No payments have been made since that time on principal or interest. Potts' claim that his investors assumed the risk of a risky venture and they got what they bargained for, both oversimplifies and misconstrues the facts. He was aware of the circumstances of the individuals he solicited; he had been to their homes as an employee of State Capital and knew of their financial status, their ignorance and their demonstrated eagerness to supplement their retirement incomes. He falsely promised that the investments would be secured, when they were not; he withheld material particulars of the relationship between FMEC and Roundtree; and he misused the funds of his investors by his improvident and reckless release of their money to Roundtree.
Recommendation Based on the foregoing, it is, hereby RECOMMENDED: That Robert F. Potts be found guilty of violations of Section 494.05(1)(a), (b), and (c) and 494.05(2), F.S. (1985) and that his mortgage broker's license be revoked. DONE and RECOMMENDED this 21st day of April, 1988, in Tallahassee, Florida. MARY CLARK 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 21st day of April, 1988.
The Issue The issue in these cases is whether petitioners are entitled to payment from the mortgage brokerage guaranty fund, and if so, in what amounts. A further issue is in what order of priority the claims should be paid. Based upon all of the evidence, including the pleadings filed in this cause, the following findings of fact are deter- mined:
Findings Of Fact 1. On January 8, 1975, the United States District Court, District of Delaware, entered a "judgment and probation/commitment order," finding petitioner guilty of violating Title 18, United States Code, Sections 1010 and 371. These charges involved, inter alia, making, passing, uttering and publishing false statements and forged instruments in connection with the obtaining of mortgage insurance under the provisions of the National Housing Act. Petitioner was fined $2,500.00 and sentenced to serve three years imprisonment, the remainder to be suspended after six months and petitioner to be placed on probation for the remaining thirty months. On or about July 9, 1976, petitioner applied to respondent for registration as a mortgage solicitor. For the reason that petitioner was found guilty as described in paragraph one above, respondent determined that petitioner did not meet the proper qualifications to be licensed and issued its notice of intent to deny said license. In his answer and request for a hearing, petitioner admitted the material factual allegations of the complaint. Petitioner did not appear and therefore offered no evidence in his own behalf.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that petitioner's application for registration as a mortgage solicitor be DENIED. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 13th day of April, 1977. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of April, 1977 COPIES FURNISHED: Mr. David L. Pierce 891 West Tropical Way Plantation, Florida 33317 Richard E. Gentry, Esquire Assistant General Counsel Office of the Comptroller The Capitol Tallahassee, Florida 32304 Joseph M. Ehrlich Deputy Director Division of Finance Department of Banking and Finance 335 Carlton Building Tallahassee, Florida 32304 Comptroller Gerald A. Lewis The Capitol Tallahassee, Florida 32304
The Issue Whether the Respondent committed the violations alleged in the Amended Administrative Complaint and Notice of Rights dated June 16, 2009, and, if so, the penalty that 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 OFR is the state agency responsible for regulating mortgage brokerage and mortgage lending in the State of Florida and for licensing and regulating mortgage brokers. §§ 494.0011(1); 494.0033(2), Fla. Stat. At the time of the final hearing, Mr. Razor held an inactive mortgage broker's license. The license was inactive because Mr. Razor did not apply for a renewal of his license when it expired on August 31, 2009. His license could be reactivated should he submit an application for renewal. Mr. Razor was a member of the Florida Bar and a practicing attorney in Florida until, in an opinion issued September 11, 2007, the Florida Supreme Court ordered Mr. Razor suspended from the practice of law for a period of 18 months. See Florida Bar v. Razor, 973 So. 2d 1125 (Fla. 2007). In its opinion, the court approved the findings of fact contained in the Report of the Referee; approved the Referee's findings that Mr. Razor had violated Rules Regulating the Florida Bar 3-4.2, 3-4.3, 4-5.3(b), and 4-8.4(a); and approved the Referee's recommendation that Mr. Razor's license to practice law be suspended for a period of 18 months. Pertinent to this proceeding, Rules Regulating the Florida Bar 3.4-3 provides: The standards of professional conduct to be observed by members of the bar are not limited to the observance of rules and avoidance of prohibited acts, and the enumeration herein of certain categories of misconduct as constituting grounds for discipline shall not be deemed to be all- inclusive nor shall the failure to specify any particular act of misconduct be construed as tolerance thereof. The commission by a lawyer of any act that is unlawful or contrary to honesty and justice, whether the act is committed in the course of the attorney's relations as an attorney or otherwise, whether committed within or outside the state of Florida, and whether or not the act is a felony or misdemeanor, may constitute a cause for discipline. The Referee based his recommendation that Mr. Razor's license to practice law be suspended for 18 months on "Respondent's [Mr. Razor's] conduct in allowing his collaborator (a suspended attorney) to practice law in an attempt to extort money; his ratification of the misconduct by failing to take immediate remedial action; his attempts to cover for the suspended attorney by defending the letter during the Bar investigation; and his inconsistent defense (lack of knowledge) at the live and final hearings." These acts constitute dishonest dealing. Mr. Razor's license to practice law was suspended 30 days after September 11, 2007, or on October 11, 2007. Mr. Razor did not report the suspension to the OFR because he did not believe it to be a reportable offense.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Office of Financial Regulation enter a final order finding that Arthur Nathan Razor violated Section 494.0041(2)(i) and (p), Florida Statutes, and revoking his Florida mortgage broker's license. DONE AND ENTERED this 9th day of June, 2010, in Tallahassee, Leon County, Florida. PATRICIA M. HART 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 June, 2010.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Respondent Ronald E. Clampitt is the President of Respondent Action Mortgage Corporation and is the person designated to act on behalf of said corporation under the provisions of Chapter 494, Florida Statutes. Action Mortgage Corporation currently holds a mortgage brokerage license. The individual mortgage broker license issued to respondent Clampitt expired on August 31, 1980, and has not been renewed. Respondent Joseph W. Langford currently holds a license as a mortgage solicitor for and on behalf of Home Mortgage Investment Corporation. His prior individual mortgage broker license expired on August 31, 1980, and has not been renewed. COUNT I The respondents were counter codefendants in a civil suit filed in the Circuit Court of Sixth Judicial Circuit of the State of the Florida in and for Pinellas County, which case was numbered 78-12033-18 and styled Action Mortgage Corporation, etc., et al., Plaintiffs, vs. Denture Services, Inc., etc., et al., Defendants. On February 8, 1980, a Final Judgment was entered in that proceeding by Circuit Court Judge David Seth Walker. Judge Walker found, as a matter of fact, that a limited confidential/fiduciary relationship existed between Langford and the counter-plaintiffs, and opined that certain activities on the part of the individual counter-defendants were "bedecked with the badge of fraud." The Court, inter alis, awarded the counter-plaintiffs Final Judgment in the nominal sum of $1.00, plus costs. It was noted that the claim of the counter-plaintiffs for punitive damages had previously been denied. Subsequent to the Final Judgment enteed in Case No. 78-12033-18, the counter-plaintiffs filed a Motion for Rehearing on the matter of punitive damages, since the Court had noted in its Final Judgment that the activities of the counter-defendants were "bedecked with the badge of fraud." The counter- defendants (respondents herein) also moved the Court to alter or amend its Final Judgment so as to remove the fraud language quoted above. By Order filed on March 10, 1980, both motions were denied by Judge Walker. Judge Walker's deposition was taken on August 22, 1980, and was received into evidence in this proceeding as petitioner's Exhibit 9. Referring to the language in the Final Judgment "bedecked with the badge of fraud," Judge Walker makes the following comments: "I do not interpret that as a finding of fraud absolute, but just that there were indicia of fraud." (p.4) "But I did not consider this to be an absolute finding of fraud. I think I mentioned that on one of the motions that the counter-plaintiffs made to reconsider the judgment of $1.00 or the refusal to grant punitive damages. I reiterated at that hearing that I found that it was an indicia, but I did not go so far in my own mind as to specifically find fraud." (p. 4) "If I had wanted to find specifically that they were in fact guilty of fraud, I would have said as much. The phrase, in my mind, 'bedecked with a badge of fraud,' is meant to suggest the indicia of fraud. Fraud is a legal conclusion that must be based upon several legally accepted circumstances. And in law school we learned the term, 'badges of fraud.' But a badge of fraud does not per se constitute fraud. I didn't feel that I needed to go too deeply in the questions, because of my finding that the counter-plaintiffs had not in fact suffered any real damage." (pp. 7 and 8) "I listed a certain series of circmustances and activities which had taken place, rather specifically. And I found that these activities and circumstances were bedecked by the badge of fraud which is admittedly a little bit flowery for normal language, but that's what I said. I did not specifically find fraud. Fraud always carries with it the badges of fraud in and of it- self does not collaterally, and on the other hand mean that fraud exists. I did not go that far in this particular judgment. I did not feel I had to." (pp. 18 and 19) "I did not feel that it was necessary for the Court to delve into the ultimate determination of fraud." (p. 20) "I do not perceive that my final judgment made an absolute finding of fraud. Again, the phrase, 'badge of fraud,' simply menas to me an indicia of fraud, and I'm confortable with the finding that that indicia is there. But as far as a finding of fraud is concerned, I did not proceed to that point, and it's not there." (pp. 20 and 21) COUNT II In 1978, Dorothy L. Jones and Byron A. Jones were the owners of real property located at 2656 Granada Circle East in St. Petersburg, Florida. The first mortgage on that property held by Molten, Allen and Williams, Inc. or the Mortgage Corporation of the South, was in default and a foreclosure action, and is pendens against the property had been filed. The monthly mortgage payments were approximately $225. At that time, Dorothy Jones was separated from her husband, lived in the home with her five minor children and was having financial difficulties. Having seen a newspaper advertisement, Dorothy Jones contacted the Respondents in an effort to obtain a second mortgage or additional funds with which to pay her debts and preserve her homestead. Neither of the Respondents agreed to make a second mortgage loan to Mrs. Jones. Instead, they agreed to make an outright purchase of the Jones's residence and lease the property back to Dorothy Jones at a monthly payment which approximated her prior monthly mortgage payment. The lease payments were later increased to $275 per month due to the loss of homestead exemption on the property. It was Mrs. Jones' understanding that she would be given the opportunity to repurchase the home at less than fair market value though she may have to pay a down payment and higher monthly payments. No appraisal was performed on the property. The closing of the transaction took place at a title company, independent of the Respondents. Mrs. Jones understood that she was signing a deed to the property and other documents transferring title to Respondents. The property was purchased by the Respondents in February of 1978 for $23,656.54 and the transfer was made subject to the mortgage to Molten, Allen and Williams, Inc., in the amount of $21,848.44. No funds were paid to Mr. or Mrs. Jones at the time of closing. During the months which followed, Dorothy Jones fell far behind in her lease payments to the Respondents. In May of 1979, Respondent Langford notified Mrs. Jones that the property owners had elected to sell the property in the near future, and advised her to contact his office if she was still interested in purchasing the property. In July of 1979, Dorothy Jones filed a Complaint against the Respondents in the Circuit Court in and for Pinellas County seeking a declaratory decree as to her rights under the aforementioned deed, lease and oral agreement to repurchase the property. (Civil No. 79-7307-17). Mrs. Jones was represented by an attorney in that action. By Order filed on July 29, 1980, the Circuit Court approved the terms and conditions of a Stipulation entered into by the Respondents and Mrs. Jones whereby Mrs. Jones was given the opportunity to purchase the subject property from the Respondents for $32,000 within 90 days, and was also required to pay back rental payments to the Respondents. For some reason not clear from the evidence adduced in the proceeding, Mrs. Jones did not repurchase the property from the Respondents. By Final Judgment filed on October 15, 1980, Mrs. Jones' claim against the Respondents was dismissed with prejudice and Respondents were awarded a judgment against Mrs. Jones in the amount of $2,887.50. Apparently, an eviction action in the County Court for Pinellas County resulted in the award of possession of the home to the Respondents. Mrs. Jones vacated the subject property in October of 1980. In April of 1981, Respondents sold the subject property to Harold and Peralita Odlam for a purchase price of $41,7000. COUNT III Respondent Clampitt was licensed as an individual mortgage broker for the years 1978 and 1979. His 1979 license expired on August 31, 1979, as did the license of Action Mortgage Corporation. Mr. Clampitt made an attempt to renew his individual mortgage broker license on October 16, 1979. The renewal license for Action Mortgage Corporation also bears the date of October 16, 1979. During the period of time between August 31, 1979 (the date upon which his individual mortgage broker license expired) and October 16, 1979 (the date upon which said renewal license was issued), respondent, Clampitt, as an individual mortgage broker, received at least three mortgage brokerage fees or commissions. A broker is considered to be licensed by the petitioner when a completed application form accompanied by the correct fee is received by the petitioner. It is the petitioner's practice to mail out renewal application to its approximately 6,500 licensees on July 15 of each year with the request that they be returned by August 15. All licenses expire on August 31 and are reissued for the following year to be effective from September 1 to August 31. Those applications which are received by the petitioner after August 31 bear a different license date. The correct amount to be remitted for the renewal of respondent Clampitt's individual license was $125-- a $75 license fee and a $50 guaranty fund fee. The $190 check received by the petitioner from the respondent on or before August 31, 1979, was accompanied by three renewal application cards. The petitioner did not apply $125 of the $190 to the renewal of respondent Clampitt's individual license because petitioner could not ascertain how the respondent desired to have the funds applied. Although a small minority of licensees do not renew their licenses in a timely fashion, it is not the practice of the petitioner to directly notify a licensee that his license has expired. Respondent Clampitt did hold a license with an effective date of September 13, 1979, as an additional broker for Fickling and Walker, Inc. in Winter Park, Florida. Under this license, respondent Clampitt would have no authority to act individually or on behalf of anyone other than Fickling and Walker, Inc. COUNT IV Respondent Clampitt arranged for a loan to a Mr. and Mrs. Fink. When examining the respondent's books, petitioner's financial examiner was unable to account for an apparent overcharge of $13.80 for credit life insurance on the loan. The examiner did not examine the loan closing documents with regard to this transaction. The evidence establishes that there had been a clerical error in the respondent's office concerning this transaction, that the cost of the credit life insurance had been miscalculated and that respondent Clampitt was entitled to the $13.80. COUNT V It is the practice of the respondent Clampitt to interview his clients over the telephone, look at the involved property and then, if he agrees to make a loan, send the client to a title insurance company to sign the necessary papers. These papers include a loan closing statement, the required RESPA statement and a recision notice which allows the customer to cancel the transaction within 72 hours without cost or obligation. Thereafter, generally five to seven days later, the customer returns to the title company to receive the loan proceeds. Respondent Clampitt does not take deposits and most often does not even meet this clients on a face-to-face basis. All borrower disclosures and rights required by law are provided respondent's clients by the title insurance company.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED THAT: The Administrative Charges and Complaint filed on March 23, 1981, against Joseph W. Langford be DISMISSED; The Administrative Charges and Complaint filed on February 3, 1981, against Action Mortgage Corporation be DISMISSED; Counts I, II, IV and V of the Administrative Charges and Complaint filed against Ronald E. Clampitt on February 3, 1981, be DISMISSED; and Respondent Ronald E. Clampitt be found guilty of accepting fees at a time when his individual license had expired, but, because of the unintentional violation of the pertinent statutory provisions, no disciplinary action be imposed for this offense. Respectfully submitted and entered this 27th day of July, 1981, in Tallahassee, Florida. DIANE D. TREMOR 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 27th day of July, 1981. COPIES FURNISHED: Walter W. Wood Assistant General Counsel Office of the Comptroller Suite 1302 - The Capitol Tallahassee, Florida 32301 John C. Dew and Jay Emory Wood Harris, Barrett and Dew Post Office Drawer 1441 600 Florida National Bank Building St. Petersburg, Florida 33731 Comptroller Gerald A. Lewis State of Florida The Capitol Tallahassee, Florida 32301
Findings Of Fact The Department, a state agency, initiated the underlying proceeding when the Cease and Desist Order was filed on February 20, 1990. Petitioner, CGFS, Inc., is a corporation which has its principal office in this state. At the time the action was initiated by the Department, the corporation had less than 25 full-time employees and a net worth of less than $2 million dollars. Petitioner DeBellonia is the sole shareholder in the subchapter S corporation and does not have an independent claim for attorney's fees and cost. A Final Order dismissing the Cease and Desist Order was entered in favor of the Petitioners DeBellonia and CGFS, Inc. on October 16, 1990. The time for seeking judicial review of that order has expired and the order has become final agency action as a matter of law. The underlying Cease and Desist Order directed to Mr. DeBellonia and CGFS, Inc. was based upon a complaint made by Ms. Connie Jones, a client of CGFS, Inc. who dealt with Mr. DeBellonia. Ms. Jones, who contacted the Department, told representatives of the agency that Mr. DeBellonia, as president of CGFS, Inc., had agreed to arrange a mortgage loan on her behalf which was to be secured by real estate in Dade City, Florida. During the time period in which Ms. Jones had the business meeting with DeBellonia, neither Mr. DeBellonia nor CGFS, Inc. were licensed as a mortgage broker or a mortgage brokerage business. If the business transaction had occurred as originally represented by Ms. Jones, both Mr. DeBellonia and CGFS, Inc. would have been in violation of the Mortgage Brokerage Act. Based upon the complaint initiated by Ms. Jones prior to the Department's filing of the Cease and Desist Order, the agency had reason to believe that Mr. DeBellonia and CGFS, Inc. were violating or about to violate the law by acting as a mortgage broker and mortgage brokerage business without the proper licenses. Mr. DeBellonia and CGFS, Inc. were able to reveal during the formal hearing process that Ms. Jones' impressions of what occurred during her meeting with Respondent DeBellonia were faulty. It was necessary, however, for the Hearing Officer to resolve the question of what weight should be given to Ms. Jones' testimony and what credibility assessment should be made to resolve the disputed issues of material facts involved in the case. The Department disputes portions of the application for attorney's fees and costs relating to time spent with a private investigator and the review of a title search. Based upon the attorney's testimony at hearing in which he gave the reasons for the use of the investigator and the title search, the 1.33 hours spent by him on these matters during his preparation of the case was reasonable and necessary. As there is no other dispute as to the reasonableness of the hours spent by Mr. Mone in defending the Petitioners, it is determined that the 11.65 hours he spent in defending CGFS, Inc. as to the Cease and Desist Order should be included in his fee charges. Although the Hearing Officer specifically finds that $300.00 an hour is a reasonable hourly rate for an attorney of Mr. Mone's experience when the matter pursued is a civil action, this case is an administrative proceeding. Based upon the affidavit of Burton Wiand, whose law practice includes civil trial litigation as well as administrative law proceedings, $150.00 per hour is a reasonable fee within the Pinellas County and Hillsborough County area for services similar to those reasonably required from Mr. Mone in these proceedings. Great weight is given to Mr. Wiand's affidavit, and $150.00 per hour is a reasonable fee in this case.
