The Issue The issue for consideration in this case is whether Petitioner should be granted registration as an associated person by the Department of Banking and Finance, or whether his application should be denied because of alleged misconduct outlined in the letter of denial.
Findings Of Fact At all times pertinent to the issues herein, the Petitioner, Richard Graibus, was either a registered associated person associated with a security firm or an applicant for registration as an associated person in Florida, and the Respondent, Department of Banking and Finance, Division of Securities and Investor Protection, (Department), was and is the state agency charged with the responsibility of regulating the sale of securities in this state. On August 19, 1988, Mr. Graibus filed an application to be an associated person of Finnet Securities, Inc., (Finnet), with the Department. On March 3, 1989, by letter, the Department notified Mr. Graibus of its intent to deny his application on the basis that prior disciplinary action taken against him by other states was prima facie evidence of his unworthiness to act as a securities dealer in Florida. Specifically, the bases for denial were: A Minnesota Cease and Desist Order in December, 1977. A Securities and Exchange commission suspension order in May, 1983. The denial of Petitioner's application for registration as an associated person with J. W. Gant and Associates by 10 states. Three judgements against Petitioner. His termination for cause from employment with American Western Securities. Petitioner was employed by American Western Securities in Denver, Colorado from November, 1977 to July 1980 when he left feeling a change would be beneficial to his career. No evidence was presented to support the Department's allegation that Petitioner was terminated for cause from that period of employment and that allegation is found to be unsupported. In December, 1977, the State of Minnesota issued a Cease and Desist Order against Petitioner alleging that he offered to sell, and did sell, unregistered securities while neither he, the firm, nor the securities were registered in that state as required by state law. Petitioner did not dispute the allegations of fact outlined in the Minnesota Order. The actual sale was made to a father and son who Petitioner had inherited as customers from his stepfather. The trades were unsolicited and were approved by petitioner's supervison who had many years experience in the securities trade. On May 23, 1983, the Securities and Exchange Commission, (SEC), found that Mr. Graibus had, at an unspecified time, wilfully violated and aided and abetted in violations of the anti-fraud and anti-manipulation provisions of the United States security law, and had failed to reasonably supervise others under his control to prevent violations of the same law. Petitioner engaged in cross trading, manipulation of stock prices, and fraudulent representations to customers regarding two stocks. These findings were incorporated in a Findings and Order Imposing Remedial Sanctions which were drafted and adopted from an offer of settlement submitted by Mr. Graibus. In its Order, the SEC took the following disciplinary action: It suspended Petitioner from association with any broker/dealer for 60 days; It barred Petitioner from acting in a supervisory capacity as a principal, officer, director or employee for 12 months; and It stipulated that Petitioner was not to act in a supervisory position without prior approval from the Commission, after the expiration of the previously mentioned 12 month period. Mr. Graibus has twice previously been granted registration as an associated person in Florida. Specifically, on May 9, 1984, he was approved as an associated person with Chesley and Dunn; and on January 28, 1985, he was approved as an associated person with J. W. Gant and Associates. In both cases, the Department had knowledge of the Minnesota Order and the SEC action since Petitioner disclosed both on each application. In 1984, while Petitioner was a principle of the brokerage firm of Chesley and Dunn, Inc., the Securities and Exchange Commission revoked the firm's registration for violations of various net capital and financial reporting regulations. There was no charge against the Petitioner. As a result of his association with this firm, and his having signed notes on behalf of the firm in his personal capacity, Mr. Graibus incurred a substantial liability for obligations of the firm, which are memorialized by three default judgements against him. The initial loan totaled $150,000.00. While manager of the firm's Sarasota office, Petitioner also invested approximately $175,000.00 of his own money which was lost. All his private obligations were fully disclosed to prospective creditors when he borrowed the money for the firm. In 1985, Mr. Graibus submitted applications to several states for registration as an associated person with J. W. Gant and Associates. These applications fully disclosed the entry of the Minnesota Order and the results of the SEC action. His applications were approved in twenty-two states, but as a result of the aforementioned SEC action, were denied by the states of Pennsylvania, Nebraska, Ohio, and Tennessee. He protested the denial by Tennessee and on November 22, 1985, that state entered a Final Order confirming its denial of his application for registration, finding that he had failed to disclose the adverse finality of the Minnesota Cease and Desist Order claiming Instead that the order had been resolved by corporate counsel. This comment is also made- in Mr. Graibus's Gant application in Florida which granted his application. Mr. Graibus did not protest the entry of the Final Order In Tennessee. Mr. Peter Maftieu is a registered securities dealer in four separate classifications. He has worked for J. W. Gant and Chesley and Dunn since January, 1983. Petitioner trained him when he first started in the industry. Incorporated as a fundamental part of Petitioner's training [pg was the insistence on full disclosure of material facts to clients and the need to insure that he, as a salesman, educated himself as to his client's situation by a full and detailed questioning to insure the securities recommended were suitable for and consistent with the client's needs. As a part of his training, Petitioner showed Mr. Maftieu the SEC and Minnesota orders as examples of what can happen if there is not full compliance with the rules. Due to increasing instances of misconduct within the securities industry in this state, none of which was shown to relate to Petitioner, in 1985 the Florida Comptroller created a task force to study the problem and come up with recommendations for efforts to combat fraud in the securities industry in Florida. In March, 1986, the task force submitted its report which, in part, recommended that the Department tighten up its review of applications for registration as securities dealers to eliminate or disqualify applicants with a disciplinary record within the industry. As a result of this recommendation, the Department altered its policy in exercising its discretionary approval authority. Petitioner has, for many years now, practiced full disclosure in the conduct of his business and it has been in excess of six years since the last findings of any violations of securities laws, rules or regulations by Petitioner. Nonetheless, in this case, the Department's denial of Mr. Graibus' application, which was based on his disciplinary history in other states, was consistent with its policy against granting registration to "unworthy" persons, as outlined in the Department's rules, and the intent of the Legislature as outlined in Section 517.1205, Florida Statutes.
Recommendation Based, on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Petitioner's application for registration as an associated person with Finnet Securities, Inc., be granted. RECOMMENDED this 5th day of January, 1990, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of January, 1990. COPIES FURNISHED: Edward W. Dougherty, Jr., Esquire Mang, Rett & Collette, P.A. 660 D. Jefferson St. Post Office Box 11127 Tallahassee, Florida 32301-3127 M. Catherine Green, Esquire Paul C. Stadler, Esquire Department of Banking and Finance Suite 1302 The Capitol Tallahassee, Florida 32399-0350 Hon. Gerald Lewis Comptroller State of Florida The Capitol Tallahassee, Florida 32399-0350 Charles L. Stutts General Counsel Department of Banking and Finance Suite 1302 The Capitol Tallahassee, Florida 32399-0350
Findings Of Fact On February 21, 1980, petitioner, as president and chief executive officer of Crown Financial Services was fined $500 and censured by NASD for violating SEC, NASD and Municipal Securities Rulemaking Board regulations. Crown Financial, a holding company under the direction and control of Petitioner, became a member of the NASD in 1977. At the time Crown Financial employed the services of a large accounting firm, knowledgeable of NASD regulations, to set up their accounts so as to comply with NASD regulations. During the first audit of crown Financial by NASD in 1979-80 it was noted that Crown was including accounts receivable from subsidiaries as cash which was contrary to NASD regulations and Crown and Petitioner were fined and censured for this infraction. Crediting such receivables as cash was the procedure established by the accounting firm hired by Crown Financial Services. On December 30, 1982 the Massachusetts Securities Division issued a Summary Order Denying Exemption from Registration and a temporary Cease and Desist Order naming Petitioner and others based upon the offering of limited partnerships in Energy Exchange Corporation which had been founded by Petitioner. Although Petitioner founded Energy Exchange in February 1981 and was its president and chief operations officer, he resigned from these positions in November 30, 1982 shortly after Energy Exchange went public. Thereafter, Swain remained an outside director and was unaware of management decisions, one of which involved the issuance of questionable (or fraudulent) securities in December 1982, which led to the actions taken by the Massachusetts Securities Division. Petitioner was unaware these securities were issued until he read of the Massachusetts Securities Division's actions in the newspaper and he had nothing to do with their issuance. On April 23, 1983, NASD fined and censured Swain in the amount of $12, 000 as a result of limited partnerships set up by Crown Financial Corporation of which Swain was Chief Operations Officer and principal owner. The violation alleged Crown Financial was engaged in a continuous and integrated offering in connection with the development of four condominiums were built (and to which limited partnerships were sold) he was unaware any other parcel of property nearby was or would be for sale, and that each of these developments was independent of the other and in no wise integrated alleged. An investigation by the Securities and Exchange Commission disclosed no integrated operation. Petitioner concluded it was prudent to enter into a consent order without admitting any violation and pay the fine rather than go to the expense of defending against the allegations. Civil actions alleged to have been brought against Petitioner and which were listed as another basis for denying registration were contained in paragraph 5 of the Exhibit 21. At the hearing Respondent stipulated to a dismissal of these grounds as a basis for denying registration. Despite the charges by NASD Petitioner' s registration with NASD remains in good standing. Petitioner produce one witness who is registered with Respondent and with NASD who testified that fines and censures for violation of NASD regulations are an every day occurrence with NASD. This witness ,was recently found in violation of NASD regulations because he had included accounts receivable for more than 30 days as assets. According to NASD regulations these accounts receivable or more than 30 days cannot be included as an asset although the vast majority will be paid.
Findings Of Fact In 1981, Barry Kandel, an employee of Allied Publishing Group, Inc., solicited Petitioners to purchase stock in Allied, a Florida Corporation. On May 1, 1981, Petitioners purchased one share of stock in Allied for $13,500. By mid-1982, Allied had gone out of business. Petitioners made unsuccessful demands for the return of their money on Brian E. Walker, the Secretary of Allied; on Thomas W. Kuncl, the President of Allied; and on Kandel. On November 19, 1984, Petitioners filed suit against Kandel, Kuncl, Walker, and Allied. The Civil Complaint filed in Case No. 84-6932 in the Circuit Court of the Fifteenth Judicial Circuit of Florida, in and for Palm Beach County, contained general allegations of fraud. On February 20, 1985, Petitioners obtained a default judgment against Allied only. No evidence was offered in this cause regarding the disposition of the litigation as to the individual defendants. The default judgment contains no factual determinations and does not specify a violation of either section 517.07 or section 517.301, Florida Statutes. Kandel currently resides in Fort Lauderdale, Florida, and Kuncl currently resides in the Gainesville, Florida, area. Kuncl was the last known person to have custody of and control over Allied's books and records. Petitioners filed a claim with Respondent, seeking reimbursement for $10,000 from the Securities Guaranty Fund, pursuant to sections 517.131 and 517.141, Florida Statutes. Their claim was denied by letter dated July 8, 1987, for failure to meet the statutory conditions. Neither Allied nor any individual associated with Allied who dealt with Petitioners was registered or licensed by the State of Florida pursuant to chapter 517, Florida Statutes, in any capacity. Petitioners did not cause a writ of execution to be issued against Allied nor the individuals associated with Allied. Petitioners did not attempt a reasonable search as to whether Allied possessed real or personal property or other assets which may be set off against a proposed claim to the Securities Guarantee Fund. Don Saxon, Director of the Division of Securities and Former Assistant Director, has been the only individual responsible for administering the Securities Guaranty Fund since 1983. The Department's interpretation of section 517.131(2), Florida Statutes, is that it requires a claimant to demonstrate findings of a violation of section 517.07 and/or section 517.301, Florida Statutes, by a licensed dealer, a licensed investment adviser or a licensed associated person. The Department's interpretation of section 517.131(3)(a), Florida Statutes, is that it requires a claimant to provide the Department with a certified copy of a judgment demonstrating a violation of section 517.07 and/or section 517.301, Florida Statutes. The Department's interpretation of section 517.131(3)(b), Florida Statutes, is that it requires a claimant to submit a copy of the writ of execution to the Department. During Saxon's tenure in administering the Securities Guaranty Fund, the Department has not waived any of the statutory requirements for claiming monies from the Fund. Section 517.131 and section 517.141, Florida Statutes, were enacted in 1978 and have remained virtually intact. The legislature did substitute the term "associated person" in place of the term "salesman" in section 517.131(2), Florida Statutes, without comment, although the order of licensed entities in that section was altered. The legislative intent behind the establishment of section 517.131, Florida Statutes, was to eliminate the bonding requirement for "individuals registered to be broker/dealers or investment advisers ... substituting therefor, a 'Security Guaranty Fund' to be funded through an assessment imposed upon them." The legislative intent behind section 517.141, Florida Statutes, was that disbursement from the Securities Guaranty Fund would be made to any person suffering monetary damages as a result of "some violation by a registrant."
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that a Final Order be entered denying Petitioners' claim for payment from the Securities Guaranty Fund. DONE and RECOMMENDED this 25th day of April, 1988, at Tallahassee, Florida. LINDA M. RIGOT, 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 25th day of April, 1988. COPIES FURNISHED: Gerald Lewis, Comptroller Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0350 Charles E. Scarlett, Esquire Office of the Comptroller Suite 1302, The Capitol Tallahassee, Florida 32399-0350 Richard O. Breithart, Esquire 818 U.S. Highway One, Suite 8 North Palm Beach, Florida 33408 Charles L. Stutts, Esquire Office of the Comptroller Department of Banking and Finance The Capitol, Plaza Level Tallahassee, Florida 32399-0350
The Issue The issues are whether Respondents K. D. Trinh Investments, Inc., Strong Financial Services, Inc., and Loren Reynolds sold unregistered securities in Florida, in violation of Sections 517.07 and 517.12, Florida Statutes, and engaged in fraudulent transactions with concealment and falsification of facts, in violation of Section 517.301(1)(a), Florida Statutes. If so, an additional issue is what penalty should be imposed.
Findings Of Fact Respondent K. D. Trinh Investments, Inc. (Trinh) has never been registered with the Division of Securities and Investor Protection (Division) as a dealer or investment advisor and its securities have never been registered with the Division pursuant to Chapter 517, Florida Statutes. Neither Respondent Strong Financial Services, Inc. (Strong) nor Respondent Loren Reynolds (Reynolds) has ever been registered with the Division as a dealer or investment advisor. Respondent Alexander Legault (Legault) was the president and general manager of Trinh at all material times. On March 14, 1986, a grand jury in the Eastern District of Louisiana, United States District Court, returned an indictment against Legault for wire fraud, mail fraud, and conspiracy to commit wire and mail fraud. The indictment alleges that Legault attempted to defraud several institutions in connection with a food brokerage scheme. The investments in the present case also involve food brokerage operations, according to the information supplied potential investors. In March 1994, Charles Mortimer of Lake Mary, Florida, attended a seminar in Leesburg, Florida, devoted to three investment opportunities. Mr. Mortimer learned of the seminar through mail flyers or newspaper announcements. Mr. Mortimer expressed interest at the seminar in a cremation society and the Trinh notes. Reynolds appeared at the seminar and presented these investment opportunities. The next month, Mr. Mortimer met Reynolds in Lady Lake, Florida, and Reynolds sold Mr. Mortimer one of the Trinh notes. Mr. Mortimer thereafter purchased through Reynolds several more notes for a total investment of $55,000. At no time prior to making these investments did Reynolds disclose to Mr. Mortimer that Legault was under indictment in New Orleans for criminal fraud and was avoiding prosecution in Canada. Mr. Mortimer would not have invested in the Trinh notes had he known this material fact. However, the record does not indicate whether Reynolds knew that Legault was under indictment or had escaped to Canada. Nor does the record reveal sufficient background information to support the finding that Reynolds reasonably should have known this fact. Mr. Mortimer received a total of $600 on this investment. He has lost the remaining $54,400. Earl Wilson learned of Trinh through Reynolds, who was Mr. Wilson’s tax advisor in 1994 and had been since 1986. Reynolds recommended that Mr. Wilson and his wife should invest a recent inheritance in Trinh notes. Between his initial investment in 1994 and his final investment on April 25, 1995, Mr. Wilson and his wife invested a little over $200,000 in Trinh notes. They lost the entire investment. William Dinges first learned of Trinh at a seminar that he attended in 1993. He purchased a $140,000 note in 1995. He lost his entire investment.
Recommendation It is RECOMMENDED that the Department of Banking and Finance enter a final order ordering Respondents K. D. Trinh Investments, Inc. and Loren Reynolds to cease and desist from any further violations of Chapter 517 and dismissing the amended administrative complaint against Respondent Strong Financial Services, Inc. ENTERED in Tallahassee, Florida, on June 4, 1997. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings on June 4, 1997. COPIES FURNISHED: Susan Steinberg Sandler Assistant General Counsel Office of Comptroller West Central Florida Regional Office 1313 Tampa Street, Suite 615 Tampa, Florida 33602-3394 K. D. Trinh Investments, Inc. 1194 Hanna Street East Windsor, Ontario Canada N8X2P4 Loren Reynolds Strong Financial Services, Inc. 241 B Ridgewood Avenue Holly Hill, Florida 32117 Harry Hooper General Counsel Department of Banking and Finance Room 1302, The Capitol Tallahassee, Florida 32399-0500
Findings Of Fact Petitioner is the governmental agency responsible for issuing real estate licenses and regulating licensees on behalf of the state. Respondent, Gregory T. Franklin ("Franklin"), is licensed in the state as a real estate broker; license number 0314387. The last license issued was as a real estate broker, c/o Equity Realty of South Florida, Inc., t/a Equity Realty, 5809 Southeast Federal Highway #200, Stuart, Florida 34997. Respondent, Equity Realty of South Florida, Inc. ("Equity"), is a corporation registered as a real estate broker; license number 0229264. Respondent, Franklin, is the qualifying broker for Respondent, Equity. On or about January 26, 1990, Mr. Robert Warren (the "buyer") entered into a contract to purchase real estate from Ms. J. Zola Miller and Ms. Adrianne Miller Hill (the "sellers"). The buyer gave Respondent an earnest money deposit in the amount of $1,000. On or about April 17, 1990, a second contract was executed by the buyer and sellers. The buyer gave Respondents a second earnest money deposit in the amount of $24,000. Both earnest money deposits were timely deposited to Respondents' escrow account, number 0194101404, Florida Bank, Stuart, Florida. The buyer and sellers had difficulty in closing the contract due to disagreements concerning conditions in the contract. At the buyer's request, Respondents used the earnest money in the amount of $25,606.04 to purchase a certificate of deposit ("CD") in the name Robert Warren Century 21 Equity Realty Escrow Account #050-215-76, located at the First Marine Bank of Florida, Palm City, Florida ("First Marine"). Respondents received the sellers' verbal approval, but not written approval, for the purchase of the CD. Respondents notified the Florida Real Estate Commission (the "Commission") on August 28, 1990, that there were conflicting demands for the $25,000 earnest money deposit. Respondents stated their intent to claim a portion of the earnest money as an earned commission and stated that they were preparing to file an interpleader action to resolve the parties' dispute over the earnest money deposit. The Commission acknowledged Respondents' notification. Negotiations between the buyer and sellers continued until December 12, 1990. At that time, the parties reached an impasse, and each made written requests for the escrow deposit. Respondents maintained the earnest money in the CD until February 8, 1991. On February 8, 1991, Respondents were notified by First Marine that the buyer was attempting to obtain the escrow monies directly from First Marine. Respondents opened a CD in the name of Robert Warren Escrow Account for Equity Realty by Gregory Franklin, Account #200-517-7320, First Union Bank of Florida, Stuart, Florida. When the CD matured on May 15, 1991, the amount of the deposit was $25,989.57. On May 15, 1991, Respondents removed the earnest moneys and invested them in CD #10696954 at Community Savings Bank. On June 19, 1991, Respondents withdrew $500, paid a penalty of $6.21, and closed the CD. The remaining balance was used to open CD #10707413 at Community Savings Bank. On June 21, 1991, Respondents withdrew $600 and paid a penalty in the amount of $8.67. Respondents used half of the $600 withdrawal to pay an attorney to initiate a civil interpleader action without the knowledge or consent of either the buyer or seller. On August 23, 1991, Respondents closed the CD and withdrew the balance. On August 23, 1991, Respondents opened CD 310725647 in the name of Equity Realty, Inc., with the balance at Community Savings Bank. On October 30, 1991, Respondents made a withdrawal in the amount of $175. On November 23, 1991, the CD was renewed. The account was closed on November 27, 1991, with a balance of $25,456.94, and deposited into the court registry. The interpleader action was ultimately resolved pursuant to a settlement agreement between the parties. Respondents obtained the consent of both parties, though not the written consent of both parties, before placing the escrowed funds into an interest bearing account on August 15, 1990. The uncontroverted testimony of Respondent, Franklin, concerning this issue was credible and persuasive. Neither the sellers nor the buyer ever revoked their consent. Respondents deposited the earnest moneys into an interest bearing account without designating who was to receive the interest from such an account without the consent of both parties. Respondents took appropriate action to resolve the conflicting demands made upon the earnest moneys deposited with Respondents but failed to take such action in a timely manner.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondents guilty of placing escrow funds in an interest bearing account without designating who is to receive the interest in violation of Florida Administrative Rule 21V- 14.014. It is further recommended that Petitioner should issue a written reprimand to Respondents and require Respondent, Franklin, during the next 12 months, to document to the satisfaction of Petitioner that he has completed 14 hours of the Brokerage Management Course. RECOMMENDED this 22nd day of January, 1993, 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 22nd day of January, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-3323 Petitioner's Proposed Findings Of Fact. 1.-6. Accepted in Finding 1. 7.-8. Accepted in Finding 2. 9.-11. Accepted in Finding 3. Accepted in Finding 4. Accepted in Finding 5. Accepted in Finding 3. Accepted in Finding 6. Accepted in Finding 7. 17.-20. Accepted in Finding 8. 21.-22. Accepted in Finding 9. 1.-6. Accepted in Finding 1. 7.-8. Accepted in Finding 2. 9.-11. Accepted in Finding 3. 12. Accepted in Finding 4 13. Accepted in Finding 5. 14. Accepted in Finding 3. 15. Accepted in Finding 6. 16. Accepted in Finding 7 17.-20. Accepted in Finding 8. 21.-22. Accepted in Finding 9. 23.-24. Accepted in Findings 10.-11. Respondents' Proposed Findings Of Fact. 23.-24. Accepted in Findings 10.-11. COPIES FURNISHED: Darlene F. Keller, Director Division of Real Estate Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Jack McRay, Esquire General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 James H. Gillis, Esquire Department of Professional Regulation, Division of Real Estate Legal Section - Suite N 308 Hurston Building North Tower 400 West Robinson Street Orlando, Florida 32801-1772 Gregory T. Franklin, pro se %Equity Realty of South Fla., Inc. 5809 S.E. Federal Highway, #200 Stuart, Florida 34997 APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-3323 All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.
Findings Of Fact Based upon my observation of the witnesses, and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, I hereby make the following findings of fact: The Petitioner, Thomas Patrick Boggs, resides in Ft. Lauderdale, Florida, and is employed with MCG Portfolio Management Corporation. On March 9, 1987, the Petitioner submitted an application for registration as an associated person with MCG Portfolio Management Corporation pursuant to the "Florida Securities and Investor Protection Act," Chapter 517, Florida Statutes. By letter dated April 9, 1987, the Respondent, Department of Banking and Finance, Division of Securities and Investor Protection, denied the Petitioner's application based on the incidents discussed in paragraphs three (3) to nine (9) below. Petitioner was arrested on August 8, 1975, in the State of Virginia for the alleged offense of passing a bad check to a service station. The charges were dropped when the Petitioner made payment on the check. In a letter dated July 24, 1978, the New York Stock Exchange ("NYSE") admonished Petitioner for failing to disclose his 1975 arrest for petty larceny on a Form U-4 (Uniform Application for Securities and Commodities Industry Representative and/or Agent). The NYSE took note of Petitioner's "explanation that [he] failed to report the offense because [he] considered the problem minor and that the charge against [him] was subsequently dropped." The letter to Petitioner went on to state that "[t]he Exchange hereby admonishes you for your conduct and cautions you that any future misconduct may result in formal disciplinary action. " In a letter dated March 20, 1981, the NYSE admonished Petitioner for failing to respond correctly to a question on a Form U-4 dated May 7, 1980. Question 50(a) of the Form U-4 read as follows: "In your previous business connections or employment, have you ever been . . . a subject of a major complaint or legal proceeding?" The Petitioner responded "no" to question 50(a), although he had been named as a party defendant in a lawsuit commenced in March 1980 by a customer of Drexel, Burnham, Lambert Incorporated where he was employed as a registered representative from January to May 1980. In a letter dated March 20, 1981, the NYSE took consideration of Petitioner's "explanation that [he] interpreted Question 50(a) as referring to [his] business connections and employment prior to entering the securities business, and that [he] had disclosed the litigation to Dean Witter personnel during [his] initial interview for employment." The NYSE's letter to Petitioner went on to state that "the Exchange hereby admonishes you for your conduct and cautions you that any misconduct on your part in the future will very likely lead the Exchange to take formal disciplinary action against you." On September 25, 1985, a suit was filed against Petitioner in the United States District Court for the Northern District of Georgia. The suit, Bernard, et al v. First Continental Resources, Inc.; T. Patrick Boggs (Petitioner); David Meeks; and First Continental Drilling Associates, a Nevada Limited Partnership (Civil Action No. 85-182), alleged fraud, breach of contract, breach of fiduciary duty, and negligence in connection with the sale of securities. First Continental Resources, Inc., was the corporation general partner of First Continental Drilling Associates. Petitioner was the individual general partner for First Continental Drilling Associates and President/Chief Operating Officer and Director of First Continental Resources, Inc. Petitioner was a controlling person of First Continental Resources, Inc., and First Continental Drilling Associates as that term is used in Section 15 of the Securities Act of 1933 and Section 20 of the Securities Exchange Act of 1934. The plaintiffs in the lawsuit sought compensatory damages of approximately $800,000, treble damages, and punitive damages of $20 million. The Petitioner and the other defendants failed to defend the suit and the Court entered an Order of Default against Petitioner on March 31, 1986. On May 31, 1986, the defendants obtained a judgment against Petitioner and all defendants for approximately $2.3 million. The Petitioner testified that he had a meritorious defense to the Bernard lawsuit but failed to present it because of lack of funds for legal representation. The Petitioner testified that he was in fact a victim of fraud along with the plaintiffs, perpetrated by some of the co-defendants in the lawsuit. George Bloukos, Executive Vice President of MCG Portfolio Management Corporation, has known the Petitioner since March of 1987 when Petitioner first sought employment with his company. Since that time, the Petitioner has been employed with MCG in a clerical-like capacity, pending resolution of his registration application. Bloukos has worked in the securities and investments profession for approximately thirty (30) years. Based on Bloukos' observation of Petitioner, the Petitioner has shown himself to be a person of good character, good business ethics and a conscientious worker. Bloukos believes that Petitioner is a trustworthy individual who would be an asset to his company and to the securities and investments profession.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that the Petitioner's application for registration as an associated person be DENIED. DONE and ORDERED this 7th day of October, 1987 in Tallahassee, Leon County, Florida. W. MATTHEW STEVENSON 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 7th day of October, 1987. COPIES FURNISHED: Charles E. Scarlett, Esq. Office of the Comptroller Suite 1302, The Capitol Charles L. Stutts, Esq. General Counsel Department of Banking & Tallahassee, FL 32399 Finance Plaza Level, The Capitol Tallahassee, FL 32399-0350 Thomas P. Boggs c/o George Bloukos MCG Portfolio Management Corp. 5301 North Federal Highway Suite 170 Boca Raton, FL 33431 Hon. Gerald Lewis Comptroller Department of Banking & Finance The Capitol Tallahassee, FL 32399-0350
The Issue Whether Respondents, Zuma Engineering Company, Inc., ("Zuma") and Michael J. Gruttadauria, sold securities in Florida in violation of Sections 517.07 and 517.12, Florida Statutes? Whether Respondents, in connection with the offer and sale to Florida investors of Zuma promissory notes, (whether the notes constituted securities or not) violated the anti-fraud provisions of Section 517.301(1)(a), Florida Statutes? Whether Mr. Gruttadauria, as President of Zuma, may be held responsible for Zuma's corporate acts even if Mr. Gruttadauria did not have direct knowledge of them?
Findings Of Fact The Parties The Department Petitioner, the Department of Banking and Finance, Division of Securities and Investor Protection, is the state agency mandated by the Florida Securities and Investor Protection Act, Chapter 517, Florida Statutes, to "administer and provide for the enforcement of all the provisions of [Chapter 517]." Section 517.03, Florida Statutes. Zuma Respondent Zuma Engineering Co., Inc., is a Florida corporation that has ceased operating and is no longer in business. Its last known address was 11700 Belcher Road South, Largo, Florida 34643. In the early part of this decade, Zuma's business operation was to consist primarily of the recycling of scrap rubber tires through a manufacturing process that produced crumb rubber to be used in the construction of roads. Zuma had other revenue components planned as well: picking up tires from used tire dealers, shipping used tires to overseas dealers, collecting factory on-site dump fees for used tires, and pursuing the manufacture of rubber mulch to be used in playgrounds. Michael Gruttadauria Mr. Gruttadauria is the President of Zuma. Mr. Gruttadauria has been the President of Zuma since its inception, that is, since the day Zuma was incorporated. Former Respondents Jeffrey George Turino was Zuma's Chief Financial Officer. He had been a licensed securities dealer at some time prior to 1990 but his license lapsed. Mr. Gruttadauria relied on Mr. Turino for the raising of capital for Zuma through the sale of promissory notes. The other former respondents were selling agents for Zuma. Several of them were insurance salesmen who benefited from pre-existing relationships with insurance business clients to sell them promissory notes as investments in Zuma. For example, former Respondent Darren Carlson was Nancy Lechner's mother's insurance agent. Carlson sold Ms. Lechner's mother nursing home insurance. In the course of their business relationship, both Ms. Lechner and her mother learned that Mr. Carlson also sold annuities and offered other investments. Ms. Lechner, a nurse, and her mother, "were looking for . . . investments that paid a little more interest than what the banks would pay, and he mentioned Zuma to us." (Vol. 1, Tr. 118.) Mr. Carlson told Ms. Lechner it was "a recycling company. They had very unique equipment that made tires into mulch and rubber that went back into the roads, . . . I had heard of recycling on the TV and how fantastic it's doing. So we invested in it." (Vol. 1, Tr. 119). Mr. Carlson did not give Ms. Lechner and her mother a business plan, an offering circular or a prospectus, but after hearing of their concerns over whether the investment was safe or not, "he told us that if anything were to happen to the company that there is always the equipment, which was worth a lot of money, that we would get our money back." (Vol. 1, Tr. 120.) Ms. Lechner and her mother invested $47,000 in Zuma in 1995. In return, they received promissory notes. At the time of the investment, they did not understand that they had loaned the money to Zuma. They were not told that the equipment, which supposedly ensured the safety of the investment, was pledged, collateralized or leased. Had they known Zuma did not own the equipment, they would not have made the loan. Importantly, too, they were not told that there were approximately $2,000,000 in outstanding promissory notes at the time they invested. Mr. Carlson also failed to tell Ms. Lechner and her mother that Zuma had applied for but not yet received a state permit necessary to carry out its operation of producing crumb rubber. Had Ms. Lechner known about the lack of a permit, she would not have invested in Zuma. After the investment was made, Ms. Lechner and her mother did not receive any interest payments as required by the notes. Nor have she or her mother ever received re-payment of any of the principal. Their $47,000 has been lost. The only contact initiated by the company after the investment was a newsletter claiming that 1995 had been an explosive year for Zuma with a major tire company considering investment in Zuma and entry into a joint venture research agreement with the University of South Florida's College of Chemistry. Bad Business From the Start Zuma was undercapitalized from the beginning. Zuma did not have the millions of dollars necessary to conduct a successful crumb rubber factory. It did not own its equipment nor did it own the property on which the business was sited. Zuma's business never turned a profit either. In fact, its revenue never came close to approaching what was necessary just to break even. From 1990 through 1993, it had significant losses. For these four years, tax returns show revenue of only $37,000. Total expenses for the four years amounted to $572,000. Of these expenses, commissions paid to agents who obtained capital by selling promissory notes executed by Zuma amounted to $248,000. During the same time period, Zuma paid out over $117,000 in interest. Zuma's financial picture was portrayed at hearing in bleak terms by Mary M. Delano, the Department's financial investigator who had reviewed Zuma's financial records: [T]he business was operating at a large loss and . . . the revenues were far below what was necessary to maintain the operations of the business. . . . with a commissions and interest expense of that significance . . . the borrowings of the company were significant and . . . the cost of those borrowed funds were significant, also. Vol. 1, Tr. 80. Zuma's financial picture did not improve after 1994. But Zuma continued to obtain loans through promissory notes mainly from elderly people like Ms. Lechner's mother. Loans evidenced by promissory notes for the period of time from 1991 through 1995 totaled nearly three million dollars. Promissory Notes Because it did not have adequate capitalization, Zuma, through its principals, employees, associates and agents offered to sell and did sell promissory notes to finance its operation. Most had a maturity date in excess of nine months. The face value of the notes ranged from $25,000 to $170,0000. They were sold to Florida investors. Typical of these investors was Carlyle H. Charles' mother. She invested over $105,000 in Zuma for which she received a promissory note. The note was executed on June 5, 1997, the day after her 91st birthday. The funds in the case of Mr. Charles' mother came from surrender of two annuities. Even with interest which should have been paid, Mr. Charles' mother would have lost over $6,000 the first year of the life of the loan because of surrender penalties imposed by the annuity companies. Had Mr. Charles' mother understood that she would have lost so much money the first year from surrender penalties, there is "no way" (Vol. 1, Tr. 103,) that she would have loaned or invested the money in Zuma. The surrender penalty was not explained to Mr. Charles' mother by the insurance agent who had established the annuities for her. Nor was it explained by Darren Carlson who actually sold the promissory note to Mr. Charles' mother. She did not realize, moreover, the nature of the investment in Zuma. After discussion with Carlson, she thought that she had either entered new annuities or had the old ones adjusted to improve her payments. Mr. Charles' mother has never received any interest payments on the promissory note or repayment of any of the principal. Any possibility of re-payment has dimmed to the point of hopelessness now that Zuma is out of business. All told, Zuma sold more than seventy notes to more than forty investors. Most of these were elderly people, retirees and widows, in their seventies and eighties, who did not understand the full import of the investments in Zuma. None of Zuma investors were provided with an offering circular, a prospectus or a financial statement about Zuma. While these investors lost all of their investments, Mr. Carlson and Zuma's other selling agents were paid handsome commissions for the sale of Zuma promissory notes, usually between 10 percent and 15 percent of the face value of the notes. Registration with the Department Zuma's promissory notes were not registered as securities with the Department pursuant to Chapter 517, Florida Statutes. Neither Zuma nor Mr. Gruttadauria have ever been registered with the Department to sell securities. Mr. Gruttadauria's involvement Mr. Gruttadauria relied on Mr. Jeffrey Turino, Zuma's Chief Financial Officer, with regard to the sale of the promissory notes. Prior to an investment being made, Mr. Gruttadauria never met or talked with an investor except for Jack Wheeler. In Mr. Wheeler's case, Mr. Gruttadauria met with Mr. Wheeler and Mr. Turino before the promissory note was executed and, at Mr. Wheeler's insistence, Mr. Gruttadauria signed the note both on behalf of Zuma and personally. Mr. Gruttadauria also signed every promissory note on behalf of the corporation. Many of these notes were signed long after Zuma's financial condition had become desperate. During this time, Mr. Gruttadauria saw the selling agents as often as once or twice a week. He did not ask them who the investors were or what their interest in investing in Zuma might be. Mr. Gruttadauria wanted to know as little as possible about the people who were investing large sums of money in his failing business. Nonetheless, Mr Gruttadauria recognized his responsibility for the financial affairs of Zuma in October of 1995 when he sent out the newsletter received by Ms. Lechner. In the closing paragraphs of a 5-page letter trumpeting Zuma's environmental achievements and advances in the areas of the market place, personnel, finance, and research the following appears: The reason this newsletter is so long, is that Michael G., [Mr. Gruttadauria], thought others had been sent out since last October, and it turns out I was misinformed on this and other matters, by an employee no longer with the firm. [T]he bottom line is that I have the ultimate responsibility of everything that has or has not now returned to a "hands on" mode in regard to the financial aspects of Zuma. * * * My attitude is that without you, Michael G., and Zuma would not only be where they are "today", but would never be able to get where we going "tomorrow". You have every right to receive accurate, truthful answers to any and all of your questions regarding Zuma. Thank you for "Today" and thank you again for "Tomorrow". Zuma Engineering Co., Inc. Michael J. Gruttadauria President/Founder Petitioner's Exhibit No. 18, (emphasis added) To this day, with minor exceptions, all the promissory notes signed by Mr. Gruttadauria are in default.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Banking and Finance enter a final order ordering Zuma Engineering Co., Inc., and Michael J. Gruttadauria to cease and desist from all present and future violations of Chapter 517, Florida Statutes, and fining them the maximum amount allowable by law: $5,000 for each violation of the provisions of Chapter 517, Florida Statutes, found above; that is, $5,000 for failure to register Zuma as a dealer in securities and $10,000 times the number of promissory notes introduced into evidence in this proceeding ($5,000 for failure to register each and every note as a security with the department plus $5,000 for the fraud connected with each and every note.) DONE AND ORDERED this 5th day of November, 1997, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 5th day of November, 1997. COPIES FURNISHED: Josephine A. Schultz, Esquire Division of Securities and Investor Protection Department of Banking and Finance 526 Fletcher Building 101 East Gaines Street Tallahassee, Florida 32399-0350 Michael J. Gruttadauria 1908 Downing Place Palm Harbor, Florida 34683 Harry Hooper, General Counsel Department of Banking and Finance Room 1302, The Capitol 01 Tallahassee, Florida 32399-0350 Honorable Robert F. Milligan Comptroller Department of Banking and Finance The Capitol, Plaza Level Tallahassee, Florida 32399-0350
Findings Of Fact Respondent Martha M. Bustillo is a real estate broker licensed in the State of Florida, having been issued license number 0401092. At all times material hereto, she has been the qualifying broker for Respondent Virmar Investments, Inc. Respondent Virmar Investments, Inc., is a real estate brokerage corporation licensed in the State of Florida, having been issued license number 0237551. At no time material hereto has Respondent Olga Venedicto been licensed in the State of Florida as either a real estate broker or as a real estate salesperson. In July of 1992 Thomas F. Sevilla contacted Virmar Investments, looking for a house to buy. Olga Venedicto took his phone call and told him that she would help him. Sevilla went to Venedicto's "office" at Virmar Investment and began working with her. Venedicto gave Sevilla her business card which represented that she is the vice president of Virmar Investments, Inc., and carries the notation "registered real estate brokers." In addition to giving him her card which carried her name, Virmar's name, and the word "brokers" in the plural form rather than the singular form, Venedicto specifically told Sevilla that she was a broker. Venedicto and Bustillo took Sevilla to see a house which he decided to buy. He gave Venedicto his check for $2,000 as a deposit and instructed her and Bustillo to make an offer on that house. Venedicto told him she would put the money in Virmar's escrow account. Instead, the money was deposited in Virmar's operating account. Sevilla did not buy that house, and Venedicto and Bustillo took him to see a second house. Sevilla decided not to make an offer on that house and asked Venedicto to refund his money. It took a month before Sevilla received a check from Venedicto. Although the check was marked "deposit return," the check was not written from Virmar's account but rather was a check from a Mega Group Corp. for only $1,675. When Sevilla attempted to cash that check, it was dishonored three times, with the notation "N. S. F." Finally, the check was honored by the bank. Sevilla had expected to receive his entire $2,000 deposit. Neither Venedicto nor Bustillo had ever told him in advance that they would keep part of his money. Although Respondents' attorney during the final hearing implied that his clients may have kept part of Sevilla's money to pay for a survey and credit report, Sevilla had not agreed in advance to pay for a credit report, and no evidence was offered as to what house Sevilla might have purchased a survey on or for what reason. Further, neither Venedicto nor Bustillo gave him a copy of any survey or credit report nor was he ever shown one or advised that either would be obtained. When Sevilla inquired as to why he was reimbursed the lesser amount, only then did Venedicto tell him that Respondents were keeping part of his money for a credit report. Respondents Bustillo and Virmar authorized and assisted Venedicto in her performance of acts and services requiring licensure as a salesperson relative to the transaction with Sevilla. Rita and Carlos Benitez listed their house for sale with Pedro Realty. Gladys Diaz was the listing agent at Pedro Realty. Respondents Bustillo and Venedicto brought Carlos Martinez and his wife to look at the Benitez house. Gladys Diaz was present at the time. Respondents Bustillo and Venedicto subsequently came to Diaz' office and presented to Diaz and Carlos Benitez an offer on behalf of Mr. and Mrs. Martinez. Respondent Venedicto represented herself to be a realtor and Respondent Bustillo to be Venedicto's partner and broker. Respondent Venedicto discussed the contract and price with Diaz and Benitez while Respondent Bustillo observed Venedicto's presentation. The offer had previously been signed on behalf of Respondent Virmar by Respondent Venedicto who represented to Diaz that the signature on the offer was that of Respondent Venedicto. Mr. Benitez signed the document, and Diaz then took the offer to Mrs. Benitez to obtain her signature. Mrs. Benitez also signed the offer, thereby completing the contract. Thereafter, delays ensued because Mr. and Mrs. Martinez were not in a financial position to be able to purchase the home. Respondent Venedicto contacted Mrs. Benitez and attempted to re-negotiate the contract. During those negotiations which were not successful, Respondent Venedicto represented herself to Mrs. Benitez as being a licensed real estate agent. In response to Mrs. Benitez' inquiries, Respondent Venedicto gave Benitez her business card carrying the names of Venedicto and Virmar and the notation "registered real estate brokers." As to the portion of the transaction involving Mrs. Benitez, all of her contact with the three Respondents in this cause was with Respondent Venedicto. Venedicto gave Benitez advice regarding proceeding with the sale and handled the negotiations. Prior to September 24, 1992, Hector F. Sehweret, an investigator for the Department of Business and Professional Regulation, requested that Respondents Bustillo and Virmar produce certain records for inspection by him. He spoke with Respondent Bustillo on a number of occasions to no avail. He offered to give her time to gather the records if necessary, but she never did. On September 24, 1992, he served Respondent Bustillo with a subpoena for those records. She still failed to produce them. Thereafter, she would not return his phone calls, and when he came to the office of Virmar Investments, Respondent Bustillo would hide from him. Neither Respondent Bustillo nor Respondent Virmar have ever produced the records subpoenaed. Further, no explanation has been given for the failure of Respondents Bustillo and Virmar to produce their records. Although the attorney for Respondents implied during the final hearing that the records may have been destroyed by Hurricane Andrew, there is no evidence to support that implication; rather, the evidence is uncontroverted that the building housing the real estate office of Respondents Virmar and Bustillo was not damaged by Hurricane Andrew. Ileana Hernandez is a realtor and a mortgage broker licensed in the State of Florida. She met Respondents Bustillo and Venedicto during a real estate transaction. In November of 1991 Respondents Bustillo and Venedicto contacted Hernandez regarding obtaining money in exchange for a second mortgage on certain real property. At the time, Respondents did not tell Hernandez the identity of the owner of the property, but Hernandez was given the address of the property and was advised that the market value of the property was approximately $79,000. Hernandez was subsequently advised that Respondent Venedicto (a/k/a Olga Bichara) was the owner of the property. It was agreed that Respondent Venedicto would execute and record the promissory note and mortgage in the amount of $15,500. Hernandez, who knew that Respondent Bustillo was the president of Terra Title, gave her a personal check payable to Terra Title in the amount of $15,000 on November 26, 1991. Respondent Venedicto, who had promised Hernandez that the promissory note and second mortgage would be recorded, never recorded those documents. Further, Respondents never delivered the original copy of the promissory note and mortgage to Hernandez despite her repeated demands. Hernandez later discovered that Respondent Venedicto was not the sole owner of the property which she had attempted to mortgage but jointly owned the property with her son. Accordingly, Respondent Venedicto's signature would not be sufficient to perfect a mortgage on the property. Hernandez also discovered that the mortgage, represented by Bustillo and Venedicto to be a second mortgage, was not. There were already two mortgages on the property. Had Hernandez known the true ownership and the true encumbrances on the property, she would not have loaned Venedicto the $15,000 because that raised the total amount of mortgages on the property to be in excess of the value of the property. Three checks which were subsequently written by Respondent Bustillo from the operating accounts of Respondent Virmar and of Mega Group Corp. were dishonored by the bank with the notation "N. S. F." As a result of those checks, Hernandez obtained default final judgments against Respondent Virmar and against Mega Group Corp., which final judgments are still unsatisfied. Prior to that time, however, Respondents Venedicto and Bustillo approached Hernandez regarding their need to borrow $35,000 to be re-paid in 30 days in conjunction with some real estate development in which Respondents Venedicto and Bustillo were involved. Respondent Venedicto and Respondent Bustillo each individually represented that Hernandez would have her money back in 30 days. Respondent Bustillo told Hernandez that Respondent Venedicto was in business with Bustillo and was selling real estate in Mexico. Bustillo asked Hernandez to make the check payable to Bustillo's company Terra Title. Hernandez went to the offices of Respondent Virmar and handed her personal check made payable to Terra Title to Respondent Venedicto. When the 30 days had passed with no payments to Hernandez, she went to Virmar Investments and made Respondent Venedicto sign a promissory note for $35,000. By the time of the final hearing in this cause, Hernandez had recovered only $15,000 of the $35,000 loan made to Respondent Venedicto and had recovered only the principal amount of the money supposed to have been secured by a second mortgage on real property. Hernandez is still owed $20,000 in principal alone.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered revoking the license of Respondent Martha M. Bustillo, revoking the license of Respondent Virmar Investments, Inc., and requiring Respondent Olga Venedicto to pay an administrative penalty in the amount of $5,000 within 30 days from the entry of the Final Order. DONE and ENTERED this 31st day of January, 1994, at Tallahassee, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of January, 1994. APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 93-3328, 93-3329, and 93-3330 Petitioner's proposed findings of fact numbered 2-18, 20-29, and 31-33 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed finding of fact numbered 1 has been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Petitioner's proposed finding of fact numbered 19 has been rejected as not being supported by the weight of the evidence in this cause. Petitioner's proposed finding of fact numbered 30 has been rejected as being unnecessary to the issues involved herein. Respondents' proposed findings of fact numbered 1, 4, 5, 8, 9, 18, 25, 26, 28, 37, 42, 49-52, 55, 57, 62, 63, 69, 71, and 73 have been adopted either verbatim or in substance in this Recommended Order. Respondents' proposed findings of fact numbered 2, 6, 11-17, 19-22, 30- 36, 43, 46-48, 53, 54, 56, 58, 60, 67 and 68 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Respondents' proposed findings of fact numbered 7, 10, 23, 29, 61, 64, 65, 70, 72, and 75 have been rejected as not being supported by the weight of the evidence in this cause. Respondents' proposed findings of fact numbered 3, 24, 27, 38-41, 44, and 45 have been rejected as being unnecessary to the issues involved herein. Respondents' proposed findings of fact numbered 59, 66, 74, and 76-78 are rejected as being irrelevant to the issues under consideration in this cause. COPIES FURNISHED: Steven W. Johnson, Esquire Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street, Suite N-308A Orlando, Florida 32802-1900 Ofer M. Amir, Esquire Amir & Associates, P.A. 8751 West Broward Boulevard, Suite 500 Plantation, Florida 33324 Darlene F. Keller, Division Director Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32802-1900 Jack McRay, Acting General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Tallahassee, Florida 32399-0792
