The Issue Whether the Petitioners are entitled to an award of attorneys' fees and costs pursuant to Section 120.595(2), Florida Statutes.
Findings Of Fact The Florida Department of Insurance is responsible for regulation of insurance transactions in the State of Florida. Beginning in January 1997, the Department of Insurance began the process of adopting rules intended to address the "parity" of insurance regulation between insurance agencies affiliated with financial institutions and agencies which are unaffiliated. The Petitioners successfully challenged parts or all of the proposed rules. As set forth in the Final Order entered June 29, 1998, Proposed Rules 4-224.002, 4-224.004, 4-224.007, 4-224.012, 4-224.013 and 4-224.014, Florida Administrative Code, were determined to be invalid exercises of delegated legislative authority. Pursuant to Section 120.595(2), Florida Statutes, the Petitioners are entitled to award of attorneys' fees and costs. The evidence fails to establish that the Department of Insurance was substantially justified in promulgating the proposed rules. The evidence offered during the rule challenge proceeding failed to establish the existence of a reasonable basis in law and fact at the time the proposed rules were drafted and published. There are no special circumstances which make an award of fees and costs unjust. Petitioner Florida Bankers Association identified attorneys' fees totaling $145,683.01, and seeks an award of $15,000, the statutory limit. Petitioner Florida Bankers Association is entitled to an award of attorneys' fees in the amount of $15,000. Petitioner Florida Bankers Association seeks an award of costs of $40,537.53, including $36,590.00 paid to Dr. Michael White, the Petitioner's expert witness during the rule challenge proceeding. The Department asserts that the payment to Dr. White is unreasonable. There is no credible evidence that the costs related to Dr. White's participation in the case are not reasonable. The fact that the Department paid less for its expert than did the Florida Bankers Association does not establish that payments to Dr. White were unreasonable. Petitioner Florida Bankers Association is entitled to an award of costs in the amount of $40,537.53. Petitioner Community Bankers Association identified attorneys' fees totaling $10,290.00, and costs of $806.23. Petitioner Community Bankers Association is entitled to an award of attorneys' fees in the amount of $10,290.00 and costs in the amount of $806.23. Petitioner Specialty Agents, Inc., did not obtain legal counsel for the rule challenge proceeding, and relied on a qualified representative to challenge the proposed rules. The qualified representative calculates that 160.1 hours were expended and suggests a valuation of $100 per hour for his time, for a total of $16,010. Petitioner Specialty Agents, Inc., seeks an award of attorneys' fees in the amount of the $15,000.00 statutory limit. The evidence fails to establish that a Petitioner's non-attorney representative is entitled to an award of attorneys' fees. Petitioner Specialty Agents, Inc., seeks an award of costs in the amount of the $249.07. Section 120.595(2), Florida Statutes, differentiates between "reasonable costs and reasonable attorney's fees", suggesting that a party may be entitled to an award of reasonable costs even if representation is provided by a non-lawyer. Without objection, Petitioner Specialty Agents, Inc., is entitled to an award of costs in the amount of the $249.07. The Department asserts that, due to "untimeliness" of the Petitions for Fees filed in these cases, an award of fees in this case is unjust. There is no issue of timeliness to be addressed in this matter. The Petitions for Fees were filed approximately 60-90 days after the time for appeal of the Final Order in the rule challenge cases had passed. The Final Order entered in the rule challenge proceeding specifically retained jurisdiction for an award of fees. There is no evidence that the Department was adversely affected by any delay in filing the Petitions for Fees.
Findings Of Fact On October 3, 1975, Respondent filed an application with Petitioner for registration as a real estate broker (Stipulation, Petitioner's Exhibit 2). That said application contained therein Question 8 which is set forth in paragraph 2 of the Amended Complaint and to which Respondent answered "No." (Stipulation, Petitioner's Exhibit 2.) That thereafter the application was approved and the Respondent subsequently received his registration as a real estate broker and has been continuously registered the Petitioner as a broker since December 22, 1975 (Stipulation.) That at the time of the execution of the application, as aforesaid, Respondent'S answer to Question 8 was incorrect in that he failed to reveal, disclose and fully explain a Complaint filed against him on August 6, 1973, in the Circuit Court of the Sixth Judicial Circuit of the State of Florida, in and for Pinellas County, by one Kenneth Beard, an individual, which complaint alleges false representations on the part of the Respondent in a business transaction. A judgment of the aforesaid Circuit Court in the above-mentioned action was in the process of appeal at the time Respondent filed his application for registration as a real estate broker (stipulation.) Respondent testified at the hearing substantially as follows: After the civil action had been filed against him, he sought the advice of counsel who informed him that the complaint therein was defective as a matter of law. He was therefore of the opinion that there was not a viable suit against him at the time he filled out his application, and thus was not attempting to mislead or hide any facts from the Petitioner. He also felt that, since he had not, in fact, committed any fraud or misrepresented any matters to the purchaser of the business in question, a negative answer on the question in the application was justified. However, upon reflection at the hearing, he conceded that, probably he had misread the question and misconstrued its meaning. Respondent's good reputation for truth and veracity in the community and in his business dealings was attested to by past officials of the Clearwater, Largo, Dunedin Board of Realtors (Testimony of Merhige, Blanton).
Recommendation That the Complaint against Respondent, William D. Folz, be dismissed. DONE and ENTERED this 5th day of April, 1976, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Frederick W. Jones Staff Counsel Florida Real Estate Commission 2699 Lee Road Winter Park, Florida 32789 Richard B. Moritz, Esquire 801 West Bay Drive Suite 704 Largo, Florida 33540
The Issue Whether Respondent's real estate broker's license should be disciplined for fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in any business transaction, pursuant to Section 475.25(1)(b) Florida Statutes(1983).
Findings Of Fact At all times pertinent to the charges, Respondent Thomas F. Steffan Jr. was a licensed real estate salesman having been issued license number 0402257. Respondent has since been issued a license as a real estate broker, same license number. Mr. and Mrs. Walther Ellis were the owners of certain property located on Windsor Road, Bonita Springs, Florida. Mr. and Mrs. Ellis listed their property for sale with Wesley Brodersen of Gulder Real Estate, Inc. in Bonita Springs, Florida. The Respondent was employed at Gulder Real Estate, Inc. during the time that the Ellises listed said property with Gulder Real Estate, Inc. On or about May 23, 1984, the Respondent solicited and obtained a Catherine A. Griffin as a prospective purchaser of the Ellis' property. Mrs. Griffin submitted a contract for sale and purchase, witnessed by Respondent, which contract for sale and purchase the Respondent in turn submitted to the Ellises. Pursuant to the terms of the May 23, 1984 contract for sale and purchase, Mrs. Griffin had placed down a total deposit of $5,000.00. The Ellises rejected the terms of sale (offer) as expressed in the May 23, 1984 contract for sale and purchase. Thereafter, Mrs. Griffin, as buyer, along with her husband, Donald Griffin, who is not a buyer in the transaction but was intimately involved in the negotiations, continued to express an interest in the property and the Ellises continued to express an interest to sell the property. In July, 1984, contract negotiations were once again begun and Mr. Griffin informed the Respondent what terms would be acceptable to his wife, Catherine A. Griffin. Mr. Griffin further requested that the signatures of Mr. and Mrs. Ellis be obtained first on a new contract for sale and purchase setting out the terms he had dictated to Respondent. Somewhere during this time period, Mr. Griffin directed Respondent to have completed a survey of the property at the Griffins'expense. Respondent next communicated with Mr. Ellis and a new contract for sale and purchase was prepared by the Respondent and signed by Mr. Ellis personally and signed by Mr. Ellis for Mrs. Ellis with Mrs. Ellis' express consent and permission. Subsequent thereto, the Respondent brought the new contract for sale and purchase to the Griffins. In the presence of Mr. and Mrs. Donald Griffin the Respondent presented the offer. Mr. Griffin immediately signed the new contract for sale and purchase in the presence of both Respondent and Mrs. Griffin on the line indicating he was signing as a witness to the buyer's signature/execution. However, as this contract (offer) was physically handed by Mr. Griffin to his wife for formal execution, it was further reviewed by Mr. Griffin, who became aware that the terms of purchase contained in the new contract for sale and purchase were not as he had dictated them to the Respondent. Mr. Griffin advised his wife not to accept the offer, instructed her not to sign, and, in fact, the new contract for sale and purchase was not signed or accepted by Mrs. Griffin. Respondent requested that the Griffins think about the offer for a while longer and they agreed to do so over an extended vacation. While the Griffins were on vacation, the Respondent, apparently believing the offer contained in the second contract for sale and purchase would eventually be accepted, notified Mr. Ellis that the offer had already been accepted. Believing that the offer had been accepted by a bona fide purchaser, Mr. Ellis requested a copy of the signed contract. Due to the fact that the Respondent did not have a contract signed by a bona fide buyer (Catherine A. Griffin) but believing that one would be obtained in the very near future because Donald Griffin had signed the second contract and because Donald Griffin had indicated that he could finance the entire operation by himself, the Respondent caused a photo copy of the signature of Catherine A. Griffin to be placed onto the second contract without the permission , consent, or knowledge of either Donald Griffin or Catherine Griffin. The altered copy of the second contract is apparently no longer in existence and did not come into evidence. The only real point of contention in the parties' respective proposed findings of fact and conclusions of law is concerning what representation was made by Respondent to Mr. Walther Ellis concerning who had accepted the second contract. Respondent admits he represented to Mr. Ellis that Mr. Griffin, controlling the transaction for buyers, had accepted the second contract. Mr. Ellis maintained that Respondent represented to him that the second contract had been accepted on his terms but he is not clear·whether Respondent told him Mrs. Griffin accepted it or who accepted it. (Walther Ellis Deposition Page 22). Mrs. Ellis's testimony presents no independent confirmation of any of this as her information in all respects is second-hand. Mr. Brodersen's testimony is that the Respondent's representation to him was that "the Griffins" had accepted the second contract for purchase and sale and that Respondent told Mr. Ellis the same thing in Brodersen's presence and also told Brodersen that the last copy of the signed contract had been mailed to Mr. Ellis by Respondent the day previous to this three-way conversation. Mr. Brodersen thought Mr. Ellis never got the fraudulent contract but testified further that Respondent later admitted to Brodersen that he had altered this copy of the second contract so as to fraudulently reflect Mrs. Griffin's signature and further admitted to Brodersen that he, Respondent, had mailed that fraudulent copy to Mr. Ellis. Mr. Brodersen never saw the fraudulent contract. Mr. Ellis testified to receiving in the mail a copy of the second contract with a suspicious-looking set of signatures which he turned over to his attorney. The parties stipulated the attorney does not now have the contract copy. By itself, the testimony of Investigator Jacobs that Respondent by telephone admitted falsifying Mrs. Griffin's signature onto a copy of the second contract for purchase and sale and further admitted destroying one copy of the fraudulent contract would fail as not having the proper predicate for voice identification. However, in light of Mr. Ellis's and Mr. Brodersen's testimony, Mr. Jacobs' testimony on Respondent's creation of the fraudulent document is accepted as corroborative pursuant to Section 120.58 Florida Statutes. The remainder of his testimony is rejected. At no time did Catherine A. Griffin and/or Donald Griffin as her agent or on his own behalf accept the Ellis' offer contained in the second contract for sale and purchase nor did Catherine A. Griffin nor Donald Griffin ever execute the second contract as a buyer. The transaction was never closed and Mrs. Griffin was returned her deposit money when she requested it in September 1984. Mr. Ellis admits having told Respondent he was not anxious for the deal to close and did not care if the deal failed to go through. Mr. Griffin spoke at length and with considerable feeling at the hearing of his desire that Respondent not receive a permanent record as a result of a single mistake committed while under stress from Respondent's father's medical condition. That Respondent was under such stress when all this occurred was confirmed by Mr. Brodersen.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That a final order be entered whereby Respondent Thomas F. Steffan Jr.'s licenses as a real estate salesman and broker be suspended for a period of one year and that he pay an administrative fine of $1,000.00. DONE and ORDERED this 8th day of October, 1985, in Tallahassee, Florida. ELLA JANE P. DAVIS 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 8th day of October, 1985. COPIES FURNISHED: James T. Mitchell, Esquire Staff Attorney Department of Professional Regulation-Legal Division of Real Estate 400 West Robinson Street Orlando, Florida 32802 Thomas F. Steffan Jr., Pro Se 18645 Sandpiper Road Ft. Myers, Florida Harold R. Huff, Director Department of Professional Regulation-Legal Division of Real Estate 400 West Robinson Street Orlando, Florida 32802 Fred Roche, Secretary 130 North Monroe Street Tallahassee, Florida 32301
Findings Of Fact Based on the admissions of the Respondent, on the testimony of the witnesses, and on the exhibits received in evidence, I make the following findings of fact: Respondent Larry L. Toney is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0089521 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker, t/a Larry L. Toney Realty, Inc., 4629 Moncrief Road West, Jacksonville, Florida 32209. At the time of the events described below, Ernest W. Mabrey was the owner of a house located at 3926 Perry Street, Jacksonville, Florida. On or about March 3, 1986, the Respondent met with Josephine Watkins, who is the daughter of Ernest W. Mabrey, at her home in Lake Butler, Florida, and advised her and Mr. Mabrey that the property described above, then owned by Mr. Mabrey, was in foreclosure. Ernestine Byrd, another daughter of Mr. Mabrey, was also present. An action to foreclose the mortgage on the subject property had in fact been filed at the time the Respondent met with Ernest W. Mabrey and members of his family. The Respondent requested that Ernest W. Mabrey sign a warranty deed to evidence the fact that he, Ernest W. Mabrey, had no interest in saving the subject property from the then pending mortgage foreclosure action. Josephine Watkins and Ernestine Byrd discussed the proposed transaction before any papers were signed. Ernest W. Mabrey did not object to transferring the subject property. On or about March 3, 1986, Ernest W. Mabrey, as grantor, signed a warranty deed which conveyed the subject property to Emory Robinson, Jr. Mr. Mabrey willingly signed his name to the warranty deed with the understanding that he was releasing his interest in the subject property because he was sick and neither he nor his daughters had the funds necessary to redeem the property. Josephine Watkins helped her father, Mr. Mabrey, write his name on the warranty deed and Ernestine Byrd signed the warranty deed as a witness to her father's signature. At the time the warranty deed was signed, no payments had been made on the mortgage for approximately five years. The Respondent did not promise to pay any money to Mr. Mabrey or his daughters in connection with the transfer of the subject property, nor did they expect to receive any money. The Respondent did not forge any signatures on the warranty deed described above. All of the signatures on that warranty deed are genuine. The grantee in the subject transaction, Emory Robinson, Jr., paid the holder of the first mortgage the sum of $6,787.11 in order to bring the payments to a current status and he assumed the mortgage. The mortgage foreclosure action was then voluntarily dismissed.
Recommendation For all of the foregoing reasons, it is RECOMMENDED that the Florida Real Estate Commission issue a final order in this case dismissing all charges against the Respondent. DONE AND ENTERED this 5th day of May, 1988, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH 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 5th day of May, 1988. APPENDIX TO RECOMMENDED ORDER The following are my specific rulings on all proposed findings of fact submitted by the parties. Findings Proposed by Petitioner: Paragraphs 1, 2 and 3: Accepted. Paragraph 4: First two lines accepted. Last line rejected as not supported by competent substantial evidence. Paragraph 5: First sentence is rejected as contrary to the greater weight of the evidence. Second sentence is rejected as constituting subordinate and unnecessary details. Paragraph 6: Rejected as contrary to the greater weight of the evidence. Paragraph 7: Accepted in substance, with additional findings for clarity and completeness. Paragraph 8: It is accepted that the house was conveyed to Mr. Robinson. The remainder of this paragraph is rejected as contrary to the greater weight of the evidence or as not supported by competent substantial evidence. Findings Proposed by Respondent: All of the findings proposed by the Respondent have been accepted in whole or in substance, except as specifically set forth below. In making my findings of fact, I have omitted a number of unnecessary details proposed by the Respondent. Paragraph 8: Rejected as constituting subordinate and unnecessary details. Paragraph 18: Rejected as constituting subordinate and unnecessary details. Paragraph 19: Rejected as subordinate and unnecessary details and as legal argument. COPIES FURNISHED: JAMES H. GILLIS, ESQUIRE DIVISION OF REAL ESTATE POST OFFICE BOX 1900 ORLANDO, FLORIDA 32802 HENRY E. DAVIS, ESQUIRE ROBERTS & DAVIS 816 BROAD STREET JACKSONVILLE, FLORIDA 32202 DARLENE F. KELLER, EXECUTIVE DIRECTOR DIVISION OF REAL ESTATE POST OFFICE BOX 1900 ORLANDO, FLORIDA 32802 WILLIAM O'NEIL, ESQUIRE GENERAL COUNSEL DEPARTMENT OF PROFESSIONAL REGULATION 130 NORTH MONROE STREET TALLAHASSEE, FLORIDA 32399-0750
Conclusions The Office of Financial Regulation ("Office") issued a denial of Petitioner’s application to become licensed as an “associated person”. Petitioner in turn filed a Petition for Administrative Hearing, which the Office referred to the Division of Administrative Hearings ("DOAH"). The assigned Administrative Law Judge ("ALI") held a formal administrative hearing, and entered a Recommended Order thereon. That Recommended Order of November 17, 2604, is attached to this Final Order, and incorporated herein by reference.
The Issue The issue in this cause is whether the Respondent's real estate license should be suspended, permanently revoked, or otherwise disciplined based upon alleged violations of Chapter 475, Florida Statutes.
Findings Of Fact Since 1977, the Respondent has been a licensed real estate salesperson in the State of Florida having been issued license number 0167049. The last license issued to the Respondent was as a salesperson for Tony Bucci Realty, Inc., 2216 East Olive Road, #108, Pensacola, Florida 32514. On November 2, 1983, a criminal information was filed in the Circuit Court of Escambia County, Florida, charging the Respondent as follows: Between February 1978 and May 1978, at and in Escambia County, Florida and Orange County, Florida: did unlawfully agree, conspire, combine, or confederate with another person or persons, to wit: Kenneth Massoud, to commit a criminal offense, to wit: counterfeiting of United States Currency. The charge constituted a criminal violation of Section 831.18, Florida Statutes, and Subsection 777.04(3), Florida Statutes, (conspiracy). At the time, counterfeiting was a felony and conspiracy to counterfeit was a misdemeanor. On January 12, 1984, the Respondent pled nolo contendere to the charge of conspiracy to commit counterfeiting, a violation of Section 777.04(3), Florida Statutes, a first degree misdemeanor, and was adjudged guilty and sentenced to six months in the county jail. The Respondent denied that he was guilty of the charges contained in the information or the charge to which he pled. On or about June 28, 1985, the Florida Bar filed a complaint against the Respondent seeking to disbar him for his conduct in the counterfeiting case. Additionally, the Respondent was charged with trust account irregularities related to his practice of law. The Respondent was found to have violated disciplinary rules relating to trust accounting procedures, the accounting of clients' interest shortages. Likewise, he was guilty of the charge of conspiracy to counterfeit. The Supreme Court of Florida found that the referee's findings of fact and recommendations of guilt were amply supported. Based on these findings, on October 2, 1996, the Respondent was disbarred from the practice of law in Florida. However, the Respondent testified that he is eligible to apply for re On June 13, 1990, an information was filed charging the Respondent with one count of possession of more than 20 grams of cannabis, in violation of Subsection 893.13(1)(f), Florida Statutes, a third degree felony, and one count of possession of marijuana with the intent to sell, deliver or manufacture, in violation of Subsection 893.13(1)(a), Florida Statutes, punishable as a third degree felony. On October 2, 1990, the Respondent entered a plea of nolo contendere to possession of a controlled substance without a prescription and possession of a controlled substance with the intent to sell or deliver. The court withheld adjudication and placed the Respondent on supervised probation for two years. At no time material hereto did the Respondent notify the Florida Real Estate Commission in writing of having entered a nolo contendere plea to a felony or to a misdemeanor. Respondent did not notify the Commission because he misunderstood his obligation to do so since he had not pled guilty nor been convicted of a felony. To his credit, he has not been subject to discipline or sanction by the Florida Real Estate Commission since his initial licensure. Finally, it is likely that the loss of his real estate sales license will leave Respondent in a more destitute position than his already extremely low income status renders him since Respondent's main income is from his employment as a licensed real estate salesperson.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the Florida Real Estate Commission finding the Respondent: Guilty of having been convicted or found guilty, regardless of adjudication, of a crime which directly relates to the activities of a licensed real estate salesperson or involves moral turpitude or fraudulent or dishonest dealing, in violation of Subsection 475.25(1)(f), Florida Statutes, as charged in Count I; Guilty of a course of conduct or practices which shows that the Respondent is so incompetent, negligent, dishonest, or untruthful that the money, property, transactions, and rights of investors, or those with whom he may sustain a confidential relation, may not safely be entrusted to him, in violation of Subsection 475.25(1)(o), Florida Statutes, as charged in Count II; Guilty of not having informed the Florida Real Estate Commission in writing within thirty (30) days of having pled guilty or having been convicted of a felony and, therefore, is in violation of Subsection 475.25(1)(p), Florida Statutes, as charged in Count III; and Guilty of having had another state agency suspend the license or registration of, or impose a penalty against it, as set forth in Subsection 475.455(2), Florida Statutes, and, therefore, in violation of Subsection 475.25(1)(e), Florida Statutes, as charged in Count IV. It is FURTHER RECOMMENDED that the Final Order should further order all of the Respondent's real estate licenses, registration, certificates, and permits be revoked. DONE AND ENTERED this 21st day of April, 1994, in Tallahassee, Florida. DIANNE CLEAVINGER 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 April, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-3843 Petitioner's Proposed Findings of Fact The facts contained in paragraphs numbered 1, 2, 3, 4, 5, 6, 7, 8 and 9 of Petitioner's Proposed Findings of Fact are adopted in substance, insofar as material. Respondent's Proposed Findings of Fact The facts contained in paragraphs 1, 2, 3, 5, 8 and 11 of Respondent's Proposed Findings of Fact are adopted in substance, insofar as material. The facts contained in paragraphs 4, 6, 7, 10 and 12 of Respondent's Proposed Findings of Fact are subordinate. The facts contained in paragraph 9 of Respondent's Proposed Findings of Fact are adopted, except for the last sentence, which is rejected. COPIES FURNISHED: James H. Gillis, Esq. Department of Business and Professional Regulation Division of Real Estate Post Office Box 1900 Orlando, FL 32802-1900 Eric Eggen, Esq. Suite 347, Blount Building 3 West Garden Street Pensacola, FL 32501 Darlene F. Keller, Director Division of Real Estate Department of Business and Professional Regulation Post Office Box 1900 Orlando, FL 32802-1900 Jack McRay, Esq. General Counsel Department of Business and Professional Regulation Northwood Centre, Suite 60 1940 North Monroe Street Tallahassee, FL 32399-0792
The Issue Whether Respondent committed the offenses alleged in the Administrative Complaint and the penalties, if any, that should be imposed.
Findings Of Fact Petitioner is an agency of the State of Florida charged with the responsibility and duty to administer Chapter 517, Florida Statutes, which is known as the Florida Securities and Investor Protection Act. On August 15, 1997 and September 9, 1997, Petitioner conducted an audit of the branch office of Merit Capital Associates, Inc., located in Boca Raton, Florida, and known as the H. K. Laurence Branch (the branch office). The branch office was an office of supervisory jurisdiction that required the presence of a branch manager. On April 28, 1997, Merit Capital executed a form entitled "Branch Registration Form" that registered the branch office with Petitioner and designated Respondent as the branch manager. Respondent accepted that designation on April 29, 1997. On April 30, 1997, the form was filed with Petitioner. In August and September 1997, Petitioner conducted an examination of the branch office. Michael Ward, whose job title is Senior Financial Investigator, was in charge of the examination. Annette Beresford, whose job title is Financial Specialist, assisted Mr. Ward. Both Mr. Ward and Ms. Beresford are full-time employees of Petitioner with appropriate training and experience. Respondent failed to properly register with the National Association of Securities Dealers (NASD) to act as a branch manager. Respondent was required by NASD rules to register as a principal because he had supervisory responsibilities. His only registration was as a salesperson. NASD Conduct Rule 3010, a rule adopted by NASD, sets forth standards for the supervision of branch offices. Pursuant to Rule 3E-600.013, Florida Administrative Code, Respondent, as the designated branch manager, was required to comply with the minimum supervisory standards set forth in NASD Conduct Rule 3010. Respondent did not meet those minimum supervisory standards while serving as the manager of the branch office. The following establish Respondent’s failure to supervise. Respondent did not provide NASD manuals to the registered representatives (salespersons) at the branch, he did not maintain Merit Capital's supervisory manuals at the branch, and he did not require that salespersons comply with Merit Capital's written policies and procedures. Respondent failed to maintain NASD and Florida registrations of salespersons at his branch. During the period April 29 through July 9, 1997, representatives of Merit Capital under Respondent's supervision at the branch office sold to members of the public shares of stock in a company known as Certified Diabetic Services, Inc., and shares of stock in a company known as Arcoplate Corporation. Respondent had supervisory responsibility for these transactions involving the sale of these two stocks. At the times pertinent to this proceeding, the stock of Certified Diabetic Services, Inc., and the stock of Arcoplate Corporation were not registered as required by Section 517.07(1), Florida Statutes, and they were not exempt from registration. Respondent should not have permitted the salespersons under his supervisory jurisdiction to sell unregistered stock During the period March 11 through July 9, 1997, Respondent was personally responsible for three transactions involving the sale of stock in Certified Diabetic Services, Inc., at a time when the stock was not registered as required by Section 517.07(1), Florida Statutes, and was not exempt from registration.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order finding Respondent guilty of failing to supervise the branch office and of selling unregistered securities. The final order should revoke Respondent’s registration under Section 517.12, Florida Statutes, and order him to cease and desist violations of Chapter 517, and the rules promulgated thereunder. The final order should also impose an Administrative Fine against Respondent in the amount of $5,000 for the failure to supervise. The final order should also impose an Administrative Fine against Respondent in the amount of $1,500 for the three transactions involving the sale of shares of unregistered stock. DONE AND ORDERED this 22nd day of January, 2002, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 22nd day of January, 2002.
Findings Of Fact Petitioner, Richard L. Hoffman (Hoffman), applied to Respondent, Office of the Comptroller, Department of Banking and Finance, Division of Securities and Investor Protection (Department), for registration as an associated person with First Southern Investment Corporation. By letter dated November 25, 1986, the Department advised Hoffman that his application had been denied, and Hoffman filed a timely request for formal hearing. By "memorandum of understanding" dated June 10, 1986, Hoffman was employed by First Florida Securities Group, Inc. (First Florida) as the manager and compliance officer of its Fort Lauderdale branch office. Pertinent to this case, the memorandum of understandings provided: It is today agreed that Richard Hoffman, as manager of a branch office of First Florida Securities Group, Inc., and representing a certain "Group" in that office agrees to work for and manage the office for First Florida Securities Group, Inc., under the following conditions: 1/ * * * E. The "Group" will be allowed an inventory bank of $50,000.00 of cost -- no one item to exceed This will be reviewed periodically. It maybe exceeded only with written approval of two officers of First, Florida Securities Group Inc. 2/ The branch office opened on June 15, 1986, and by June 27, 1986, Serious problems in the operation of the branch office began to surface. These problems were addressed in a meeting on Monday, June 30, 1986, between Nick Christos, chief executive officer of First Florida; Jim Palmer, compliance officer for First Florida; and, Hoffman. The results of that meeting were memorialized in a memorandum to Hoffman of July 7, 1986, which provided, inter alia: This is to summarize the results of my meeting with you on Monday, June 30, 1986. In attendance, also, was Jim Palmer, Compliance Officer. The following is intended as a summary of conclusions, without benefit of detailed conversations that led to our mutual understanding Letter to be sent to Jim Palmer from you, with respect to "as of" trades and other trades Purchased by customers at prices under the market on Jocom. (Not yet received as of this date). * * * Understanding by you that your office would henceforth adhere strictly to the $25,000 limit with respect to maximum inventory levels per corpora- tion -- with a $50,000.00 maxi- mum for your office at the end of each trading day. (Note that this limit was violated on Friday, June 27 when 41,200 International Communications was in inventory, with a value of $51,500). * * * We reviewed the fact that our Bear Stearns Margin Clerk was concerned about the Sy Schwartz account (purchases of 30,000 and 110,000 shares of Jocom) of which 110,000 shares or $96,250 still remains unpaid as of this date. Review of concern about the number and total dollars involved in over-due payments of Ft. Lauderdale customers (not materially reduced as of this date). The proof established that Hoffman failed to comply with his agreement to explain the "as of" trades and other trades purchased by customers at prices under the market in Jocom, adhere to the maximum inventory levels, and address over- due payments. Since there was no improvement in the operation of the branch office, Mr. Christos advised Hoffman on Monday, July 14, 1986, that: Your Ft. Lauderdale group, as of pre-opening this morning, will have no authority to represent the firm in trading NASDAQ stocks. * * * 3. You will have one week, effec- tive with the termination of business on Friday, July 18, 1986, for your branch to find another "home" ... (associate themselves with another deal- er). The principal of First Florida, Mr. Winkler, declined to support Mr. Christos because of his belief that the branch office had generated substantial revenues and that it would work out its problems. Accordingly, since Hoffman and the "Group" were not to be terminated, Mr. Christos and Mr. Palmer resigned as chief executive officer and compliance officer, respectively, for First Florida. On July 15, 1986, Hoffman, who held a principal's license, was elected president of First Florida, although he continued to operate as branch manager. The confidence Mr. Winkler placed in the branch office and Hoffman was short lived. Between July 19, 1986, and July 31, 1986, First Florida received complaints from over thirty customers of the branch office regarding unauthorized transactions, the failure to report or process trades, and the failure to provide confirmations or proceeds of sale. As a consequence of these complaints, Hoffman was terminated on July 31, 1986. First Florida's loss from the operation of the branch totaled approximately $657,000. Of this sum, $357,000 was expended to cover the debit balance with its correspondent Bear Stearns for unpaid securities accounts, and $300,000 for settlements with customers who alleged that purchases in their accounts were unauthorized. While First Florida's association with the "Group" may have been unprofitable, Hoffman benefited quite well. During the period of June 15-July 15, 1986, Hoffman earned over $60,000 in commissions through First Florida. While Hoffman concedes that trades he received from customers were not processed, he asserts that the blame for such failure rests on Mr. Brazel, the "trader" for the branch office. According to Hoffman, Mr. Brazel frequently traded at home, rather than at the office, and during the week of July 21- 25, 1986, traded exclusively at home. Because of Brazel's absence, Hoffman asserted that trades were not executed or they were "lost" because of some motivation of Brazel not to process them. Hoffman concludes: "I didn't have any idea what was going on" and there was "no way (I) could control the trades." Hoffman's attempt to "pass-the-buck" to Brazel is unpersuasive. While Brazel may be culpable, Hoffman also knew by mid-July 1986, if not by early July, that serious trading problems existed at the branch office, and that Brazel, if Hoffman is to be believed, was no small part of those problems. Yet Hoffman, who had been in the business for over 30 years, was the manager of the small branch office for First Florida, was president of the firm, was the firm's trader in Brazel's absence, and was a salesman for his own accounts, denies any responsibility for his failure to assure that trades were executed on behalf of his clients or the firm. Hoffman's testimony is inherently improbable and unworthy of belief. Hoffman's failure to diligently exercise his responsibilities as branch manager, president, trader, and salesman resulted in losses to his clients, as well as to other clients of the firm, since he failed to assure that their requests to sell securities were properly processed. 3/ In addition to Hoffman's failure to properly manage the branch office and his clients accounts, several other irregularities surfaced during his tenure with First Florida. Inexplicably, while employed by First Florida, Hoffman provided a customer, Sy Schwartz, with a written guarantee against loss. That guarantee provided: Sy Schwartz: This is to inform you, I agree that if Jocom is not up by July 7, 1986 you do not have to pay for it and I will take the trade back into my trading account. /s/ Richard L. Hoffman Also unexplained by Hoffman, was his personal payment of over $119,000 to his customer, Bruce Ross, between June 19, 1986, and July 15, 1986. These monies were variously described by Ross as involving the repayment of loans or his dealings in stocks. The substance of these transactions was not, however, further explained by either Mr. Ross or Hoffman. Following his termination with First Florida, Hoffman associated himself with First Southern Investment Corporation (First Southern). During his tenure at First Southern, although not registered, Hoffman held himself out as a senior account executive, and attempted to sell securities to customers he had previously serviced at First Florida. Both Hoffman and the Department offered the testimony of various witnesses concerning their opinion of Hoffman's reputation in the business community. Not surprisingly, those who had a good experience with Hoffman found him reputable, and those who felt they had suffered adversely under his representation found him to be of bad repute. The proof of Hoffman's reputation, offered through these witnesses, was not persuasive.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the application of petitioner, Richard L. Hoffman, for registration as an associated person with First Southern Investment Corporation be DENIED. DONE AND ORDERED this 15th day of July, 1987, in Tallahassee, Florida. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The Oakland Building 2900 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of July, 1987.
Findings Of Fact The respondent, Elizabeth V. T. Roache, has been a registered real estate broker in Florida since 1957. Charles Woods and Miriam Woods had their house and property located at 601 North Mashta Drive in Key Biscayne, Florida on an open listing at a selling price of $155,000.00. Mrs. Roache contacted Lorne A. Smith, with whom she had previously had one business dealing (jointly purchasing and reselling a lot) in the past. Mr. Smith offered to buy the Woods' property for $140,000.00. On or about December 10, 1972, Mrs. Roache prepared a deposit receipt contract listing "Lorne A. Smith and/or assigns" as the purchaser and stating a purchase price of $140,000.00. Mr. Smith signed this document and the respondent Roache signed as a witness. On the same date, respondent delivered this document to the Woods and the Woods rejected the offer. (Exhibit 1). There is some dispute in the evidence as to the timing of the events which transpired. Respondent Roache and Mr. Smith testified that Smith asked Roache to go in with him as a copurchaser of this property after the offer of $140,000.00 was rejected. The investigator for the Commission, Mr. Albert W. Lotus, Jr., testified that Smith told him on two occasions that this was a fifty-fifty proposition "from the beginning". In any event, Mrs. Roache and Mr. Smith decided to go in on this together and to make an offer of $147,500.00 to the Woods. Mrs. Roache then took the same December 10, 1972, document back to the Woods on the same date. The Woods accepted the $147,500.00 offer and handwritten changes were then made on the document and initialed by the Woods and Mr. Smith. These changes related to the change in purchase price, the balance of the deposit being placed in escrow and excepting the pool heater from those appliances required to be in working order. There was also a change made in the amount of the commission to be paid to the broker, respondent herein. No changes were made in the name of the purchaser, nor did Mrs. Roache remove her name as a witness or sign as a purchaser. The respondent testified that she informed the Woods at the time of presenting the second offer on December 10, 1972, that she was to be a copurchaser and that she did not change the name of the purchaser on the deposit receipt contract because it had already been drawn up and because the words "and/ or assigns" would adequately cover her as a copurchaser. Both Mr. add Mrs. Woods testified that they were not told on December 10, 1972, that respondent was to be a copurchaser, and, indeed, did not learn that she was to be a purchaser until a day or two before the closing date of March 22, 1973. Between the dates of December 10, 1972, and March 22, 1973, Mrs. Roache spent a good amount of time at the subject property cleaning, fixing it up and supervising workmen. Mr. Woodsy did not remember seeing her working around the house, and Mrs. Woods saw respondent come in and out many times. During this time, the Woods were living in a home adjacent the the subject property. The closing occurred on March 22, 1973, and the warranty deed contained the names of Mr. and Mrs. Smith, and the respondent Roache. (Exhibit No. 2). In May of 1973, the house was resold by respondent and the Smiths for a purchase price of $170,000.00. There was evidence that the house was not resold before the March 22, 1973, closing date and that the new owners redid many of the improvement which respondent and the Smiths had caused to be made.
Recommendation Based upon the above findings of fact and conclusions of law, it is recommended that respondent be found guilty of violating 475.25(1)(a) and that her registration as a real state broker be suspended for a period of ninety days. Respectfully submitted and entered this 14th day of November, 1975, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Louis B. Guttmann, III, Esquire 2699 Lee Road Winter Park, Florida 32789 Mrs. Elizabeth V. T. Roache 910 Harbor Drive Key Biscayne, Florida 33149 ================================================================= AGENCY FINAL ORDER ================================================================= FLORIDA REAL ESTATE COMMISSION ALBERT W. LOFTUS, JR., Petitioner, vs. PROGRESS DOCKET NO. 2664 DADE COUNTY ELIZABETH V.T. ROACHE, DOAH CASE NO. 75-1169 Respondent. /
