Findings Of Fact Respondent David Henry Charnack was connected with Property Resale Service, Inc., as a registered real estate salesman, from April 17, 1974, to March 7, 1975.
The Issue The issues to be determined are whether Respondent violated Sections 475.25(1)(b), 475.25(1)(e), 475.25(1)(k), and 475.42(1)(d), Florida Statutes (2006), and Florida Administrative Code Rule 63J2-14.009, as alleged in the Administrative Complaint, and if so, what penalty should be imposed?
Findings Of Fact Petitioner is the state agency charged with the licensing and regulation of the real estate industry in the State of Florida, pursuant to Section 20.165 and Chapters 455 and 475, Florida Statutes. At all times material to this proceeding, Respondent was a licensed real estate sales associate, having been issued license number SL 706026. During the time relevant to this case, Respondent was a sales associate affiliated with Jacksonville Home Finders, Inc., a brokerage company located in Jacksonville, Florida. Katrin Rabren was the broker/owner of Jacksonville Home Finders, Inc. (Homefinders). In approximately 2006, she hired Respondent as a sales associate, and Respondent's license was listed as affiliated with Homefinders in September 2006. In early April 2007, Ms. Rabren received a call from Alvin Reynolds, the owner of some property Homefinders was managing at 3501 Kernan Boulevard, Number 234, in Jacksonville. Mr. Reynolds was calling to ask for his funds from the rental of the property. The property was apparently rented and funds received from the tenant for a security deposit and first month's rent on or about March 12, 2007. However, those funds, totaling $1,444.99, were not placed in the broker's trust account. Ms. Rabren confronted Respondent about the funds and was told that Respondent spent the money on personal bills. Respondent told Ms. Rabren that she would replace the money. On April 5, 2007, Respondent gave Ms. Rabren a check made out to Jacksonville Homefinders for $1,489.99. The check was from an account for Winter Property Maintenance, Respondent's husband's company. Ms. Rabren's husband deposited the check in Homefinder's escrow account. On April 6, 2007, the check was returned for insufficient funds. Ms. Rabren paid the property owner out of her personal funds. Respondent has not replaced the funds or delivered funds to the employer/broker for deposit into the escrow account.
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED: That the Florida Real Estate Commission enter a Final Order finding that Respondent has violated the provisions of Sections 475.25(1)(b), 475.25(1)(e), 475.25(1)(k), 475.42(1)(d), Florida Statutes (2006), and Florida Administrative Code Rule 63J2- 14.009, as alleged in the Administrative Complaint, and revoking Respondent's license as a real estate sales associate. DONE AND ENTERED this 20th day of October, 2010, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of October, 2010.
The Issue The issue in this case is whether Respondents have discriminated against Petitioners based on Petitioners' national origin.
Findings Of Fact On August 28, 2009, Ms. Greene was a loan officer employed by CenterState Home Loans, LLC. The office where Ms. Greene worked was located inside CenterState Bank, N.A., located at 6930 Gall Boulevard in Zephyrhills, Florida. The office is separate from CenterState Banks, Inc. There is signage on a glass wall of her office stating, "CenterState Home Loans, LLC." Ms. Greene is paid by CenterState Home Loans, LLC. She is paid by commission. Thus, there is no incentive not to complete loan applications. CenterState Home Loans, LLC, is a separate corporation from CenterState Banks, Inc., and CenterState Bank, N.A. Both CenterState Banks, Inc., and CenterState Bank, N.A. are interest holders in CenterState Home Loans, LLC, but are not the managing members of CenterState Home Loans, LLC. Platinum Home Mortgage Corporation is the managing member of CenterState Home Loans, LLC. As the managing member, Platinum Home Mortgage manages the quality control and integrity of CenterState Home Loans, LLC. CenterState Home Loans, LLC, is not authorized to do Federal Housing Association (FHA) loans. Any FHA loans originated by CenterState Home Loans, LLC, are assigned to Platinum Home Mortgage. On August 28, 2009, Petitioners, Mr. Velez's mother, and Petitioners' young daughter came to Ms. Greene's office to discuss the possibility of obtaining a loan through CenterState Home Loans, LLC, and a loan through the Pasco County Home Buyers Program. The purpose of the Pasco County Home Buyers Program is to aid qualified home buyers in purchasing their primary residences. Initially, Petitioners were interesting in applying for an FHA loan. Prior to the meeting, Mr. Velez had telephoned Ms. Greene and asked what types of information would need to be submitted. Ms. Greene stated that he would need W-2 forms, paystubs, bank statements, and anything that showed proof of any assets or debts. Petitioners brought some of the documentation to the meeting. At the meeting, Petitioners supplied information to Ms. Greene, who typed the information into her computer using loan software entitled "Loan Soft." The information was placed on a Uniform Residential Application, which is called a Form 1003. No property was identified on the Form 1003 because Petitioners did not have a sales contract for a specific piece of property. They indicated that the property they wanted to purchase would be approximately $140,000. Mr. Velez told Ms. Greene that he was anticipating a 50 percent loan from Pasco County Home Buyers Program, which would leave approximately $70,000 to be financed plus closing costs. When Ms. Greene input the information into the computer program, it automatically calculated the approximate closing costs. The interest used to do the calculations was based on the interest rate on August 28, 2009, and was not a guaranteed rate. With Petitioners' permission, Ms. Greene pulled a credit report on each of them during the meeting on August 28, 2009. The credit report showed that there were some debts in collection and that there was an outstanding judgment against Ms. Guerrero. Additionally, based on CenterState Home Loan, LLC, guidelines, the credit scores did not qualify Petitioners for a second mortgage, which included a Pasco County Home Buyers Program loan. On August 28, 2009, Ms. Greene needed additional asset information from the Petitioners and requested that they provide her with information concerning checking, savings, or money market accounts for at least a two-month period. Mr. Velez did present a bank statement at the meeting, which showed a current balance of less than $200. Ms. Greene told Petitioners that the debts in collection and the outstanding judgment needed to be resolved. Additionally, Ms. Guerrero was an authorized signer on some of her mother's credit cards, and a statement would have to be provided that Ms. Guerrero was not responsible for the debts associated with those credit cards. The software program that Ms. Greene used automatically completes a page in the application titled, "Pre- Approval Cover Sheet and Check List." The program put "completed" by a number of items which had not been completed, such as the Form 1003 and current asset statements. Petitioners had supplied some pay stubs and some bank statements at the August 28, 2009, meeting. The Form 1003 did not indicate that Petitioners had been pre-approved for a loan. The meeting ran near to the time CenterState Home Loans, LLC, was closing and could not be completed before closing time. Ms. Greene printed out a copy of the Form 1003, with the information that had been completed, and gave it to Petitioners. Petitioners were to complete, sign, and return the Form 1003 to Ms. Greene. Additionally, Petitioners were to provide evidence that the debts had been paid and the judgment satisfied, along with evidence of current assets. Because the application was not completed and additional information was needed, Ms. Greene could not fully analyze the application. Sometime after the August 28, 2009, meeting, Ms. Greene reviewed the information that had been supplied to her by Petitioners and discussed the information with Mr. Velez on the telephone. Mr. Velez wanted to schedule a meeting to discuss the application. She advised him that, based on the credit scores and the limited funds in his bank account, he could not qualify for a loan with a second lien by the Pasco County Home Buyers Program. Thus, there would be no need to meet. Mr. Velez told her that he wanted to continue with the process. Petitioners set about paying off the debts in collection and satisfying the judgment against Ms. Guerrero. Mr. Velez had received a disability settlement and placed some money in a bank account. Petitioners did not supply updated information to Ms. Greene. Sometime in October or November 2009, Mr. Velez called Ms. Greene and requested that she send a realtor a pre-approval letter. Ms. Greene replied that she could not do that because she did not have the supporting documents to be able to give a pre-approval letter. Mr. Velez became very angry and demanded the documents he had previously provided at the August 28, 2009, meeting. Ms. Greene had only copies of the documents that he provided, but she placed them in an envelope and left them for Mr. Velez to pick up. Petitioners stated in Form 1003 that their ethnicity was Hispanic or Latino. Mr. Velez stated at the final hearing: My basis for my racial discrimination was the fact that she [Ms. Greene] denied us the opportunity to turn in updated information when stated that she would allow us to do so. Ms. Greene never stated that she would not take additional information because Petitioners were Hispanic. She has processed loans for other Hispanics which involved the Pasco County Home Buyers Program, and she has closed loans for other minorities. Ms. Greene never discussed Petitioners national origin with them. She did not base any decision regarding their loan application on their national origin. After Petitioners were advised by Ms. Greene that they would not qualify for a loan involving the Pasco County Home Buyers Program, they applied for loans at two other lending institutions and were turned down on the basis of too many inquiries or insufficient credit scores. They finally received a loan from Manhattan Mortgage.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered dismissing Petitioners' Petition for Relief. DONE AND ENTERED this 3rd day of December, 2010, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of December, 2010.
The Issue Whether Petitioners' proposed rates are justified pursuant to the requirements of Section 627.062, Florida Statutes, or whether the Department of Financial Services, Office of Insurance Regulation (OIR) was correct in denying the requested rate increases.
Findings Of Fact The Hartford companies are property and casualty insurers transacting insurance in the State of Florida pursuant to valid certificates of authority and the Florida Insurance Code. Two types of personal lines insurance filings submitted by Hartford to the OIR are at issue in this proceeding: two filings for homeowners insurance (Case Nos. 07-5185 and 07-5186) and two filings for dwelling fire insurance (Case Nos. 07-5187 and 07- 5188). Hartford's substantial interests are affected by the notices disapproving the filings in this case. Homeowners insurance includes coverage for a variety of perils in and around a home, is usually purchased by a homeowner, and covers both the structure and the contents of a home. Dwelling/fire insurance is usually purchased by the owners of properties that are leased or rented to others, and provides coverage for the structure only. Both types of insurance cover damage caused by hurricanes. The New Legislation and its Requirements In a special session held in January 2007, the Florida Legislature enacted changes to the Florida Hurricane Catastrophe Fund (CAT Fund), as reflected in Chapter 2007-1, Laws of Florida. The special session was precipitated by a perceived crisis regarding the cost and availability of homeowners insurance after the 2004 and 2005 hurricane seasons. As a result of the substantial number of claims incurred after multiple severe hurricanes each of these years, changes in the insurance marketplace resulted in some insurance companies withdrawing from the Florida market, others non-renewing policies, one company becoming insolvent, and the cost for reinsurance available to all insurers rising dramatically. One of the primary features of the legislation was an expansion of the CAT Fund. The CAT Fund was established in 1993 after Hurricane Andrew to provide reinsurance to insurers for property insurance written in Florida at a price significantly less than the private market. The CAT Fund is a non-profit entity and is tax exempt. Prior to the enactment of Chapter 2007-1, the CAT Fund had an industry-wide capacity of approximately $16 million. The purpose of the changes enacted by the Legislature was to reduce the cost of reinsurance and thereby reduce the cost of property insurance in the state. As a result of Chapter 2007-1, the industry-wide capacity of the CAT Fund was increased to $28 billion, and insurers were given an opportunity to purchase an additional layer of reinsurance, referred to as the TICL layer (temporary increase in coverage limit), from the CAT Fund. Section 3 of Chapter 2007-1 required insurers to submit a filing to the OIR for policies written after June 1, 2007, that took into account a "presumed factor" calculated by OIR and that purported to reflect savings created by the law. The new law delegated to the OIR the duty to specify by Order the date such filings, referred to as "presumed factor filings" had to be made. On February 19, 2007, the OIR issued Order No. 89321-07. The Order required insurers to make a filing by March 15, 2007, which either adopted presumed factors published by the OIR or used the presumed factors and reflected a rate decrease taking the presumed factors into account. The presumed factors were the amounts the OIR calculated as the average savings created by Chapter 2007-1, and insurers were required to reduce their rates by an amount equal to the impact of the presumed factors. The OIR published the presumed factors on March 1, 2007. In its March 15, 2007, filings, Hartford adopted the presumed factors published by OIR. As a result, Hartford reduced its rates, effective June 1, 2007, on the products at issue in these filings by the following percentages: Case No. 07-5185 homeowners product: 17.7% Case No. 07-5186 homeowners product: 21.9% Case No. 07-5187 dwelling/fire product: 8.7% Case No. 07-5188 dwelling/fire product: 6.2% The Order also required that insurers submit a "True-Up Filing" pursuant to Section 627.026(2)(a)1., Florida Statutes. The filing was to be a complete rate filing that included the company's actual reinsurance costs and programs. Hartford's filings at issue in these proceedings are its True-Up Filings. The True-Up Filings Hartford submitted its True-Up filings June 15, 2007. The rate filings were certified as required by Section 627.062(9), Florida Statutes. The filings were amended August 8, 2007. Hartford's True Up Filings, as amended, request the following increases in rates over those reflected in the March 15, 2007, presumed factor filings: Case No. 07-5185 homeowners product: 22.0% Case No. 07-5186 homeowners product: 31.6% Case No. 07-5187 dwelling and fire product: 69.0% Case No. 07-5188 dwelling and fire product: 35.9% The net effects of Hartford's proposed rate filings result in the following increases over the rates in place before the Presumed Factor Filings: Case No. 07-5185 homeowners product: .4% Case No. 07-5186 homeowners product: 2.8% Case No. 07-5187 dwelling/fire product: 54.3% Case No. 07-5188 dwelling/fire product: 27.5% Case Nos. 07-5185 and 07-5186 (homeowners) affect approximately 92,000 insurance policies. Case Nos. 07-5187 and 07-5188 (dwelling/fire) affect approximately 2,550 policies. A public hearing was conducted on the filings August 16, 2007. Representatives from Hartford were not notified prior to the public hearing what concerns the OIR might have with the filings. Following the hearing, on August 20, 2007, Petitioners provided by letter and supporting documentation additional information related to the filings in an effort to address questions raised at the public hearing. The OIR did not issue clarification letters to Hartford concerning any of the information provided or any deficiencies in the filings before issuing its Notices of Intent to Disapprove the True-Up Filings. All four filings were reviewed on behalf of the OIR by Allan Schwartz. Mr. Schwartz reviewed only the True-Up Filings and did not review any previous filings submitted by Hartford with respect to the four product lines. On September 10, 2007, the OIR issued Notices of Intent to Disapprove each of the filings at issue in this case. The reasons give for disapproving the two homeowners filings are identical and are as follows: Having reviewed the information submitted, the Office finds that this filing does not provide sufficient documentation or justification to demonstrate that the proposed rate(s) comply with the standards of the appropriate statute(s) and rules(s) including demonstrating that the proposed rates are not excessive, inadequate, or unfairly discriminatory. The deficiencies include but are not limited to: The premium trends are too low and are not reflective of the historical pattern of premium trends. The loss trends are too high and are not reflective of the historical pattern of loss trends. The loss trends are based on an unexplained and undocumented method using "modeled" frequency and severity as opposed to actual frequency and severity. The loss trends are excessive and inconsistent compared to other sources of loss trends such as Fast Track data. The catastrophe hurricane losses, ALAE and ULAE amounts are excessive and not supported. The catastrophe non-hurricane losses, ALAE and ULAE amounts are excessive and not supported. The particular time period from 1992 to 2006 used to calculate these values has not been justified. There has been no explanation of why the extraordinarily high reported losses for 1992 and 1993 should be expected to occur in the future. The underwriting profit and contingency factors are excessive and not supported. Various components underlying the calculation of the underwriting profit and contingency factors, including but not limited to the return on surplus, premium to surplus ratio, investment income and tax rate are not supported or justified. The underwriting expenses and other expenses are excessive and not supported. The non-FHCF reinsurance costs are excessive and not supported. The FHCF reinsurance costs are excessive and not supported. The fact that no new business is being written has not been taken into account. No explanation has been provided as too [sic] Hartford believes it is reasonable to return such a low percentage of premium in the form of loss payments to policyholders. For example, for the building policy forms, only about 40% of the premium requested by Hartford is expected to be returned to policyholders in the form of loss payments. As a result of the deficiencies set forth above, the Office finds that the proposed rate(s) are not justified, and must be deemed excessive and therefore, the Office intends to disapprove the above-referenced filing. The Notices of Intent to Disapprove the two dwelling/fire filings each list nine deficiencies. Seven of the nine (numbers 1-6 and 8) are the same as deficiencies listed for the homeowners filings. The remaining deficiencies named for Case No. 07-5187 are as follows: 7. The credibility standard and credibility value are not supported. 9. No explanation has been provided as too (sic) why Hartford believes it needs such a large rate increase currently, when the cumulative rate change implemented by Hartford for this program from 2001 to 2006 was an increase of only about 10%. The deficiencies listed for Case No. 07-5188 are the same as those listed for Case No. 07-5187, with the exception that with respect to deficiency number 9, the rate change implemented for the program in Case No. 07-5188 from 2001 to 2006 was a decrease of about -3%. Documentation Required for the Filings Florida's regulatory framework, consistent with most states, requires that insurance rates not be inadequate, excessive, or unfairly discriminatory. In making a determination concerning whether a proposed rate complies with this standard, the OIR is charged with considering certain enumerated factors in accordance with generally accepted and reasonable actuarial techniques. Chapter 2007-1 also amended Section 627.062, Florida Statutes, to add a certification requirement. The amendment requires the chief executive officer or chief financial officer and chief actuary of a property insurer to certify under oath that they have reviewed the rate filing; that to their knowledge, the rate filing does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which the statements were made, not misleading; that based on their knowledge, the information in the filing fairly presents the basis of the rate filing for the period presented; and that the rate filing reflects all premium savings reasonably expected to result from legislative enactments and are in accordance with generally accepted and reasonable actuarial techniques. § 627.062(9)(a), Fla. Stat. (2007). Actuarial Standards of Practice 9 and 41 govern documentation by an actuary. Relevant sections of Standard of Practice 9 provide: Extent of documentation - . . . Appropriate records, worksheets, and other documentation of the actuary's work should be maintained by the actuary and retained for a reasonable length of time. Documentation should be sufficient for another actuary practicing in the same field to evaluate the work. The documentation should describe clearly the sources of data, material assumptions, and methods. Any material changes in sources of data, assumptions, or methods from the last analysis should be documented. The actuary should explain the reason(s) for and describe the impact of the changes. Prevention of misuse - . . . The actuary should take reasonable steps to ensure that an actuarial work product is presented fairly, that the presentation as a whole is clear in its actuarial aspects, and that the actuary is identified as the source of the actuarial aspects, and that the actuary is available to answer questions.. . . . * * * 5.5 Availability of documentation- Documentation should be available to the actuary's client or employer, and it should be made available to other persons when the client or employer so requests, assuming appropriate compensation, and provided such availability is not otherwise improper. . . . In determining the appropriate level of documentation for the proposed rate filings, Petitioner relied on its communications with OIR, as well as its understanding of what has been required in the past. This reliance is reasonable and is consistent with both the statutory and rule provisions governing the filings. Use of the RMS Catastrophic Loss Projection Model In order to estimate future losses in a rate filing, an insurer must estimate catastrophic and non-catastrophic losses. Hartford's projected catastrophic losses in the filings are based upon information provided from the Risk Management Solutions (RMS) catastrophic loss projection model, version 5.1a. Hartford's actuaries rely on this model, consistent with the standards governing actuarial practice, and their reliance is reasonable. Catastrophe loss projection models may be used in the preparation of insurance filings, if they have been considered by and accepted by the Florida Commission on Hurricane Loss Projection Methodology (the Hurricane Commission). The Hurricane Commission determined that the RMS model, version 5.1a was acceptable for projecting hurricane loss costs for personal residential rate filings on May 17, 2006. In addition to approval by the Hurricane Commission, use of the model is appropriate "only if the office and the consumer advocate appointed pursuant to s. 627.0613 have access to all of the assumptions and factors that were used in developing the actuarial methods, principles, standards, models, or output ranges, and are not precluded from disclosing such information in a rate proceeding." §627.0628(3)(c), Fla. Stat. Both the Consumer Advocate and a staff person from the OIR are members of the Hurricane Commission. In that context, both have the ability to make on-site visits to the modeling companies, and to ask any questions they choose regarding the models. Both OIR's representative and the Consumer Advocate participated in the meetings and had the same opportunity as other commissioners to ask any question they wished about RMS 5.1a. The Hurricane Commission members, including the Consumer Advocate, clearly have access to the information identified in Section 627.0628(3)(c). However, there are restrictions on the Hurricane Commission members' ability to share the information received regarding trade secrets disclosed by the modeling companies. For that reason, the Commission's deliberations are not, standing alone, sufficient to determine that the Office of Insurance Regulation has access. In this case, credible evidence was submitted to show that RMS officials met with staff from the Office in July and October 2006 to discuss the model. RMS offered to provide any of its trade secret information to the OIR, subject to a non- disclosure agreement to protect its dissemination to competitors. RMS also opened an office in Tallahassee and invited OIR staff to examine any parts of the model they wished. In addition, both RMS and Hartford have answered extensive questionnaires prepared by OIR regarding the RMS model, and Hartford has offered to assist OIR in gathering any additional information it requires. Most of the questions posed by OIR involve the same areas reviewed by the Commission. RMS' representative also testified at hearing that RMS would not object to disclosure of the assumptions during the hearing itself if necessary. Finally, OIR Exhibit 1 is the Florida Hurricane Catastrophe Fund 2007 Ratemaking Formula Report. The Executive Summary from the report explains how rates were recommended for the Florida Hurricane Catastrophic Fund (CAT Fund) for the 2007- 2008 contract year. The report stated that the RMS model, as well as three other models accepted by the Hurricane Commission, were used for determining expected aggregate losses to the CAT Fund reinsurance layer. Three models, including the RMS model, were also used for analysis of detailed allocation to type of business, territory, construction and deductible, as well as special coverage questions. The models were compared in detail and given equal weight. The report notes that these three models were also used in 1999-2006 ratemaking. The report is prepared by Paragon Strategic Solutions, Inc., an independent consultant selected by the State Board of Administration, in accordance with Section 215.555(5), Florida Statutes. While OIR did not prepare the report, they show no hesitation in accepting and relying on the report and the modeled information it contains in these proceedings. Indeed, one of OIR's criticisms is Hartford's failure to use the report with respect to CAT Fund loss recovery estimates. Based upon the evidence presented at hearing, it is found that the OIR and Consumer Advocate were provided access to the factors and assumptions used in the RMS model, as contemplated by Section 627.0628. The Alleged Deficiencies in the Homeowners Filings1/ A rate is an estimate of the expected value of future costs. It provides for all costs associated with the transfer of risk. A rate is reasonable and not excessive, inadequate or unfairly discriminatory if it is an actuarially sound estimate of the expected value of all future costs associated with an individual risk transfer. In preparing a filing, an actuary identifies the time period that its proposed rates are expected to be in effect. Because ratemaking is prospective, it involves determining the financial value of future contingent events. For the rate filings in question, actuaries for Hartford developed their rate indications by first considering trended premium, which reflects changes in premium revenue based on a variety of factors, including construction costs and the value of the buildings insured. Trended premium is the best estimate of the premium revenue that will be collected if the current rates remain in effect for the time period the filing is expected to be in place. Expenses associated with writing and servicing the business, the reinsurance costs to support the business and an allowance for profit are subtracted from the trended premium. The remainder is what would be available to pay losses. This approach to ratemaking, which is used by Hartford, is a standard actuarial approach to present the information for a rate indication. As part of the process, expected claims and the cost to service and settle those claims is also projected. These calculations show the amount of money that would be available to pay claims if no changes are made in the rates and how much increased premium is necessary to cover claims. The additional amount of premium reflects not only claims payments but also taxes, licenses and fees that are tied to the amount of premium. The first deficiency identified by OIR is that "the premium trends are too low and are not reflective of the historical pattern of premium trends." In determining the premium trend in each filing, Hartford used data from the previous five years and fit an exponential trend to the historical pattern, which is a standard actuarial technique. Hartford also looked at the factors affecting the more recent years, which were higher. For example, the peak in premium trend in 2006 was a result of the cost increases driven by the 2004 and 2005 hurricanes, and the peak in demand for labor and construction supplies not matched by supply. Costs were coming down going into 2007, and Hartford believed that 2006 was out of pattern from what they could anticipate seeing in the future. The premium trends reflected in Hartford's filings are reasonable, reflective of historical patterns, and based on standard actuarial techniques. The second identified deficiency with respect to the homeowner filings was that the loss trends are too high and are not reflective of the historical pattern of loss trends. A loss trend reflects the amount an insurance company expects the cost of claims to change. It consists of a frequency trend, which is the number of claims the insurance company expects to receive, and a severity trend, which is the average cost per claim. The loss trend compares historical data used in the filing with the future time period when the new rates are expected to be in effect. Hartford's loss trends were estimated using a generalized linear model, projecting frequency and severity separately. The model was based on 20 quarters of historical information. The more credible testimony presented indicates that the loss trends were actuarially appropriate. The third identified deficiency is that the loss trends are based on an unexplained and undocumented method using "modeled" frequency and severity as opposed to actual frequency and severity. As noted above, the generalized linear model uses actual, historical data. Sufficient documentation was provided in the filing, coupled with Hartford's August 20, 2007, letter. The method used to determine loss trends is reasonable and is consistent with standard actuarial practice. The fourth identified deficiency is that loss trends are excessive and inconsistent compared to other sources of loss trends, such as Fast Track data. Saying that the loss trends are excessive is a reiteration of the claim that they are too high, already addressed with respect to deficiency number two. Fast Track data is data provided by the Insurance Services Office. It uses unaudited information and is prepared on a "quick turnaround" basis. Fast Track data is based on paid claims rather than incurred claims data, and upon a broad number of companies with different claims settlement practices. Because it relies on paid claims, there is a time lag in the information provided. Hartford did not rely on Fast Track data, but instead relied upon its own data for calculating loss trends. Given the volume of business involved, Hartford had enough data to rely on for projecting future losses. Moreover, Respondents point to no statutory or rule requirement to use Fast Track data. The filings are not deficient on this basis. The fifth identified deficiency in the Notice of Intent to Disapprove is that catastrophe hurricane losses, ALAE and ULAE amounts are excessive and not supported. ALAE stands for "allocated loss adjustment expenses," and represents the costs the company incurs to settle a claim and that can be attributed to that particular claim, such as legal bills, court costs, experts and engineering reports. By contrast, ULAE stands for "unallocated loss adjustment expense" and represents the remainder of claims settlement costs that cannot be linked to a specific claim, such as office space, salaries and general overhead. Part of the OIR's objection with respect to this deficiency relates to the use of the RMS model. As stated above at paragraphs 25-33, the use of the RMS model is reasonable. With respect to ALAE, Hartford analyzed both nationwide data (4.4%) and Florida data (4.8%) and selected an ALAE load between the two (4.6%). This choice benefits Florida policyholders. It is reasonable to select between the national and Florida historical figures, given the amount of actual hurricane data available during the period used. With respect to ULAE, the factors used were based upon directions received from Ken Ritzenthaler, an actuary with OIR, in a previous filing. The prior discussions with Mr. Ritzenthaler are referenced in the exhibits to the filing. The more credible evidence demonstrates that the ALAE and ULAE expenses with respect to catastrophic hurricane losses are sufficiently documented in Hartford's filings and are based on reasonable actuarial judgment. The sixth identified deficiency is that the catastrophe non-hurricane losses, ALAE and ULAE amounts are excessive and not supported. According to OIR, the particular time period from 1992 to 2006 used to calculate these values has not been justified, and there has been no explanation of why the extraordinarily high reported losses for 1992 and 1993 should be expected to occur in the future. OIR's complaint with respect to non-hurricane losses is based upon the number of years of data included. While the RMS model was used for hurricane losses, there is no model for non- hurricane losses, so Hartford used its historical data. This becomes important because in both 1992 and 1993, there were unusual storms that caused significant losses. Hartford's data begins with 1992 and goes through 2006, which means approximately fifteen years worth of data is used. Hartford's explanation for choosing that time period is that hurricane models were first used in 1992, and it was at that time that non-hurricane losses had to be separated from hurricane losses. Thus, it was the first year that Hartford had the data in the right form and sufficient detail to use in a rate filing. Petitioners have submitted rate filings in the past that begin non-hurricane, ALAE and ULAE losses with 1992, increasing the number of years included in the data with each filing. Prior filings using this data have been approved by OIR. It is preferable to use thirty years of experience for this calculation. However, there was no testimony that such a time-frame is actuarially or statutorily required, and OIR's suggestion that these two high-loss years should be ignored is not based upon any identified actuarial standard. Hartford attempted to mitigate the effect of the severe losses in 1992 and 1993 by capping the losses for those years, as opposed to relying on the actual losses.2/ The methodology used by Hartford was reasonable and appropriate. No other basis was identified by the OIR to support this stated deficiency. The seventh identified deficiency is that the underwriting profit and contingency factors are excessive and not supported. The underwriting profit factor is the amount of income, expressed as a percentage of premium, that an insurance company needs from premium in excess of losses, settlement costs and other expenses in order to generate a fair rate of return on its capital necessary to support its Florida exposures for the applicable line of business. Hartford's proposed underwriting profit factor for its largest homeowners filing is 15.3%. Section 627.062(2)(b), Florida Statutes, contemplates the allowance of a reasonable rate of return, commensurate with the risk to which the insurance company exposes its capital and surplus. Section 627.062(2)(b)4., Florida Statutes, authorizes the adoption of rules to specify the manner in which insurers shall calculate investment income attributable to classes of insurance written in Florida, and the manner in which investment income shall be used in the calculation of insurance rates. The subsection specifically indicates that the manner in which investment income shall be used in the calculation of insurance rates shall contemplate allowances for an underwriting profit factor. Florida Administrative Code Rule 69O-170.003 is entitled "Calculation of Investment Income," and the stated purpose of this rule is as follows: (1) The purpose of this rule is to specify the manner in which insurers shall calculate investment income attributable to insurance policies in Florida and the manner in which such investment income is used in the calculation of insurance rates by the development of an underwriting profit and contingency factor compatible with a reasonable rate of return. (Emphasis supplied). Mr. Schwartz relied on the contents of this rule in determining that the underwriting profit factor in Hartford's filings was too high, in that Florida Administrative Code Rule 69O-170.003(6)(a) and (7) specifies that: (6)(a) . . . An underwriting profit and contingency factor greater than the quantity 5% is prima facie evidence of an excessive expected rate of return and unacceptable, unless supporting evidence is presented demonstrating that an underwriting profit and contingency factor included in the filing that is greater than this quantity is necessary for the insurer to earn a reasonable rate of return. In such case, the criteria presented as determined by criteria in subsection (7) shall be used by the Office of Insurance Regulation in evaluating this supporting evidence. * * * An underwriting profit and contingency factor calculated in accordance with this rule is considered to be compatible with a reasonable expected rate of return on net worth. If a determination must be made as to whether an expected rate of return is reasonable, the following criteria shall be used in that determination. An expected rate of return for Florida business is to be considered reasonable if, when sustained by the insurer for its business during the period for which the rates under scrutiny are in effect, it neither threatens the insurer's solvency nor makes the insurer more attractive to policyholders or investors from a corporate financial perspective than the same insurer would be had this rule not been implemented, all other variables being equal; or Alternatively, the expected rate of return for Florida business is to be considered reasonable if it is commensurate with the rate of return anticipated for other industries having corresponding risk and it is sufficient to assure confidence in the financial integrity of the insurer so as to maintain its credit and, if a stock insurer, to attract capital, or if a mutual or reciprocal insurer, to accumulate surplus reasonably necessary to support growth in Florida premium volume reasonably expected during the time the rates under scrutiny are in effect. Mr. Schwartz also testified that the last published underwriting profit and contingency factor published by OIR was 3.7%, well below what is identified in Hartford's filings. Hartford counters that reliance on the rule is a misapplication of the rule (with no explanation why), is inconsistent with OIR's treatment of the profit factors in their previous filings, and ignores the language of Section 627.062(2)(b)11., Florida Statutes. No evidence was presented to show whether the expected rate of return threatens Hartford's solvency or makes them more attractive to policyholders or investors from a corporate financial perspective than they would have been if Rule 69O- 170.003 was not implemented. Likewise, it was not demonstrated that the expected rate of return for Florida business is commensurate with the rate of return for other industries having corresponding risk and is necessary to assure confidence in the financial integrity of the insurer in order to maintain its credit and to attract capital. While the position taken by OIR with respect to Hartford's filings may be inconsistent with the position taken in past filings, that cannot be determined on this record. The prior filings, and the communications Hartford had with OIR with regard to those filings, are not included in the exhibits in this case. There is no way to determine whether Petitioners chose to present evidence in the context of prior filings consistent with the criteria in Rule 69O-170.003, or whether OIR approved the underwriting profit and contingency factor despite Rule 69O- 170.003. Having an underwriting profit factor that is considered excessive will result in a higher rate indication. Therefore, it is found that the seventh identified deficiency in the Notices of Intent to Disapprove for the homeowners filings and the second identified deficiency in the Notices of Intent to Disapprove for the dwelling/fire filings is sustained. The eighth identified deficiency is that various components underlying the calculation of the underwriting profit and contingency factors, including but not limited to the return on surplus, premium to surplus ratio, investment income and tax rate are not supported or justified. Return on surplus is the total net income that would result from the underwriting income and the investment income contributions relative to the amount of capital that is exposed. Surplus is necessary in addition to income expected from premium, to insure that claims will be paid should losses in a particular year exceed premium and income earned on premium. Hartford's expected return on surplus in these filings is 15%. The return on surplus is clearly tied to the underwriting profit factor, although the percentages are not necessarily the same. It follows, however, that if the underwriting income and contingency factor is excessive, then the return on surplus may also be too high. Hartford has not demonstrated that the return on surplus can stand, independent of a finding that the underwriting profit and contingency factor is excessive. Premium-to-surplus ratio is a measure of the number of dollars of premium Hartford writes relative to the amount of surplus that is supporting that exposure. Hartford's premium-to- surplus ratio in the AARP homeowners filing is 1.08, which means that if Hartford wrote $108 of premium, it would allocate $100 of surplus to support that premium.3/ The premium-to-surplus ratio is reasonable, given the amount of risk associated with homeowners insurance in Florida. The OIR's position regarding investment income and tax rates are related. The criticism is that the filing used a low- risk investment rate based on a LIBOR (London Interbank Offering Rate), which is a standard in the investment community for risk- free or low-risk yield calculations. The filing also used a full 35% income tax rate applied to the yield. Evidence was presented to show that, if the actual portfolio numbers and corresponding lower tax rate were used in the filings, the rate after taxes would be the same. The problem, however, is that Section 627.062(2)(b)4., Florida Statutes, requires the OIR to consider investment income reasonably expected by the insurer, "consistent with the insurer's investment practices," which assumes actual practices. While the evidence at hearing regarding Hartford's investments using its actual portfolio yield may result in a similar bottom line, the assumptions used in the filing are not based on Petitioner's actual investment practices. As a result, the tax rate identified in the filing is also not the actual tax rate that has been paid by Hartford. The greater weight of the evidence indicates the data used is not consistent with the requirements of Section 627.062(2)(b)4., Florida Statutes. Therefore, the eighth deficiency is sustained to the extent that the filing does not adequately support the return on surplus, investment income and tax rate. The ninth identified deficiency is that the underwriting expenses and other expenses are excessive and not supported. Hartford used the most recent three years of actual expense data, analyzed them and made expense selections based on actuarial judgment. The use of the three-year time frame was both reasonable and consistent with common ratemaking practices. Likewise, the commission rates reflected in the agency filings are also reasonable. The tenth identified deficiency is that the non-FHCF (or private) reinsurance costs are excessive and not supported. The criticism regarding private reinsurance purchases is three- fold: 1) that Hartford paid too much for their reinsurance coverage; 2) that Hartford purchases their reinsurance coverage on a nationwide basis as opposed to purchasing coverage for Florida only; and 3) that the percentage of the reinsurance coverage allocated to Florida is too high. Hartford buys private reinsurance in order to write business in areas that are exposed to catastrophes. It buys reinsurance from approximately 40 different reinsurers in a competitive, arm's-length process and does not buy reinsurance from corporate affiliates. Hartford used the "net cost" of insurance in its filings, an approach that is appropriate and consistent with standard actuarial practices. Hartford also used the RMS model to estimate the expected reinsurance recoveries, which are subtracted from the premium costs. Hartford buys private catastrophic reinsurance on a nationwide basis to protect against losses from hurricanes, earthquakes and terrorism, and allocates a portion of those costs to Florida. Testimony was presented, and is accepted as credible, that attempting to purchase reinsurance from private vendors for Florida alone would not be cost-effective. The cost of reinsurance, excluding a layer of reinsurance that covers only the Northeast region of the country and is not reflected in calculating costs for Florida, is approximately $113 million. Hartford retains the first $250 million in catastrophe risk for any single event, which means losses from an event must exceed that amount before the company recovers from any reinsurer. In 2006, Hartford raised its retention of losses from $175 million to $250 million in an effort to reduce the cost of reinsurance. Hartford purchases reinsurance in "layers," which cover losses based on the amount of total losses Hartford incurs in various events. Hartford allocates approximately 65% of the private reinsurance costs (excluding the Northeast layer) to Florida in the AARP homeowners filing. Only 6-7% of Hartford's homeowners policies are written in Florida. The amount Hartford paid for reinsurance from private vendors is reasonable, given the market climate in which the insurance was purchased. Hartford has demonstrated that the process by which the reinsurance was purchased resulted in a price that was clearly the result of an arms-length transaction with the aim of securing the best price possible. Likewise, the determination to purchase reinsurance on a nationwide basis as opposed to a state-by-state program allows Hartford to purchase reinsurance at a better rate, and is more cost-effective. Purchasing reinsurance in this manner, and then allocating an appropriate percentage to Florida, is a reasonable approach. With respect to the allocation of a percentage of reinsurance cost to Florida, OIR argues that, given that Florida represents only 6-7% of Hartford's homeowner insurance business, allocation of 65% of the reinsurance costs to Florida is per se unreasonable. However, the more logical approach is to examine what percentage of the overall catastrophic loss is attributable to Florida, and allocate reinsurance costs accordingly. After carefully examining both the testimony of all of the witnesses and the exhibits presented in this case, the undersigned cannot conclude that the allocation of 65% of the private reinsurance costs is reasonable, and will not result in an excessive rate.4/ The eleventh identified deficiency is that the FHCF (or CAT Fund) reinsurance costs are excessive and not supported. Hartford purchases both the traditional layer of CAT Fund coverage, which is addressed in a separate filing and not reflected in these filings, and the TICL layer made available pursuant to Chapter 2007-1, Laws of Florida. Hartford removed the costs of its previously purchased private reinsurance that overlapped with the TICL layer and those costs are not reflected in these filings and have not been passed on to Florida policyholders. In estimating the amount of premium Hartford would pay for the TICL coverage, it relied on information provided by Paragon, a consulting firm that calculates the rates for the CAT Fund. As noted in finding of fact number 31, the RMS model, along with three other models accepted by the Hurricane Commission, were used by Paragon for determining expected aggregate losses to the CAT Fund reinsurance layer, clearly a crucial factor in determining the rate for the CAT fund. Hartford did not use the loss recoveries calculated by Paragon, but instead estimated the total amount of premium it would pay for the TICL coverage and subtracted the expected loss recoveries based on the RMS model alone. The expected loss recoveries under the RMS model standing alone were 60% of the loss recovery estimate calculated by Paragon when using all four models. Hartford claimed that its use of the RMS model was necessary for consistency. However, it pointed to no actuarial standard that would support its position with respect to this particular issue. Moreover, given that the premium used as calculated by Paragon used all four models, it is actually inconsistent to use one number which was determined based on all four models (the Paragon-based premium estimate) for one half of this particular calculation and then subtract another number using only one model for the other half (the loss recoveries rate) in order to determine the net premium. To do so fails to take into account the unique nature of the CAT fund, in terms of its low expenses and tax-exempt status. Accordingly, it is found that the CAT-Fund reinsurance costs for the TICL layer are excessive. The twelfth identified deficiency is that Hartford did not consider in the filing that no new business is being written. OIR's explanation of this asserted deficiency is that the costs associated with writing new business are generally higher than that associated with writing renewals. Therefore, according to OIR, failure to make adjustments to their historical experience to reflect the current mix of business, means that the costs included in the filing would be excessive. Hartford began restricting the writing of new business for these filings in 2002. Ultimately, no new business for the AARP program was written after November 2006 and no new business was written for the agency program after June 2006. Credible evidence was presented to demonstrate that a very low percentage of new business has been written over the period of time used for demonstrating Hartford's historical losses. As a result, the effect of no longer writing new business is already reflected in the data used to determine expenses. No additional adjustment in the filing was necessary in this regard. The thirteenth identified deficiency is that no explanation has been provided as to why Hartford believes it is reasonable to return such a low percentage of premium in the form of loss payments to policyholders. For example, for the building policy forms, OIR states that only about 40% of the premium requested by Hartford is expected to be returned to policyholders in the form of loss payments. OIR pointed to no actuarial standard that would require a specific explanation regarding how much of the premium should be returned to policyholders. Nor was any statutory or rule reference supplied to support the contention that such an explanation was required. Finally, the more credible evidence presented indicates that the correct percentage is 44%. In any event, this criticism is not a basis for finding a deficiency in the filing. Alleged Deficiencies in the Dwelling/Fire Filings The seventh deficiency identified in the dwelling/fire filings, not reflected in the homeowner filings, is that the credibility standard and credibility values are not supported. Credibility is the concept of identifying how much weight to put on a particular set of information relative to other potential information. Credibility value is determined by applying the "square root rule" to the credibility value, a commonly used actuarial approach to credibility. Hartford used the credibility standard of 40,000 earned house years in these filings. This credibility standard has been the standard within the industry for personal property filings for over forty years and has been used in prior filings submitted to OIR. Mr. Schwartz testified that his criticism with respect to the credibility standard and credibility values is that Hartford did not explain why they used that particular standard. However, Florida Administrative Code Rule 69O-170.0135 discusses those items that must be included in the Actuarial Memorandum for a filing. With respect to credibility standards and values, Rule 69O-170.0135(2)(e)5., provides that the basis need only be explained when the standard has changed from the previous filing. Given that no change has been made in these filings with respect to the credibility standard, this criticism is not a valid basis for issuing a Notice of Intent to Disapprove. The ninth deficiency in the Notice relating to the dwelling/fire filing in Case No. 07-5187 provides: "No explanation has been provided as too (sic) why Hartford believes it needs such a large rate increase currently, when the cumulative rate change implemented by Hartford for this program from 2001 to 2006 was an increase of only about 10%." With respect to Case No. 07-5188, the deficiency is essentially the same, except the cumulative rate change identified for the same period of time is a decrease of about -3%. Testimony established that the dwelling/fire rate increases were larger than those identified for the homeowners filings because Hartford did not seek rate increases for these lines for several years. The decision not to seek increases was not based on the adequacy of current rates. Rather, the decision was based on an internal determination that, based on the relatively small number of policies involved in these two filings, the amount of increased premium reflected in a rate increase was not sufficient to incur the costs associated with preparing the filings. Mr. Schwartz pointed to no authority, either in statute, rule, or Actuarial Standard, that requires the explanation he desired. He acknowledged that he understood the basis of how Hartford reached the rate increase they are requesting. The failure to provide the explanation Mr. Schwartz was seeking is not a valid basis for a Notice of Intent to Disapprove.
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED: That a final order be entered that disapproves the rate filings in Case Nos. 07-5185 and 07-5186 based upon the deficiencies numbered 7,8,10 and 11 in the Notices of Intent to Disapprove, and that disapproves the rate filings in Case Nos. 07-5187 and 07-5188 based on the deficiencies numbered 2,3,5 and in the Notices of Intent to Disapprove. DONE AND ENTERED this 28th day of March 2008, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON 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 28th day of March, 2008.
Findings Of Fact At all times pertinent to the issues herein, Herbert A. Licht, was a certified general contractor in the State of Florida under license Nos. CG C011504 and CG CA-175O4. Respondent qualified All Florida Builders, Inc. under license No. CO CO11504 from February, 1978 until September, 1980. He also qualified Perma-Vent Industries of Orlando, Inc. (PVO) and Perma-Vent Industries of Tampa, Inc. (PVT) from inception to the present and was sole qualifier of both. PVT, at all times pertinent hereto was licensed as a home improvement contractor under license H 0000969 having been licensed in March, 1980. Respondent was initially the president and vice president, and a director of PVT as well as owner of one-half the capital stock of the corporation. The business of PVT was to sell and install home improvement products and services in the Tampa area. Similar in operation to PVT was Perma-Vent Industries of Orlando, Inc. (PVO), licensed as a home improvement contractor in December, 1979 under license number AC 0000874. Again Respondent owned one-half the stock in this corporation and initially was the president, vice president, resident agent and a director. Elliott Greenberg was the owner of the other half interest in both PVT and PVO. Elliott Greenberg is not licensed as a contractor by the State of Florida. Perma-Vent Industries, Inc. (PVI) was initially incorporated in mid- 1980, but was not licensed by Respondent until February, 1983 when he secured license number HC 0001282. This company, of which Respondent was, again, president, vice president, registered agent, director and one-half owner, was not qualified by Respondent until after the incidents pertinent to this hearing. At all times pertinent here, Respondent had failed to qualify PVI. Another corporation established by Respondent was Statewide Funding Corporation (Statewide), set up in April, 1980, which operated as a collection agency for the financial paper generated by Respondent's other businesses as described above. Respondent had a relationship to this company identical with that of the others mentioned above. Respondent also operated All Florida Builders, Inc. (AFB) for 18 months from early 1978-1979/80, engaged in the business of selling and installing home improvements. AFB was the predecessor to PVO, but Greenberg had no proprietary interest in it. In addition to his ownership of one-half of the stock in the other corporations mentioned, however, Greenberg was also secretary/treasurer and a director of them all. In the operation of the various businesses by the Respondent and Mr. Greenberg, there was some difference between how PVT and PVO operated and how PVI did. In the former, while Respondent handled the office and financial end of the business Greenberg handled sales and operations. As to the latter, Greenberg had almost total control of all aspects of the business though Respondent's license was used for those activities of the operation which needed it, such as the pulling of permits for particular jobs. In both the PVO and PVT operations, Mr. Greenberg was the overall sales chief who oversaw the phone room canvassers and the street sales force, through managers who answered to him. Installation and construction was also within Greenberg's area of supervision through the "expediter", an individual who assigned the particular jobs and insured the proper materials were on hand. The "installers" or "mechanics", the individuals who actually did the hands-on work, were, in theory, independent contractors who were paid by the job. None of the instant companies maintained payrolls for these people, deducted withholding, or any other deduction called for. While the sales force of PVT was set up and operated exactly as that of PVO, the Tampa company had no expediter or installers. These services were performed for it by PVO's personnel even though the corporations were, theoretically, separate. As to PVI, this was a different situation entirely. PVI's salesmen were independent contractors who, primarily, took orders for work to be done with, normally, materials and labor furnished by PVI. They were free to set their own prices and, as compensation, received the difference between the contract price for the job and the actual cost of labor and materials as charged by PVI. In the event the salesman, as was sometimes done, procured his own installer's, he would pay that individual's salary from his own profit which was the difference of his contract price and the cost of materials. PVI performed collections services on these contracts. Turning to the operations of PVT and PVO, canvassers from the phone room, calling numbers in line from the local phone books, would try to set up appointments for salesmen to subsequently try to sell aluminum siding or home repair. The salesmen were trained using an "Eleven Point Sales Outline" adopted by Mr. Greenberg from a sales brochure used by another similar firm in another part of the country and brought by a former employee of this company. This sales program is typical of a high-pressure sales operation where the facts are often misrepresented or used loosely in order to convince a prospective buyer that he or she is getting special treatment. Once the salesman got the prospective customer/homeowner to sign a contract for some type of service, the contracts were brought to the home office where the Respondent himself, according to his repeated testimony, reviewed every contract entered into by PVT and many entered into by PVO. Once the contract was approved by Respondent a copy was forwarded to the operations section where the expediter, an employee of PVO, actually assigned the work to the workmen who would accomplish it, The expediter also determined how much raw material would be used on the job and insure that it was issued to the workmen and properly costed. Many of the workmen utilized by Respondent's corporations to apply siding or otherwise do home repair work were themselves not licensed, but operated under the Respondent's license as a general contractor. Ordinarily the expediter furnished the workmen with blank letters of authorization, signed by Respondent and on hand in the PVO office, for the purpose of applying for the required permits in appropriate cases. There was some indication that, initially, the workmen were not required to obtain permits for their particular jobs. In fact, one workman, Melvin Nichols, indicated that he was advised by a representative of the Respondent that he need not bother with getting a permit unless there was trouble. Ordinarily, however, the applicators were given signed letters of authorization. This is a perfectly legitimate practice within the construction industry trade in Florida. However, once the job was completed the installer was supposed to obtain from the homeowner a certificate of completion, which he thereafter would turn in to the expediter as one of the pre-conditions for receiving payment for his services. One of the other things the installer had to submit was a breakdown sheet indicating exactly what expenses were incurred by him, including permit fees, if any. Once this was done, someone from whichever of Respondent's companies actually contracted for the work, PVI, PVO, or PVT, would return to the homeowner's residence with typed copies of the already signed, handwritten, agreement and other documents. When he first started in business, Respondent would conform these subsequently typed and executed documents to the date on the original handwritten documents. However, when he determined that this practice was not appropriate he ceased doing it and the typewritten documents were dated as of the date of their signing. As a result, there were often multiple documents covering the same work signed by the parties on different dates, creating a morass of paperwork which to the average customer was often confusing, especially in the situations where the customer could neither read nor write. Initially, when the businesses were first started, the Respondent personally supervised the training of the salesmen and frequently went to the construction site to observe and insure that the work was being done properly. However, as his business expanded Respondent, by his own admission, had less and less time to do this and devoted more and more time to the financing and administrative aspects of the business which were done in the office. However, as will be seen below, Respondent still, on a period basis, personally involved himself in the actual procurement of signatures on mortgages and the other quasi-legal aspects of the operation. In the succeeding paragraphs several case studies will be analyzed individually. It will be possible to see a similar thread of activity, however, throughout the operations. While Respondent claims he was not aware of the day-to-day activities of these three companies, and tries to exculpate himself from any responsibility for the operations of PVI, it is clear this was not so. The evidence clearly shows that the operations of all three companies were tied in together, all operating out of or under the control of the home office, which was at the same location for all three (four if AFB is considered separately) and were established and financed by or through the arrangement of the Respondent, Licht. BROWN Some time during 1979 an individual holding himself out to be a representative of AFB came to the New Smyrna Beach, Florida, home of John H. Brown and his wife, Lilly Mae. This individual suggested that the Brown's should have their home with aluminum siding and also have aluminum soffit and facia installed. During this initial meeting, the AFB representative showed Mr. Brown some photographs of homes on which, he said, his company had applied this same product, and discussed how, if Mr. Brown were to agree, the improvements would be paid for. They discussed the monthly payments for the work and Mr. Brown was convinced to sign some papers relating to the job. He was not specifically told what the papers were, but he was assured his payment would be cheaper than those of other people for whom the same type of work was done. Neither Mr. Brown nor his wife can read or write and he advised the salesman of this fact. He is currently retired after 30 years of work with the Florida East Coast Railroad as a laborer and his sole source of income is his railroad retirement check. The Browns are, however, somewhat familiar with credit and credit financing, since they purchased their home utilizing a mortgage calling for monthly payments, and furnished the home through credit payments with Montgomery Ward. Subsequent to the first meeting, on or about December 27, 1979, Mr. and Mrs. Brown (Mrs. Brown is senile with only sporadic periods of lucidity) signed a retail installment contract with All Florida Builders which provided for that company to install aluminum siding on all four walls of the Browns' home. The price was $4,000.00 which was to be financed over 60 monthly payments of $103.49, each, for a total of $6,209.40. The annual percentage rate on the financing was 18.8 percent and the payments were to be secured by an interest in the Browns' home. Mr. Brown contends he did not know he was signing a contract at that time, and thought he was merely signing an authorization for the work to be done. This contract was not fully filled out at the time it was signed in that the salesman's license number was not contained thereon, nor was the amount financed listed. This contract was never signed by the contractor and the Browns were not furnished a notice of their right to rescind the contract at the time they signed it. The contract also contained a slight overcharge on the financing of the contract; this overcharging was not disclosed as is required by the statute. At no time during the preparation and execution of these documents were the Browns advised of the nature or content of the documents they were signing. In that connection, the salesman in question here was Ron Greenberg, who is, coincidently, the brother of Elliott Greenberg, mentioned previously. The following day, December 28, 1979, Mr. Brown was convinced to sign a second retail installment contract for the same aluminum siding with the addition of soffit and facia. This time the work was to cost $6,500.00 payable in 60 payments of $167.93 each for a total of $10,089.60. The payments due under this contract were to be secured by a mortgage on the Browns' home. This contract, also, was not complete at the time that it was presented to the Browns' for signature. Again, the salesman's name and license number were not noted on the contract, nor were the charges itemized and again, the company failed to execute the contract. This time, however, Brown was furnished with a notice of right to rescind, but he was not advised of the nature of these or any of the documents he signed on this date. Nonetheless, pursuant to that contract, AFB began to install siding on the Browns' home. However, the job was not completed, nor was any of the soffit and facia installed as called for in the contract. What little work was done was done without proper permit as required by the City of New Smyrna Beach. Even though the work was not completed, in early 1980 representatives of AFB prevailed upon Mr. Brown to sign a certificate of completion without advising Mr. Brown of the fact that he was indicating thereon that the work called for in the contract was complete. After AFB ceased work on the Brown property without completing the job called for, Brown was convinced to sign another contract calling for a cash price of $4,000.00 for the installation of aluminum siding on the Brown home. Sixty payments of $100.00 each would bring the total payments to $6,000.00 On the day this third contract was signed, Mr. Brown was also asked to sign, and did sign, a mortgage on his property in the amount of $4,000.00 dated December 27, 1979. Mr. Brown did not know he was signing a mortgage nor was he advised of the contents of the documents before he signed them. Thereafter, however, Respondent notarized the mortgage bearing date of December 27, 1979, indicating that he witnessed the signature of both Browns on that date. In fact, he did not witness the signatures on that date or any other date. In addition, subsequent to Brown signing the mortgage, Respondent altered the terms of the mortgage reflecting a $6,000.00 rather than $4,000.00 security interest. Respondent initialed the change and subsequently caused the mortgage to be filed in public records. None of the documents which Mr. Brown signed were given to him at the time of signing by the salesman. In fact, all copies which he received were sent to him by mail at a much later date. Respondent justified the alteration of the amount of the mortgage on the basis that he was conforming it to the intent of parties and the contract. However, Brown did not know what he had signed. Approximately two years later, in early 1982, two salesmen from PVO advised Mr. Brown at his home that they were going to complete the work called for under the previous contract at a cheaper price. They advised him that in the future all payments were to be made to PVO and, as a result, Mr. Brown discontinued the payments which he had been making under the earlier contract with AFB regularly since 1979, even though the work had not been done. Pursuant to these oral representations, on February 2, 1982, Mr. Brown signed another installment contract and note which provided that PVO would install aluminum soffit and facia around the entire house, install aluminum window and door trim, and cover the rear porch ceiling with an aluminum ceiling material. The cash price for this work was listed on the contract as $3,440.00 payable over 54 monthly installments of $98.214 at 12 percent per year add-on interest. The contract also provided for payment to be secured by a mortgage on the Brown's home. Again, Mr. Brown was not aware of the fact that he was signing a contract, nor was he verbally advised of the nature of the documents he was signing at or prior to doing so. The contract in question failed to contain the salesman's license number and the agreement itself was not signed by a representative of PVO. Mr. Brown was also not given either written or oral notice of his right to rescind the contract. On February 24, 1982, Mr. Brown was convinced to sign yet another retail installment contract secured by a mortgage on his home. This contract called for PVO to install aluminum ceilings on both the upstairs and downstairs porches. Again, Mr. Brown was not made aware of the fact that he was signing a contract at the time he signed this document, which called for a cash price of $1,800.00 financed over three years at monthly payments of $68.10 each. The salesman's license number was again not listed on the contract, nor was Mr. Brown furnished either a written or verbal notice of his right to rescind the contract. The work called for in the February 2 and 24, 1982 contract was performed as called for. However, no permit was ever obtained for the work though Section 10-65, New Smyrna Beach Ordinances requires it. Once the work was completed, the Browns signed a certificate of completion. And at some time subsequent to February 24, also they signed a series of typewritten contract, notes, and other documentation including a mortgage on their property, all of which were dated February 2, 1982. All of these documents also contained the signature element for Leroy Jackson, an individual who had become a co-owner of the Browns' home subsequent to December 27, 1979, but prior to February 2, 1982. Mr. Jackson was a resident of Detroit, Michigan, and consequently the documents were sent there for his signature. The mortgage, bearing Jackson's signature and dated February 2, 1982, reflects that all signatures were affixed and the document notarized in Volusia County, Florida, on February 2, 1982. The notary jurat executed by an individual named French, indicates that this notary witnessed all signatures in Volusia County, Florida. However, as was stated before, no one signed the document prior to February 24, 1982, and Mr. Jackson's signature was affixed in Detroit, Michigan. The typewritten contract executed on February 24, combined the terms of the handwritten February 2 and February 24 contracts increasing the monthly payment, the total amount of the payment, and the percentage rate. This document, however, and all other documents, bore the date of February 2, 1982, though they were not presented or signed until on or after February 24. Further, the completion certificate which the Browns' signed, purportedly on February 19, 1982, referred to work that was not to be performed until after March 1, 1982 under the terms of the contract dated February 24, 1982. It is clear from all of the above that the documentation prepared by individuals in the employ of the Respondent is totally unreliable and false in most particulars, all to the detriment of the customer, Mr. and Mrs. Brown. Payment amounts were raised, the total amount was raised, interest rates were excessive without disclosure, and the documents themselves were insufficient in form. As a result of Mr. Brown's ceasing payments on the 1979 contract when he signed the new ones in 1982, Mr. Brown was required to secure the services of an attorney who was able to negotiate a partial settlement of the matter with Respondent's company. Pursuant to the settlement, Mr. Brown continued to make payments of $100.00 per month on the December 27, 1979, contract and will do so until such time as the $1,000.00 balance is paid. At the request of the Browns' attorney, in May 1984 an architect inspected the work performed on the Browns' home and determined that it was, for the most part acceptably done. However, in October 1982, a representative of another aluminum company had previously inspected the work done on the Brown house, at the request of Brown's attorney. His estimate of $5,000.00 for the work, which included labor, materials, and a 30 percent profit and overhead margin, was substantially lower than that charged by Respondent's company for the same work. NEWMAN Some time in mid-1979, Floyd Newman was visited by a salesman for AFB. Mr. Newman repeatedly told the salesman he did not want any work done, however, the salesman convinced Newman to allow him to display his material. During the course of the sales presentation, the salesman measured the Newmans' open carport. He then attempted to convince Mr. Newman to install an aluminum carport over the open area at a cost of $3,200.00. Mr. Newman immediately advised the salesman that he did not want the carport and could not pay for a carport out of his sole income of $212.00 per month from pension and food stamps. In response to this the salesman advised Mr. Newman that the company would finance the construction and asked if the Newmans would be willing to mortgage their home. Mr. Newman indicated absolutely not, nonetheless, the salesman convinced Mr. Newman to sign a piece of paper which he represented was merely for the company file. In reality it was a preprinted form retail installment contract. The only thing on the form at the time Mr. Newman signed it was the amount of $3,200.00. The space for the description of the work to be done, and that for the computation of payments was blank, except for the total sum. Mr. Newman was given neither explanation of the contract nor a copy at the time he signed. This blank contract, however, was, subsequently filled in out of the presence of Mr. Newman. It called for the installation of a carport as well as the delivery of eight cans of paint for $3,200.00. The document, which was dated August 18, 1979, reflected the salesman as David Cavetta. However, numerous other spaces were still left blank. For example, the commencement and completion dates were not given, the finance charge information was not given, and the agreement was not signed by a representative of the company. Several weeks after Mr. Newman signed the blank contract, two men came out to begin work on Mr. Newman's home. On their arrival, Mr. Newman asked them to leave but they went ahead nonetheless and completed the work. One of the installers, Charles Barefoot, was an independent, unlicensed contractor. He was compensated on a square foot basis. Barefoot and the other installer, Mr. Seibert, completed the installation of the carport without obtaining any permit required for the project. About two weeks after the carport was completed the Respondent came to the Newmans' property with certain pre-printed blank forms that he wanted signed. At this point, Respondent told the Newmans' that the papers merely showed that the work had been done, and in response to his request Newman signed four or five of the documents. One of the documents signed on this occasion was a mortgage deed, and others included a home improvement sales contract, a certificate of completion, a credit application, and a notice of right of rescission. The Newmans', whose ability to read and write is limited, did not know what it was they had signed and Respondent did not explain the documents to them. Mr. and Mrs. Newman completed the fifth grade of school. Neither has any experience with credit. The only purchase they made on time was their home, and on that occasion the paperwork was completed by the seller and the Newman's signed what they were asked to sign. The contract brought by Respondent was dated August 18, 1979 but was not signed until approximately four weeks after that date. This typewritten contract provided for the same work as on the handwritten one. The cash price was $3,200.00, but when credit, life insurance, official fees, and a finance charge of $2,465.77 were added, the deferred payment price, with interest at 16.65 percent over 84 monthly installments came to $5,989.20. The interest rate on the contract exceeded the legal limit. The mortgage deed, also dated August 18, 1979, which was signed in blank at the same time as the contract, at the request of Respondent, was filled in at a later date. Respondent notarized the Newmans' signatures on the instrument. The mortgage deed referred to property located on Huggins Street, in Lake County, Florida, property which the Newmans' had not owned for several years at the time the mortgage was executed. Consequently, there were two falsifications on the mortgage. The first was the improper property serving as security, and the second was the erroneous date, both items placed there by the Respondent after the Newmans signed. The Newmans denied giving Respondent the property description for the Huggins Street property. Respondent, at first contending that the Newmans were the ones who gave it to him, subsequently admitted that he may have secured the property description from county records subsequent to the date the Newmans signed the mortgage deed in blank. It is clear, and so found, that Respondent procured the Newmans' signature on a blank mortgage deed, filled it in with date and property description thereafter, and falsely notarized the exhibit. None of the documents were, according to Mr. Newman, explained to him at the time they were signed, nor was he given a copy of them at the time of signing. Instead he received copies through the mail several weeks after Mr. Licht had come to their home. Approximately two months after the initial contact in August, Mr. Newman received a letter asking for the first month's installment payment for the carport. Thereafter, between November 2, 1979 and November 2, 1980, Mr. Newman made payments to AFB in a total amount of $775.00. It was not until approximately nine months after he began making payments that Mr. Newman found out what documents he had signed. When he did, he immediately stopped making payments. While Mr. Newman was making the payments, however, a salesman from PVO, a successor to AFB, came back to the Newmans' property, ostensibly to see how the previous work had been accomplished, but in reality to sell additional home improvement services. On that visit Newman again signed a retail installment contract and a notice of rescission of rights, which provided for PVO to install aluminum soffit and facia around the Newman home for $1,375.00. At this point the contract was not completely filled in as to the terms of the financing, but the instrument did provide that the original contract of August 18, 1979 was to be incorporated in the latter contract dated July 22, 1980. This work was performed by Larry Willbanks, an independent contractor acting as an applicator for the Respondent. Willbanks was not licensed as a contractor in the state of Florida and neither he nor anyone else obtained the required building permits to accomplish the work in question. Once the work was done, the Newmans signed additional typewritten documents which conformed to the original handwritten documents signed previously. The typewritten contract which the Newmans signed after the work was completed was dated July 22 1980, though the actual signing took place several weeks later. It provided for payment of $4,683.05, which included the total price of the new work done and the unpaid balance on the carport, as well as additional administrative expenses. After the finance charge was added in, the total deferred payment price was $8,615.88 to be paid over 84 monthly installments. The contract also, by bearing interest at 19.5 percent, overcharged the Newmans finance charges in the amount of $614.00. Though the Newmans signed the documents dated July 22,they claimed they did not know they had signed an additional contract and note because they thought the work was included in the earlier contract. They have not received copies of these July, 1980 documents, however. After observing both Mr. and Mrs. Newman in their sworn testimony at the hearing, it is obvious that the Newmans may feel that they have an opportunity to take advantage of the situation and have themselves excused from any further payments. Nonetheless, clearly they are inordinately unsophisticated and there is little chance that they understood just what it was they were signing. When this is considered along with the obvious fact that Respondent personally secured an unlawful mortgage on property formerly owned by the them, it is clear that they were the victims and not the Respondent. In any event, several months after signing the documents, the Newmans stopped making payments on the basis that they felt they had been tricked into signing the earlier 1979 one. SUTTON Aleen Sutton, a nearly illiterate 72 year old laundress, resides in Sanford, Florida. At the time pertinent to this complaint, in 1980; her home was in very poor condition. There was a hole in the porch floor and in the kitchen; the dining room floor was sagging; and the windows were supported by rotten, cracked, and unstable wood. Just about this time Mrs. Sutton was advised that a government sponsored home improvement project was under way in the area which would help low-income homeowners improve their property. In order to determine if she was eligible for the program, Mrs. Sutton went to the agency's office where she was told that a representative from the agency would come out to see her home and determine whether or not she could qualify. Shortly thereafter Mrs. Sutton received a telephone call from a solicitor for PVO whom she mistook to be a representative of the agency. She was asked if someone could come out to talk to her about home improvements and, because of her misconception, she agreed. A PVO salesman, Gary French, came out several days later and when he arrived, Mrs. Sutton, thinking he was with the agency, showed him all of the problems she was having with her home. French advised her that he would fix her home up and showed her pictures of a house which, he represented, would be what hers would look like when it was finished. At this point Mrs. Sutton still thought she was dealing with someone from the agency. During the initial meeting French got Mrs. Sutton to sign three documents; a contract, a credit application, and a notice of rescission. According to Mrs. Sutton, she did not know what she had signed. Though she signed the right of rescission she was not advised that she had three days in which to decide to do so. Though she gave Mr. French information about her income and her previous credit history, she did not know she was agreeing to finance improvements to her home. The contract she signed at that time provided for applying aluminum soffit and facia completely around the house; for capping all windows with aluminum stock; for replacing all rotten wood; and for caulking and sealing all cracks. No mention was made in the contract about the hole in the front porch or kitchen floor or the sagging dining room floor. Though the contract outlined the financing provisions of the transaction, and called for the price to be secured by a mortgage on the house, there was no disclosure statement nor was the salesman's license number filled in. In addition, the contract was not signed by any representative of the Respondent. The actual work on the Sutton property was done by Mr. Edward Ferguson, an independent contractor working for the Respondent on a per foot basis. At the time he worked on the Sutton property he did not have any type of a license for contracting issued by the State. At no time did he procure any of the required building permits for the work done. Ferguson put aluminum around the windows and replaced some of the wood. He also installed some of the soffit and facia called for by the contract. However, he did not complete the installation, and the aluminum around the windows was improperly installed. Before the work was completed, Respondent and some associates went to Sutton's house to get her to sign typewritten copies of the documents she had signed previously. At first Mrs. Sutton refused to sign, indicating that the work had not been completed, and that some damage had been done to her screens. When Respondent paid a cash settlement of $37.00 for the damage to the screens and the clean-up of the debris left by the workmen Mrs. Sutton signed the papers presented to her. The evidence conflicts on whether these documents were signed voluntarily or under coercion. On one hand there is evidence to indicate she was told that she had to sign the paper "or else" on the other hand, there is evidence that once Mrs. Sutton was paid the $37.00 she was completely satisfied and willing to sign as requested. It is likely that Mrs. Sutton, thinking the government was going to pay for the work signed without being coerced once she was paid for the damage and clean-up and it is so found. This does not affect the nature of the transaction. In any event, the documents were signed and the typewritten contract in the amount of $2,600.00 (cash price) and $4,032.96 (deferred payment price) provided that Mrs. Sutton was to give a security interest to secure the payment. Mr. Sutton contends she did not know what she was signing and had she known the effect of these documents she would not have signed them. She also did not know that she signed a notice of rescission or a certificate of completion, and that since the work was not done she would not have signed it had she known what it was. Respondent notarized Mrs. Sutton's signature on the mortgage as of May 29, 1980. This document is in error in that it bears an improper date. This is consistent with Respondent's demonstrated practice of violating the rules regarding notarization. Mrs. Sutton was not furnished with copies of any of the documentation at the time she signed them, but received them somewhat later through the mail. Once the documents were signed, no one from PVO ever returned to the Sutton premises and the work called for in the contract was not complete. Mrs. Sutton made several payments according to the terms of the contract after they were explained to her by her daughter. However, she fell behind in payments and this precipitated a conference Mrs. Sutton, Respondent, and officials of the Barnett Bank, to whom the mortgage had been sold by Respondent. As a result Mrs. Sutton filed a suit against PVO as a result of which, in addition to an award to her of compensatory and punitive damages, the mortgage on her property was cancelled. FRANCIS In December 1981, Bryce Francis, in response to a brochure he received in the mail from PVO, expressed an interest in the company's services. As a result, one of PVO's salesmen, Jim Heidish, came out to Mr. Francis' DeLand, Florida, home and convinced Mr. Francis to sign a contract for PVO to spray the Francis' home. This initial contract was signed on December 12, 1981, and the contract price was $2,925.00. Somewhat later, on December 31, 1981, Mr. Francis signed a second contract with PVO calling for the company to install aluminum soffit and facia around the overhang of the home, to cover the front porch ceiling, and to replace rotten wood where necessary. This second contract had a price of $2,225.00. Work was begun on the Francis' home without PVO or any of its employees procuring the required building permits from the City of DeLand or from Volusia County. Mr. Francis refused to allow any work to continue after the first day because of his dissatisfaction with the quality of the work performed. When he checked under some of the aluminum which was installed, which was sagging in some areas, he found that it had merely been installed over the rotten wood which had not been replaced. OSGOOD John and Nancy Osgood, older residents of Orlando, Florida, were visited at their home in December, 1981, by Gary French, a salesman for PVO. French asked Mr. Osgood if he would like siding put on his home. When Mr. Osgood told French that he could not pay for it because of his retired status and limited income, and would not mortgage his home to secure the work, French told Osgood that PVO did not need a mortgage. PVO would put up siding on the Osgood home as a demonstration of their product and workmanship for half the normal price, a total of approximately $600.00. Osgood said he would not object to paying a little bit to have his home improved, but that he could not afford any large sums. Mr. French reassured the Osgoods that they would pay only $25 or $50 a month and that they would not have to mortgage their home. Mrs. Osgood also repeatedly told French she did not want the work done, but French kept coming back and after several days of pressure salesmanship the Osgoods finally decided to go ahead with the work, providing the siding could be obtained at cost. On or about December 12, 1981, after the repeated visits by French, the Osgoods signed a retail installment con tract and note which called for PVO to install aluminum siding on the exterior walls of the home and trim on all windows and doors. Cash price was $7,000.00 which when financed over 108 monthly payments resulted in a deferred term payment price of $14,581.08 which included $7,570.00 in finance charges. The contract also provided that a security in the form of a mortgage on the Osgoods' home would be provided. Neither Osgood can read or write with any proficiency. Though they have, in the past, purchased items on credit and have a mortgage on their home, they have never had any credit cards. Those cases where they did purchase on credit, the seller completed the paperwork and the Osgoods', accepting the seller's representation as true, signed what was put before them. The Osgoods were never told that the contract price for the siding was $7,000.00 which would eventually increase to $14,570.00. This amount far exceeds the $600.00 which Mr. French initially advised the Osgoods the work would cost. They also were never told that they would be signing a mortgage on their property to secure payment of the contract price. It is obvious that the Osgoods did not know what they were signing and signed trusting in Mr. French, who they had previously advised that they were unable to read and write. This contract, as in the case of many others, did not contain the salesman's license number, nor was it signed by the company. On December 18, 1981, the Osgoods signed another contract containing many of the same provisions as the previous one, as well as a notice of right of rescission. Here again, they were not advised before they signed as to the nature of the documents they were signing, what the documents pertained to and what their rights were under the contract. This contract, as well, was not signed by a representative of the company. Several weeks later, on December 30, 1981, the Osgoods were prevailed upon to sign another contract with PVO for the installation of an aluminum awning over the front porch. This contract had a price of $1,665.00 and also called for the execution of a mortgage on the Osgoods' home as security. It also contained blank spaces when it was signed by the Osgoods which related to finance charges, total deferred payment, and the added annual percentage rate, as well as the number of payments to be made for the amount of monthly payments. The contract was not signed by any representative of the company. Approximately two weeks later the Osgoods were induced to sign a fourth contract which, this time, provided for PVO to install eleven aluminum window awnings around the exterior of the home on each window. This contract, as in the case of the others signed by the Osgoods, contained blank spaces at the time it was presented to the Osgoods for signature. For example, the salesman's license number was not furnished and the contract was not signed by a representative of PVO. Although this contract also required the Osgoods to mortgage their home as security for the contract, they were not advised of this information prior to signing, nor were they advised of the total amount they would have to pay under the contract, or the amount of their monthly payments. The `aluminum work called for in the several contracts signed by the Osgoods was performed by an independent contractor working for PVO who accomplished what work he did without any type of license and without first obtaining any of the required permits. While this work was being accomplished, Mr. Osgood received copies of all the documents which he had previously signed, but which had not been furnished to him at the time of signing. After the work was stopped before completion, French presented the Osgoods with a typewritten contract bearing the date December 18, 1981, and typewritten copies of all the other documents, such as the right of rescission, completion certificate, and mortgage, which had been signed by the Osgoods when in handwritten form prior to that time. The typewritten contract incorporated all the provisions of the prior handwritten contracts and reflected a cash price for all the work of $12,565.00 to be paid over 108 monthly payments of $242.33 each. It was at this time that Mr. Osgood first learned that his monthly payments would be in that sum. Even at this point, however, the Osgoods were not advised verbally that they would be required, under the terms of the contract, to execute a mortgage on their property as security for their payment. This mortgage, which was signed by the Osgoods before the work was satisfactorily completed, reflected the deferred payment price, of $26,171.64. The mortgage was notarized by Gary French, the salesman, who certified that the Osgoods had appeared before him and signed it on December 19, 1982. This was blatantly false. The Osgoods contend, however, that even at this point they were not aware that the document they had signed was a mortgage and they continued to rely on French's representation to them that a mortgage would not be necessary for the work to be performed. When Mr. Osgood subsequently discovered that he had signed a mortgage on his house and that his monthly payments were far in excess of that which he had anticipated he would be required to pay, he nonetheless attempted to make the payments. He paid a portion of the first payment, but thereafter defaulted. Foreclosure action was brought against him by PVO, but was subsequently dismissed upon arrangements being made that the Osgoods would pay $25 a month until the entire debt is paid. Though the Osgoods were convinced to sign a certificate of completion dated January 28, 1982, the project was incomplete at the time and remains incomplete. Not even half of the window awnings have been installed, and inspection of the property made in April of 1983 reflected that the aluminum siding was not properly grounded and that electrical wires are hanging dangerously close to one of the awnings. This latter feature may not be the responsibility of Respondent. An independent estimate of work identical to that provided for in the PVO contracts with the Osgoods reveals that a total cash price, including a 20 percent profit and overhead margin, and a 20 percent allowance for commission would be under $4,000.00, a sum substantially less than that listed as the cash price on the PVO contract. GADSON Some time during the spring of 1982, Mr. R. B. Polk, a salesman for PVO, came to the Ocala, Florida, home of Pearl B. Gadson, a 74 year sight- deficient widow who lives with her grandson on $274.00 a month which she receives from Social Security, and $300.00 which he receives from the same agency. Mr. Polk told Mr. Gadson that the government was fixing up homes for the elderly, which included the installation of aluminum, soffit and facia. Mrs. Gadson indicated that she didn't need the aluminum but did require boards replaced on the eaves and on the porch of her home. Mr. Polk specifically advised Mrs. Gadson that the government would pay or help pay for this work to be done, and since Mrs. Gadson had heard of a project in Lakeland, Florida, where the government was paying for the repair of private homes, Mrs. Gadson assumed that Polk was involved in the same type of project. Mrs. Gadson advised Mr. Polk that before she made any commitment she wanted to talk with her son in Connecticut. When Polk came back the second time he told her he had already talked with her son about the work to be done on her home. On this second visit, Mrs. Gadson was prevailed upon to sign some papers which, she was told, she would have to sign in order for the government to assume the cost of her home repair. One of the documents that Mrs. Gadson signed on that occasion was a retail installment contract on a pre-printed form, which at the time she signed it contained blank spaces where the description of the improvements, as well as the terms of the contract should be inserted. The only information on the form at the time she signed it was her name and address and the salesman's name and license number. She also signed a notice of right of rescission and credit application on this same second visit. This contract, which was subsequently dated May 10, 1982, was filled in as to the missing particulars by someone for PVO after Mr. Polk left the Gadson residence. When finally filled in, it provided for PVO to install aluminum siding on all exterior walls, new screens on the front of the home, and steps at the front door. Cash price was $7,000.00, to be financed over 84 payments of $153.56 per month, for a total deferred payment price of $12,899.04. The documents which Mrs. Gadson signed were not given to her at the time of signing, but were delivered by Mr. Polk on May 19, 1982, some ten days after signing. When the installer, Melvin Nichols, applied for and obtained the building permit to do this work from the City of Ocala, he utilized a notarized letter of authorization signed by the Respondent. Eight days after the date on the contract, Mr. Nichols installed the siding as called for in the contract and put the screen on the front porch. He also attempted to repair the porch roof overhang but failed to do so satisfactorily and also failed to install the front steps. At some later time Mrs. Gadson was also requested to sign typewritten copies of the documents previously signed, as well as a certificate of completion, both long and short form, and a mortgage. All of the documents, with the exception of the certificate of completion, were back-dated to the date of the original handwritten contract of May 10, 1982. At no time was Mrs. Gadson advised that she was signing a mortgage on her property, or for that matter, even a contract which would cost her some $7,000.00 if she paid cash for it. She believed that she was signing "government papers" and had she known that she was encumbering her property she would not have signed these documents. Once she was informed that she had to pay, she began making payments to the best of her ability. However, she began to fall behind and is still not current or up-to-date on her payments. At no time pertinent to this complaint was Mr. Polk licensed by the State of Florida as a home improvement salesman. SZUCS Michael Brandt, a salesman for PVT first approached Thomas Szucs in August or September, 1982 in St. Petersburg, Florida. Mr. Szucs, a 44-year old unmarried man, who lives alone, while having been determined to be mentally and physically competent is, nonetheless mentally retarded. Mr. Szucs receives a monthly income from Social Security because of his disability and is the beneficiary of a trust set up by his grandparents who also left him the house in which he resides in St. Petersburg. The initial contact with Szucs took place in the home of Szucs' neighbor where Brandt was attempting to make a sale for PVT, and he asked Szucs if he was interested in having home improvement done. Apparently, Szucs indicated he was because somewhat later another salesman, Woody Ayers, came to Mr. Szucs' home on several occasions and as a result of their discussions, on September 4, 1982, Mr. Szucs signed a contract with PVT providing for the company to install aluminum soffit, facia, gutters and windows on his home. This contract was a cash sales contract in the amount of $8,640.00. Szucs was not given a copy of the contract at the time of signature but did receive a copy in the mail at a later date. Mr. Szucs contends that he was advised by Mr. Ayers that the work proposed by PVT would increase the value of the home by between eight and nine thousand dollars, but he was not advised of his right to rescind the contract within three days. The work on the Szucs' house was performed by Melvin Nichols, an independent contractor working with PVT. Mr. Nichols has never been licensed as any type of contractor in the state of Florida. He began doing the work called for in the contract without first obtaining any permits from either local or county government and continued to do so until he was advised by the St. Petersburg police that he had to either get a building permit or stop work. Thereafter, on September 9, 1982, Mr. Nichols obtained a permit from the City of St. Petersburg using a letter of authorization signed by the Respondent. Approximately ten days after Nichols started work on the Szucs' project, Mr. Szucs informed Mr. Ayers that he could not or would not pay cash for the work as was called for in the initial contract. As a result, a second contract, this time providing for the same work for the same cash price, but calling for 120 payments of $158.62 each, was signed. This contract provided that the amount due was to be secured by a mortgage on the Szucs' home and bore a date of September 4, 1982, several days prior to the actual date of signing. Mr. Szucs was not notified of his right to rescind this contract nor was he advised that he would be required to sign a mortgage on his property to secure the payments due under the contract. However, when the work was completed Mr. Szucs was asked to sign a third contract, this time the typewritten copy of that installment contract signed previously. In addition, however, he was asked to sign a typed notice of rescission, certificate of completion and a mortgage, all of which, according to Szucs, were pre-printed forms and had not been filled in at the time they were presented to him for signature. This typewritten contract and the notices of rescission all were dated September 4, though they were signed somewhat later. The mortgage, in the amount of $19,034.40, giving a security interest in the Szucs' home in favor of PVT appears to have been filled in as to its particulars after signature by Mr. Szucs. Mr. Szucs received copies of the documents he had signed , in the mail, between two and four weeks after he signed them. When Mr. Szucs' attorney, who had not been previously contacted regarding the work being done by PVT on the Szucs' residence, found out about it, he had an inspection of the work done by a state-certified contractor, who estimated that, including a 12 percent profit margin, the value of the work done was approximately $2,700.00. Thereafter, the attorney negotiated with Respondent for satisfaction of the mortgage on the Szucs' home and paid Respondent $3,000.00 for it. There was substantial difference in the testimony regarding the value of the materials provided by PVT in this work on the Szucs' residence. Respondent attempted to show that the expert who testified regarding the value of the work done was motivated by some inappropriate consideration to give a low estimate. It is found however, that even if this estimate was low and allowing for some increase, the amount charged by Respondent was exorbitant. LOREK In April, 1983, Chester and Evelyn Lorek, entered into a contract with PVT to install shingles on the roof, drip edging around the roof, and aluminum soffit and facia on all existing overhang of their home in Tampa, Florida. The cash price on the contract was $7,631.55 to be paid over 120 payments of $139.89 a month, for a total of $16,786.80. After signing that contract however, the Loreks decided to pay cash instead of financing and thereafter, on May 9, 1983, entered into a second contract with PVT to perform the same work except for the drip edge for a cash price of $5,000.00. According to normal practice, the contracts were forwarded by PVT to the expediter for that company located with PVO in Orlando, who attempted to locate a roofer to complete the project. PVO had been using Johnson's Roofing Company in Tampa for most of their work in that area. However, at this particular time, Johnson's was unavailable and attempts to locate another roofing contractor to do the job were unsuccessful. Since the work had to be performed on the roof before the aluminum work could be done, PVT entered into a contract with Gary Cook, who installed the aluminum soffits and facia, to obtain a local roofer to perform the necessary roofing work on the Lorek home. Cook, however, either could not or would not locate a licensed roofing contractor and instead did the work himself, along with his helpers. Cook is not a licensed roofer. Apparently the Loreks had some question about the work being done because on May 9, 1983, they called the building department in Tampa and requested an inspection. According to the inspector who did the actual review, Archie Arthur, Cook had failed to secure any permit for doing the work. In addition, the work that was done was in violation of the building code in that the wrong size staple was used to affix the shingles to the roof, and neither the lead boots on the roof ends nor the flashing was replaced as required. As a result, a notice of violation was issued which ceased work on the property. Because the roof work was not done, Cook was unable to complete the aluminum work as well. After the work was stopped however, the Loreks contacted another roofing contractor who was properly licensed, who obtained the necessary permit, and who completed the roofing work as necessary for an additional sum of $1,960.00. During all this time Cook was not licensed as a contractor in any capacity in Tampa or by the State, which fact either was known or should have been known to the Respondent. In any case, Respondent at no time visited the Lorek project while it was being accomplished. HUDSON In April or May, 1983, Flossie Hudson, a widow, was contacted by Bruce Coblitz about having some work done to her home in Orlando. Coblitz was an independent contractor who worked with PVI. At the time he dealt with Ms. Hudson he was licensed by the state of Florida as a home improvement salesman and he employed canvassers who obtained leads for him. Mrs. Hudson had a carport which had previously been enclosed with blocks and a tar and gravel roof, but the interior had not been completed. On their first meeting, Coblitz told Mrs. Hudson that PVI could finish off the carport, making a room out of it, including drywall, ceiling, paneling, carpet and insulation for $1,600.00 and during their discussion Mrs. Hudson got the impression that she could have the work done for payments of from $50.00 to $100.00. During that conversation on May 11, 1983, Mrs. Hudson signed a piece of paper prepared by Coblitz which turned out to be a home improvement sales contract and promissory note. The terms of the agreement provided for PVI to finish the room remodeling by installing drywall, paneling, wall-to-wall carpeting and two inside doors for a cash price of $6,000,00 instead of the $1,600.00 which Coblitz had verbally represented to Mrs. Hudson. The $6,000.00 was to be financed over 120 payments at $110.00 per month. At the time she signed the contract Mrs. Hudson also signed a notice of rescission and a credit application. Mrs. Hudson contends that Mr. Coblitz did not tell her she was signing a contract nor did she know what any of the documents she signed were. As far as she was concerned she thought they were documents authorizing a credit check. Her eyesight, she contends, is not very good and she has never been able to ready very well, even though she went through the eighth grade in school. The documents themselves had blank spaces on them which were not filled in prior to Mrs. Hudson's signature and Mrs. Hudson was not given copies of the documents at the time she signed them. Several days later, on May 16, 1983, Mr. Coblitz again visited Mrs. Hudson and had her sign a second sales contract which called for PVI to do the same work as outlined in the May 11th contract in addition to work to be done on an archway entrance and adjoining wall. The cash price was increased to $7,000.00 and the monthly payments to $128.52. Again, Mr. Coblitz did not advise Mrs. Hudson that she was signing a contract and again, she contends, she did not know that the document she had signed was a contract. According to her she was still waiting for Coblitz to bring out a contract for her to sign and, again, she was not given a copy of the May 16 contract at the time she signed it. Neither the May 11 nor the May 16 contract was signed by a representative of PVI nor was Mrs. Hudson ever informed of her right to rescind either contract within three days. Coblitz told her that the work performed by PVI would be guaranteed, but the contracts with PVI which were signed by Mrs. Hudson specifically stated that no warranties of any type were being given. The work on Mrs. Hudson's property was begun by a PVI subcontractor, Steve Kolozsvary, an unlicensed contractor. Mr. Kolozsvary failed to pull any of the required permits for this work and he testified that when he was supposed to obtain a permit Mr. Valentine, an employee of PVI would give him a letter of authorization for that particular project. None was given him for this job. As of the time the work was begun, on May 19, 1983, Mrs. Hudson had still not received a copy of the contract. The following day she mentioned it to her daughter, Teresa, who decided that no work should proceed until her mother received the contract. On May 21, 1983, when the workmen came, she refused to let the work continue and sent them away. She claimed that she did this because her mother had no contract and also because the materials which the workmen had brought to the site appeared to her to be of inferior quality. Once the work was stopped both Coblitz and Valentine, at different times, came out to Mrs. Hudson's home to find out what the problem was. When they found out that Mrs. Hudson was refusing to allow the work to proceed because she did not have a copy of the contract, Valentine proposed that a new contract be drawn up. This new contract, dated May 25, 1983, provided for the same work to be completed as was called for in the earlier contract but with a reduction in cash price to $4,006.00 to be financed over 72 months at $95.69 each. Teresa Hudson advised her mother to sign this contract because some of the work had already been accomplished and she believed they had no choice. Based upon the advice of her daughter Mrs. Hudson signed this contract unaware that she had signed any previous contracts. She was given a copy of the May 25 contract when it was signed and the following day she exercised her right to rescind that contract. This rescission was based on what was perceived as irregularities in the name of the salesman listed on the contract. Kolozsvary applied for a building permit to do the Hudson work on May 26, 1983 after the contract had been rescinded but no further work was done on the contract. At the time of rescission 60 percent of the work called for had been completed. Representatives of the City of Orlando, Building Inspection Department, inspected the property on June 1, 1983, and discovered several deficiencies. There was no fire-blocking material in the vertical and horizontal openings in the wall and the wires which held up the suspended ceiling were not properly spaced. At no time when Mr. Valentine was negotiating with Mrs. Hudson for amendments to the contract on behalf of PVI was he licensed by the state of Florida as a home-improvement salesman. An independent evaluation of the work listed in the contract that PVI proposed to do resulted in a total estimated price for the work of $3,444.40. This amount included profit and salesman's commission. It is not so far off that price of $4,006.00 contained in the May 25, 1983 contract. JOHNSON Sometime in the late spring of 1983, a canvasser employed by Bruce Coblitz, came to the Orlando, Florida home of Mabel Johnson. He advised her that PVI was starting a new business and he was inquiring of residents in her neighborhood to see if anyone desired to have an extension or addition added to their home. Apparently Mrs. Johnson indicated some interest because approximately a week later Rick Midden came to Mrs. Johnson's home and was told by her that she wanted a cement-block addition. Midden talked her out of that indicating it would be too costly and suggested that the screened-in patio in back of her home could be modified by PVI with aluminum that would be considerably less expensive than the $25,000.00 estimated cost of concrete- block. In fact, Midden told Johnson that an aluminum addition would cost her approximately $10,000.00 with monthly payments available. Midden, at the time, was not licensed as a home improvement salesman in the state of Florida, a fact which was known to Respondent's associate, Mr. Greenberg. On a second visit, Midden along with another salesman, Rick Woods, took Mrs. Johnson to visit another home in the area where PVI had constructed an addition similar to that which they were proposing for her. Mrs. Johnson was still not satisfied and wanted some more time to consider. Midden agreed to come back a fourth time. On this fourth visit, Mrs. Johnson signed what she understood was a "temporary contract", a credit application and a notice of right of rescission. She was advised at that time by Mr. Midden that when the work was completed she would have to sign another set of papers. This first contract, however, which provided for PVI to remove the existing roof over the patio, enlarge the slab, in stall a glass and screen enclosure, install paneling with insulation, wall-to-wall carpeting, and a server from the kitchen of the home, showed a price of $10,000.00 financed over 120 payments of $183.60. Total deferred price was $22,032. This contract however was subsequently voided prior to work beginning and a second contract, along with the ancillary papers, was executed on June 1, 1983, and provided for PVI to do all that was included in the original contract plus adding three electrical outlets. The financing terms were identical with that in the previous contract and Mrs. Johnson was given a copy of both contracts and the notice of rescission at the time they were signed. Thereafter on June 8, 1983, Mr. Midden applied for and obtained a building permit from the City of Orlando to do the addition to the Johnson home. Steven Kolozsvary was the individual who performed the work according to a subcontract with PVI and the addition was completed sometime that month. Once the work was completed Mrs. Johnson was requested to sign a typewritten contract, a completion certificate, a notice of right of rescission, and a mortgage dated June 20, 1983. The terms of the contract were identical to the earlier non-voided handwritten contract. Mrs. Johnson was not given copies of the typed contract at the time of signature but received them approximately a week and a half later through the mail. The work performed was not done correctly. Water seeped in around the baseboards and notwithstanding the fact that Mrs. Johnson kept calling PVI to speak with Mr. Midden, nothing was done to correct the problem. She ultimately spoke with Elliott Greenberg's son in July, 1983 and after several calls, someone finally came out to attempt repair but the problem was not corrected. After continued effort to have the problem rectified, Mrs. Johnson finally filed a complaint with Petitioner herein and also called the City of Orlando, determining that a final inspection had not been performed. It was also discovered that no electrical permit had been pulled prior to the work and in September, 1983 an inspector with the Orlando Building Department found that the aluminum siding installed was not properly grounded. Another inspection by the Orlando Building Department, dealing with electrical code violations, indicated there was no light at the back door, there were no outside receptacles and there were insufficient receptacles within the structure. As for the outside receptacles, Mrs. Johnson indicated she did not want them installed because of the potential that other people would use her electricity. Efforts by the building department to determine who had done the electrical work on the project, through calls by the building department to PVI, resulted in PVI advising that they did not know who had done the work. It was not until Mrs. Johnson filed her complaint with the Department of Professional Regulation and the City of Orlando that Respondent first came out to the Johnson residence. He determined that the water was seeping in because the slab for the addition had been poured too low and directed that the slab be repoured. This was done by Mr. Kolozsvary and the repairs were successful, approximately four months after the project was turned over as being completed under the contract. THOMAS Lizzie and Elijah Thomas are an elderly couple who live on a total of $304.00 per month Social Security payments. Any time payments they have made in the past have been based on paperwork completed by the seller. They own their house in Orlando, Florida, which they share with their grandchildren Annette and Johnnie Odums. Though Annette has completed the eleventh grade she can barely read or write and Johnnie Mae Odums, who went to school through the tenth grade, can read and write only a little. In May, 1983, Bart Mauldin, an employee of Bruce Coblitz, contacted the Thomases asking them if they were interested in having any improvements done to their home. Apparently he felt that some potential was there because some time later Coblitz himself came to the Thomas home and advised them that PVI would install a new floor, cabinets and countertops in the kitchen; a bathtub, commode, soapdish, toilet paper holder and towel rack in the bathroom; and repair the bathroom sink and replace the bathroom tile. According to Coblitz all this work would cost five or six hundred dollars and on this visit the Thomases signed some papers pursuant to Coblitz' request. It turns out that these papers constituted a home improvement sales contract, promissory note contract, and security agreement and disclosure statement dated June 1, 1983. Lizzie Thomas actually signed the documents but Elijah signed with an "X". This contract provided for PVI to do substantially the work referred to above for a cash price of $6,000.00 financed over 120 payments of $110.16 each. The payments were to be secured by a mortgage on the Thomas' home. This contract contained several blank spaces at the time it was signed by the Thomases, including the dates for the commencement and completion of the work, and the contract was not signed by a representative of PVI. Neither one of the Thomases were advised by anyone from PVI that the contract price was $6,000.00 instead of the $600.00 originally quoted. The Thomases were not given a copy of the contract at the time of signing. On the date of signing they were also requested to sign a notice of right of rescission but they were not informed as to what that document was nor were they informed verbally of the right to rescind the contract. The Thomases also signed an application for an installment loan at the same time but they were not advised of the effect of the document they were signing. About a week after the signing work was begun by Gary Householder, a subcontractor working for Bruce Coblitz. Householder and his crew worked on the home periodically for two days. On the second day, one of the workmen requested Mrs. Thomas sign a piece of paper. Because of arthritis in her hand she was unable to do so at the time. As a result she asked her granddaughter, Johnnie Mae to sign the paper which turned out to be a certificate of completion dated June 10, 1983. Neither Mrs. Thomas nor Johnnie Mae Odums knew what that document, signed on June 10, was. Neither was given an opportunity to read it even if they could, but they were told the workmen would be back the following day. The work that was performed pursuant to the June 1, 1983 contract was performed without the required building permit being pulled. On June 11, 1983, Mrs. Thomas was asked to sign more documents which included typewritten copies of the previously signed contract and ancillary papers. The typewritten contract terms were essentially the same as those contained in the hand written contract and while Mrs. Thomas signed her name, Annette Odum signed Elijah Thomas' name to the typewritten agreement. Again, the cash price stated in the contract was $6,000.00 but neither Thomas was advised of this fact nor were they advised that they would be required to sign a mortgage on their home to secure the payments. The right of rescission agreement was, again, signed without explanation, as was the long form certificate of completion. In that regard, the work covered by the contract had not been completed at the time the Odums were requested to sign that certificate. The mortgage dated June 11, 1983, provided for 120 payments of $110.16 each for a total of 13,219.00. Mrs. Thomas signed the agreement without knowing what it was and, again, Annette Odum signed her grandfather's name and witnessed her grandmother's signature. The second witness to Elijah Thomas' signature was William Valentine, the expediter, who in his capacity as notary, falsely notarized that Elijah Thomas signed the mortgage. Neither the Thomases nor Ms. Odums were advised that they had signed a mortgage on June 11, 1983. Had Mrs. Thomas been aware of the fact that she was mortgaging her home she would not have signed the document. None of the typewritten copies were provided to the Thomases at the time of signing but were forwarded through the mail several weeks later. The Respondent signed the contract and all of the required papers including the dealer certification note on the certificate of completion for PVI. Later in the month of June, 1983, Mrs. Thomas requested that her nephew, Nathanial Boldes, read some of the documents which she had received regarding the contract in question which she still felt was for $600.00. When Boldes read them he found that the cost was $6,000.00 not $600.00 and also discovered that his grandmother had already signed the mortgage on the property. He also observed the work on the project was not completed even though the certificate of completion form reflected that it was. Mr. Boldes immediately called Mr. Coblitz and requested the work be completed. Coblitz responded that the work would be completed within three days. In fact, some additional work was done but the project was not completed as requested. Therefore, Mr. Boldes again contacted PVI and in response to this call, Mr. Valentine came out and went through the house with Mrs. Thomas making a list of the things that needed to be done. He procured Mrs. Thomas' signature on this list which turned out to be a completion certificate for these items. Notwithstanding this signature and the fact that the work was not completed, in mid-July, 1983, a representative of PVI persuaded Johnnie Mae Odums to sign the Thomas name to yet another certificate of completion without advising of the nature of this document. However, when they received copies through the mail, Mr. Boldes discovered that the completion certificates had been signed even though the work had not been completed. As a result the Thomases made no payments under the contract and the matter is currently in litigation. An independent inspection of the work performed on the Thomas' home and that called for by the contract with PVI was conducted. The resulting estimate indicates that the cash price for the total project should be in the area of $4,392.00 including 20 percent sales commission and 20 percent profit. WILLIAMS Laura Mae Williams, a retired widow with limited reading and writing skills lives on a $238.00 monthly pension in a home located in Orlando, Florida. In June, 1983, Gary French and Duane Beard, came to the Williams' home to see if they could sell her some home improvements. They offered to fix the roof and put siding on her home and advised her that the company they were with, PVI, had a good deal for older people. At this point, French was sales manager with PVI and Beard was a salesman working with the company as an independent contractor. Beard and French advised Mrs. Williams that the improvements they proposed would cost approximately $4,000.00 and could be financed with payments of $80.00 per month. Mrs. Williams told them that she could not do anything without talking with her daughter about it first. Nonetheless, they convinced her to sign some papers so that after she talked with her children, everything could be taken care of. In reality, on that visit, Mrs. Williams signed a home improvement sales contract, a promissory note, a security agreement, a disclosure agreement, credit application and a notice of rescission rights. None of these were explained to her. All she was told was that the documents were necessary so that the bank would finance her purchase. This contract, dated June 16, 1983, provided for PVI to remove and replace the roof on the property for a cash price of $4,488.00 payable in 120 monthly payments of $81.69 each. The contract also provided for PVI to have a security interest in the property. None of the documents were explained to her truthfully and though they were given to her at the time she signed, she did not look at them because she had told French and Beard not to come until she had had a chance to talk with her children. She was assured that nothing would be done pursuant to anything they had discussed until she had done so and had gotten back to them. The contract which Mrs. Williams signed failed to reflect the license number of either salesman and the contract was not signed for the contractor. On June 21, five days after Mrs. Williams unwittingly signed the contract, workmen showed up at her home and began to work on the roof. The work was accomplished by Joseph Panasuk doing business as Joseph Roofing, who accomplished the work without first obtaining the required building permit. It took approximately four hours to complete the work and when the work was completed, Mr. Panasuk had Mrs. Williams sign a certificate of completion. Mrs. Williams did not ask Mr. Panasuk to leave, even though she had not called Beard and French back and agreed to have the work done, primarily because she did not know she could do so. The evening the work was completed French and Beard came out to Mrs. Williams' house with another paper for her to sign. Again, they did not explain what the document was, but merely said that it was necessary for the bank to finance the project. At this time, however, Mrs. Williams' daughter, Sylvia, was at home and urged her mother not to sign the document. Mrs. Williams did so, however, because she felt she had to. The following day, representatives of PVI came out with more papers to sign. At this point, Sylvia Williams reviewed them and noticed that the contract called for a deferred purchase price of about $10,000.00 and again urged her mother not to sign the papers. Notwithstanding this advice, Mrs. Williams, nonetheless, signed. This contract, a typewritten copy, called for the same work to be done at approximately the same price as called for in the original handwritten copy. When Sylvia Williams called the building department the following day, she found out that no permit had ever been pulled to do this work. She thereafter called PVI to check on whether a permit should be pulled and was told that it had been. When she told the woman with whom she spoke that the building department had told her no permit had been issued, she was referred to Bill Valentine, to whom she also told the results of her inquiry. Somewhat later Gary French called her back and said that because they had not read the contract to her mother, they were going to reduce the price to $2,600.00 plus interest, and would bring out a new contract for Mrs. Williams to sign. Consistent with that, on June 214, 1983, Mrs. Williams was asked to and did sign a third contract which called for the same work to be performed but which reduced the cash price to $2,603.90, plus the finance charge of $1,249.06 for a total of $3,852.90. On this same date Mrs. Williams also signed a Notice of Rescission and a mortgage in favor of PVI. That same date Mrs. Williams and her daughter took the contract to an attorney and had it rescinded. Thereafter, PVI filed a foreclosure action against Laura Mae Williams and this matter is currently in litigation. Also on June 214, 1983, three days after the work was completed, the contractor obtained a permit to reroof Mrs. Williams' home from the Orange County Building Department, the City of Orlando Building Department, even though Mrs. Williams' residence is inside the city limits. An independent evaluation of the contract and the work performed thereunder resulted in a total cost estimate for the project of $2,504.00, including commission and profit, and this figure is approximately $100.00 less than that called for in the final contract. The ultimate contract price here was not exorbitant.
Recommendation Based on the foregoing, it is, therefore: RECOMMENDED that Respondent Herbert A. Licht's certificate be suspended for a period of three years and that he pay an administrative fine of $10,000,00. RECOMMENDED this 1st day of November, 1984, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 Filed with the Clerk of the Division of Administrative Hearings this 1st day of November, 1984. COPIES FURNISHED: Stephanie A. Daniel, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Joseph C. Jacobs, Esquire Melissa Fletcher Allaman, Esquire Post Office Box 1170 Tallahassee, Florida 32302-1170 Paul B. Steinberg, Esquire 300 71st Street, Suite 301 Miami Beach, Florida 331141 Fred Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 James Linnan Executive Director Construction Industry Licensing Board Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 =================================================================
Recommendation Based on the forgoing, it is RECOMMENDED that a final order be entered dismissing the petition. Each party shall bear its own costs and fees associated with this proceeding. DONE AND ENTERED this 28th day of June, 2002, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 28th day of June, 2002. COPIES FURNISHED: Victor Barrett 1959 Thomasville Avenue, Southeast Palm Bay, Florida 32909 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway Suite 100 Tallahassee, Florida 32301 Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway Suite 100 Tallahassee, Florida 32301 Terri Jones, Esquire Brevard County Board of County Commissioners 2725 Judge Fran Jamieson Way Viera, Florida 32940
The Issue The issue in this case is whether Petitioner's two applications for continuing education course approval should be denied for the reasons set forth in the Florida Real Estate Commission's Notices of Intent to Deny, which were issued on February 19, 2009.
Findings Of Fact Petitioner Jon D. Tremper is a licensed real estate sales associate. In 1988, Petitioner established a home inspection company and has since performed several thousand inspections of properties in Florida. In 1999, Petitioner established The Home Inspection Academy, which he describes as a "private school providing training to the home inspection industry." Petitioner has developed and taught home inspection and construction-related courses to individuals and to groups including the Florida Association of Building Inspectors. Petitioner applied to the Department of Business and Professional Regulation, Division of Real Estate (Division) for continuing education credit for two courses that he developed and wished to present for credit to licensed real estate professionals: "Homeowner's Guide to Hurricane Protection & Insurance Discounts," and "Protecting Homes from Termites, Water Damage and Mold." The courses were placed on the FREC agenda for consideration at its January 20, 2009, meeting. The FREC denied both courses by way of Notices of Intent to Deny issued on February 19, 2009. The FREC's intent to deny was based on Subsection 475.182(1)(a), Florida Statutes (2008),1 the relevant portion of which provides: Approval or denial of a specialty course must be based on the extent to which the course content focuses on real estate issues relevant to the modern practice of real estate by a real estate licensee, including technology used in the real estate industry. Each Notice contained the following finding of fact: The Director of the Division of Real Estate suggested that the course could be denied due to the subject matter of the course not being related to the profession of real estate and not related to the nuts and bolts of real estate. "Homeowner's Guide to Hurricane Protection & Insurance Discounts" is a three-hour course. The learning objectives of the first hour are to understand the impact of recent hurricanes in Florida, which structures survived the storms and why they survived, and the wind resistance upgrades that are available to homeowners. The learning objectives of the second hour are to understand what insurance companies are looking for and how a homeowner can lower his premium, where to get help in determining cost-effective wind resistance upgrades, and the necessity of taking the initiative in dealing with insurance companies. The learning objectives of the third hour are to understand the "My Safe Florida Home" program offered by the State of Florida, the importance of and procedures for documentation of home improvements, and the best resources available for protecting a home from hurricanes. "Protecting Homes from Termites, Water Damage and Mold" is a three-hour course. The learning objectives of the first hour are to know the threats of termites, water damage and mold to Florida homes, where to get help when a problem is found, and the seven ways to ensure that a home stays termite free. The learning objectives of the second hour are to know and understand the unique elements of Florida climate, the importance of keeping water out of Florida homes, and the seven ways to prevent water damage. The learning objectives of the third hour are to know and understand the conditions for mold growth in Florida homes, why mold remediation is necessary, and the seven ways to keep mold out of Florida homes. Ralph McCoig, the chairman of the FREC, has been a real estate agent and broker for nearly 30 years. Since 1994, Mr. McCoig has been the owner and broker of Edita Realty in Rockledge. Mr. McCoig testified that Petitioner’s courses were of great interest to homeowners, but were not really relevant to a real estate licensee's practice. Mr. McCoig stated that a licensee's duties to a seller are to establish a price for the house based on the current market, to market the house, and to negotiate the contract of sale. A licensee's duties to a buyer are to find houses, show the properties, and assist the buyer in obtaining financing. Licensees do not give opinions on hurricane insurance requirements or on termite, water or mold damage. Mr. McCoig stated that home inspection companies, insurance agents, and licensed pest control companies are the professionals qualified to deal with the matters discussed in Petitioner's courses. A real estate licensee would be better served to retain these professionals on his client's behalf, because they are the best sources of relevant information and because the real estate professional does not want to incur liability for practicing beyond his area of expertise. Mr. McCoig testified that the FREC determined that Petitioner’s courses were not applicable to a real estate professional's job and not appropriate for continuing education credit. Petitioner testified that his courses were not designed to make a realtor an expert in hurricane protection or termite, water and mold damage, but to give the realtor the ability to offer common sense advice to his clients. Petitioner pointed out that the standard contract for sale and purchase of real property in Florida contains provisions regarding disclosure of wood-destroying organisms and mold, and that Section 627.711, Florida Statutes, requires insurers to take certain actions regarding discounts for hurricane reinforcements. Petitioner opined that realtors should be familiar with these matters in order to properly serve their clients. Petitioner also testified that the Department of Business and Professional Regulation, Bureau of Education and Testing's web site discloses "thousands" of approved courses, including some whose titles appear equivalent to Petitioner’s proposed courses and some of which appear frivolous, such as "Feng Shui for Realtors." In rebuttal, Mr. McCoig testified that the FREC has recently denied applications for courses related to Feng Shui concepts. Mr. McCoig stated more generally that the current FREC board has taken a more hands-on and restrictive approach to the approval of continuing education courses than had been the practice in previous years, when the Division had apparently been delegated authority to approve courses at the staff level. The FREC board intends to whittle the list of approved courses down to a manageable number directly related to the "nuts and bolts" of real estate practice in Florida.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order denying Petitioner's applications for continuing education course credit for courses titled "Homeowner's Guide to Hurricane Protection & Insurance Discounts" and "Protecting Homes from Termites, Water Damage and Mold." DONE AND ENTERED this 19th day of June, 2009, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of June, 2009.
Findings Of Fact At all times pertinent to these Findings of Fact, the Respondent has been a licensed real estate broker in the State of Florida having been issued license number 0317497. In 1985, the Respondent operated his own real estate brokerage firm, Kline Real Estate, Inc., which acted as a marketing agent for Majestic Builders, a construction company. Both Kline Real Estate, Inc., and Majestic Builders did business in and around the Spring Hill, Hernando County, Florida, area. Majestic Builders was owned by George Orlando. In early 1985, Majestic Builders' qualifying general contractor was Stephen Cannon. In early 1985, the Respondent was contacted by the Whitmarshes of Lynchburg, Virginia, who expressed interest in having a modified version of a Majestic Builders model home built on a piece of property in Spring Hill, Florida. Eventually, the Whitmarshes selected a lot on which to have the residence built, and the Respondent brokered the purchase of the lot (from a third party) and the construction contract. Both contracts were entered into on or about April 27, 1985. Both contracts required that the Whitmarshes make a deposit, $1,000 on the lot purchase and $5,000 on the construction contract. Both deposits were made into the escrow account maintained by Kline Real Estate, Inc. The $1,000 deposit was disbursed without incident at the closing of the lot purchase on or about May 7, 1985. The construction contract between the Whitmarshes and Majestic Builders provided in connection with the deposit: DEPOSIT TO FIX HOME PRICE FOR PERIOD OF 6 MOS. [MONTHS), DURING WHICH COMMENCEMENT MAY BEGIN WITHIN 30 DAYS OF NOTIFICATION AND INITIAL PAYMENT OF 30% OF BALANCE. SHOULD COMMENCEMENT BE AFTER 6 MOS., DEPOSIT WILL STILL APPLY BUT TO NEW PURCHASE PRICE OF MODEL AT TIME OF CONSTRUCTION. For the balance of the spring and summer of 1985, the Whitmarshes continued to consult with the Respondent and, primarily through the Respondent, with George Orlando regarding the modifications the Whitmarshes desired to make to the Majestic Builders model, but they were not particularly anxious to commence construction for personal, family health reasons. In addition, they understood and knew from the contract provision and from conversation with the Respondent that their $5,000 deposit was supposed to be credited to the price of the home they eventually built even if commencement was more than six months from the contract date. On or about November 11, 1985, the Respondent advised the Whitmarshes by telephone, confirmed in writing: This [is] notification, that in accordance with your contract, you are legally in default. This letter is written out of legal necessity and has no bearing on your deposit which will bw [sic] applied to the agreed upon purchase price of a Majestic Home. The default merely is to state the builder is no longer held to the prices quoted. And any changes either up or down will be reflected in the new contract price. (Emphasis added.) Notwithstanding his November 11 letter, the Respondent withdrew the Whitmarshes' $5,000 deposit from the Kline Real Estate, Inc., escrow account and deposited it in the Kline Real Estate, Inc. operating account. Of the $5,000, $1,000 was used the purchase of a building lot for Majestic Builders, and $1,500 was paid directly to George Orlando, to whom the Respondent believed the $5,000 belonged. 1/ The Respondent is unable to account for the balance of the $5,000. 2/ On or about March 21, 1986, the Respondent received a letter from Mr. Whitmarsh stating: "With this letter I authorize you to use $500 from my escrow account to obtain a new floor plan and prepare a cost estimate for my revised version of your Wind and Wildfire Model Home." The Respondent, who had had a heart attack in September, 1985, and was in the process of closing out Kline Real Estate, Inc., and getting out of the real estate business, passed the letter on to George Orlando. Orlando balked at the request, taking the position that the purpose of the $5,000 was not for use to draw up revised plans. But it is the Respondent's understanding that Orlando eventually relented and agreed not to require the Whitmarshes to pay for the revised plans with new money. It is unclear from the evidence whether revised plans ever were drawn. 3/ In approximately June or July, 1986, the Respondent closed Kline Real Estate, Inc., and got out of the real estate business. He never heard anything else from the Whitmarshes about the transaction and assumed that Orlando and the Whitmarshes had satisfactorily concluded their business dealings. But in fact in approximately early 1987, the Whitmarshes received information that Majestic Builders was not a licensed contractor. Although, on checking, they learned that Majestic Builders then had a licensed qualifying contractor, the Whitmarshes still did not feel comfortable with Orlando and Majestic Builders. In about April, 1987, the Whitmarshes decided to hire another builder and asked Orlando for the return of their deposit. Orlando refused, saying that the Respondent had the money. 4/ Nonetheless, the Whitmarshes never contacted the Respondent for the return of the deposit. Later, the Whitmarshes and Orlando became involved in another dispute arising out of the alleged improper use of Orlando's Wind and Wildfire drawings by the Whitmarshes and the builder they eventually hired, Stephen Cannon, who had been Majestic Builders' qualifying general contractor but had left to start his own construction company with the understanding that Cannon would not use any of Majestic Builders' drawings. The Respondent had no knowledge of any of these disputes between Orlando and the Whitmarshes until he was interviewed by a Department of Professional Regulation (DPR) investigator in August, 1988. The DPR had begun an investigation of Orlando on the Whitmarshes' complaint of alleged violations of the laws regulating construction contractors and learned that the dispute involved a deposit that had been held in trust by a licensed real estate broker. DPR then began an investigation of the Respondent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Real Estate Commission enter a final order finding the Respondent, Ronold E. Kline, guilty of violating portions of paragraph (b) and paragraphs (d) and (k) of Sections 475.25(1), Florida Statutes (1987), and suspending his license for a period of one year. RECOMMENDED this 15th day of December, 1989, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 15th day of December, 1989.
The Issue The four count Administrative Complaint presents the following issues: Whether Mr. Burgess is guilty of concealment, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction in violation of Section 475.25(1)(b), Florida Statutes (2007).2 Whether Mr. Burgess operated as a broker without being the holder of a valid and current license as a broker in violation of Section 475.42(1)(a), Florida Statutes and, therefore, in violation of Section 475.25(1)(e), Florida Statutes. Whether Mr. Burgess failed to ensure his brokerage corporation had a current registration with the Department in violation of Florida Administrative Code Rule 61J2-5.019, and, therefore, in violation of Section 475.25(1), Florida Statutes. Whether Mr. Burgess is failed to account or deliver to the Bells any property or assets which has come into his hands and is not his property and which he is not entitled to retain, in violation of Section 475.25(1)(d)1, Florida Statutes.
Findings Of Fact Clear and convincing evidence establishes the following findings of fact: The parties agree that Mr. Burgess is now, and has been at all times material to this case, a Florida licensed real estate broker, holding license number 701456. Mr. Burgess's business relationship with Willis C. and Nell F. Bell (the Bells) began in 2002 and 2003. In those years he served as realtor in selling a duplex and buying a house located at 42 East Drive, North Miami Beach, Florida. Later the Bells paid Mr. Burgess $1,000 to assist with re-financing the house. In the following years, Mr. Burgess borrowed money from the Bells. The Bells knew little about real estate and the real estate business. They trusted and relied upon Mr. Burgess, and he knew that. Mr. Burgess entered into a contract with the Bells to sell a townhouse located at 648 Northeast Second Street, Homestead, Florida. The contract is titled “Exclusive Right of Sale Listing Agreement” and dated October 3, 2006. The contract identifies Mr. Burgess as an “Authorized Listing Associate or Broker.” It gives Mr. Burgess the exclusive right to sell the Bells’ property and obligated him to market and sell the property. The contract identifies the sale price as $310,000.00. The contract term is October 3, 2006 to April 3, 2007. The first sentence of the contract identifies the parties as the Bells (Sellers) and Mr. Burgess and World Realty (Brokers). Mr. Burgess signed it as “Authorized Listing Associate or Broker.” The signature area identifies the Brokerage Firm Name as Beachfront Realty, Inc. The Bells purchased the Homestead townhouse at Mr. Burgess’s urging. He convinced the Bells that buying the Homestead townhouse was a good real estate investment. Mr. Burgess also loaned the Bells $3,000 or $3,500 to help them purchase the property. Mr. Burgess did not succeed in finding buyers for the property. Mr. Burgess proposed to the Bells that they rent the property. He repeatedly offered to locate a tenant for them. For some time the Bells resisted the idea because of concerns about wear and tear and possible damage to a new townhouse. Finally they agreed. Mr. Burgess identified a tenant, Ms. Kenya Horne. He repeatedly told the Bells that Ms. Horne’s occupation and lease of the townhouse were dependent on approval to participate in a government rent support program. Mr. Burgess prepared and the Bells executed a lease with Ms. Horne for the period beginning October 8, 2007 and ending September 30, 2008. It provided for lease payments of $1,300.00 per month and a security deposit of $1,300.00. Mr. Burgess signed the lease as a witness. But the Bells told Mr. Burgess that they did not want Ms. Horne to take possession of the townhouse until they met and approved her. Mr. Burgess agreed. He repeatedly assured the Bells that he would not give Ms. Horne possession of the property until they had met and approved of her. Also Mr. Burgess repeatedly advised the Bells that Ms. Horne had not moved into the property because she could not obtain needed approval for rent assistance. These assurances were false. Despite his repeated assurances and statements, Mr. Burgess gave the tenant possession of the property. She lived there four or five months. During the same time period, while the tenant occupied the property, Mr. Burgess was telling the Bells that Ms. Horne had not obtained rent assistance and that renting the property to her was not going to work. He never told the Bells that the tenant moved in. And he never gave the Bells any rental payments or a deposit or made any arrangements for them to receive rental payments or a deposit. Uneasy about matters, the Bells traveled with Laurence Linder, a friend who was a real estate broker and insurance salesman, to Homestead to inspect the townhouse. They found that the property had been occupied and damaged. The damage included holes in several walls and fire damage in the kitchen. The stove and microwave were destroyed. The carpet was damaged. The Bells called Mr. Burgess from the townhouse and asked him how the property was. Mr. Burgess did not know that the Bells were at the townhouse. He told them it was in fine shape. When the Bells told Mr. Burgess that they were in the townhouse, he broke down and cried and admitted he had let somebody live there without telling them. When the Bells confronted Mr. Burgess with his actions and the damage, Mr. Burgess admitted deceiving the Bells about the tenant and her occupation of the townhouse. He promised to make restitution for the damage. Mr. Burgess signed a document titled Remedy of Rental. In it he agreed to do the following: Pay the City of Homestead’s final outstanding utility bill of $1,700 on or before March 14, 2008. Pay the Bells $4,600 to repair damage and an additional $2,000. Pay the Bells $5,200.00, the rental amount from October 2007 to January 2008, on or before April 11, 2008. Pay all amounts by certified or cashiers check. Mr. Burgess did not make any of the payments agreed to in the Remedy of Rental.
